Issuers, while exercising their right not to disclose sanctions-sensitive information, should also take into account the risks arising therefrom for investors. The relevant recommendation is contained in the information letter of the Bank of Russia dated June 14.

Shortly after the introduction of tough anti-Russian sanctions in connection with the events in Ukraine, the Russian government issued a decree authorizing issuers not to disclose partially or fully their financial statements and information on the issue of securities, if this would risk sanctions for them or their counterparties. The new disclosure procedure will be in effect until December 31, 2022, and it applies to legal relations arising from January 1, 2019.

In practice, this norm is sometimes applied in situations where sanctions risks are hardly traceable. For example, Rusnano, whose financial problems became the center of attention on the debt market at the end of last year, since March has stopped disclosing information on coupon payments on all bond issues in material facts, citing a government decree.

The Central Bank in its letter recommends issuers and insiders “to use the granted right to restrict disclosure and (or) provision of information taking into account the specific circumstances of the issuer’s activities, the possibility of negative consequences in connection with the restriction of information disclosure, in particular, the emergence of possible risks associated with the lack of information necessary for investors to make an investment decision.”

“Special attention should be paid to the assessment of the risk of non-disclosure of information related to the exercise of rights on securities, for example, on the date on which the persons entitled to exercise rights on the issuer’s securities are determined (fixed), or on accrued (announced) and (or) paid income on the issuer’s securities. as well as information that may affect the conduct of organized trading in the issuer’s securities, for example, on the upcoming early redemption of securities, on the issuer’s conclusion of an agreement on novation or the provision of compensation, resulting in the termination of obligations under the issuer’s bonds,” the regulator notes.

Investors are advised by the Central Bank to take into account the fact that the issuer may have disclosed limited information, as well as the risk that information that could have a significant impact on the quotations of securities and on decision-making is not disclosed.