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Corporate law and governance, financial transaction taxes

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Financial infrastructure and financial market regulation


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FFMS Drafts Simplified IPO Bill

29.03.2012 20:16 / Interfax

The Federal Financial Market Service (FFMS) has drafted a bill to simplify IPO procedures, said Head of FFMS Dmitry Pankin.

“In a joint effort with NAUFOR (National Association of Stock Market Participants) we have drafted amendments to the law to simplify the IPO procedure, including issue registration rules, for instance, securities will be tradable prior to issue report registration. The prospectus will change as well, in some cases it will not be required at all”, he said.

Pankin announced that the requirement for obligatory prospectus registration will be lifted in five cases:

- the securities are offered to qualified investors;

- according to the terms of placement of shares and (or) share convertible securities, they are offered to the issuer’s shareholders;

- according to the terms of placement, the shares are offered to a maximum of 150 persons, excluding the issuer’s shareholders and (or) qualified investors;

- the funds attracted by the issuer by placing one or more share issues (bonus issues) within one year amount to a maximum of RUB 200mn;

- according to the terms of placement, the total funds paid by each potential buyer is a minimum of RUB 4mn.

Also, according to Head of FFMS, the draft includes the possibility of prior approval of prospectus with FFMS, as well as separate registration of prospectus parts: the main part (issuer info, financial standing etc.) and addenda (details on securities and bond guarantor). The main part is valid for a maximum of 1 year.

Pankin also announced that detailed prospectus requirements will not be listed in a regulation instead of federal law.

According to him, the draft includes advance state registration of share issues in the event of establishing and reorganizing an entity prior to state registration of the entity.

Also, he said that the draft abolishes the regulation that ties bonds issue to charter capital limits and (or) third party collateral.

The bill also abolishes the 3-year trading limit on exchange traded bonds.

The Head of FFMS says these amendments will simplify IPOs by Russian issuers and create a better environment for foreign investors in the Russian market.

In his speech at the International Capital Markets Conference on Thursday, Pankin stated that Russia faces the task of developing the financial market, implementing new technological solutions in economics.

“You will remember that 10-15 years ago, in the heyday of global finance, new transactions and technologies were on the rise. It seemed at the time that through developed financial markets we will boost our economy, offer affordable housing, money to the poor, support the rise of emerging markets”, he said.

“What have we ended up with? A deep financial crisis, a rethinking of our approaches to the financial market. We say that the financial market is too vast and needs to be squeezed down, that bonuses and compensations in the financial market are over the top and need to be cut, we are over-staffed, the fat cats in the banks are to blame for the financial crisis”, said the Head of FFMS.

According to Pankin, Russia should learn from others’ mistakes in developing the financial market: “As opposed to the usual blunders followed by amends”.

Ruben Aganbegyan, MICEX-RTS President, said a press conference that Russia has taken a fundamental resolution to make its national market a part of the global financial system. “We should not invent the wheel, given the plethora of services and instruments, we will try to adopt the best global concepts according to our challenges”, he said.

“The public is more and more convinced that the MIFC is a financial center in Moscow, the pricing center for Russian assets in Russia. Therefore, Russian IPOs abroad can hardly serve as proof of a successful IFC”, said Aganbegyan.

Project Group №1Ruben AganbegyanDmitry Pankin