RUSSIAN INTELLIGENCE-RELATED LEGAL DOCUMENTS


Concerning Measures on Formation of an All-Russian Telecommunications System and Guaranteeing the Rights of Proprietors in Protection of Securities on the Stock Market of the Russian Federation

Legislative Act by Russian President Boris Yeltsin
3 July 1995
No 662

For purposes of setting up an all-Russian telecommunications system to serve federal agencies of state authority, agencies of state authority of subjects of the Russian Federation, agencies of local autonomy and subjects of entrepreneurial operations of all forms of property, bringing about conditions for operation of an electronic system for financial settlements, forming the infrastructure of the stock market of the Russian Federation, and ensuring protection of the property rights of securities, I hereby:

1. Do establish that the following are immediate tasks of state policy in the area of formation of a modern market structure:

creating organizational-technical conditions and the technological system of telecommunications service to federal agencies of state authority, agencies of state authority of subjects of the Russian Federation, agencies of local autonomy and subjects of entrepreneurial operations of all forms of property in effecting financial settlements and operations on the securities market;

formation of unified standards for carrying out and recording operations on the financial market of the Russian Federation, including on the securities market, that guarantee privacy of business deals, protection of information, consideration for and security of the rights of owners, and also state and public enforcement of antimonopolistic legislation of the Russian Federation;

formation of scientific-production complexes on developing and producing domestic communications equipment and systems with the use of the latest advances in science and world experience;

recruiting Russian and foreign investors in the creation and development of the all-Russian telecommunications system;

providing state monitoring of the activity of the all- Russian telecommunications system.

2. For purposes of protecting the rights of investors, including shareholders, do acknowledge that in accordance with legislation of the Russian Federation:

securities being kept in depositaries and depositary- clearing organizations, as well as at nominal holders, shall be entered in accounts relating to property of others separately from the actual holdings of these organizations, and cannot be included as part of the receivership in bankruptcy proceedings;

in taxation of securities operations, specialized depositary and depositary-clearing organizations, as well as nominal holders of securities, cannot be considered the owners of the securities of clients, or of the income accruing from these securities, and accordingly may not be taxed for operations involving clients' securities, nor for the profit in the part formed as a result of capital gains with respect to clients' securities;

specialized depositary and depositary-clearing organizations, including those that are nominal holders of securities of their clients, have no right to make deals with their clients' securities that involve dispossession and encumbrance with pledges of these securities;

denying a shareholder or his commissioned nominal securities holder entry in the shareholders' register is invalid, does not curtail or limit the rights of the shareholder, and may be appealed by established procedure;

the responsibility for violation of antimonopolistic laws of the Russian Federation as they relate to restrictions on the acquisition or ownership of securities is borne by the owners of these securities. Specialized depositary and depositary-clearing organizations, as well as the nominal holders of securities have no right to monitor observance of antimonopolistic laws of the Russian Federation by their clients.

3. Do resolve that the Government of the Russian Federation within a month shall:

provide a schedule of steps on bringing procedures against the keepers of registers who violate requirements for maintaining the register of shareholders that are established by laws of the Russian Federation, including those who deny to shareholders or to nominal holders of securities with their power of attorney inclusion in the register of shareholders;

adjust acts of the Finance Ministry of the Russian Federation and the State Tax Service of the Russian Federation to accord with the Law of the RSFSR "Concerning Tax for Securities Operations" for purposes of precluding double taxation of the income of investors from capital gains, and also bearing in mind that the operations of depositary and depositary-clearing organizations and nominal holders of securities with respect to safekeeping of securities, accounting for them and transferring them in the course of completing securities deals do not incur property rights in relation to these securities, and cannot be added to securities operations in accordance with laws of the Russian Federation concerning taxation of securities operations.
4. Do uphold the proposal of the State Committee of the Russian Federation on State Property Management and of enterprises that develop and produce communications systems regarding setting up a financial-industrial group: the Information Technologies Open Joint-Stock Company based on privatized state enterprises and other organizations to be listed in an addendum.

Do resolve that the Government of the Russian Federation within a month shall:

solve in accordance with established procedures the problems of privatizing the state enterprises listed in the addendum to this Decree, and incorporating into that privatization the addition of packages of shares to the authorized capital of the Information Technologies Company;

approve founding documents of the Information Technologies Joint-Stock Company and the makeup of its managerial agencies.

5. Do consent to the proposal made by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation, the Fund of Presidential Programs, the Communications Ministry of the Russian Federation and the Federal Agency of Governmental Communications and Information affiliated with the President of the Russian Federation concerning cooperation with Russian financial and investment institutes in setting up a Russian Financial and Stock Communications Fund (hereinafter referred to as the Fund) as a not-for-profit organization providing telecommunications service to participants in the financial and stock markets of the Russian Federation.

Do establish that:

the main task of the Fund is to offer communications services to financial agencies of state authority, agencies of state authority of subjects of the Russian Federation, agencies of local autonomy and subjects of entrepreneurial activity in effecting financial operations, including monetary settlements for deals, carrying out operations on the securities market, and also on exchange of information on conditions of privacy, payment and responsibility to clients;

monies accruing to the Fund from service to federal agencies of state authority, agencies of state authority of subjects of the Russian Federation, agencies of local autonomy and subjects of entrepreneurial activity shall be applied to support the tasks of the Fund and develop the all-Russian telecommunications system.

Do approve the attached makeup of the organizational committee of the Fund.

Do resolve that the organizational committee shall within a month hold talks with Russian financial and investment institutes on their participation in the fund, prepare and present to the Government of the Russian Federation a draft of the charter of the Fund.

6. Do resolve that the Government of the Russian Federation within two months shall:

solve the necessary problems associated with establishing the Fund and approving its charter;

grant as a founding contribution to the authorized capital of the Fund the Atlas-2 data transmission system, site No 10 with building under construction on Vernadskiy Prospect in the city of Moscow, and the lease rights to some main and outlying communications networks;

support presentation of proposals by cofounders of the Fund on setting up a trusteeship for the Fund.

7. Do consent to the proposal made by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation, the Fund of Presidential Programs, the Communications Ministry of the Russian Federation and the Federal Agency of Governmental Communications and Information affiliated with the President of the Russian Federation concerning cooperation with Russian financial and investment institutes in setting up a Central Fund for Storing and Processing Stock Market Information (hereinafter termed the Central Fund) as a not- for-profit organization for accounting and storage of public information regarding financial operations and securities deals, as well as copies of regulatory documents and the mandatory reports of securities issuers.

Do establish that:

the basic tasks of the Central Fund are to ensure integrity of public information concerning property rights for securities, volumes and prices of deals on the securities market, copies of regulatory documents and the mandatory reports of securities issuers, to offer such information to federal agencies of state authority, agencies of state authority of subjects of the Russian Federation and agencies of local autonomy, and for a fee to subjects of entrepreneurial operations of all forms of property and to investors, including for subsequent presentation in a court of law as proof of property rights, and also to provide services on keeping securities certificates;

monies accruing to the Central Fund shall be applied to support the tasks of the Central Fund and develop the system for accounting and storage of information.

Do resolve that the Government of the Russian Federation shall solve the necessary problems associated with establishing the Central Fund and approving its regulatory documents, as well as contributing the necessary property to the authorized capital of the Central Fund, including a switching node under construction in the town of Dubna, Tula Oblast.

8. Do accept the proposal of the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation concerning cooperation with interested federal agencies of executive authority and the agencies of executive authority of subjects of the Russian Federation in setting up a center for protection of commercial information whose primary task would be enforcement of protection of confidential commercial information being transferred over channels of the Fund, as well as the integrity and reliability of information processed and stored in the Central fund.

9. Do resolve to approve operations of the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation concerning setting up a unified all-Russian system of billing, clearing and storing securities and recruiting for participation in the venture Russian and foreign banking and non-banking organizations, including the Savings Bank of the Russian Federation.

10. Do resolve that the Government of the Russian Federation shall route some proceeds of privatized loans of the International Bank of Reconstruction and Development, and of the European Bank of Reconstruction and Development that were offered in 1993 to development of a unified all- Russian system of settlement, clearing and storage of securities in the Russian Federation by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation.

11. Do resolve that the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation shall take steps to attract funding by international financial organizations and foreign technical assistance for development of depositary, depositary-clearing and depositary-accounting organizations.

Do resolve that the State Committee of the Russian Federation on management of State Property, and the Russian Fund of Federal Property shall, by agreement with the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation, determine within two months a procedure for transferring shares of joint-stock companies that are in federal possession into storage in depositary clearing organizations duly licensed by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation.

12. Do resolve that the Central Bank of the Russian Federation shall, at the request of depositary, depositary- clearing and depositary-accounting organizations, ensure opening of accounts in billing centers of the Central Bank of the Russian Federation in accordance with established procedures.

13. Do establish that monies of the specialized budget fund for financing development of the securities market set up by Decree No 478 of the President of the Russian Federation dating from 11 May 1995 "Concerning Enforcement of Guaranteed Income to the Federal Budget From Proceeds of Privatization" shall be managed by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation in accordance with a procedure approved by the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation.

14. Do resolve that the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation shall:

within a month approve the content and procedure of representing and processing public information concerning deals on the securities market and also, with the participation of the Central Bank of the Russian Federation, present the draft of a decree of the President of the Russian Federation concerning organization of payments relating to operations on the securities market with provision for the capability of converting different currencies in the payment process, and certifying organizations, including banks, that handle settlements on the securities market;

in the course of 1995 provide for introducing identification numbers of securities in accordance with international standards, and adoption of standard depositary, depositary-clearing and depositary-accounting operations.
Do establish that decisions of the Federal Commission on Securities and the Stock Market affiliated with the Government of the Russian Federation published within its purview shall go into effect from the day of their official publication without further registration.

15. Do resolve that the Ministry of Communications of the Russian Federation and the Federal Agency of Governmental Communications and Information affiliated with the President of the Russian Federation shall allocate the necessary communications channels in accordance with established procedures to the Fund, the Central Fund, and also the Maritime Central Depositary.

Do resolve that the Federal Agency of Governmental Communications and Information affiliated with the President of the Russian Federation shall provide service of networks and lines being transferred to the Fund for a fee on a temporary basis until 1 January 1997.

16. This Decree goes into effect from the day of its publication.

President of the Russian Federation Boris Yeltsin Moscow, the Kremlin
3 July 1995
No 662.