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. Last Updated: 07/27/2016

Business to Fight IPO Crackdown

The business community will fight a government crackdown on firms making stock offerings abroad using foreign-registered vehicles as insurance against political risk, a leading member said Tuesday.

The Federal Service for Financial Markets is pushing for amendments in corporate listing legislation that would force companies to list first in Russia before carrying out an international initial public offering.

The amendments would apply to companies with at least 75 percent of their assets in Russia that want to list outside Russia through a foreign-based holding firm.

Alexander Shokhin, who chairs the coordination council of Russia's leading business groups, said foreign IPOs acted as insurance for Russian companies in the current political climate.

"This is a step in the wrong direction and we will fight it. International IPOs are very important for Russian companies, not only for financing of expansion and new projects but also as a political hedge," Shokhin said.

"It is impossible for Russian companies to defend their interests with Russian investors. They definitely need foreign participation."

Shokhin said the planned changes were another example of administrative barriers being put up, which was typical of the current administration.

Russian companies have raised almost $2.5 billion on the London Stock Exchange so far this year.

Current legislation theoretically obliges firms to list on the MICEX or RTS bourses before launching IPOs abroad, but companies have used loopholes by creating a non-Russian holding company as the listing vehicle.