Download Alexey Nikolaevich Chubinov,

Alexey Nikolaevich Chubinov,
Deputy head of the Regional Branch of the Federal Service for Financial Markets in
the Central Federal Okrug, Novosibirsk
Typical violations revealed during examination of documents, presented to the RB
FSFM of Russia in the CFO according to chapter XI.1 FZ “On joint-stock companies”
Slightly more than a year ago the order of the FSFM of Russia Came into effect, it has
differentiated powers between the central office of the FSFM of Russia and its regional
branches on examination of documents, presented with a view of acquisition shares of open
joint-stock companies.
Accordingly, there already is a certain period of time during which the Regional branch has
examined of voluntary/obligatory offers, notices/requests for buy-out (hereinafter – offers
on acquisition of shares) of shares in open joint-stock companies submitted to us in order to
realizeу the norms of chapter XI.1 of the Law on Joint-Stock Companies.
During the period since the beginning of 2007 and till February, 2008 the RB of FSFM of
Russia in the CFO received 72 offers on acquisition of shares of open joint-stock companies.
There are 3 160 open joint-stock companies in sphere controlled by the RB FSFM RF in CFO.
Accordingly, it is possible to come to the conclusion that process of mergers under new
rules is not in demand yet.
Obligatory offers on acquisition of shares presented much more often, and it is no wonder
since the duty to present obligatory offer lies with every purchaser of a large share holding
has.
What typical drawbacks have emerged in practice? The main drawback is the discrepancy
between the presented documents to the requirements of the RF legislation. More than 50%
of offers on acquisition of shares received by the RD FSFM RF in the CFO have received
orders to bring them in compliance with the legislation of the Russian Federation.
As a rule, the reason for such errors is simple carelessness in documents preparation, and
absence of due regard for the requirements of operating statutory acts.
The most widespread infringements are:
1. Incomplete set of the documents established by chapter. XI.1 of the law on jointstock companies and Regulations on requirements to the procedure of carrying out certain
actions in relation to acquisition of more than 30 percent of shares in open joint-stock
companies, approved by Order of the FSFM of Russia on 13.07.2006 No. 06-76/pz-n.
For example:
- No inventory of the presented documents is given;
- No report of an independent appraiser is presented, or only notarially certified copy of the
conclusion on market value of securities is presented;
- No document specifying the date of the greatest in price last transaction, for which during
the 6 months before the date of sending obligatory offer to the company the person sending
the obligatory offer or its affiliated persons got or took up the obligation to purchase such
securities, or showing that these persons during the specified term did not get and did not
take up the obligation to purchase the respective issued securities;
- No magnetic carrier containing the texts of the documents is presented.
2. Absence of all obligatory data and conditions in the offers on acquisition of
shares established by chapter XI.1 of the Law on joint-stock companies, for example:
- The place of residence of the physical person sending the offer is not specified;
- The issuer’s code is not shown;
- There is no mail address;
- There is no mention of existing affiliated persons;
- Sections which are not necessary for the given person are filled, and the necessary
sections are not filled;
- The voluntary offer does not specify the date when the validity period of the bank
guarantee begins.
3. Unauthentic information in the documents presented to the RB FSFM RF in the
CFO, for example:
- From the person sending the obligatory offer in respect of affiliated persons;
- Miscalculation of the percentage of securities belonging to the company;
-Technical errors.
4. Violation of the terms to carry out the procedure of sending the offer on
acquisition of the shares established by chapter XI.1 of the Law on joint-stock
companies.
For example, the date for which the list of owners of the purchased securities will be
made, is less than 45 days after the date of sending the request about buy-out to the OAO.
5. Sending obligatory offers in respect of not all securities of OAO according to
item 1 of article 84.2 of the Law on joint-stock companies. Probably, in this case
the persons sending the obligatory offer confuse it with voluntary where the
quantity of purchased shares is shown at the discretion of the person sending
such offer.
6. Violation of the established requirements to bank guarantees.
A) According to articles 84.1, 84.2, 84.7 of the law on joint-stock companies bank
guarantee must have already been given at the moment of sending the offer on purchase of
shares.
B) According to Regulations on requirements to the procedure of carrying out certain actions
in connection with acquisition of more than 30 percent of shares in open joint - stock
companies, approved by Order of the FSFM of Russia on 13.07.2006 No. 06-76/pz-n, bank
guarantee includes:
- The full company name of the guarantor;
- The abbreviated company name of the guarantor (if any);
- AGRN;
- TIN;
- The amount for which the bank guarantee is given or the order of its definition;
- Condition about irrevocability of the bank guarantee;
- Validity period of the bank guarantee or order of its definition.
Consequently, a bank guarantee cannot contain instructions for beneficiaries to present the
documents which are not provided by the law on joint-stock companies. The law on jointstock companies provides for the guarantor’ right to demand from beneficiary only the
documents confirming writing-off of the purchased/bought-out securities from their owner’s
personal account for their further transfer to the personal account of the person who sent
the offer/notice.
C) From the point of view of the РB FSFM RF in the CFO the concept of “bank guarantee”
covers only guarantees issued in compliance with the Russian legislation. According
to article 368 of the Civil Code of the Russian Federation bank guarantee can be issued only
by credit and insurance companies. Credit organizations according to FZ from 02.12.1990
No. 395-1 “On banks and bank activity” are understood as credit organization –legal entity
which has the right to carry out bank operations on the basis of the special permission
(license) of the Central Bank of the Russian Federation in order to derive profit as the main
objective of its activity.
Thus, at the moment bank guarantees issued by foreign banks, that do not have
all permissions necessary to operate as credit organizations on the territory of the
Russian Federation, can not be accepted foe the purposes of chapter XI.1 of the
Law on joint-stock companies.
D) Bank guarantee is not issued for the whole necessary amount.
E) Bank guarantee specifies cancelled state registration numbers of the issues of securities.
7. Violation of the established requirements to the independent appraiser’s report.
According to item 26 of the Federal Appraisal Standard “GENERAL CONCEPTS OF
APPRAISAL, APPROACHES AND REQUIREMENTS TO THE APPRAISAL PROCEDURE (FAS No.
1)”, approved by Order Of the Ministry for Economic Development of Russia on July 20,
2007 No. 256 and coming into effect on September 15, 2007, the total amount value of the
appraisal object specified in the appraiser’s report can be recognized as recommended for a
transaction with the appraised objects if no more than 6 months have passed from the date
when the appraiser’s report was made before the date of the transaction with the appraised
object or the date of presenting the public offer.
According to item 8 of the above standard the date of appraisal (date of carrying out
evaluation, date of value definition) is the date for which the cost of the appraised object
was determined.
If according to the legislation of the Russian Federation it is obligatory to evaluate the
object, then no more than three months may pass from the date of appraisal before the
date of drawing up of the evaluation report, except when the RF legislation provides
otherwise.
8. The text of the offer on shares acquisition contains the evidence of conclusion
of the contract for purchase and sale of shares in the form of a single document.
Here it is necessary to remember, that according to article 84.2 of the Law on joint-stock
companies both voluntary and obligatory offers are public offers. According to article 433 of
the Civil Code of the Russian Federation the contract is deemed to be made at the moment
when the person who sent the offer receives information on its acceptance. According to
article 434 of the Civil Code of the Russian Federation the contract in the cases specified
above is made by exchange of documents, and in this case it is not required to draw up a
contract.
The RB FSFM RF in the CFO according to chapter XI.1 of the Law on joint-stock companies
can carry out the following actions:
1. Sending an order to bring the offer on acquisition of shares in compliance with the
legislation of the Russian Federation.
2. Sending an order to eliminate the violations – obliging the purchaser of a large share
holding to present the offer on purchase of shares.
3. To bring the person which purchased more than 30 percent of shares of an open
joint-stock company to administrative responsibility according item 15.28 of the
Administrative Code of the Russian Federation for violation of the rules of their
acquisition.