As at December 31, 2014, the Company’s share capital amounted to RUB 7,280,089 (nominal), 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 has neither convertible securities, exchangeable securities, nor securities with warrants.
As of the end of 2014, the Company was also authorised to issue 2,613,935,751 additional 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, 2014, Rostelecom held 6.14% of its ordinary and 13.69% of preferred shares as treasuries. The treasury shares were acquired by the Company in 2014 as a result of the statutory share buy back as part of the reorganisation process, during which the mobile assets were spun off into a subsidiary company, CJSC RT-Mobile, and then transferred to the JV with Tele2 Russia. In addition, Mobitel, Rostelecom’s subsidiary, held 13.99% of the ordinary shares and 26.57% of the preferred shares initially acquired by Rostelecom in 2013. This was a result of the statutory share buy-back procedures during the merger with OJSC Svyazinvest, which were then contributed to Mobitel.
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 of ordinary shares or securities convertible into ordinary shares by open subscription that constitutes more than 25% of the total number of ordinary shares in issuance, requires a three-quarters majority vote at a shareholders’ meeting.
The following table sets out the shareholder ownership structure of ordinary and preferred shares, as of December 31, 2014.
Shareholder structure as of December 31, 2014
|Shareholders||Total Equity Capital||Ordinary Shares||Preferred Shares|
|Number of shares||%||Number of shares||%||Number of shares||%|
|The Russian State through|
|Federal Agency For State Property Management (FASPM)||1,254,189,564||43.07%||1,254,189,564||46.99%||0||0.00%|
|State Corporation "Bank for Development and Foreign Economic Affairs" (VEB) ||110,360,758||3.79%||110,360,758||4.13%||0||0.00%|
|LLC Mobitel ||437,936,342||15.04%||373,416,997||13.99%||64,519,345||26.57%|
|Rostelecom (treasury shares)||197,107,264||6.77%||163,854,908||6.14%||33,252,356||13.69%|
|Other shareholders ||912 441 842||31.33%||767 382 074||28.75%||145 059 768||59.74%|
The Company is controlled by the Russian State, which holds 51.12% of the Company’s ordinary shares through VEB and FASPM. On April 1, 2014, FASPM and VEB entered into a shareholders' agreement on the management and voting of Rostelecom shares. According to the agreement, FASPM has the right to provide VEB with binding instructions regarding how it exercises its shareholder rights with respect to Rostelecom shares. The agreement will expire on December 31, 2016.
Russian law, including the Joint Stock Companies Law and corporate governance requirements applicable to companies listed on the Russian stock exchanges, provide certain protections to minority shareholders.
For instance, certain corporate actions require supermajority shareholder approvals. In cases when the decision is made by supermajority, dissenting shareholders (including shareholders who voted against a resolution or abstained from voting) are entitled to demand the Company to buy-back their shares. In addition, companies are required to obtain the approval of non-interested shareholders for certain transactions with interested parties and shareholders owning not less than 1% of the company’s stock can claim damages caused by the company’s managers or directors. Furthermore, since the Company’s shares are listed on the Moscow Exchange, Rostelecom is required to comply with a number of corporate governance standards which provide additional protection to all its shareholders. However, if the interests of minority shareholders conflict with those of its other shareholders, 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 minority shareholders’ interests.
None of the Company’s shareholders have voting rights that are different from any other shareholders.
Each shareholder of the Company has an obligation under Russian law to notify the Company and the Central Bank of the Russian Federation in writing about (i) an acquisition of 5% or more of the ordinary shares, and (ii) any circumstances which results in a change in the number of such shares above/below the 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% or 95% thresholds. However, since the obligation to notify about such acquisitions or disposals lies with Rostelecom shareholders, the Company’s ability to know whether this information is up-to-date or accurate depends on shareholders’ compliance with the regulation.
The Company’s ordinary and preferred shares are listed on the Moscow Exchange under the tickers ‘RTKM’ and ‘RTKMP’, respectively, and both are included in the Level 1 quotation list. Rostelecom ordinary and preferred shares are included in the MICEX Index, the MICEX Telecoms Index, MSCI Russia, MSCI Russia 10/40 and Market Vectors Russia.
American Depositary Receipt (ADR) programme
Rostelecom has had an ADR programme for its ordinary shares since February 1998. Each ADR represents six ordinary shares. JPMorgan Chase Bank is the Depositary Bank responsible for administering the sponsored ADRs, with Sberbank of Russia acting as Custodian.
ADRs are traded over-the-counter in the United States on the OTCQX under the ticker ‘ROSYY’ and on the London, Frankfurt and other foreign stock exchanges (without being listed on these exchanges). As at December 31, 2014, 11.2 million ADRs were outstanding representing 2.5% of the total number of underlying ordinary shares.
Both ordinary shares and preferred shares grant equal rights to shareholders of each respective category.
As required by the Joint Stock Companies Law and the Company’s Charter, all ordinary shares grant identical rights to each holder. Each fully paid ordinary share, except for certain circumstances expressly provided for by law (e.g. when a shareholder acquires shares in excess of a certain threshold and is therefore required to make a mandatory offer to purchase shares of other shareholders), gives its holder the right to:
- transfer such ordinary shares freely without the consent of other shareholders;
- participate in the Company’s management as provided by the Joint Stock Companies Law and the Company’s Charter;
- participate in the Annual General Shareholders’ Meeting (“AGM”) and vote on all matters within the shareholders’ competence, including through a nominated representative;
- receive dividends in accordance with the Joint Stock Companies Law and the Company’s Charter if the AGM resolves to pay such dividends (always subject to the Board of Directors’ recommendation);
- upon the Company’s liquidation, receive a proportionate amount of the Company’s property after the Company’s liabilities are discharged;
- demand that the Company buys back some or all of their shares if the holder votes against a resolution or abstains from voting on matters relating to:
- any reorganisation;
- entering into a major transaction, as defined by the Joint Stock Companies Law; and
- amending the Company’s Charter or approving a new addition to the Company’s Charter that limits shareholder rights;
- exercise statutory pre-emption rights to acquire ordinary shares in accordance with the applicable Russian law;
- have access to certain Company documents, receive copies for a reasonable fee and, if holding 25% or more of the voting shares either individually or jointly with other shareholders, have free access to accounting documents;
- file a lawsuit against a Director or any member of the Company’s executive bodies (including the Chief Executive Officer) to reimburse damages caused by Rostelecom’s own negligence (applicable if a shareholder owns 1% or more of the voting shares either individually or jointly with other shareholders);
- obtain a list of persons entitled to participate in the general shareholders’ meeting if holding, individually or jointly with other shareholders, not less than 1% of the Company’s voting shares;
- propose matters for the AGM agenda and nominate candidates to the Board of Directors, the Audit Commission, the Nominations Committee and a candidate for the position of President not later than 60 days after the end of the relevant financial year (if holding, individually or jointly with other shareholders, not less than 2% of the Company’s voting shares);
- demand that the Board of Directors call an Extraordinary General Meeting of Shareholders (“EGM”) or an unscheduled audit of the Company by the Audit Commission or an independent auditor if holding, individually or jointly with other shareholders, not less than 10% of the Company’s voting shares;
- exercise other shareholder rights provided by the Company’s Charter, under Russian law or by the decisions of an AGM.
Preferred shares (or type A preferred shares)
Preferred shares generally confer on their holders the following principal rights:
- to receive a fixed dividend, except in certain cases envisaged by the Joint Stock Companies Law and the Company’s Charter; and
- to enjoy preference over ordinary shares in any distribution of profits and any proceeds in case of liquidation.
While there are no limits on admission of shareholders to shareholders’ meetings, in accordance with Rostelecom’s Charter and the Joint Stock Companies Law, only holders of ordinary shares have voting rights. The preferred shares confer no voting rights unless the Company’s Charter and the Joint Stock Companies Law states otherwise. Holders of preferred shares are entitled to vote on:
- the adoption of amendments to the Charter that would adversely affect their rights as preferred shareholders, including: the issuance of any other type of preferred shares that would enjoy a priority in terms of rights to receive dividends or a preference in respect of liquidation value; amendments to the formula for calculating dividends and/or the liquidation value attached to the preferred shares; or
- reorganisation or liquidation.
They may also vote at shareholders’ meetings following a shareholders’ meeting at which a decision was adopted not to pay dividends on preferred shares or to pay them only in part. The right to vote on this matter continues until the dividends to which the holders of preferred shares are entitled are paid in full.
Holders of ordinary and preferred shares may:
- freely transfer their shares without the consent of other shareholders;
- participate in the distribution of the Company’s net profits in the form of dividends (see “Dividend Policy”) and in the distribution of the Company’s assets in the event of liquidation;
- enjoy the right of first refusal in respect of additional shares being placed by Rostelecom through an open subscription and, in certain circumstances, by way of a closed subscription; and
- have access to certain company documents, receive copies for a reasonable fee and, if holding 25% or more of the voting stock either individually or with other holders, have access to accounting documents and minutes of the management board meetings.
Rostelecom shareholders may also exercise other rights provided by Russian law and the Company’s Charter.
Controlled by the
 The Company owns 99.9% of the share capital of LLC Mobitel.
 Shareholders that own less than 2% of Company's share capital.