Corporate Actions Reform News
Russian Issuers Switch to ISO Standards for Shareholder Meetings
In May-June 2015, during the period when shareholder meetings are conducted in Russia, issuers were able to utilize electronic technologies and ISO standards to inform shareholders and vote at meetings.
Seventy-nine (79) issuers, including major ones (such as: Gazprom, Sberbank, Moscow Integrated Power Company (JSC «MIPC») and Mosenergo), conducted shareholder meetings using ISO 20022, an international corporate actions standard. As a result, shareholders1 now have the opportunity to receive information remotely about meetings and meeting materials, to vote on agenda items and to see meeting results.
The use of electronic technologies and the ISO 20022 standard by Russian issuers at shareholder meetings improves the quality of corporate governance and makes it easier for securities holders to exercise their rights. In the future, it will make Russian assets more attractive.
The e-proxy voting technology allows investors, if securities are safe-kept in depositories, to vote remotely and completely replaces paper documents. The ISO 20022 standard used by NSD in interactions with its clients contains requirements for documents submitted in frames of corporate actions. This simplifies shareholders’ participation in meetings. Meanwhile, a shareholder who intends to exercise his/her rights liaises with the only provider – their depository. Electronic technologies and standards recognized on the international level reduce costs associated with corporate actions and mitigate the risks of the non-exercise of shareholder rights. The procedure for corporate action processing became transparent and more convenient. This positively affects Russian assets’ attractiveness and issuers’ corporate governance quality.
In August 2014, NSD launched the e-proxy voting in the local format. As of April 2015, the e-proxy voting technology also became available in ISO standard. Russian issuers (including major companies) conducted shareholders meetings using the new technology. In the first three months since its launch, 79 issuers have conducted shareholder meetings via e-proxy voting in the ISO standard. Since the launch of e-proxy voting, more than 1,100 meetings have been held in which shareholders could exercise their rights using the e-proxy voting technology (including e-proxy voting in both local and ISO formats)2.
Eddie Astanin, Chairman of the Executive Board, NSD, said: “In recent years, the Russian settlement infrastructure has been developing quickly. Previously, we used international experience and brought to Russia those institutions and technologies that had become best practice, for example, the central securities depository. However, after the implementation of electronic technologies at shareholder meetings, the Russian financial infrastructure has moved to the forefront of the global industry.
Of course, there are more than 79 issuers in Russia but this is only the first step. Given that the largest Russian issuers (Gazprom, Sberbank, Moscow Integrated Power Company and Mosenergo) have already implemented the new technologies, we have every reason to speak about a significant coverage and a gradual switch to the international format for companies that are still using the local format..”
Some markets already implemented electronic technologies for shareholder meetings. For example, new technologies demonstrated great results in Turkey. In 2011, when electronic voting technology was first introduced in Turkey, foreign investors’ attendance at shareholder meetings increased more than fivefold.
Previously electronic technologies associated with corporate actions had been introduced in local formats. In Russia, the electronic voting technologies were implemented for the first time in internationally recognized ISO formats. These formats contain the unified requirements for all security holders to participate in the meeting and to exercise security holder rights – either in Russia or abroad.
The new technologies have been implemented as a part of the corporate actions reform initiated by NSD on the Russian market. In addition to the e-proxy voting currently available, which allows shareholders to vote via their depositories, NSD plans to introduce another technology – e-voting, which allows investors to vote directly and attend shareholder meetings online.
The corporate actions reform in the Russian securities market will bring about the new methods of security holders’ participation in general meetings:
- E-proxy voting. In accordance with this method, an investor will submit electronic voting instructions through the securities depository that provides services to the investor. However, the investor will still be able to attend general meetings either personally or by proxy. This method has been available earlier and is now confirmed by the new law.
- E-voting. This method implies voting through an electronic system (such as a web site) that allows for the submission and calculation of votes. This method does not require the use of hard-copy documents or personal attendance.
Information about the Corporate Actions Reform
As an active participant of the reform, NSD seeks to ensure that the reform is as comfortable as possible for securities market participants. For the updated information on the reform progress, please visit the dedicated web portal corpactions.ru.
1 — The use of these technologies by shareholders is available if shareholders’ securities are safe-kept in depositories.
2 — As of 30 June 2015.