First Results of Corporate Actions Reform

On 24 September 2015, a second conference “Corporate Actions Reform: Today and Tomorrow” was conducted in Moscow by the Independent Directors Association and National Settlement Depository (NSD), Russia’s central securities depository. Specialists of the Bank of Russia, the Stock Market Development Center Foundation, the Moscow Exchange, ROSSWIFT, more than 150 representatives of investment companies, registrars and depositories, corporate secretaries and IR directors from Russia’s major issuers attended the event.

It is worth remembering that in 2013 a corporate actions reform was initiated in Russia. The reform includes measures aimed at improving the regulations for and technologies of collecting and distributing corporate information, as well as corporate action processing. In summer 2015, the Russian federal law which stipulated key reform provisions was adopted. Provisions included: changing the approach to drawing up a list of security holders, the new procedure for corporate actions processing in a centralized manner through the record-keeping system’s institutions, new methods for participating in general shareholder meetings and the establishment of a corporate information center on the basis of the central securities depository.

The new provisions will take effect 1 July 2016. Conference participants discussed the first reform results: annual shareholder meetings held in 2015 using the e-proxy voting technology, as introduced by NSD.

Pavel Filimoshin, Economic Adviser to the Department for Admission to Financial Markets of the Bank of Russia, noted that reform was multifaceted and affected not just issues related to security holders’ record-keeping rights, but also other spheres, such as: enforcement proceedings, securities pledge and placement. He called on conference participants to pay more attention to reform details, to identify bottlenecks and to give their feedback to the regulator on resolving these problems in a timely manner.

The first session was opened by Maria Krasnova, Deputy Chairwoman of the Executive Board, NSD, who presented her report on corporate actions reform and its initial results. The audience was informed about statistics on the use of e-proxy voting technology (which included the ISO 20022 international standard of messages). Thus, in 2015, 125 meetings were initiated using the new technology. Representatives at 55 meetings held by major issuers (such as: Gazprom, Sberbank, Moscow Integrated Power Company and Mosenergo) were granted the opportunity to take advantages of the new electronic voting technology.

Among the participants of the first panel were Tatiana Medvedeva, Senior Legal Adviser, the Stock Market Development Center Foundation; Nadezhda Ushakova, Senior Vice President, Head of Depository, VTB; Sergey Klinkov, Investor Relations Director, Moscow Exchange; Oleg Tsvetkov, Managing Director – Head of the Corporate Secretary Service, Sberbank; Olga Antonova, Deputy Director General for Legal Affairs, R.O.S.T. Registrar; Evgeny Grishanin, Deputy Director General for Legal Affairs, JSC STATUS; Vadim Protasenko, General Director, JSC Computershare Registrar; Irina Baichorova, Managing Director of Depository, Bank of New York Mellon; and Igor Zhelezny, Deputy Director of Depository, Sberbank.

The delegates commended NSD for contributing to reform implementation and noted the efficiency of NSD’s interactions with the market and the regulator during the change process. Ms. Medvedeva emphasized the importance of the reform in respect to corporate governance development as a crucial factor for companies’ investment attractiveness.

Irina Bystrova, representative of the Sberbank depository, opened the second forum session with her report on the experience in introducing electronic voting technologies at annual shareholder meetings. On 29 May 2015, Sberbank carried out its first voting using the cascade method, in compliance with ISO 20022 standard. Ms. Bystrova noted the numerous advantages of ISO 20022, namely, its easy automation and independence from the transport system, as well as the opportunity to send many details. There were some difficulties with informing depositors, in particular, with the separation of information into public and non-public parts. Ms. Bystrova pointed out that for the bank introducing new technologies it was very important to maintain client safety and reliability.

The second part of the conference was devoted to the implementation of electronic voting technologies at annual shareholder meetings. Sergey Bernevega, Managing Director for Corporate Actions, NSD; Sergei Vasiliev, Director of Marketing and Development Department, R.O.S.T. Registrar; Irina Baichorova, Managing Director of Depository, Bank of New York Mellon; Elena Solovieva, Global Head of Standard Implementation, ROSSWIFT; Irina Gurova, Project manager for operating development, Infinitum; and Marina Uspenskaya, Customer Services Director, JSC Computershare Registrar, took part in the discussion.

Mr. Bernevega described in detail the development of electronic voting technology, formats of interaction and the transition to ISO standards. Ms. Baichorova highlighted the new disclosure regime for foreign shareholders by foreign nominees and the opportunity to vote electronically proved its value: shareholders liked the fact that they did not have to disclose extensive information at the moment of drawing up the shareholders list (for those taking part in shareholder meetings). Shareholders can send electronic ballots and be put on the list immediately; and the ballot committee will receive their votes.

Elena Solovieva, ROSSWIFT representative, spoke about the advantages of ISO 20022 and its prospects in Russia.

The conference concluded with a report by Alexander Diakovskiy, Vice President, Director for Information Products, NSD, which was dedicated to forming a unique data source on securities and issuers on the Russian market (and which was developed in conjunction with Interfax). According to Mr. Diakovskiy, next year, NSD plans to receive the status of an official source of corporate information (the golden copy).