NDC General Meeting Approves NDC Reorganization into a Closed Joint Stock Company

28 April 2009
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The National Depository Center (NDC), Russia's only settlement depository servicing the full range of debt and equity securities of Russian issuers, announced today that a general meeting of its members has approved NDC’s reorganization from not-for-profit partnership into a closed joint stock company. The company plans to implement this decision in the following way:

·      To reorganize NDC into “The National Depository Center” (Closed Joint Stock Company) (NDC) in accordance with the procedure and terms adopted;

·      To establish a procedure and terms of reorganization and an order of succession in the course of the Partnership’s reorganization into “The National Depository Center” (Closed Joint Stock Company);

·      To establish the charter capital of “The National Depository Center” (Closed Joint Stock Company) in the amount of RUR1,505,920,000 from NDC’s equity funds (based on nominal value of 150,592 common registered shares with RUR10,000 nominal value each);

·      To establish a procedure of the purchase of shares in “The National Depository Center” (Closed Joint Stock Company) by the members of the Partnership in proportion to the number of NDC members’ votes at the general meeting of the members of the Partnership as of the date the decision on NDC reorganization;

·      To appoint Nikolay Egorov as general director (a sole executive body) of “The National Depository Center” (Closed Joint Stock Company) for three years with effect from the moment of state registration of the company;

·      To approve the following 12 members of the Board of Directors of “The National Depository Center” (Closed Joint Stock Company) until next annual general meeting of shareholders of “The National Depository Center” (Closed Joint Stock Company):

-          Ivan Bolshakov, First Vice President, Deputy Chairman of the Management Board, Evrofinans Mosnarbank;

-          Mikhail Bratanov, Director of Depository, «ROSBANK» (OJSC JSCB);

-          Veronika Vasilieva, Director, Department of Depository Services, ZAO UniCredit Bank;

-          Nikolay Egorov, Senior Vice President and Member of the Board of Directors, MICEX;

-          Bella Zlatkis, Deputy Chairman of the Management Board, Sberbank;

-          Alexander Ikonnikov, General Director, Managing Partner, Board Solutions;

-          Konstantin Korischenko, President, MICEX;

-          Sergey Lykov, Member of the Management Board, Deputy Chairman, Vnesheconombank;

-          Natalia Sidorova, Head of Depository Services Department, ING BANK (EURASIA) ZAO;

-          Vladimir Tatsiy, First Vice President, Head of Depository Center, GPB OJSC (Gazprombank);

-          Tatiana Chepeleva, Project Director, OTKRITIE Brokerage House JSC;

-          Galina Shubina, Deputy Chief of Depository, JSC VTB Bank (Vneshtorgbank).

·      To approve the following list of members of the Audit Committee of “The National Depository Center” (Closed Joint Stock Company) until the next annual general meeting of shareholders of “The National Depository Center” (Closed Joint Stock Company):

-          Olga Gordienko, Chief Accountant, MICEX;

-          Vladislav Zimin, Economic Advisor, Market Services Department, Bank of Russia;

-          Mikhail Lomakin, Head of Department for Specialized Depository Services, Depository Services Division, JSC VTB Bank;

-          Vyacheslav Ulupov, Director, Internal Audit Service, Vnesheconombank;

-          Yuri Yukin, Vice President, Head of Internal Audit Service, Evrofinans Mosnarbank.

The general meeting of the members of the Partnership approved suggested amendment to a Regulation on NDC’s Audit Committee and extended the term of office of members of the Audit Committee elected by the general meeting of NDC’s members on April 25, 2008 up to the moment of state registration of “The National Depository Center” (Closed Joint Stock Company).

Nikolay Egorov, NDC Director, in his comments on results of the general meeting of NDC’s members, said:“Today we attended an event of high significance, namely the decision on NDC’s reorganization from not-for-profit partnership into a joint stock company. Among the arguments in favor of reorganization is the commercial nature of a settlement depository’s activities; in fact NDC gets most of its income from the provision of services but not from membership fees. At the same time financial infrastructure is a functional element of high social importance. World practice incorporates these two forms of a central settlement depository functioning either as a not-for-profit partnership or as a joint stock company. Another important motivation for such a change is the intention to improve the corporate governance system. The legal framework for joint stock companies is clearer; this is of more value to the founders and the members of the partnership as reorganization makes NDC more transparent both for shareholders and for other market participants.”

Konstantin Korischenko, President, MICEX, added: “Reorganization of NDC into a joint stock company is a logical step in the course of implementation of a business oriented model of the company’s development.  This will lead to unification of the legal status of the MICEX Group’s companies and will contribute to an increase in transparency for the corporate governance system. Such a decision lets us implement the MICEX Group’s Development Strategy regarding conversion to a single share allowing increased efficiency and competitiveness for all businesses of the Group.”

Sergei Lykov, Member of the Management Board, Deputy Chairman, Vnesheconombank, Chairman of the Board of Directors, NDC, pointed out: “Results of the general meeting confirmed that NDC maintains its leading position in the trading infrastructure of Russia’s securities market. I would like to stress that this is reflected in the dynamic increase in assets on deposit and in securities turnover, improvements in the conduct of operations and the implementation of new technologies. I think that the main factor in NDC’s success is its constant search of something new, its intention to set new standards of best world practice. Certainly for me, as the Chairman of the Board of Directors of NDC, it has been very interesting and important to take part in the activities related to NDC’s reorganization into a joint stock company. It is great to realize that we managed this task which now is a case study not only for NDC but also for the whole Russian stock market.

We have to go forward. It would be logical now to begin implementation of a project for the formation of a central depository as a part of an international financial center formed in Moscow in line with the task set by Russian President and Government. NDC can be a good foundation for that project. We approached this stage prepared by the longstanding efforts of market participants. The most important issue is that the project has to be implemented in an evolutionary manner in the spirit of compromise, designed to allow all categories of participants to develop efficiently.”

Sergei Shvetsov, Director of Financial Markets Operations Department, Bank of Russia, said: “The goal of reorganization is to get rid of legal obstacles preventing NDC from becoming a full scale settlement depository with a license as non-banking credit organization. Speaking of corporate structure of “The National Depository Center” (Closed Joint Stock Company) we can emphasize three basic aspects: participation of the Bank of Russia, MICEX’s role and the participation of minority shareholders. Although the Bank of Russia has not put forward senior employees as representatives on NDC’s management bodies, we think that the inclusion of independent directors in the Board of Directors is a positive factor. The inclusion of representatives of owners, customers and independent directors in the Board of Directors of NDC is a step towards improvement of the corporate structure.”

The meeting also considered other issues related to the Partnership’s reorganization into a joint stock company.

The members of the Partnership reviewed NDC’s operating results for 2008 and:

·      approved a report by NDC Director related to the Partnership’s operations for 2008, a report by the Audit Committee on financial results for 2008, and the company’s financial statements for 2008;

·      considered an audit report on NDC’s financial statements for 2008 by Deloitte & Touche CIS;

·      approved NDC’s report on fulfillment of the Profit and Loss budget for 2008 and the Investment Budget for 2008;

·      approved the remuneration for the members of the Board of Directors of NDC and members of the Audit Committee in the amount of RUR4.12 million (1.1% of NDC’s net profit for 2008).

The partnership’s members approved the following candidates to the Board of Directors of Depository Clearing Company CJSC (DCC):

-        Eddie Astanin, Deputy Director, NDC;

-        Yuri Dubin, Director, Depository, Sberbank;

-        Grigory Egorov, Legal Advisor to the NDC Director;

-        Andrei Remnev, Director of Depository, Vnesheconombank;

-        Sergei Naumov, Deputy Director - Controller, NDC.

Zhanna Klimova, Chief Accountant, NDC, was nominated as a candidate to DCC’s Audit Committee.

NDC’s Director was authorized to forward to DCC a proposal on the nomination of candidates to DCC’s management bodies and to take all necessary measures related to NDC’s participation in an annual general meeting of DCC shareholders. In accordance with Clause 15.1 of the DCC Charter, NDC, a shareholder with a 37.29% stake in DCC, has the right to nominate its representatives to the Board of Directors and Audit Committee of DCC to May 15, 2009.

About NDC:

Not-for-Profit Partnership “The National Depository Center” is the largest settlement depository in Russia, servicing the full range of debt and equity securities of Russian issuers. NDC provides storage of global certificates and depository accounting for 99% of corporate bond issues, sub-federal and municipal bond issues. It services 100% of transactions conducted in the federal bond and the Bank of Russia bond markets, more than 99% of transactions conducted in the corporate and regional bond markets, and more than 99% of stock exchange transactions with equities and OTC trades. The international rating agency Thomas Murray has assigned NDC an АА- rating as a central depository. NDC is Russia's national numbering agency, and the substituting numbering agency for the CIS, authorized to assign the international ISIN and CFI codes.

Among NDC’s founders are MICEX and Bank of Russia (the founders’ shares in the property of NDC are 46.67% and 39.35% respectively, and in the votes 50.16% and 42.3% respectively). Members include GPB OJSC (Gazprombank), Evrofinans Mosnarbank, «ROSBANK» (OJSC JSCB), JSC VTB Bank (Vneshtorgbank), Bank of Moscow, JSC «ROSSIYSKIY KREDIT BANK, Vnesheconombank, ING BANK (EURASIA) ZAO, JP Morgan Bank International LLC, ZAO UniCredit Bank, Deutsche Bank, and Sberbank. The Partnership also has stakes in Depository Clearing Company CJSC (37.29%), in Settlement Depository Company CJSC (28.54%) and in Bank "National Clearing Centre" CJSC (0.27%).


 For further information about NDC: www.ndc.ru, or NDC Public Affairs Department: +7 495 232 0910, .

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