Izvestia
Russian companies to be allowed to sell 100% of shares abroad
The Russian Federal Financial Markets Service (FFMS) has drafted an order on the initiative of President Dmitry Medvedev that would allow Russian companies to place 100% of their shares abroad. These changes can rightly be considered revolutionary, because the current restrictions are fairly severe – companies cannot place more than 25% of their shares on foreign stock exchanges. These new rules would remove the limit on the number of shares that can be traded abroad. Companies would be exempt from the obligation to place their shares on Russian stock exchanges.
Nevertheless, this would not apply to companies in strategically important sectors, where the 25% limit would be retained, and companies in the extractive industries would be subject to even more severe restrictions – a limit of 5%.
Consequently, the hidden desires of the majority of Russian companies have come to fruition. When it comes to stock exchanges, Russian companies opt for London, New York and Hong Kong over Moscow. Placement abroad provides an opportunity to attract a wide range of foreign investors and boost share price. Businesses learned to circumvent legal prohibitions in a simple, elegant way by placing parent companies under foreign jurisdiction, thus minimizing their dependence on Russian regulators. If the new rules are adopted, this would no longer be necessary.
The FFMS could be paving the way for the impending privatization of state companies, legislatively clearing the field for them to be put to more profitable use. However, the head of the agency denies that this was their aim.
“These are long-term goals unrelated to any impending privatization,” said FFMS head Dmitry Pankin, continuing “We are competing globally, and our issuers will now be able to compete with foreign issuers in foreign markets.”
Stock exchanges will have to compete with each other now. Weakening regulatory pressure will cause a massive outflow of foreign issuers, and the new joint Russian stock exchange will have to cope with this. This month, the two domestic platforms – RTS and MICEX – signed a merger agreement. Yevgeny Studenikin, vice president of equity trading at BrokerCreditService Financial Group, is pessimistic about this kind of competition.
“This decision is certainly a negative factor for the Russian stock exchanges,” said Studenikin. “They cannot match the quality of service offered by their foreign competitors, but this could be a good incentive for them to develop.”
Dmitry Pankin is sure that competition will benefit Russian stock exchanges, especially if Moscow is to become an international financial center.
“The establishment of such a center implies the openness of the market for all participants in terms of input and output,” he said. “We need to create an environment in Russia that is favorable to issuers located within Russia and refrain from erecting artificial administrative barriers that are ultimately ineffective.”
Nezavisimaya Gazeta
Primorye authorities crack down on extremist opposition
A Vladivostok court is to hear a case against activists from the unregistered opposition party Other Russia accused of fomenting “hatred towards the authorities and law enforcement bodies.” The authorities in Primorye believe that growing extremism is threatening the region’s security.
Vladivostok’s Leninsky court will try Alexander Kurov, a member of Primorye’s Other Russia party, and Igor Popov, leader of the party’s regional branch, who have organized rallies and pickets in defense of the 31st article of the Constitution. They were detained in fall 2010 and charged with “inciting hatred and hostility, and insulting human dignity” and “organizing extremist activities.” Kurov is also accused of the public incitement to extremism.
“They conducted regular political events on behalf of Eduard Limonov’s banned National Bolshevik Party and distributed its election manifesto,” said Olga Levchenko, a senior assistant to the head of Primorye’s investigating department.
“Handouts distributed at public events held by the opposition were found to incite hatred for the ‘authorities’ and ‘law enforcement.’ Investigators also found that a poster held by Kurov at a rally in support of military retirees (‘The duty of every real man today is to unleash a holy war against this state and this bandit government’) contained a call for extremism.”
Both Kurov and Popov claim they have never been members of the National Bolshevik Party.
“No date has yet been set for the hearing but we will insist on full acquittal at the trial, because the case against us is politically motivated, fabricated by those who disapprove of Eduard Limonov’s new party and, on the other, by those who dislike our active participation in Vladivostok’s political life,” Kurov told NG on Thursday. He said that the poster was aimed at officials who violate the law.
During the investigation, the activists protested against the indictment and complained that investigators repeatedly threatened to beat or kill them if they did not put an end to their extremist activity. On the other hand, they were offered money, good jobs and other benefits as incentives to give up their political struggle. But the court rejected their pleas.
“That the charges against Kurov and Popov are far-fetched is clear even to those who issued their arrest warrants; the case was filed to intimidate others and keep them from attending rallies against authorities,” said Artyom Samsonov, one of the protesters.
But Presidential Envoy to the Far Eastern District Viktor Ishayev believes the growing extremist sentiments in the area are one of the main threats to national security. “The situation in the Far East is under control and manageable, but it is not as harmless as it seems,” he said. “Over the past five years, there has been a 15-fold increase in the number of extremist incidents.”
Experts believe economic problems and the increasing gap between different segments of society are responsible for the growth of anti-government feelings in Primorye.
Vedomosti
VTB to sue Baturina for $31 million
VTB on Wednesday launched a lawsuit in the Moscow commercial court against Yelena Baturina’s Inteco demanding that it repays 870.6 million rubles ($31 million), part of a 1.5 billion ruble loan.
A source with close ties at Inteco said the company had missed a repayment deadline. A source at VTB claims Inteco is several months behind on its loan interest payments.
VTB decided to sue because the talks on the nonperforming loan have not yielded any results, VTB’s press service said.
Inteco borrowed the money in December 2009 on the surety of Sintez and with part of the loan guaranteed by the Finance Ministry.
Inteco representative Gennady Terebkov has stated that the company “is honoring all its commitments to the creditor banks, is in constant open dialogue with them, and seeks optimal solutions to problems if and when they arise.”
Unofficially, the company admits that it has defaulted on the loan.
Inteco owes 1.5 billion rubles ($54 million) to VTB, about 14 billion rubles ($501 million) to Sberbank and between 14.8 billion and 30 billion rubles ($530 million to $1 billion) to the Bank of Moscow.
The Bank of Moscow’s press service said Inteco is a problem borrower but refused to say how much the company owes or how long it has been in default.
Inteco faithfully serviced all its debts in early July, said an employee at Sberbank. It repeatedly used Bank of Moscow (BOM) funds to do so, under a simple scheme. According to an inspection at BOM in spring 2011, Russian Land Bank, owned by Baturina’s former subordinates, would buy BOM securities and then resell them to Sberbank.
Yelena Baturina, the wife of former Moscow mayor Yury Luzhkov, said in an interview that many companies, including banks, are interested in buying her business. She said VTB was one of them.
Soon after her husband was dismissed last autumn, the Moscow authorities terminated several joint projects with Inteco. Market players now see it as a takeover target and VTB as the main bidder.
In December 2010, VTB President Andrei Kostin attended talks between Baturina and Vasily Anisimov, a metals magnate and chairman of Coalco, a New York-based real estate firm, in Vienna. Those close to Kostin said VTB was prepared to finance the deal.
VTB carried out a due diligence investigation of Inteco, estimating its developer assets (excluding regional ones) at 350 million euros. A bank representative said VTB is not interested in buying and will not lend funds to potential buyers, but is monitoring developments as Inteco’s creditor.
The potential buyers include Coalco, companies owned by Yury Kovalchuk, a co-owner of Rossiya bank, and Suleiman Kerimov’s investment vehicle Nafta Moskva.
The Finance Ministry has no information about Inteco’s rumored default on the loan it guaranteed.
RIA Novosti is not responsible for the content of outside sources.
