Russia: Update on dividend payments on depository receipts (DRs) and Russian shares - amended
Note: This announcement originally published on 26 August 2022 has been updated to reflect the latest status. The changes have been highlighted.
Clearstream Banking1 informs customers that on 10 June 2022, the Central Bank of the Russian Federation’s Board of Directors published a decision on establishing requirements for the distribution of dividends paid on shares of Russian joint-stock companies to the accounts of Foreign Nominees Holders (FNH), such as Clearstream Banking.
Pursuant to the Resolution, the payment of dividends on Russian issuers’ shares held in foreign nominee securities accounts will be carried out in a different manner to the procedure established by paragraph 4 of Article 8.7 of Federal Law No. 39-FZ dated 22 April 22, 1996 “On the Securities Market”.
The process foresees, that within one business day upon receipt of the income payment, the NSD or the local sub-custodian (depository) must send to its clients (FNHs and depository banks of DRs programs) the information about the payment, which includes the request to disclosure the beneficial owners of the securities. The required information should include:
- Country of registration
- Information (documents) required for tax withholding
- Bank account details, including S-type cash account (in case applicable)
The Russian depository requires this information within 70 calendar days from the date of the request. Once completed, the Russian depository will pay out the dividends within three working days upon receipt of the full and complete information.
10 working days after the expiration of the above-mentioned period, the local sub-custodians may accept applications for income payment directly from the beneficial owners holding the shares via FNH or having investments in the form of DRs. Such applicants will have to provide, amongst other information, the document confirming the ownership of the securities.
If all of the dividends were not paid out to the securities holders, then the remaining amount shall be returned by the local sub-custodian to the issuer within 10 working days after the expiration of the one-month period from the date of completion of the dividend payment period.
Following the FAQ published by the European Commission on 12 August 2022, and in particular its answer to Question 21, Clearstream Banking is seeking guidance of the competent authorities if the disclosure process can be offered by Clearstream Banking.
Clearstream Banking continues to explore the matter with the competent authorities. It cannot be excluded that the requirements of the Resolution of the Board of Directors of the Central Bank of the Russian Federation of 10 June 2022 may result in economic benefit to persons listed under EU Council Regulation (EU) no. 833/2014.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany, and registered in Register B of the Amtsgericht Frankfurt am Main, Germany, under number HRB 7500.