Change of ownership must not interfere with fulfillment of public debt obligations - Nabiullina

MOSCOW. May 16 (Interfax) - Changes in the ownership of issuers by court ruling must not give rise to situations where the rights of a wide range of investors are affected, the Central Bank of Russia believes.

During the National Association of Stock Market Participants (NAUFOR) conference on Friday, the head of the association, Alexei Timofeyev reminded Central Bank Governor Elvira Nabiullina of a number of cases related to prosecutors' lawsuits and court rulings verdicts on them. They include Solikamsk Magnesium Plant, where a decision against minority shareholders was recently partially overturned; Domodedovo Airport, where the court sanctioned bond servicing; and oilfield services company Borets, which has not yet been resolved - the National Settlement Depositary pays coupons only to those depositors not prohibited by the court or enforcement documents. The head of NAUFOR asked whether it was possible to count on a more cautious approach by law enforcement agencies to situations affecting a wide range of investors.

"Our position, as before, is that we believe that legislation safeguards the rights of bona fide purchasers of securities at organized trading, and they must be protected properly by law enforcement practice. And only then can we have investor confidence, we discussed this with you from the outset. And without confidence, there is no question of any exponential growth in market capitalization, and the president has set these tasks. On the contrary, loss of confidence could cause capital to flow from the Russian economy to foreign markets, and no one wants that," Nabiullina said.

The Central Bank believes this does not involve changes to the legislation: all the rules have already been written down, and the regulator hopes that law enforcement practice "will be appropriate."

"For its part, the Bank of Russia always publicly expresses its attitude to issues with safeguarding investor rights, including, if there are procedural opportunities for this, taking a legal stance in court, as in the so-called Solikamsk Magnesium case [the Central Bank is involved as a third party and has publicly stated its position several times]. With regard to payments on bonds, a ban on payments on bonds, we believe that a change of owner should not interfere with the fulfillment of public debt obligations or infringe on the interests of the majority of investors," Nabiullina said.

"Here, of course, it is very important that solutions be developed that would allow issuers to fulfill their obligations related to bonds. We will do everything in our power here," she said.