Russian regulations on GDR programmes for Russian companies James Roe, Alexandra Fasakhova, London Stock Exchange, 1 July 2010

Agenda Key foreign regulatory issues faced by Russian companies Russian FSFM regulation of GDR issuance

History of limitations on GDR programmes For the past 10 years FSFM has been: consistently reducing the ceiling for GDR offerings by Russian companies 2001: Permission requirement and 75% threshold introduced 2003: 75% threshold reduced to 40% 2006: 40% threshold reduced to 35% and 70/30 rule introduced 2008: 35% threshold reduced to 30%, lower thresholds of 25% and 5% introduced for strategic companies, 70/30 rule preserved vigorously criticising offshore offerings of Russian businesses

June 2009 Amendments Came into effect on 1 January 2010 Further reduced the ceiling for GDR offerings Applicable ceiling depends on: existing level of Russian listing; and whether a company is a strategic subsoil company Imposed additional compliance requirements on Russian companies

New thresholds for GDR programmes Maximum threshold reduced to 25% and only available if any of the following criteria is met: Shares are A listed; or Depositary is incorporated in a country whose regulator has an agreement with FSFM; or Issuer is a strategic subsoil company which cleared its 25% GDR offering with State Commission Other companies are subject to lower thresholds of: 15% for B listed shares; and 5% for V or I listed shares and for subsoil strategic companies without State Commission clearance for a higher limit 70/30 rule changed to 50/50 rule

Additional compliance requirements Post offering notification obligation introduced: Report on the results of the offering (local and international) within 30 days following the offering The permission now has 1 year of shelf life FSFM can also cancel the permission if: the underlying shares are redeemed; or the post offering notification requirement is not complied with. Continuous obligation to update the FSFM on any changes to the depositary agreement introduced

Contact details James Roe Partner, Moscow Tel Mob Alexandra Fasakhova Senior Associate, Moscow Tel Mob

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