Recently adopted a new bill, according to which depositary receipts on the shares of Russian companies are prohibited from posting on foreign stock exchanges. Companies must withdraw their shares from foreign exchanges within 5 days from the date of entry into force of amendments. Let's deal with what happened and what it threatens.
Back in February of this year, the depository receipts of Russian companies "collapsed" in foreign stock exchanges due to geopolitical shock. At the same time, the auction was suspended at the St. Petersburg Exchange. The new regulatory act is designed to reduce the pressure of the West on the Russian stock market.
However, it is worth noting that the fall in depositary receipts does not mean the fall of the company's shares. In February, due to the freezing of the foreign exchange reserves of the Russian Federation and the country's disconnection from the SWIFT system, the cost of depository receipts of companies on foreign exchanges fell by 40-80%. The Central Bank almost immediately announced that dividend payments to foreigners will be suspended, which even more accelerated the collapse of the cost of depositary receipts.
The London Exchange, in turn, suspended trading, already then Russian companies feared Delivere. The collapse of the depositary receipts and the introduced CB measures to restore the economy of the country led to the fall of the shares of Russian companies. Foreigners became unprofitable to invest in them.
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Mikhail Reshetnikov, head of the Ministry of Economic Development, said that these amendments will affect the majority of Russian companies, including Sberbank, Rosneft, Aeroflot, Gazprom, LUKOIL and other companies selling shares abroad. According to the civil servant, these companies now it is not clear to trade with shares abroad.
From the new bill will not be able to leave even to those companies that work in Russia, but are registered abroad. This is, for example, Yandex, Tinkoff, Fix Price, VK, Ozon, etc.
This is due to the fact that now dividends can only receive shareholders who bought ruble stocks, and not depositary receipts in other currencies.
To enter foreign stock exchanges, Russian companies have concluded an agreement with banks that made the release of depositary receipts. Now these treaties will have to terminate. This will have 5 days after the entry into force. And another 5 days is given in order to submit confirming documents to the Central Bank.
After these procedures, the Bank of Russia will be obliged to notify the owners of depository receipts about Delivery. Russian receipts holders will receive securities instead, and for foreigners the Russian market is now closed.
On a global scale, the adoption of the law means a complete refund of the control over the Russian stock market to the state, as well as a blow to globalization of the global economy. Since this step can provoke similar situations in other countries.
Now, to get dividends, a foreign investor must be registered on the Russian Exchange.
The Russian stock exchanges will benefit from such a decision, since after delisting all the shares of Russian issuers return to the country.
Thus, the new law will help some companies to resist afloat, since their shares will buy or Russians or the state itself. This is another step to stabilize the country's economy.