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. Last Updated: 07/27/2016

RECENT LEGISLATION: Security Issue Suspension




"On Adoption of the Regulation on the Procedure for Suspension of Issue and Recognition of Securities Issue as Not Issued and Not Valid and on Introducing Changes and Amendments to the Acts of the Federal Securities Commission" -- a Resolution of the Federal Securities Commission of Dec. 31, 1997 with the attached regulation.


The regulation defines the procedure for, the conditions of and the consequences of suspension of securities issue and recognition of securities issue as not issued and not valid. This regulation is not applicable to state securities, securities issued by mutual funds and securities of credit organizations, the state registration of which is conducted by the Central Bank of the Russian Federation. The suspension of securities issue and recognition of securities issue as not issued and not valid is conducted by the Federal Securities Commission (the "Federal Commission") or by registration bodies, which have been authorized to register securities issues by the Federal Commission. Securities issue may be suspended or may be recognized as not issued at any step of issue procedure prior to the date of registration of a report on the results of securities issue. It may be recognized as not valid after registration of the report by a court's decision. The regulation defines cases when the securities issue may be suspended (e.g. breach of law, etc.), the list of persons who will be notified in case of suspension and the terms for such notification. The regulation requires that from the date of such notification transactions with such securities and their advertising are prohibited. The issuer must be informed of its obligation to discontinue the breach, or the registration body may appeal to a court for recognition of non-validity of the issue. The regulation also establishes that a securities issue may be recognized as not valid at the claim of the Federal Commission, other registration bodies, state tax services, prosecutors and other state bodies and interested person in cases and in accordance with the procedure established by the Russian legislation. The main consequence of recognition of securities issue as not issued and not valid, among others, is mandatory withdrawal from the turnover and reimbursement of money (or other property) to its owners. The regulation establishes that in the case of annulment of state registration of issue of documentary securities, the issuer is obliged to cancel certificates of securities.