On September 12, 2014 the decision of the National Commission for Securities and Stock Market "On amendments to the Regulation on carrying out depositary activities"4 (hereinafter, the Decision) came into effect.
The Decision provides for the course of actions under agreements on servicing securities issues between issuers and the Central Depository that provide for the payment of dividends in monetary form.
Thus an issuer must arrange for the transfer of funds to be paid to depositors of a depositary institution and to clients of a correspondent depository to the cash account of the Central Depository at the Settle- ment Center. On its part, the Central Depository should arrange for the transfer of funds to the appropri- ate accounts of depositary institutions and correspondent depositories no later than three business days upon their receipt and simultaneously provide an instruction on such payment, and shall indicate the total amount of accrued dividends (income) and their amount per security. Depositary institutions should pay the obtained funds to their depositors in accordance with the terms of agreements on servicing/opening se- curities accounts or in accordance with the procedure provided for in the securities account questionnaire. Correspondent depositories should also pay the received funds to their clients.
The funds received on accounts of the Central Depository, depository institutions and correspondent de- positories as dividends (income) obtained on issuers’ securities shall not be deemed their property or in- come. If no funds were paid to the owner of securities, as the latter failed to take action required to obtain them, within 5 business days upon expiry of the established term reverse actions should be taken. Thus, depository institutions transfer funds to the Central Depository, which on its part sends them back to the issuer. Along with the funds, information is sent about persons that obtained no dividends, with the amount of dividends (income) stated. The same procedure is applied to funds in case of termination of an agreement between a depositary institution and a depositor, unless otherwise provided.
If owners of 50 or more percent of an issuer’s shares are business entities with the State share constituting 100 percent, the issuer shall pay dividends accrued on shares of such business entities directly to the State.