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. Last Updated: 07/27/2016

Decrees on Securities Issued

President Boris Yeltsin has issued decrees spelling out the responsibilities of Russia's securities watchdog and outlining a long-term plan for the market's development, including tax provisions initially viewed as favorable to investment.


The two separate decrees were signed Monday, when concerns about Yeltsin's health were rife.


One decree confirms provisions in the Law on Securities, passed in April, which outlines the functions of the Federal Securities Market Commission -- renamed from the Federal Commission on Securities and the Capital Market.


According to the law, the commission -- currently headed by Dmitry Vasiliyev -- will consist of six people and answer directly to the Russian president rather than the prime minister.


The decree effectively confirms the commission's existence under the new federal law.


"It was absolutely necessary," said Bruce Bean, managing partner at Coudert Brothers law firm. "This will give the commission what they think they need to operate under the law."


The law grants the commission's chairman the status of a government minister and outlines the panel's rights and functions.


The second decree confirms a 30-page document called Concept for the Development of the Stock Market. A joint statement issued by the commission and the Central Bank, it outlines a broad plan for building the market's infrastructure in the next few years, a commission spokesperson said Wednesday.


The document is the result of nearly two months of work by a panel of experts -- headed by Vasiliyev and deputy chairman of Central Bank Andrei Kozlov -- to draft a comprehensive state policy on capital markets. That mandate followed a presidential decree on protecting shareholders' rights.


Interfax reported that the new document spells out tax policy on securities transactions, promising "no new taxes."


He said it could mean the government has no plans to impose the 20 percent value-added tax on securities transactions, in line with many countries which shy away from VAT to encourage investment.


Currently capital gains are taxed as profits, after the government abolished last fall taxes on separate securities transactions.


One big question mark hanging over securities tax policy is how new unit investment funds will be taxed. Movement is toward a scheme like that for U.S. mutual funds, under which capital gains are passed on to shareholders in the fund who are liable for the tax, while the fund itself is not taxed.