17. Equity

The nominal share capital of the Company recorded on its incorporation has been indexed, to account for the effects of hyperinflation from that date through 31 December 2002. The share capital of the Company in the Russian statutory accounts at 31 December 2013 amounted to 7,280,089 nominal (uninflated) RUB (2012 and 2011: 7,280,089).

The authorized share capital of the Company as at 31 December 2013, 2012 and 2011 comprised 6,354,642,352 ordinary shares and 242,832,000 non–redeemable preferred shares. The par value of both ordinary and preferred shares amounted to RUB 0.0025 per share.

During the reorganisation the number of outstanding ordinary shares resulted from the conversion of Svyazinvest ordinary shares into additional 1,071,502,300 Rostelecom ordinary shares, and the cancellation of 1,345,556,268 Rostelecom ordinary shares, which previously owned by Svyazinvest, on 1 October 2013.

As at 31 December 2013 the issued share capital of the Company was as follows:


Type of shares Number of shares issued Total par value Carrying value
Ordinary Shares, RUB 0.0025 par value 2,669,204,301 6.673 72
Preferred Shares, RUB 0.0025 par value 242,831,469 0.607 25
Total 2,912,035,770 7.280 97

As at 31 December 2012 and 31 December 2011 the issued share capital of the Company was as follows:


Type of shares Number of shares issued Total par value Carrying value
Ordinary Shares, RUB 0.0025 par value 2,669,204,301 6.673 72
Preferred Shares, RUB 0.0025 par value 242,831,469 0.607 25
Total 2,912,035,770 7.280 97

Data for comparative periods were revised as if the reorganization had occurred at the beginning of the earliest comparative period.

Ordinary shares carry voting rights with no guarantee of dividends. Preferred shares have priority over ordinary shares in the event of liquidation but carry no voting rights except on resolutions regarding liquidation or reorganization, changes to dividend levels of preferred shares, or the issuance of additional preferred shares. Such resolutions require two–thirds approval of preferred shareholders. The preferred shares have no rights of redemption or conversion.

Owners of preferred shares have the right to participate in and vote on all issues within the competence of shareholders’ general meetings following the annual shareholders’ general meeting at which a decision not to pay (or to pay partly) dividends on preferred shares has been taken.

In case of liquidation, the residual assets remaining after settlement with creditors, payment of preferred dividends and redemption of the par value of preferred shares is distributed among preferred and ordinary shareholders proportionately to the number of owned shares.

Accordingly, the preferred shares of the Company are considered participating equity instruments for the purpose of earnings per share calculations (refer to Note 30).

As a result of the reorganization approved by shareholders’ meeting as at December 30, 2013 dissenting minor shareholders obtained the right to sell their shares. For this purpose stock redemption reserve was accrued in the financial statements as at December 31, 2013. The reserve is classified as current payables, refer to note 19.

Treasury shares

As at 31 December 2013, 2012and 2011 total number of treasury shares held by the Group was as follows:


Type of shares 31 December 2013 31 December 2012 31 December 2011
Ordinary Shares 465,757,157 229,568,655 184,725,611
Preferred Shares 72,987,143 69,432,721 70,042,234
Total 538,744,300 299,001,376 254,767,845

In October 2011 the Board of Directors of the Company approved decision on shares buy back up to the amount of USD 500 million.

During 2011 total number of ordinary shares realized as an exercise of the options under the management motivation program constituted 18,122,013. During 2012 the Group realized 83,635,424 ordinary shares, including 25,389,645 shares realized as an exercise of the options under the management motivation program and 56,287,425 shares transferred in exchange of acquisition of a 50% stake in Sky Link from OJSC Svyazinvest (refer to Note 5). During 2012 total number of preferred shares realized as an exercise of the options under the management motivation program constituted 952,074.

In 2013 total number of ordinary shares realized as an exercise of the options under the management motivation program constituted 66,610,190 shares. During 2013, 2012 and 2011 the Group purchased 221,575,350, 166,693,203 and 31,383,885 ordinary shares, respectively, for 28,067, 25,636 and 4,506 respectively.

Dividends

According to the charter of the Company a preferred share carries dividend amounting to the higher of 10% of the net income after taxation of the Company as reported in the Russian statutory accounts divided by 25% of total number of shares and the dividend paid on one ordinary share.

Total amount of dividend paid on ordinary shares should be not less than 20% of net profit of the Group as reported under IFRS.

In June 2013 the General Meeting of Shareholders approved the dividends for the year ended 31 December 2012 in the amount of 2.4369 roubles per ordinary share (2011: 4.6959 roubles per ordinary share) and 4.1022 roubles per preference share (2011: 4.6959 roubles per preference share).


Category of shares Number of shares Dividends per share, roubles Total sum of dividends, roubles
Declared and approved for 2012      
Preference shares 242,831,469 4.1022 996,143,252
Ordinary shares 2,943,258,269 2.4369 7,172,426,076
Total 3,186,089,738   8,168,569,328

The difference between the dividends declared and the dividends presented in the statement of changes in equity is explained by the treasury shares, held by the subsidiaries of the Company.