More transparency for issuers


And more amendments to regulation of shareholders meeting needed

Moscow Exchange is preparing changes to its Listing Rules for issuers included in the top-level quotation lists (levels 1 and 2). In particular, companies will be obliged to establish special sections for shareholders and investors on their websites and Moscow Exchange will exercise control over the content of these sections. Major issuers have already complied with these requirements, but investors make a point of recognizing them in the Listing Rules. In addition, Moscow Exchange should pay attention to the disclosure of information for shareholders’ meetings, which is the thorniest issue in the relations between issuers and investors.
The Moscow Exchange’s Expert Council on Listing has decided to recommend modifying the Listing Rules for issuers whose shares are included in the quotation lists. The new requirements are aimed at intensifying the work with investors and shareholders. In particular, the Council recommends obliging issuers to keep special IR website sections (for shareholders and investors) for disclosing information on approved dividend policies, dividend payments for the last five years, contact details and short biographies of issuers’ IR directors or heads of their IR units. In addition, it is proposed that issuers should be obliged to keep this information up-to-date, which Moscow Exchange intends to monitor quarterly. “The quotation list should guarantee the issuer’s good quality to investors to the full extent. The existing disclosure measures are probably not sufficient. Not all the issuers included in the quotation lists are currently acting as recommended by the Expert Council,” Pavel Mitrofanov, director of corporate ratings at RAEX (Expert RA), commented. In addition to the new listing requirements, the Expert Council voted for a number of recommendations applying to issuers: publication of materials in English in the IR website sections for companies with a foreign shareholding of 5% or more; placement of materials on past events for at least the last 12 months for investors and shareholders; adoption of an investor calendar and keeping it up-to-date. Besides, the Council recommends electronic voting during general shareholders meetings.
The Expert Council’s recommendations will turn into a requirement shortly, Moscow Exchange noted. These changes will be made to the listing rules as early as in the first half of 2018 after they are approved by the Exchange’s Supervisory Board and the Bank of Russia. “As our audit has shown, not all the companies included in the second level quotation list have established IR sections on their websites. As for issuers on the top-level quotation list, all of them have IR sections, but their content is sometimes a mere formality, no contacts of responsible executive are provided. Our goal is to highlight the relevance of this section,” the MOEX press service commented.
Today, large issuers generally comply with these recommendations. “We’ve been regularly publishing what the Expert Council on Listing recommends to disclose for a long time already,” NLMK confirmed. Mechel’s spokesperson said that the company met the requirements laid down in the recommendations and needed not make any changes to the current disclosure procedures. Norilsk Nickel, Severstal and TMK confirmed the same. The issuers also welcomed the disclosure initiative. “Openness creates an atmosphere of predictability, mutual understanding and trust, i.e. the goodwill directly influencing the operating efficiency and, eventually, the shareholder value,” NLMK said expressing their collective opinion.
A universal obligation is more reliable than an initiative supported by good practice of the most responsible issuers, investors believe. However, in addition to the proposed initiatives, one should pay attention to the disclosure of information for general shareholders meetings both in English and in Russian, Ivan Maksimov, Deputy Executive Director of the Association of Institutional Investors, notes. Until now, there are many companies not complying with the Corporate Governance Code (CGC) recommendations as regards the list of materials for shareholders’ meeting, says Denis Spirin, Director of Corporate Governance at Prosperity Capital Management. “For example, Gazprom recognized as one of the companies implementing the CGC on the Government’s instructions, did not even disclose the comparison tables of amendments made to its by-laws for the general shareholders meeting in 2017,” he reminds. Besides, the disclosure in English of all the materials published in Russian, would enable investment advisory firms such as ISS (Institutional Shareholder Services) “to speed up preparation of voting recommendations, thereby facilitating voting of foreign investors at meetings,” Mr. Spirin emphasized. This is of special importance in the context of the recent discussion on increasing investors’ activity at shareholders’ meetings (for details, see the Kommersant issue published September 26, 2016).
Maria Sarycheva, Anatoly Jumailo

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