Approximately half of Russian companies that have depository receipts on foreign exchanges have received permission to keep them temporarily or indefinitely, according to the results of the delisting campaign. Almost three-quarters of domestic issuers made an attempt to maintain their depositary programs.

Investors will have to pay for the early termination of depository programs (DR-programs) first of all – they will be charged a solid commission, taking into account the market situation. Nothing threatens issuers right now, but in the future they may well face claims from their investors if they are unable to directly receive shares of Russian companies or money for them.

Depository annihilation

In April 2022, the Russian authorities, by adopting Law 114-FZ, put domestic companies in a dilemma: either close depositary programs listed on foreign exchanges, or justify their need for a government commission to control foreign investment. Only such Russian, in fact, issuers as Yandex, Tinkoff Bank, X5 Retail Group, Fix Price, Ozon and a number of others escaped this because of the registration of parent structures abroad.

The reason for the adoption of the law was the suspension at the end of February, after the start of the military operation of the Russian Federation in Ukraine, trading in receipts of Russian companies on the New York Stock Exchange (NYSE) and NASDAQ, as well as on March 3 on the London Stock Exchange (LSE), where the day before the price domestic DR collapsed by 95-97%. For example, securities of Sberbank were valued at 1 cent.

Michael Cooper

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