2013

Essential recent and upcoming changes in the Russian securities laws

9, Vozdvizhenka Str. Moscow 119019 Russia tel. +7 (495) 122 05 17 www.lecap.ru lecap@lecap.ru

9, Vozdvizhenka Str. Moscow 119019 Russia tel. +7 (495) 122 05 17 www.lecap.ru lecap@lecap.ru

Early redemption of the notes

Noteholders will be entitled to claim early redemption of the notes by the issuer even when such provisions are missing in the offering documents. The early redemption shall arise in respect of:

1) the accrued interest on the notes, when such interest is overdue in excess of 10 business days or of such other shorter period which might be set up in the decision on the issue of the notes;

2) (if the nominal value of the notes is paid by instalments) the part of the nominal value of the notes which is overdue in excess of 10 business days or of such other shorter period which might be set up in the decision on the issue of the notes;

3) (if the issuer is obliged to purchase the notes) the notes which have not been purchased within 10 business days after the due date or within such other shorter period which might be set up in the decision on the issue of the notes;

4) collateral which is provided over the notes, where such collateral has been lost or significantly deteriorated.

The noteholders are entitled to claim early redemption of the notes until the issuer discloses the information that the default giving ground to redemption has been eliminated. The issuer shall redeem the notes within 7 business days upon the receipt of the noteholder’s request.

As of 1 July 2014

Our team’s recent experience in capital markets

2

Advising Promsvyazbank, OJSC

(originator) and VTB Capital, CJSC

(arranger) on securitisation of the Bank’s

pool of mortgage loans (including

transaction structuring, setting up the

mortgage agent, drafting issuance

documents, rendering Legal Opinion to

support the assignment of credit rating by

Moody’s)

Advising

VTB Capital Finance

on registration of issues

of RUB 25bn.

structured notes

(2012 - 2013)

Advising

ING Commercial

Banking, the issuer, on

the registration of the

program of RUB 15bn.

floating rate bonds

Advising

Volkswagen Bank RUS LLC

on the registration of its debut

Russian bonds program

(including security structuring,

and rendering Legal Opinion to

support the assignment of A-

credit rating by S&P)

As of 1 July 2014

New regulation on the noteholders’ representative and collective enforcement of noteholders’ rights comes into effect

As of 1 July 2014 As of 1 July 2016

MEETING OF THE NOTEHOLDERS

The issuer shall be obliged to convene the meeting of the noteholders upon request of the noteholders holding not less than 10 per cent of the aggregate amount of the then outstanding notes (in relation to a single issue), except for the cases where the issuer declines such a request of the noteholders on the “sufficient basis” (however the law does not provide for a specific list of such grounds for refusal).

As a general rule, the issuer shall bear the costs relating to the preparation of and holding the meeting of the noteholders.

At the meeting the noteholders may decide on the matters provided for in the Federal Law “On the Securities Market”, including on giving consent to amending issuance documents related to the scope and the use of their rights under the notes.

The resolutions which will be passed at the general meeting of the noteholders will be binding on all noteholders including those who have voted against the resolution or have not voted.

NOTEHOLDERS MAY APPOINT THEIR REPRESENTATIVE

At the meeting the noteholders may appoint the noteholders’ representative.

The noteholders’ representative acts on behalf of all noteholders including those who have voted against its appointment or have not voted.

The Federal Law imposes certain obligations on the noteholders’ representative (e.g., an obligation to determine the existence of circumstances which may affect the noteholders’ rights) and grants certain statutory powers to it (e.g., a right to attend (without vote) the general meeting of the shareholders of the issuer).

The issuer shall remunerate the noteholders’ representative as per an agreement which is entered into by and between the issuer and the noteholders' representative.

THE ISSUER MUST APPOINT THE REPRESENTATIVE OF THE NOTEHOLDERS

The issuer will be obliged to appoint the noteholders' representative:

1) (with respect to new issues) in case the notes are publicly offered or privately sold to more than 500 investors, excluding qualified investors;

2) (with respect to previously sold notes and new issues) in case the notes are admitted to stock on a regulated market, except for the notes offered solely to qualified investors (if such an offering occurs after 1 July 2016).

Where a noteholders’ representative has not been appointed at the notes placement, the issuer shall appoint such representative subject to further approval thereof by the resolution of the meeting of the noteholders.

The meeting of the noteholders may at any time appoint another representative and this representative may as well substitute the one previously appointed by the issuer or elected by the meeting of the noteholders.

NOW: Where the income is paid on securities which are registered in a depositary account of a foreign nominee, or of a depositary program account, or of a foreign authorised holder, the income tax shall be calculated and withheld by the depositary, acting as the tax agent, based on the consolidated information submitted by the holders of these accounts, including the information on the countries of tax residence.

As of 1 January 2014

Advising

RESO-Leasing, OJSC,

the issuer,

on the issue of

RUB 2.5bn. bonds

Taxation

NEW: Foreign entities acting in the interests of third parties may clarify the consolidated information within 25 business days in order to have the withheld tax adjusted either by reducing or by increasing the tax amount.

The depositary, acting as the tax agent, shall calculate and withhold the income tax on the interest paid on the Russian government securities, Russian region securities and municipal securities registered in a depositary account of a foreign nominee holder, a foreign authorised holder and (or) a depositary program.

The depositary shall not be obliged to calculate and withhold the income tax if a foreign nominee (authorised) holder of securities fails to submit or submits false or incomplete information necessary for calculating and withholding the tax.

The depositary, acting as the tax agent, shall transfer to the budget the withheld income tax in respect of income paid to foreign nominee (authorised) holders within 30 days (differently from the actual regulation where the tax shall be transferred to the budget at the moment on which the income is paid).

The tax authority shall be entitled to request the tax agent to support calculation and payment of the tax withheld with documents (including also the documents proving accuracy of the information which was submitted by foreign organisations acting in the interests of third parties).

2

Full legal support of

USD 466mln. SPO

of PhosAgro

Advising

International Finance Corporation

on the first placement of

01-06 series notes and supporting

the registration

of the notes program

(amounts to RUB 23bn.)

Advising TELE2, the issuer,

on the issue of bonds and

rendering Legal Opinion

regarding the irrevocable offer

securing obligations under the

bonds

Our team’s recent experience in capital markets

As of 10 November 2013

Advising

Russian Railways

on placement of

RUB 40bn. additional

issue of shares

Advising

Prime Finance,

the issuer, on issuance of

USD 360mio foreign

currency bonds, guaranteed

by

O1 GROUP LIMITED

0

2

The new legislation on securities issues sets forth additional cases when securities may be

purchased by qualified investors only:

1) unsecured notes are issued by an issuer, which satisfies bankruptcy, insolvency and/or

property insufficiency criteria as established by the Russian insolvency legislation;

2) notes are issued by an issuer, whose net assets as of the end of second or more

consecutive financial years remain below its charter capital amount.

2

Additional cases when securities may be purchased by qualified investors only

Advising

JSC Bashneft

on the merger with five

oil-refining companies

(conversion to a single share)

Advising

Citibank (Moscow)

on the issue of

RUB 5,3bn.

mortgage-backed bonds

of Bank Uralsib

Our team’s recent experience in capital markets

DRAFT LAW ON THE OPERATIONS OF SPECIALISED PROVIDERS ON THE OTC MARKET

The Draft Law No. 363920-6 “On the Derivatives Market and Operations of Specialised Operators on the OTC Financial Markets of the Russian Federation” aims to introduce regulation of the operations of specialised operators - OTC market players (loan brokers, forex operators, insurance operators, financial advisors).

The Draft Law provides for the following regulatory forms:

1) self-regulatory organisation (SRO): specialised operators will be obliged to join the SRO for the specific type of activity, operating under the supervision of the Bank of Russia;

2) two-level system of performance standards: (a) the National Standards introducing requirements to agency operations in a specific area, and (b) the SRO Standards regulating specific activities of specialised operators;

3) mandatory certification of specialised operators’ staff.

Our team’s experience in legislative drafting

Draft Laws

DRAFT LAW ON SECURITISATION

The Draft Law No. 249606-5 «On Amendments to Certain Legislative Acts of the Russian Federation (with Regard to Regulation of Securitisation of Financial Assets)» aims to introduce the following:

1) two types of SPV: special financial company (when financial assets are securitised) and special project finance company (for project finance transactions);

2) security over receivables: receivables (existing and future receivables) are allowed to be pledged to secure issuer’s obligations under the notes;

3) a class of notes may be subordinated to other classes of notes with the same collateral;

4) rules aimed to ensure validity of the assignment of receivables in bankruptcy proceedings are provided.

2

Разработка новых правил

раскрытия информации об

облигациях с ипотечным

покрытием, инициированная

Международной финансовой

корпорацией (IFC), реализующей

проект по развитию первичного

рынка ипотечного кредитования в

России

Development of the

Russian pledge

legislation

(2010 - present)

Drafting new rules of

information disclosure

related to mortgage-

backed bonds

(initiated by International

Finance Corporation in

2008)

Drafting regulations

aiming to introduce

legislation governing

infrastructure bonds in

Russia

(2009 – present)

Development of the Russian

legislation on public-

private partnership (PPP) as

a member of the expert

council of the PPP Center

(2011 – present)

Developing legal

framework for

securitisation of

assets in Russia

(2008 – present)

www.lecap.ru 2013