Simplified participation in corporate actions and increased reliability of corporate information. By Yuliya Shibukova, Relationship Manager, GSS Russia
In continuation of our previous communications on the evolutuion of the corporate actions reform, we would like to now note that a new legislative framework related to the rights associated with Russian securities has come into effect as of 1 July 2016.
One of the key pillars of the ongoing corporate actions reform in the Russian securities market envisages the elimination of the necessity for power of attorney for corporate actions, if the required authorisations are part of the custody agreement. This is a result of the introduction of mandatory exchange of electronic documents between the CSD and the local custodians and now allows the custodians to legally act on behalf of their clients on the basis of the custody agreements and their clients' instructions, without any further authorisations. Please take note however that due to the fact that market offers are not considered corporate actions under the Law on Joint Stock Companies, participation in such events will continue to require the presentation of a full package of documents (power of attorney and constituent documents), as currently.
In accordance with the new legislation, it has now become possible to not disclose owner account holders in relation to corporate actions. The same also applies to foreign nominee account holders, which may no longer disclose information on their underlying clients for corporate action purposes. The foregoing is subject to being stipulated in the custody agreement between the local custodian and the owner account holder, respectively between the foreign nominee account holders and its underlying client. If such non-disclosure possibility is not stipulated in the custody agreement, then securities owners will be disclosed by default. It is important to note however that such non-disclosed foreign nominee account holder underlying clients and owner account holders shall have no right to request from the respective issuer execution of rights to their securities, including repurchase or redemption of such securities and shall also have no right to dispute decisions of meetings of securities holders.
At the same time, it continues to be mandatory to obligatorily disclose securities owners if requested by the Central Bank, courts or issuers, in the cases prescribed by the legislation (i.e. for requests not related to corporate events), within 15 days from the date when the disclosure request has been received.
Furthermore, with effect from 19 July 2016, a new regulation by the Central Bank set a list of corporate information that is to be submitted by issuers to the CSD electronically as well as the procedure and the deadlines for such submission through the whole chain of market participants. In particular, issuers are now obliged to submit information on corporate actions to the CSD in case:
- a CSD nominee account is opened with a Registrar
- the CSD performs centralised mandatory safekeeping for a bond's issuer
The information subsequently disclosed by the CSD shall prevails over all other sources of information.
The concentration of such corporate information with the CSD is expected to a large extent to resolve the core problem of multiple corporte action information sources and make such information reliable and quickly available to investors.
Yuliya Shibukova
Relationship Manager
GSS Russia
yuliya.shibukova@unicredit.ru