Russia: Forced conversion procedure


Note: This announcement is linked to previous Announcements A22107 and A22125 on DR conversions.

Forced conversion

Russian Federal Law No.319-FZ (the Russian Law) gave the possibility for holders of depository receipts (DR) with Russian underlying shares to convert their DRs into shares of Russian issuers through the forced conversion procedure. This conversion window of 120 days was available starting from the effective date of the Russian Law (14 July 2022) until 10 November 2022.

Clearstream Banking understands that DR holders electing to follow this procedure were to send an application directly to the Russian custodian bank where the account of the DR program is opened. DR Russian custodian banks would then assess the possession of the DRs, the identity of the DR holder and their eligibility to apply for the forced conversion based on their own set of rules and procedures in line with the Russian Law.

Forced conversion applications can be rejected if the DR agent’s Russian custodian has reasonable doubts with respect to the completeness or accuracy of provided information.

The application ostensibly would be accepted if the DR agent’s Russian custodian deems that documentation is valid and meets all the requirements in terms of content, completeness and accuracy of the information provided under the forced conversion procedure. As a result of the instruction acceptance, the DR agent’s Russian custodian would debit the securities account of the DR agent (BNY Mellon, Citibank, Deutsche Bank, J.P. Morgan) and credit the account of the DR holder opened in their own name without the DR agents’ and Clearstream Banking’s consent or any kind of involvement.

Clearstream Banking has no visibility on these processes and is exclusively dependent on the information received externally and cannot verify which positions have effectively been converted under the Russian Law or which forced conversion applications have been rejected by the DR agents’ Russian custodians.

Information flow from customers

Customers are expected to inform Clearstream Banking without any delay if any of their holding has been converted under the forced conversion procedure. For this reason, to facilitate the information collection, Clearstream Banking shall announce a corporate action event for each DR program. Even though customers may send a corporate action instruction under the events, it is important to note that Clearstream Banking will consider them as information only. Customers will not instruct any conversion to the DR agent and the information collected will be used for reconciliation purposes only.

Upon receiving information from the customer that the position has been converted, Clearstream Banking will immediately block the disclosed position on the customer’s account.

Interaction with DR agents’ Russian custodians

DR agents are expected to provide an exhaustive list of converted positions impacting Clearstream Banking’s account as well as the custody chain pertaining to the converted DRs.

There are three possible scenarios:

  1. If the positions customers have disclosed as converted are reconciled in the list provided by the DR agents (by reconciliation of the custody chain information provided on both sides), Clearstream Banking will confirm to the DR agent that the corresponding position is held in Clearstream Banking’s books.
    The position will remain blocked until the agent arranges for the mark-down of the corresponding position.
  2. Should the DR agent provide no information to Clearstream Banking, but the relevant customer informs Clearstream Banking of a converted position under forced conversion procedure, Clearstream Banking shall engage with the DR agent to resolve any information discrepancies.
  3. Should a DR agent inform Clearstream Banking that a position has been converted under forced conversion procedure, but the relevant customer did not inform Clearstream Banking by the corporate action event deadline of such status, Clearstream Banking will block the corresponding position of the customer and on a commercially reasonable effort basis, will communicate the custody chain to the customer.

Clearstream Banking shall make reasonable efforts to liaise with all the parties impacted to ensure the converted DRs are identified and reconciled as per the above details. Customers cannot hold Clearstream Banking liable for any delays in the reconciliation process and any other consequences which may arise thereof.

Voluntary conversion

Voluntary DR conversion events are expected to remain open for Clearstream Banking S.A. (CBL) customers to the extent that all intermediaries involved in the process (other than CBL) will continue to support it and that the DR conversion falls within the permitted activities and is in compliance with all applicable sanctions, including those of the EU, United Kingdom and the U.S.A.

Customers of Clearstream Banking AG (CBF) currently do not have the possibility to instruct a voluntary DR conversion as communicated in Announcement D22069.

By sending an instruction for a voluntary conversion event, customers certify to Clearstream Banking and to the DR agent that the position instructed is not converted under the forced conversion procedures as introduced by the Russian Law. Clearstream Banking cannot check whether the instructed position for a voluntary conversion event is reported as converted under the forced conversion procedure. Clearstream Banking will thus process the instruction received as long as there are sufficient positions on the customer’s account. It is the responsibility of the customers to check and obtain such information from their underlying customers or to act upon information that Clearstream Banking received from the DR agent and passed on to the customers on the converted position and the time of the blocking.

Customers agree to hold Clearstream Banking harmless and indemnify it against any loss, claim, damage, liability or expense, including attorney’s fees, imposed on or incurred by or asserted against Clearstream Banking as a result of DR conversion instruction duplication or withholding information of the converted position under the forced conversion procedure. 

Due to uncertainties and circumstances beyond Clearstream Banking’s control with regards to conversion procedures set forth in the Russian Law, settlement in Russian DRs will remain suspended in CBL and CBF until further notice to ensure the integrity of the securities issue.

Further information

For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.


1. Clearstream Banking refers to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany, and registered in Register B of the Amtsgericht Frankfurt am Main, Germany, under number HRB 7500.