Market Participants Discuss Russian Corporate Action Reform

16 February 2015
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On 11 February 2015, National Settlement Depository (NSD), Russia’s central securities depository, and the Independent Directors Association held a conference “Corporate Action Reform: Challenges and Practice.” The event was held in Radisson SAS Slavyanskaya Hotel, Moscow.

Among the delegates were representatives of major issuers, Russian and foreign custodians, depositories, registrars and Russian regulator of the financial market. NSD was represented by Eddie Astanin, Chairman of the Executive Board, who moderated the first session “Corporate Action reform: Legal Requirements,” Maria Krasnova, Deputy Chairman of the Executive Board, who opened the conference with her report, and Sergei Bernevega, Managing Director for Corporate Information, who took part in the second session that covered practical issues of the reform.

Pinar Bakhtiyarogly, a representative of the central securities depository of Turkey, was a special guest of the conference. Ms. Bakhtiyarogly shares her country’s experience in introducing the e-proxy voting technology.

The corporate action reform is a logical continuation of the market infrastructure development in recent years: the central securities depository’s creation, the foreign nominee account institution’s legalization in Russia; this will allow upgradung a level of local market development and stimulating Russian and foreign investors’ activity.   

In the light of forthcoming legal changes in the corporate action sphere, the participants of the conference discussed issues of information distribution, relations between market participants, regulation and practical use of the new corporate action procedure based on a case of a general shareholder meeting allowing shareholders who keep securities in nominee accounts to use the e-proxy voting function from 2014. Moreover, the participants of the discussion assessed the outlook of increasing the corporate governance efficiency.

The delegates of the conference agreed that the relevance of the key topic of the conference is defined by the challenges of our time and the international experience in this field. Market participants supported the new standards and agreed that the corporate action reform and the introduction of the e-proxy voting can mitigate risks and bring advantages for issuers and shareholders. For instance, Ms. Bakhtiyarogly stated that the average number of the members of shareholder meetings increased fivefold since the moment of the e-technologies launch in Turkey.

Meanwhile, the innovations in this sphere can bring some risks and challenges; the speakers paid special attention to these matters. An issue of corporate action participants’ material responsibility for errors or delays generated a lively discussion. It was stressed that this issue requires a detailed analysis, and the e-proxy voting that involves the use of the record keeping system instead of the document transfer by mail contributes into the identification of responsible parties at each stage.

The participants of the conference paid great attention to switching from the paper document interchange to the electronic one. The market participants consider crucial the situation when the innovations do not decrease the reliability of the existing system, so the openness of the reform and the market participants’ involvement in discussing the associated issues were highly estimated and approved by the delegates.

Eddie Astanin, Chairman of the Executive Board, NSD, said: “The professional community’s interest and proactive participation in the conference as well as in the process of corporate action reform demonstrate that we are on the right path. The feedback from market participants, the close and constant contact with them is very important for us, it lets us identify the most topical issues and trends and to set priorities in our work.”

Alexander Ikonnikov, Chairman of the Supervisory Board, Independent Directors Association, added: “The Independent Directors Association welcomes the initiatives connected with the enhancement of corporate governance quality in Russian companies. We think that corporate action reform is an important step towards increasing transparency, the protection of shareholder rights and compliance with the newest international approaches in this sphere.”

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