Dear Client,
The Central Bank of Russia (CBR) announced preliminary major steps of a forthcoming corporate actions reform in the Russian securities market, which will aim at:
- decreasing the costs for all participants, including investors, issuers and depositories / registrars
- maximum unification of the processing for all corporate actions
- introducing the use of electronic documentation exchange throughout the whole chain of corporate actions processing participants
The reform will mostly affect General Shareholder Meetings (GMs) and pre-emptive rights execution processes as well as buy-back and squeeze-out procedures. In particular, all communication and documentation flow related to GMs will be arranged through custodians while shareholders not using custodians will be allowed to do it directly with the issuers. Information on GMs will be "cascaded" by the issuers, through Russia's National Settlement Depository (NSD), to the custodians and their clients. Custodians, in return, will pass the lists of their clients and their way of voting through NSD back to the issuers.
The Power of Attorney for participation in corporate actions, in case of participation through depositories / custodians, will be abolished, provided that the necessary authorisations have been provided in the depository agreement.
For custodian clients the proxy voting will be arranged through their custodians. In case of personal attendance, the shareholders will be able to participate in the meeting.
The first draft of the respective changes to the legislation will be prepared in May 2014 and are subsequently expected to come into force by the end of the year, though earlier introduction may also take place.
We will continue to keep you updated of any developments.
Impact on investors: Investors, including those with securities in Foreign Nominee and Foreign Authorized Holder accounts, will benefit from simplified corporate actions procedures.