Updated on 28 May 2024
Q&A will be further 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.
What are the key stages of the redomiciliation process that the Company still needs to go through in order to be registered in Russia?
MD Medical Group has obtained a permission from the Cyprus Registrar of Companies to continue its operations outside the Republic of Cyprus and on 28 May 2024 the Company has finalized its state registration in the Special Administrative Region (“SAR”) on Oktyabrsky Island in Russia's Kaliningrad Region as an International Public Joint-Stock Company MD Medical Group Investments (the short name: MD Medical Group IPJSC).
Since 23 May 2024 trading in the Company's Global Depositary Receipts ("GDRs") on the Moscow Exchange has been suspendedstarting from 23 May 2024. On the next day after the state registration of IJPSC, the GDRs will be exchanged for the IPJSC shares on the list of securities publicly traded on the Moscow Exchange, with trading in the IPJSC shares resuming on the Moscow Exchange after completion of the automatic conversion of GDRs into the IPJSC shares, which may take up to 15 business days from the date of state registration of IPJSC.
After the state registration of IPJSC, the Company is obliged, in accordance with Article 5, Part 2 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023, to send to RCS Issuer Services S.AR.L. a notice of termination of the depositary agreement in respect of GDRs. This move will have the effect of terminating the GDR programme.
After the state registration of IPJSC, the Russian registrar starts maintaining the IPJSC shareholder register, with measures taken to complete automatic and forced conversion of GDRs into the IPJSC shares.
The Company will disclose all the main stages of its state registration in the Russian Federation, as well as the procedures for conversion of GDRs into the IPJSC shares, on the Company's website.
What legal status has the Company received after its redomiciliation to Russia?
Following state registration in the Russian Federation, MD Medical Group has 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 after the redomiciliation?
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. Currently, the Company's GDRs are suspended in trading on the Moscow Exchange.
In accordance with Article 5, Part 5 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023, after the date of state registration of IPJSC in the Russian Federation, the Moscow Exchange will exchange the GDRs for the IPJSC shares on the list of securities publicly traded on the Moscow Exchange; after that, the IPJSC shares will be admitted to public trading instead of the GDRs.
At the same time, the Company would like to note that after the state registration of IPJSC in the Russian Federation all GDRs with the rights of their holders registered with Russian depositories will be automatically converted into the IPJSC shares. Such conversion will take place without the involvement of GDR holders in accordance with Article 5, parts 15–19 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023 and the Resolution of the Board of Directors of the Bank of Russia dated 15 September 2023.
If the rights of GDR holders to GDRs are recorded by foreign entities, for the purposes of this conversion of GDRs into the IPJSC shares, the Company recommends that GDR holders follow either the standard GDR conversion procedure by contacting the depository of the GDR depositary programme or the forced conversion procedure in line with Article 5, parts 20–26 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023 and the Resolution of the Board of Directors of the Bank of Russia dated 12 April 2024.
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 before and 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.
After the state registration of IPJSC, the Company is obliged, in accordance with Article 5, Part 2 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023, to send to RCS Issuer Services S.AR.L. a notice of termination of the depositary agreement in respect of GDRs. This move will have the effect of terminating the GDR programme.
Who will be the register holder of MD Medical Group?
The Company has appointed Interregional Registration Centre ("IRC") as its register holder (registrar). Contacts of IRC: email: info@mrz.ru, phone: +7 495 234 4470, website: https://mrz.ru/en/.
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.
At the same time, by virtue of Article 5, Part 4, Clause 2 of Federal Law No. 452-FZ On Amendments to Certain Legislative Acts of the Russian Federation dated 4 August 2023, a GDR holder will be able to receive dividend payments only upon conversion of its GDRs into the IPJSC shares as part of automatic, standard, or compulsory GDR conversion procedures.
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 IPJSC’s shares. In case of standard and/or forced conversion of GDRs into the IPJSC'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 were only available for OTC transactions. On 23 May 2024 the Moscow Exchange suspended GDRs trading till the process of automatic conversion is finalized. After that, the shares of IPJSC will be traded on the Moscow Exchange.
THE PROCESS OF CONVERTING GDRS INTO THE IPJSC SHARES
What will the conversion of GDRs into the IPJSC shares look like?
Depending on a number of factors, the conversion of GDRs into the IPJSC shares may be automatic, standard, or forced.
Automatic conversion
Automatic conversion of GDRs into the IPJSC 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 IPJSC 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.
The automatic conversion procedure will roughly last 15 business days from the date of state registration of IPJSC.
Standard conversion
As a general rule, GDR holders with ISIN US55279C2008 who have received no ordinary shares of IPJSC as a result of automatic conversion are entitled to convert GDRs into the IPJSC 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 depositary programme. GDR holders are advised to check availability of standard GDR conversion to them with the depository, RCS Issuer Services S.AR.L., at DRConversions@rcsgroup.lu and on its website MD Medical Group Investments PLC — DR Directory (rcsgroup.lu), or with their broker and/or custodian.
To receive the IPJSC shares, GDR holders need to have a personal account in the IPJSC shareholder register with IRC prior to converting GDRs into shares. The IPJSC shares will be credited to this personal account upon conversion. Such account must be opened in the name of the beneficial owner of the shares rather than their broker or custodian.
For further transfer of securities from the owner's personal account with the registrar for subsequent transactions with them, shareholders may independently open a brokerage account with a Russian broker.
Pursuant to Article 5 of Federal Law No. 452-FZ dated 4 August 2023, GDR holders entitled to participate in this type of conversion are determined as at the date of the Company's state registration, except as otherwise provided for by Federal Law No. 452-FZ.
See the Appendix for guidelines on contractual (standard) 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 IPJSC 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. In line with the procedure, the GDR holder may, within 120 days from the starting date of the period for submitting applications for forced conversion, submit an application for forced conversion of securities of a foreign issuer into shares of an international company, with a set of supporting documents attached (see the relevant list on the website of the Company or Interregional Registration Centre), to the register holder with whom the personal account of depositary programmes for recording rights to shares of an international company has been opened (in the case of MD Medical Group, this is Interregional Registration Centre from the time of state registration of IPJSC).
The procedure and terms of forced conversion of GDRs into the IPJSC shares are determined by the Resolution of the Board of Directors of the Bank of Russia On Establishing the Procedure and Timeframe of Forced 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 12 April 2024.
Information on the starting date of the period for accepting applications for forced conversion of GDRs into the IPJSC shares by Interregional Registration Centre will be posted on the official websites of Interregional Registration Centre and IPJSC. According to the above Resolution of the Board of Directors of the Bank of Russia dated 12 April 2024, the starting date of the period for submitting applications for forced conversion will be determined by IPJSC at its own discretion, provided that such date may not be earlier than 60 days or later than one year from the date of state registration of IPJSC.
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 registrar to refuse to open a personal account and credit the relevant number of the IPJSC 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 forced conversion takes place roughly within 160 days from the starting date of the period for submitting forced conversion applications.
In what case are the IPJSC shares credited to type C depositary accounts upon conversion?
As a result of the conversion of GDRs into the IPJSC shares, the IPJSC 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 who are not foreign companies recording rights to securities 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 IPJSC shares?
Each GDR corresponds to one ordinary share of IPJCS. This ratio will remain unchanged until the completion of forced conversion.
After conversion, can a foreign holder of GDRs have the IPJSC shares credited to an account with a foreign broker/depository?
As a result of standard or forced conversion, the Company's shares are credited to the owner's personal account in the Company's shareholder register, after which the owner will be able to transfer them to a nominee holder. Following that, the IPJSC shares may only be recorded on an account with a Russian depository or with a foreign broker/depository that has a foreign nominee holder's depositary account with a Russian depository.