Q&A will be updated as significant new information becomes available or relevant events occur
Why has the Company decided to redomicile to Russia?
The Company's redomiciliation process to the Special Administrative Region (“SAR”) on Oktyabrsky Island in the Kaliningrad Region was initiated to overcome the constraints arising from MD Medical Group's existing corporate structure. For example, it is currently impossible to pay dividends. Redomiciliation is expected to help the Company resume dividend payments.
When will the redomiciliation be completed?
The redomiciliation process is to be completed subject to certain regulatory approvals and other consents which may not be reliably obtained within a specific timeframe. Furthermore, possible changes in the applicable laws or regulations and/or external factors may affect the redomiciliation process and the Company's ability to achieve its objectives. If the redomiciliation process proceeds generally in line with the schedule anticipated by the Company, it could be completed in the first half of 2024.
All important developments regarding the redomiciliation will be published on the Company's website.
What are the key stages of the redomiciliation process that the Company still needs to go through in order to be registered in Russia?
After the consent of the Cyprus Registrar of Companies is received, the set of documents for the Company’s state registration in the Russian Federation should be submitted to the management company in the SAR. The SAR management company is to review the documents and submit them to the Bank of Russia to register the Company's share issue and prospectus. Following their registration, the documents will be submitted to the Russian registrar for the purposes of the Company’s state registration in Russia. After that, the Russian registrar starts maintaining the Company's shareholder register, GDRs will be exchanged for the Company's shares on the list of securities publicly traded on the Moscow Exchange, and measures will be taken to complete automatic, standard and forced conversion of GDRs into the Company's shares.
The Company will be publishing information about all the main stages of the redomiciliation process, including those running concurrently, on its official website.
What legal status will the Company receive after its redomiciliation to Russia?
Following state registration in the Russian Federation, MD Medical Group will become International Public Joint-Stock Company MD Medical Group Investments (IPJSC MD Medical Group Investments), registered in the SAR on Oktyabrsky Island, Kaliningrad Region.
Will the Company maintain the current listing of its securities on the Moscow Exchange ("MOEX") after the redomiciliation?
Currently, the Company's GDRs are publicly traded on the Moscow Exchange. On 7 November 2023, the Bank of Russia decided to register the GDR prospectus and admit the Company's shares to public trading in the Russian Federation through the admission of its GDRs. Starting the same date, GDRs received the primary listing status on the Moscow Exchange.
Conversion of GDRs the rights to which are accounted by Russian depositories into shares of MD Medical Group Investments, which will be traded on the Moscow Exchange, is to take place automatically, i.e. without the involvement of GDR holders, in line with Article 5 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023.
If the rights to GDRs are accounted by foreign entities, for the purposes of this conversion, the Company recommends that GDR holders follow either the standard conversion procedure by contacting the depository of the GDR depositary programme or the forced conversion procedure in line with Article 5 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023.
Does the Company consider the option of listing GDRs on alternative stock exchanges?
No, the Company is not currently considering listing GDRs on any alternative stock exchanges.
Why has the Company decided to change the depository of the GDR depositary programme?
In August 2023, the Company completed the procedures for changing the depository of the GDR depositary programme. RCS Issuer Services S.A.R.L. was appointed as the new depositary bank of the GDR depositary programme effective from 8 August 2023. Previously, JPMorgan Chase Bank N.A. performed this function.
The change of the depository can simplify the procedure of standard conversion of GDRs into the Company's shares for GDR holders after the Company's redomiciliation to the Russian Federation.
GDR holders will not be required to take any additional steps regarding the change of the depository.
Will redomiciliation enable the Company to resume dividend payments to its shareholders?
If the redomiciliation process is successfully completed, the Company will be able to resume dividend payments to its shareholders.
Will the Company and/or GDR holders incur any costs associated with redomiciliation?
The Company will incur certain costs associated with this process, including advisory fees, SAR registration, etc.
No costs will be incurred by GDR holders upon automatic conversion of GDRs into the Company’s shares. In case of standard and/or forced conversion of GDRs into the Company's shares, GDR holders may incur certain costs, including those associated with the preparation of conversion-related documents.
What are the tax consequences of redomiciliation for shareholders and GDR holders?
Each of the shareholders and/or GDR holders is strongly encouraged to consider their own tax consequences and to consult with appropriate tax advisors.
Will the Company change its corporate governance?
The Company will continue to adhere to international standards of corporate governance and transparency practices, including, inter alia, independent directors, committees under the Board of Directors, regular disclosures in accordance with the Russian laws, as well as international best practices in corporate governance.
How can investors dispose of the securities after the delisting from the London Stock Exchange?
Until GDRs are converted into shares, for the duration of the GDR programme, these securities outside Russia will only be available for OTC transactions. That said, until the date of the Company's state registration in the Russian Federation, GDRs will continue to be traded on the Moscow Exchange, where the Company's GDRs currently have primary listing.
THE PROCESS OF CONVERTING GDRS INTO THE COMPANY'S SHARES
What will the conversion of GDRs into the Company's shares look like?
Depending on a number of factors, the conversion of GDRs into the Company's shares may be automatic, standard, or forced.
Automatic conversion
Automatic conversion of GDRs into the Company's shares takes place for all depositary accounts opened with Russian depositories where GDR holders' rights to GDRs are recorded. No action is required from GDR holders, regardless of whether they are residents or non-residents of the Russian Federation.
The procedure and terms of automatic conversion of GDRs into the Company’s shares are determined by the Resolution of the Board of Directors of the Bank of Russia On Establishing the Procedure and Timeframe of Automatic Conversion of Foreign Issuers’ Securities Certifying Rights to Shares of Joint-Stock Companies with the Status of an International Company into Shares of Such Joint-Stock Companies dated 15 September 2023.
Standard conversion
As a general rule, GDR holders are entitled to convert GDRs into the Company’s shares following the “standard” procedure, i.e. on the terms set out in the depositary agreement between the Company and the depository of the GDR depository programme. GDR holders are advised to check with their foreign broker and/or foreign depository if standard conversion of GDRs is available to them.
To receive the Company’s shares, GDR holders need to have a securities account opened with the Company's Russian depository / shareholder register or with a foreign depository that has a foreign nominee depositary account with the Russian depository prior to the conversion of GDRs into shares. The Company's shares will be credited to this account upon conversion.
Forced conversion
Under Russian law, if rights to GDRs are recorded in foreign infrastructure (i.e. by a foreign depository) and the GDR holder is unable to receive the Company's shares in the following cases determined by the Russian laws:
- restrictive measures imposed on the GDR holder or its affiliates;
- restrictive measures imposed on international organisations that record the GDR holder's rights;
- unfriendly actions of foreign states, international organisations or foreign financial institutions,
then the forced conversion procedure applies. Herewith the GDR holder must, within 120 days from the date determined by a decision of the Board of Directors of the Bank of Russia, file an application to the Russian registrar (depository) with which a personal account (depositary account) for depositary programmes will be opened in the name of RCS Issuer Services S.A.R.L., for forced conversion of GDRs into the Company's shares, and attach a set of documents, with the list of said documents to be published on the website of the Russian issuer (depository).
Among other things, an application for forced conversion of GDRs into the Company's shares must be accompanied by documents available under the circumstances and evidencing the GDR holder's ownership of the relevant number of GDRs, the validity and legality of the interest of the person applying for forced conversion of GDRs, providing information on the foreign nominee holder keeping records of the holder's rights to the GDRs and superior nominee holders (foreign nominee holders), as well as documents evidencing (confirming) the establishment of the GDR holder's rights to the Company's shares.
The law provides for the right of the depository (registrar) to refuse to open a depositary account (personal account) and credit the relevant number of the Company’s shares if there are reasonable doubts about the completeness and/or reliability of information or if information specified in the application for forced conversion and the documents attached thereto in accordance with Article 5, Clauses 25–25 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023, is insufficient.
Forced conversion is applied to residents and non-residents of the Russian Federation alike.
The procedure and terms of forced conversion will be determined by a decision of the Board of Directors of the Bank of Russia, which has not been adopted yet.
In what case are the Company's shares credited to type C depositary accounts upon conversion?
As a result of the conversion of GDRs into the Company's shares, the Company's shares may be credited to a type C depo account opened with a Russian depository in the name of the GDR holder.
A type C depositary account is a depositary account opened with a Russian depository to record rights to securities with a special legal regime in terms of restrictions on debiting and crediting securities.
Generally, all non-residents of the Russian Federation serviced and accepted for servicing by a Russian depository have type C depositary accounts opened for them, except for non-residents of the Russian Federation who are not foreign lenders in accordance with Clause 1 of Executive Order of the President of the Russian Federation No. 95 On the Temporary Procedure for Meeting Obligations to Certain Foreign Lenders dated 5 March 2022, and non-residents of the Russian Federation who simultaneously meet the requirements of Clause 12, Subclauses "a" and "b” of Executive Order of the
President of the Russian Federation No. 95 On the Temporary Procedure for Meeting Obligations to Certain Foreign Lenders dated 5 March 2022, as well as international organisations named in Clause 1, Subclause "c" of Executive Order of the President of the Russian Federation No. 738 On the Application of Certain Executive Orders of the President of the Russian Federation dated 15 October 2022.
At what ratio will GDRs be converted into the Company’s shares?
Each GDR corresponds to one ordinary share of the Company. This ratio will remain unchanged until the completion of forced conversion.
After conversion, can a foreign holder of GDRs have the Company's shares credited to an account with a foreign broker/depository?
Upon conversion, the Company's shares may only be credited to an account with a Russian depository or registrar (depending on the terms of conversion of GDRs into shares announced by the depository), or with a foreign broker/depository that has a foreign nominee holder's depositary account with a Russian depository or registrar.