Ref. No. AE-20/2561 dated 1 April 2016
Attn.: NSD’s Clients
Dear Clients,
On 1 July 2016, provisions of the Federal Law No. 208-FZ “On Joint Stock Companies” dated 26 December 1995 (hereinafter referred to as the Federal Law “On Joint Stock Companies”) and Federal Law No. 39-FZ “On the Securities Market” dated 22 April 1996 (hereinafter referred to as the Federal Law “On the Securities Market”) that shall amend the procedures and technologies of exercising rights on Russian issuers’ securities in the course of processing some corporate actions, will come into effect.
I. The new procedure implies that for owners of securities held at securities depositories, a number of rights attached to securities may be exercised only via securities depositories servicing these owners using electronic data interchange (hereinafter referred to as EDI). Other rights attached to securities may be exercised by securities owners via securities depositories using EDI or independently, by means of direct interaction with issuers and by using paper documents.
The following rights shall be exercised by owners of securities held in securities depositories only via their securities depositories:
- Pre-emptive rights to acquire securities, including shares (exercising rights stipulated by Article 40 of the Federal Law “On Joint Stock Companies”);
- Purchasing securities, including shares, by a joint stock company (exercising rights stipulated by Article 72 of the Federal Law “On Joint Stock Companies”);
- Repurchasing securities, including shares, by a joint stock company at the security holder’s request (exercising rights stipulated by Article 75 of the Federal Law “On Joint Stock Companies”);
- Voluntary offers to purchase shares (Article 84.1 of the Federal Law “On Joint Stock Companies”);
- Mandatory offers to purchase shares (Article 84.2 of the Federal Law “On Joint Stock Companies”);
- Mandatory repurchase of shares at the request of a shareholder owning not less than 95% of a joint stock company’s shares (Article 84.8 of the Federal Law “On Joint Stock Companies”).
The following rights shall be exercised by owners of securities held in securities depositories either independently or via their securities depositories:
- To add items to the General Shareholders’ Meeting agenda;
- To nominate candidates to executive bodies or other bodies of an issuer that is a joint stock company or candidates of representatives of the bond holders;
- To request to call (convene) a General Shareholders’ Meeting;
- To participate in the General Shareholders’ Meeting and to exercise voting rights;
- To exercise other rights attached to securities.
II. The approach to drawing up lists shall be amended too under the new legislative provisions:
1. Upon the requests of the Bank of Russia and the issuer, and in accordance with Article 8.6-1 of the Federal Law “On Securities Market,” the list(s) of security holders will be drawn up as of the exact dates specified in the requests. Registrars and nominee holders will be obliged to submit the necessary information to draw up lists. These lists shall be submitted within 15 working days.
2. In accordance with Article 8.7-1 of the Federal Law “On Securities Market,” the list(s) of persons/legal entities exercising rights to securities (for participating in the General Shareholders’ Meeting, and for exercising the pre-emptive right to acquire securities) shall be drawn up. The list(s) will be drafted by the registrars based on their accounting information and data received from nominee holders. In cases stipulated by Article 8.9 of the Federal Law “On Securities Market,” data submitted by nominee holders may include information on the vote of the person/legal entity exercising rights to securities. Nominee holders have the right to withhold information about these persons/legal entities if so stipulated by agreements with these persons/legal entities.
To facilitate communication with securities market participants during the ongoing changes, NSD has launched a special website on corporate actions reform – corpactions.ru (hereinafter referred to as the website). The website includes an in-depth description of all aspects of the reform, including legislative changes, the proposed timeframe, and technological details.
Please note that the rules of electronic interactions with the central securities depository, including electronic document formats, are established by the central securities depository. These rules apply to both registrars and NSD clients. Information about electronic document formats developed in line with provisions of the Federal Law “On Joint Stock Companies” and the Federal Law “On Securities Market” is available on the website in the Corporate Actions section.
To avoid possible errors that may occur in the course of EDI, NSD regularly tests new processes in cooperation with market participants. Information on the timing of joint tests is reflected in the road map published on the website.
Should you have any question related to this message, please do not hesitate to contact your account manager at: +7 495 956-27-90, +7 495 956-27-91.