Depository receipts of Russian companies will be removed from foreign markets.
A new federal law was adopted on the delisting (exclusion from the quotation list) of certain shares of Russian issuers from foreign markets. The motivation for this decision is the exclusion of pressure from the West on the stock market of the Russian Federation. At the end of February 2022, against the backdrop of a change in the political situation in the world, securities of Russian issuers traded on foreign stock exchanges sharply lost in price.
The law will enter into force 10 days after its official publication, and from that moment the shares of Russian companies will not be listed on foreign exchanges. Under the new law, only receipts of companies that:
are registered in Russia;
on foreign exchanges, only secondary listing was carried out (that is, depository receipts giving the right to own securities are foreign, while the shares themselves are Russian).
Do not fall - securities of companies operating in Russia on Russian money, but registered abroad, the primary listing of which was made in the West. They have the opposite - the shares are foreign, and the receipts that give the right to own them are foreign.
The former can potentially include Sberbank, Gazprom, Gazpromneft, Lukoil, Magnit, MTS, Novatek, VTB, Rostelecom, etc. The second - Yandex, VK, FixPrice, Ozone, Qiwi, Headhunter, etc.
The law gives the Government of the Russian Federation the right to grant permission for the circulation of already traded Russian shares with foreign receipts in the West. This may be requested, in particular, by the issuer itself.
Companies falling under the new law are required to quickly terminate previously concluded agreements with Western banks that issued receipts. Then you also need to promptly report on the termination of the contract to the Central Bank.
The bank is obliged to notify the holders of the forthcoming delisting. Russian investors who still have receipts at the time of delisting will be converted into Russian shares. The question remains what will be done with foreign investors deprived of access to the Russian stock market. In the current situation, the only possible way out is in the form of the bank's own conversion of receipts, followed by the sale of shares and the payment of compensation to former holders.
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