New rules on depository accounting

Foreign securities will continue to have direct access to the Russian accounting infrastructure. The Bank of Russia decided not to limit the presence of foreign assets by issuing only Russian depositary receipts. In addition, the Bank of Russia intends to simplify the procedure for their issuing.

Depositories will be obliged to inform their clients of the risks associated with foreign jurisdictions, including possible restrictions or blocking. It is planned to compile a list of circumstances under which domestic accounting institutions will not be held liable to depositors, e.g. in case of sanctions imposed by foreign states or the nationalisation of foreign companies.

As to the accounting of foreign investor rights to Russian securities, the regulator provides for creating conditions for opening segregated accounts. In this case, the owner of Russian assets will be able to freely use them and transfer them to a separate account without his/her foreign intermediary’s consent.

However, depositories will still have to disclose all owners recorded in the aggregated account (if it is provided for by law or agreement). If a foreign intermediary refuses to disclose information about its investors, the rights to securities in depository accounts may be limited.

All these provisions aimed to enhance investors’ protection, will form the basis for the concept of regulatory changes.