Forced (mandatory) conversion of Global Depositary Receipts (GDRs) (2024) of Russia-related companies: Forced conversion of GDRs of VK (VKONTAKTE)
As it was analyzed in our notice regarding forced (mandatory) conversion of Global Depositary Receipts (GDRs) in 2024, forced conversion for the companies, which have re-domiciled to Russia, is already possible meaning that the holders of the GDRs can get a chance to finally convert their GDRs into shares.
We would like to provide basic information regarding forced conversion of VK (VKONTAKTE), which was one of the first companies decided to change its place of incorporation – on September 26, 2023 VK was registered in Kaliningrad Region of the Russian Federation as VK International Public Joint-Stock Company (“VK IPJSC”) and appointed Joint Stock Company Interregional Registration Center (“MRZ”) as the register-keeper (Registrar).
VK announced that forced conversion will start before 26.09.2024, but there is still no certain date – however, the Registrar at the latest of 3 business days prior to the starting date of the conversion shall disclose it in accordance with the Russian legislation. When the date is disclosed, the holders will have 120 days to apply for forced conversion of VK GDRs into shares to the Registrar and provide certain documents. In case of VK the current list of the documents is already published by the Registrar and includes the following (for the holders–natural persons):
- application for forced conversion, which shall include various information about the holder of GDRs, such as: full name of the holder, ISIN and the number of GDRs, details of encumbrances/restrictions of the disposal of GDRs (if exist), information about the foreign nominee holder and the superior nominee holders, representations of the holder about trustworthiness of data indicated in the application, etc. – notarized and apostilled application containing the original signature of the holder;
- notarized and apostilled copy of passport/ID-card of the holder with the notarized translation into Russian (details of the provided document shall be equal to the details in the application);
- document confirming the number of GDRs being held by the holder as of the date that is the closest to the application submission date, but not earlier then 26.09.2023 (date of re-domiciliation of VK to Russia) – an original made on the letterhead of the foreign nominee holder (your broker, where you keep GDRs), signed by its authorized representative, whose signature authenticity is notarized;
- documents confirming that the holder cannot receive shares due to the restrictive measures or unfriendly actions of foreign states, international organizations, etc. – demands to the documents depend on their forms;
- document on the foreign nominee holder keeping records of the holder’s rights to the GDRs (your broker, where you keep GDRs) and on superior nominee holders containing an unambiguous identifier of each nominee (so-called ‘custody chain’) – an original signed by the authorized representative of the foreign nominee holder on its letterhead;
- notarized and apostilled power of attorney with the notarized translation into Russian to our representative;
- documents confirming payment for services of the Registrar, etc.
Please be informed that this list contains only basic information for the holders-natural persons in accordance with the details provided by the Registrar as of 24.05.2024 and in each case the additional analysis of the required documents is necessary.
You should provide the relevant documents available in the current circumstances, but, according to our experience, the approach of the registrar will be strictly formal and only those who provide comprehensive set of documents meeting maximum formalities will succeed. The additional documents may also be requested by the Registrar.
If the documents are filed within 120 days from the opening date, the Registrar will have 20 working days to analyze them and either to satisfy the application or to reject it.
If the Registrar decides to satisfy the application, it shall open the personal account for the holder and credit the relevant number of VK shares to it within 30 working days after the expiration of the above-mentioned term of 120 days. The successful conversion will give the holder a right to receive future dividends of VK.
You can find more information on DR conversion on our special page.