Lack of disclosure in Russia expected to raise value of alternative sources of data on issuers - Deputy Finance Minister

MOSCOW. Feb 29 (Interfax) - Investors in Russia will have to increasingly rely on data from auditors, rating agencies and independent directors when making decisions given the decreasing amount of information disclosed by companies and the speed at which it is released, Deputy Finance Minister Alexei Moiseyev said.

"In a situation where it is inevitable that the amount and speed of disclosure will decrease, unfortunately it is inevitable [that] going forward the market will apparently have to rely increasingly on what a rating agency tells them or what an auditor tells them," Moiseyev said at the 13th All-Russian Corporate Governance Forum: Development Paths in a New World.

A third source of information could be independent directors who will "not be afraid" to disclose data on a company, he said.

The accessibility of corporate financial reporting remains a complex and urgent issue. The stock market cannot work without full disclosure of information, but this exposes companies to the risks of sanctions, Moiseyev said.

Since the spring of 2022, the Russian stock market has been operating under rules where first companies had the right to completely conceal their financials from the public and then, since the summer of 2023, many were deprived of this option. Government resolution No. 1102, dated July 4, 2023, barred companies from concealing their balance sheets and reports on financial results, but still allowed them to not publish certain "sensitive information" due to sanction risks.

But some companies and business associations are unhappy even with these disclosure rules and they are lobbying to revise this resolution. However, these requests have not won public support from the Central Bank, Finance Ministry and Economic Development Ministry, so at the moment the new disclosure rules have only two exceptions.

At the end of November, President Vladimir Putin signed a decree under which a number of organizations, including oil company Rosneft, were granted the right to not disclose corporate information as of July 1, 2023 due to sanction risks.

The president also issued a decree that allows 'economically significant organizations' (ESO) to not disclose information about their activities. The concept of ESOs was introduced into Russian legislation in the summer of 2023, when law No. 470-FZ, which gives the government the right to compile a list of such organizations, went into effect.

But the government has still not published a list of ESOs. First Deputy Economic Development Minister Ilya Torosov said this document might be ready in the next "two to three weeks." The list might initially include "about six of the largest companies," he said.