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Foreign IPO Restriction to be Lifted Later

23.05.2012 12:41 / Interfax

Lifting the foreign IPO restriction will become a reality after a competitive Russian market infrastructure is established, Deputy Head of Federal Financial Market Service (FFMS) Elena Kuritsyna told the press at Investments in Russia Forum on Wednesday.

In November 2011, FFMS drafted the new licensing regulation for Public Offering and/or Trading Securities Abroad. The effective date has been set for 1 January 2013. According to the draft, a company may float up to 100% of its total shares (currently restricted to 25%). The draft does not include mandatory offering of shares in Russia. Today, the issuer can place a maximum of 50% issued securities abroad, with the remaining amount to be floated in Russia.

“We had an understanding that it could come into effect on 1 January 2013. Now we realize it will not be so”, said Kuritsyna, pointing out that there has been no decision to postpone the effective date yet.

On 19 October 2011, the President authorized the government, the Central Bank of Russia and the Financial Market Committee Workgroup to develop a procedure for lifting restrictions on placement and circulation of Russian securities outside of the Russian Federation.

The procedure envisions the following steps: Central Depositary Act (effective 1 January 2012); central depositary accreditation (to be completed); opening nominee accounts for foreign depositaries in Russia; lifting restrictions.

Kurytsina says there is no central depositary accreditation procedure in place yet. “Even if the central depositary is accredited by the year-end, it will require a few more months to open accounts, to get up to speed”, she said.

She noted that the fully functional infrastructure is a prerequisite that will ensure foreign investors are comfortable working with Russian assets. “They must be equally comfortable with buying shares and depositary receipts”, said Deputy Head of FFMS.

Kurytsina also said that the current debate is not about setting a particular end date for the restrictions, it is about market development bringing an end to the restrictions.

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