Regulator might put off lifting restrictions on Russian share placements abroad
MOSCOW. April 6 (Interfax) - The Federal Financial Markets Service (FFMS) might postpone the elimination of restrictions on the placement of Russian shares abroad, which was planned for January 1, 2013, if a central depository does not begin operations by the end of 2012, FFMS head Dmitry Pankin told reporters on Friday.
He said the removal of these restrictions should be linked to the creation of a central depository giving foreign custodians the ability to open nominal custody accounts at Russian depositories.
"This link must be maintained. If a central depository cannot begin operating normally by January 1, 2013, it means we will push back the date for lifting restrictions on placements abroad," Pankin said.
The regulator in November 2011 drafted a decree to approve a new provision on the approval process for the placement and/or organization of trading of securities abroad that was scheduled to go into effect on January 1, 2013. Under this provision, companies would be able to place up to 100% of their total shares, compared to the current cap of 25%. The provision also has no requirement for a mandatory offering of shares in Russia, while now an issuer can place up to 50% of a share offering abroad, while the remainder must be placed in Russia.
The law On the Central Depository went into effect on January 1, 2012, and a central depository was expected to be established in April. But the Finance Ministry has still not issued a decree to assign the status of central depository. The draft has sparked heated debates among the Finance Ministry, FFMS and the Central Bank.
"We have already approved the Finance Ministry's draft decree to assign central depository status. We are happy with the Finance Ministry's latest version, we have no objections," Pankin said.
A source at the Finance Ministry told Interfax that the draft decree has not been submitted to the Justice Ministry yet.
Under the latest version of the decree, the FFMS can consider an application for central depository status for up to four months. The only contender for the role of central depository is the National Settlement Depository, a division of the MICEX-RTS group.
Pankin said tax mechanisms could be used to encourage Russian companies to place their shares on the domestic market rather than abroad. "It is possible to make a more interesting configuration. Make such mechanism so that the configuration of selling securities through the central depository and then through Euroclear and Clearstream is more interesting compared to the creation of an SPV," he said, referring to the special purpose vehicles Russian companies set up for share placements abroad.
"Now the configuration is such that a Russian company creates an SPV that issues shares, receives the money and gives it to the parent company in the form of a loan. The Finance Ministry said recently that such a loan should be subject to tax. For now they decided not to introduce such a tax on old operations, but for future transactions this issue remains open," Pankin said.
