Russia's Central Bank canceling limit on share amount of Russian issuers planning placements abroad
MOSCOW. July 13 (Interfax) - The Central Bank of Russia (CBR) is canceling the limit on the amount of shares that Russian issuers may place and that are permitted to be in public circulation outside the country, the CBR said in a statement, having posted the corresponding draft instruction for public discussion.
The draft instruction is scheduled to become valid in the second half of 2021.
There are currently two restrictions on the placement and circulation of shares on foreign platforms. Specifically, the overall number must not exceed 25% of the total volume of shares of one type, while no more than 50% of the total number of offered shares is permitted for trading abroad. The CBR noted that the limits have been introduced in order to reduce the outflow of trading activity from Russian to foreign markets.
"In recent years, there has been a steady flow of liquidity for the dual listing of shares on the Russian stock market, which applies to Russian companies with open depositary receipt programs as well as to foreign companies with Russian businesses and secondary listings on the Russian stock exchange. We have now formed a reliable settlement and accounting infrastructure, and have introduced advanced technologies in order to implement corporate rights and to facilitate the participation of shareholders in global corporate actions. Furthermore, we expect that the lifting of restrictions will in turn remove unnecessary barriers and become an additional incentive for Russian companies to enter public equity markets," the CBR's director of corporate relations, Yelena Kuritsyna, said in the statement.
The topic of lifting restrictions on the placement of Russian shares abroad is not new. In 2011, the Federal Financial Markets Service (FFMS), which regulated Russia's financial markets prior to the functions being transferred to the CBR, had already prepared a regulatory act on allowing for the removal of the restrictions as of the beginning of 2013 for all companies, excluding strategic ones, for whom the amount was set at 25%. However, the document never came into force, as the CBR opposed the full lifting of restrictions on the circulation of shares of Russian companies abroad. CBR First Deputy Governor Sergei Shvetsov, during the St. Petersburg International Economic Forum (SPIEF) in June of this year, announced that the regulator was planning to return to the discussion of lifting the 25% restriction on depositary receipts in the overall volume of Russian issuers' shares.
The Moscow Exchange previously reported that it had a stake of 79% at the end of 2020 in the trading of shares of Russian issuers with dual listings compared with the 21% stake of the London Stock Exchange.
