Central Bank Of Russia Announces Relaxation Of Certain Requirements For The Placement And Circulation Of Shares Outside Of Russia

• Published date: 27 July 2021
• Subject Matter: Finance and Banking, Financial Services, Commodities/Derivatives/Stock Exchanges
• Law Firm: Dentons
• Author: Tamer Amara and Filipp Petyukov

What's it all about?

In order to support the liquidity on the Russian stock market, Russian securities laws have historically provided for certain caps on the number of shares of Russian issuers that could be offered for placement and/or circulation outside of Russia (whether directly or by way of offering of depository receipts representing such shares).

The scope of the relevant caps has varied since their initial implementation in early 2000s with the caps as they currently stand being as follows:

• the number of shares of a Russian issuer being offered / admitted to trading outside of Russia shall not exceed 25 per cent of all shares of the same category (the "Volume Cap"); and
• the number of shares offered outside of Russia shall not exceed 50 per cent. of the aggregate number of shares that are being offered (the "Proportion Cap").

What's new?

On 13 July 2021, the Central Bank of Russia announced its intention to repeal the Volume Cap and the Proportion Cap and published a draft of the relevant regulation (the "Draft Regulation") on its website for public consideration.

In its press-release the regulator cited the stable inflow of liquidity of the dual-listed shares into Russian market, with the number of transactions in such shares executed on the Russian market increasingly growing, and that the change is looking to remove additional barriers for Russian...