Description of share capital
The Company’s share capital is RUB 7,280,089.4250, consisting of 2,669,204,301 ordinary shares and 242,831,469 preferred shares, all of which are fully paid, issued and outstanding and have a nominal value of RUB 0.0025 each. The Company neither has convertible securities, nor exchangeable securities, nor securities with warrants.
The Company is also authorized to issue additional 2,613,935,751 ordinary shares and 531 preferred shares, all such shares having a nominal value of RUB 0.0025. Under Russian legislation, charter capital refers to the aggregate nominal value of the issued and outstanding shares. As of December 31, 2013, Rostelecom held 7.2% of its ordinary and 17.5% of preferred shares as treasures acquired by the Company as a result of the statutory share buy-out procedures during the second stage of its reorganisation . In addition, Mobitel, Rostelecom`s subsidiary, held 9.4% of the ordinary shares and 12.6% of the preferred shares initially acquired by Rostelecom, the IRCs and Dagsvyazinform as a result of the statutory share buy-out procedures during the first stage of reorganisation and then contributed to Mobitel. The number of shares held by Mobitel was changed several times following transactions related to the second stage of the reorganization, SkyLink acquisition and others.
In accordance with the Joint Stock Companies Law and the Company’s charter, a decision on any issuance of shares or securities convertible into shares by closed subscription, or an issuance by open subscription of ordinary shares or securities convertible into ordinary shares constituting more than 25% of the number of issued ordinary shares, requires a three quarters majority vote of a shareholders’ meeting.
The following table sets out certain information with respect to the ownership of ordinary shares by each shareholder, as of December 31, 2013:
|The State through:|
|Federal Agency For State Property Management||1,254,189,564||46.99|
|State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)`(1)||110,360,758||4.13|
|Russian Direct Investment Fund (2)||36,093,683||1.35|
|(1) Controlled by the Russian Government.
(2) Controlled by Vnesheconombank
(3) The Company owns 99.9% of the share capital of LLC Mobitel.
The Company is directly controlled by the Russian Government, which holds 51.12% of the Company’s ordinary shares through VEB and FASPM. There are no measures in place to ensure that such control is not abused.
Russian law, including the Joint Stock Companies Law and corporate governance requirements applicable to companies listed on Russian stock exchanges, provide certain protections to minority shareholders. For instance, there are supermajority shareholder approval requirements for certain corporate actions, pursuant to which a shareholder is able to demand that the company purchase the shares held by that shareholder if the shareholder voted against or did not participate in voting on certain types of actions. In addition, companies are required to obtain the approval of disinterested shareholders for certain transactions with interested parties and the shareholders owning not less than 1% of the company’s stock may bring an action for damages caused by the company’s managers or directors. Furthermore, since the Company’s shares are listed on Moscow Exchange, Rostelecom is and expect to continue to be required to comply with a number of corporate governance standards which provide additional protection to its shareholders, including minority shareholders. However, no assurance can be given that the applicable Russian laws and the corporate governance standards with which Rostelecom has to comply will be able to fully protect the interests of its minority shareholders if such interests are in conflict with the interests of its other shareholders.
None of the Company’s shareholders have voting rights different from any other holders of the shares.
Each shareholder of the Company has an obligation under Russian law to notify in writing the Company and the Central Bank of the Russian Federation about (i) an acquisition of 5% or more of the Ordinary shares, and (ii) any circumstances which result in a change in the number of such shares above/below the 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% or 95% threshold. However, since the obligation to notify regarding such acquisitions or disposals lies on Rostelecom shareholders, the Company’s ability to know whether such information is up to date or accurate, depends on shareholders’ compliance with the regulation.
Ordinary shares are listed on quotation list “A1” of Moscow Exchange under the ticker “RTKM”. Preferred Shares are listed on quotation list “A1” of Moscow Exchange under the ticker “RTKMP”. ADRs are also traded over-the-counter in the United States on the OTCQX under the ticker “ROSYY”.