It turned out inconvenient with foreign investors – Newspaper Kommersant No. 181 (7382) of 09/30/2022
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Professional participants are asking to adjust the restrictions on transactions with shares of Russian strategic enterprises by non-residents from unfriendly countries. In particular, it is proposed to lift the ban on such transactions by companies controlled by Russian individuals or legal entities, as well as management companies in the course of trust management of mutual funds. Existing regulations have a negative impact on the efficiency of services rendered to Russian investors, which leads to a decrease in their confidence in the market.
The National Association of Stock Market Participants (NAUFOR) sent a letter to the Ministry of Finance, the Central Bank and the presidential administration with a request to clarify some provisions of Decree No. 520 “On the application of special economic measures in the financial and fuel and energy sectors…”. The decree, signed on August 5, introduces a temporary ban on transactions with shares in a number of Russian companies by persons from unfriendly jurisdictions. The restrictions affected banks and subsoil user companies included in the list of strategic enterprises and strategic joint-stock companies, as well as their subsidiaries. Transactions made in violation of this decree must be declared null and void.
In the appeal of professional participants, it is noted that not only foreign persons, but also Russian financial organizations that have foreign shareholders or participants, but are under the control of Russian legal entities or individuals, fall under the established ban.
“Even if there are residents, for example, of Cyprus, in the company’s shareholder structure, then all operations of this company on the stock market are blocked, although the Cypriot shareholder may be 100% of Russian origin,” Kommersant’s interlocutor on the market notes. According to him, there are quite a lot of such companies on the Russian market.
At the same time, the introduced restrictions affect not only the own operations of such companies or banks, but also complicate their work with clients, limiting the available tools. “We are talking about operations that are standard for all professional participants and are associated with the transfer of ownership of Russian securities classified as strategic areas,” says NAUFOR President Alexei Timofeev. Such transactions include short sales of securities and repo transactions, when a professional participant acts as a party to the transaction. “The problem of transactions with securities that fell within the scope of the decree is quite serious, since it applies not only to strategic enterprises, which would be quite understandable, but also to companies in whose capital they invested. The lists of infrastructure companies in the fuel and energy complex and credit organizations have not been approved,” says Elena Mende, lawyer of the Anatoly Sobchak Baltic Bar Association.
In addition, Russian mutual funds, where among the owners of shares there are foreign investors, also fell under the restrictions. The share of such shareholders, according to NAUFOR, is less than 0.1% of the total number, but carries significant risks for the rest.
According to Nikolai Shvaikovsky, head of Alfa Capital’s government relations department, the ban on transactions and transactions with securities named in the decree can be interpreted as a ban on transactions with the relevant assets of mutual funds, because there are now formally no restrictions on ownership for them. shares of “unfriendly persons”. As a result, management companies try to avoid dealing with a significant number of Russian shares. “This carries the risk of violating investment declarations and established requirements for the structure of the funds’ assets,” Alexey Timofeev points out.
Professional participants are asking to withdraw from the decree financial organizations controlled by Russian individuals or legal entities, as well as management companies in the course of trust management of mutual funds. However, according to lawyers, given the importance of strategic enterprises, it seems unlikely that Russian professional participants with foreign participation will receive complete freedom of operations. According to Elena Mende, the solution to the problem of transferring the functions of issuing general (framework) permits by the government commission, as well as changing subparagraph “b” of the decree, with the prescription of the threshold for investments, is about who should monitor these investments and bear the consequences of the nullity of the corresponding operations. Nikolai Shvaikovsky proposes to allow “transactions within the framework of mutual funds with securities of strategic companies”, and instead of this, introduce “restrictions on transactions with shares of the relevant funds for resident shareholders of unfriendly jurisdictions.”
The Ministry of Finance confirmed receipt of the letter and noted that it was accepted for work. The Central Bank did not respond to Kommersant’s request.
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