Russian regulations on GDR programmes for Russian companies James Roe, Alexandra Fasakhova,

Agenda
Key foreign regulatory issues faced by Russian companies
Russian FSFM regulation of GDR issuance

History of limitations on GDR programmes
For the past 10 years FSFM has been:
consistently reducing the ceiling for GDR offerings by Russian companies
2001: Permission requirement and 75% threshold introduced
2003: 75% threshold reduced to 40%
2006: 40% threshold reduced to 35% and 70/30 rule introduced
2008: 35% threshold reduced to 30%, lower thresholds of 25% and 5% introduced for strategic companies, 70/30 rule preserved
vigorously criticising offshore offerings of Russian businesses

June 2009 Amendments
Came into effect on 1 January 2010
Further reduced the ceiling for GDR offerings
Applicable ceiling depends on:
existing level of Russian listing; and
whether a company is a strategic subsoil company
Imposed additional compliance requirements on Russian companies

New thresholds for GDR programmes
Maximum threshold reduced to 25% and only available if any of the following criteria is met:
Shares are “A” listed; or
Depositary is incorporated in a country whose regulator has an agreement with FSFM; or
Issuer is a strategic subsoil company which cleared its 25% GDR offering with State Commission
Other companies are subject to lower thresholds of:
15% for “B” listed shares; and
5% for “V” or “I” listed shares and for subsoil strategic companies without State Commission clearance for a higher limit
70/30 rule changed to 50/50 rule

Additional compliance requirements
Post offering notification obligation introduced:
Report on the results of the offering (local and international)
within 30 days following the offering
The permission now has 1 year of “shelf life”
FSFM can also cancel the permission if:
the underlying shares are redeemed; or
the post offering notification requirement is not complied with.
Continuous obligation to update the FSFM on any changes to the depositary agreement introduced

Contact details
James Roe
Partner, Moscow
Tel [phone]
Mob [phone]
[e-mail]
Alexandra Fasakhova
Senior Associate, Moscow
Tel [phone]
Mob [phone]
[e-mail]