CBR sees risk in under-disclosing information 'under guise' of sanctions risks - Nabiullina
MOSCOW. May 15 (Interfax) - Issuers could use sanctions risks as a reason not to disclose corporate information that is important for investors, which in fact does not carry these risks, Central Bank Governor Elvira Nabiullina said at the Russian National Association of Securities Market Participants (NAUFOR) Russian Stock Market 2024 conference.
Nabiullina also emphasized that the risk of sanctions restrictions does actually exist, thus it is still not possible to return to the full-scale disclosure of information, and it is necessary to seek a balance between requirements for issuers and avoidance of external risks for them.
"Information is currently undisclosed that is actually related to sanctions, to the risk of sanctions, and not related, because there are no consequences from this," she said.
Nabiullina said that issuers could try to disclose less information, including aggregate financial information, without which it is difficult for investors to obtain an idea about that in which they are investing. Meantime, the risks of insider trading are rising, yet there are still no effective mechanisms to combat this, the Central Bank governor said. Another possible consequence is discrediting the institution of quotation lists.
Regarding this, the regulator plans to provide for possibly separating the securities of companies with incomplete data disclosure, and intends to publish a draft regulatory legal act on this topic soon. Nabiullina said that the separation is envisaged for issuers that disclose information at less than the certain minimum that protects the rights of investors to have access to information.
"We will reduce the incentive for issuers not to disclose information that is not related to sanctions risks, and they will understand that here they fall into a different category, so why not disclose then," she said.
Nabiullina also said that issuers would retain the same level of listing, and exclusion from quotation lists is not envisaged.
Moreover, the Central Bank of Russia plans to propose amendments to the law on permitting unqualified investors to have access to transactions with these separate securities only after additional testing.
Companies were required to return to disclosing information about themselves in July 2023. The Russian government at the time issued resolution No. 1102, adopted in March 2022, in order to cancel the "moratorium" on information transparency. Despite issuers returning to publishing balance sheets and financial statements, they retained the right not to disclose certain "sensitive information" owing to sanctions threats.
The Central Bank consistently defends its position on the need to disclose corporate reporting, with exceptions for sensitive topics. Nabiullina has repeatedly said that the information is necessary in order to develop the capital market.