Dear Client,
According to the Law, all communication and documentation flow related to GMs will be arranged through nominee holders, including foreign nominee holders, however the shareholders will also be allowed to participate in the GM personally. Information on GMs will be 'cascaded' by the issuers, through Russia's National Settlement Depository (NSD), to the custodians acting as nominee holders to their clients. Nominee holders, in return, will pass the lists of their clients and their voting information through NSD back to the issuers/registrars. It is also proposed to use electronic documentation flow throughout the whole chain of corporate actions processing participants.
Custodians will be authorised to participate and vote at GMs based on their clients' instructions without the Power of Attorney, which is requested by the Issuers according to the current legislation. The procedure for instructing custodians by their clients should be stipulated in their custody agreement. Custodians will not be obligated to confirm the receipt of the clients' voting instructions provision, or provide the depository agreement.
Entitled shareholders participating in a GM through a Foreign Nominee Holder shall be included in the list of entitled shareholders based on the information provided by the Foreign Nominee Holder to its local custodian not later than 5 working days prior to the GM.
The draft states that the persons or legal entities, holding owners or exercising rights for the Russian securities kept on a Foreign Nominee Account, are determined in accordance with the local laws of such persons or entities. It is also stated that the owner of the securities can be a foreign organization not having a status of legal entity in its country.
The Law is expected to be enacted before the end of 2014.
Impact on investors: Investors, including those using Foreign Nominee accounts, will benefit from the simplified proxy voting process.