Russia: AGM period to be extended until September and share buyback procedure simplified

09.04.2020

Clearstream Banking1 informs customers that on 1 April 2020 the State Duma approved in its third final reading a draft law that envisions the extension of the annual general meeting (AGM) period until September and simplification of the buyback procedure for joint-stock companies. The bill will become law and go into effect after being approved by the Federation Council, signed by the President, and published.

The new regulations are aimed at easing corporate event procedures for public joint stock companies due to the current pandemic situation and will be valid only in 2020.

Background

AGM

The new legislation allows Russian companies to hold AGMs until the end of September (currently until the end of June). Moreover, the law introduces new deadlines for disclosure of consolidated financial statements: 210 days after the end of the reporting period for annual statements (currently 120 days) and 180 days for semi-annual statements (now 60 days).

Buyback

Currently Russian companies should fix the purchase price based on a professional evaluator’s report and give shareholders at least a 30-day notice. The new simplified procedure will allow the issuers not to publish buyback announcements as material facts, and only to notify the Central Bank of Russia (CBR) thereof.

The foreseen amendments will provide Russian companies with the opportunity to buy back their shares in 2020 at market price via brokers, provided the following conditions apply:

  • The shares are listed.
  • The weighted average share price for any three months after 1 March 2020 decreased over 20% compared to the weighted average price for the same period beginning from 1 October 2019.
  • The major stock index value for any three months after 1 March 2020 decreased over 20% compared to the same period beginning from 1 October 2019.
  • The shares are purchased on-exchange based on bids of public investors.
  • The shares are purchased via brokers acting on the company’s instructions.
  • The board of directors approved the simplified share buyback procedure and determined the type, quantity and period of the buyback, which will end no later than 31 December 2020.

Impact on customers

Clearstream Banking is further investigating with its local agents and will advise its customers accordingly

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