Russian ADRs: What You Can Do After Conversion
Due to the termination of the programs of the American Depositary Receipts (ADRs) of the Russian companies (Gazprom, MTS, Gazprom Neft, etc.), which took place in 2022, many shareholders decided to convert their ADRs into shares in order to avoid losing their investments and to be able to get their dividends in future.
What can the shareholder do with his converted shares and how can he claim the dividends? Please find answers to these questions in our newsletter below.
1. WHAT CAN I DO WITH THE SHARES AFTER THE CONVERSION?
Actions with the shares of the Russian companies are seriously limited for the shareholders from the “unfriendly” countries (including all members of the EU, Switzerland, Norway, etc.). Sale or purchase of any amount of such shares requires an approval of the special governmental commission (Presidential Decree No. 81 dated 01.03.2022), which is difficult to receive.
2. HOW CAN I COLLECT DIVIDENDS?
Some of the companies (Gazprom, MTS, Gazprom Neft, etc.) distributed the dividends to the shareholders in 2022, but they could not be credited to the shareholders prior to the conversion of their ADRs into shares.
Shareholders have 3 years to claim the dividends starting from the date of taking decision on their distribution.
After the conversion, the shareholder will be able to claim the dividends within 3 years after the date of taking decision by the General Meeting of the Shareholders of the company on their distribution (item 9 of the article 42 of the Federal Law No. 208 dated 26.12.1995). Each company establishes its own procedure for claiming the dividends.
For example, please find below the deadlines for claiming the dividends distributed in 2022 for the income in 2021 and/or for the income in 2022 of 5 major Russian companies (many other major Russian companies did not distribute their dividends in 2022):
PJSC Mobile TeleSystems – 21.06.2025 (for 2022);
Gazprom Neft – 26.06.2025 (for 2021), 15.11.2025 (for 2022);
Rosneft Oil Company – 29.06.2025 (for 2021), 22.12.2025 (for 2022);
PJSC Gazprom – 29.09.2025 (for 2022);
PJSC LUKOIL – 04.12.2025 (for 2022).
3. WHERE WILL THE DIVIDENDS BE CREDITED? WHAT CAN I DO WITH THEM?
Distribution of the dividends to the “unfriendly” shareholders can be done only to the special type “C” account (Presidential Decree No. 95 dated 05.03.2022). Such account shall be opened only in the Russian bank.
Distribution of the dividends to the “unfriendly” shareholders can be done only to the special type “C” account in the Russian bank, where the usage of money is strictly limited.
The usage of the dividends on such accounts is strictly limited. The shareholders cannot transfer this money to their ordinary bank accounts; the dividends on the type “C” bank account can be:
used to pay Russian taxes and charges;
used to pay commissions to the Russian broker, which maintains the account with the converted shares of the shareholder;
transferred to different Russian type “C” bank account of the shareholder, etc.
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This newsletter shall not be viewed as legal advice. It is prepared for educational and informational purposes only. Mosgo & Partners is not responsible for any consequences of reliance on the information contained in this newsletter without specific professional advice.
© Mosgo & Partners. Moscow, 2023.