Medvedev Acts on Petersburg Forum Vows
The measure is expected to increase the attractiveness of domestic companies
Published: July 6, 2011 (Issue # 1664)
MOSCOW — In a flurry of activity aimed at attracting foreign investors, President Dmitry Medvedev signed a decree Friday that will lift restrictions on domestic companies wanting to list securities abroad and ordered the creation of a central securities depositary by Sept. 1.
Medvedev also appointed Prime Minister Vladimir Putin to oversee privatization of state-owned companies through 2015 and set a deadline for City Hall and the Moscow region government to draft a plan to expand the boundaries of Moscow.
The orders followed Medvedev’s speech during the St. Petersburg International Economic Forum last month, which revealed details of the Kremlin’s plans for the country’s modernization.
Russian companies making initial public offerings on foreign stock exchanges will be able to list as much of their equity as they want — compared with the current limit of 5 percent to 25 percent of their capitalization, according to a statement on the Kremlin web site.
The measure is expected to increase the attractiveness of domestic companies, some of which have successfully listed abroad.
Internet company Mail.ru raised $1 billion in an IPO in London late last year followed by search engine Yandex, which raised a record $1.4 billion in its IPO on NASDAQ in May.
In another sign of the trend, Sberbank announced Friday that its American Depositary Receipts had been admitted for trading on the London Stock Exchange.
However, eliminating the restriction on the amount of shares listed abroad is unlikely to affect local companies substantially because the rule in fact existed only on paper, analysts said.
Domestic companies attempting to attract foreign investors were listing shares through offshore companies, which allowed them to get around the restrictions, Finam analyst Alexander Osin said.
In another measure to attract foreign investors Medvedev also ordered the creation of a central securities depositary, which has so far failed to gain final approval because of disagreements between the relevant government agencies. He also decreed that foreign companies can open depositary accounts locally.
The central depositary, which will facilitate equity transactions, is supposed to replace the two depositaries serving the clients of the MICEX Stock Exchange and the RTS — which finalized the details of their merger last week.
MICEX clients are currently served by the National Settlement Depositary, while the Depositary-Clearing Company serves clients of the RTS.
A law on the central depositary, which the State Duma passed in its first reading in 2007, stalled after the Finance Ministry, the Economic Development Ministry and the Federal Service for Financial Markets engaged in a struggle over which institution would function as the central depositary.
Creating a central depositary will ease the work of the stock market because all clients will be served in one place, said Pavel Dorodnikov, head of the trading department at Rye, Man Gor Securities.
It currently takes one to seven days to transfer securities from one depositary to the other if the companies closing the deal have their shares traded on different stock exchanges, Dorodnikov said.
The measure will also eliminate costs related to transferring the securities, he said by telephone.