CBR proposes to triple initial market cap ceiling for tech sector issuers

MOSCOW. July 19 (Interfax) - The Central Bank of Russia (CBR) has proposed to liberalize one of the conditions for classifying the shares of a Russian company as a high-tech (innovation) sector security by tripling the upper threshold for the issuer's market capitalization in the first week of trading after their shares are accepted for trading.

"Without in any way diminishing the significance of support for small and medium businesses, it is important to support specifically fast-growing high-tech companies," Central Bank chief Elvira Nabiullina said at a meeting of the Council for Strategic Development and National Projects on Monday.

However, such companies, having received state support, do not always meet the criteria of a small business or the criteria set for the exchange to classify them as being part of the innovation and investment market sector.

"And here special criteria are needed for such companies so as to extend to them already existing support measures and, possibly, work out special measures," Nabiullina said.

She said the CBR proposes to triple the ceiling for issuers' market capitalization for classifying their shares as being in the innovation sector to 75 billion rubles from 25 billion rubles.

The ceiling on companies' market cap in the first week of trading on the exchange market is a criterion included in the rules for classifying the shares and bonds of Russian companies, as well investment units traded on the organized security market as securities in the high-tech (innovation) sector of the economy for the purposes of applying a tax rate of zero to the tax base for corporate profit tax determined by income from transactions with these securities. The rules were approved by a government resolution (No. 156) dated February 22, 2012.

Twenty securities are currently traded in the Moscow Exchange innovation and investment market sector, including the shares and depositary receipts of Qiwi , Softline Holding , United Aircraft Corporation (UAC), Human Stem Cell Institute, International Medical Center of Biomaterials Processing and Cryostorage, Pharmsynthez , and Positive Group .