1. Dividends for Russian local shares and
GDRs/ADRs issued on Russian local shares
BCS FINANCIAL GROUP

2. Payment of dividends - Legal background for local shares
According to the Federal Law on Joint-Stock Companies (NO. 208-FZ OF
DECEMBER 26, 1995)
1. A company may, as per the results of the first quarter, half-year or
nine months of the financial year and/or as per the results of the
whole financial year, announce the payment of dividends on the placed
shares.
2. Dividends shall be payable out of the company's net profit.
3. The decisions on the payment (announcement) of dividends including the
decisions on the rate of the dividend and the form of its payment on the
shares of each category (type) shall be taken by a general meeting of
shareholders. The rate of dividends may not exceed the one
recommended by the board of directors (the supervisory board) of the
company.
4. Dividends are to be paid in cash or in any other assets if such condition
is specified in Memorandum of the company.
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3. Payment of dividends - Legal background for local DRs
o Depository receipts are regulated by the Deposit Agreement which is
concluded between the issuer of shares and the issuer of Depository
receipts. Transmission of rights assigned to the owner of local shares to
the holders of DRs is regulated by this Agreement though it is usually not
disclosed. Terms of Agreements could be different for the different DR
issues, but mostly all rights given to the owners of local shares are
passed to the DRs holders.
o All Depository receipts for all DRs issued on Russian local shares
conclude obligation for the issuer of DRs to pass dividends paid to
underlying local shares to the DR holders.
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4. The following corporate actions are not usual for Russian equities :
 Distribution of subscription rights
 Stock dividends
 Dividend reinvestment plans (SCRIP / DRIP)
 Dividend currency options
Dividends on Russian local shares are paid in cash – RUR.
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Market practice for dividends on Russian local shares

5. 5
Service FEEs for DRs
o Pursuant to the terms and conditions of the Deposit Agreement the
Depositary (Issuer of DRs) may collect and receive service fee per DR.
o DR FEEs are mandatory for the DR holder but optional for DR issuer.
o DR FEEs are of the following two types:
 Annual fees – to be collected to cover depository services,
expenses of Depository for inspection of the Russian share
registrar, other general expenses.
 Special Fees – to be collected for execution by the Depositary of
any special action (DR creations / cancellations; participation in
Voluntary corporate actions; Income distributions)

6. EXAMPLE
Table of FEEs for Rule 144A and Regulation S GDRs issued by
The Bank of New York on Sberbank of Russia local shares *
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* Complete Prospectus of Sberbank, Offering of 1,712,994,999 Ordinary Shares in the form of Ordinary Shares and Global
Depositary Shares, Page 214

7. o Annual fees:
 Usually not more than USD 0.03 a year;
 Could consist of f.eg. $0.01 depositary share annual fee, $0.01
service fee, $0.01 custody fee;
 Could be withdrawn on the annual, semiannual, quarterly basis;
 Could be withdrawn together with distribution of annual dividend;
 No EX DD is applicable for DR Annual fees;
 Annual fee is debited from clients account by custodian on a
settled position as at the Record Date;
 Record Date and amount of fee is announced by the Depositary
(Issuer of DRs) a month before RD;
 New information about DR Annual fee is distributed via clearing
systems where DRs are trades – DTC, Euroclear.
Service FEEs for DRs – Market Practice
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8. 8
o Cash distribution fees:
 Usually not more than USD 0.02 per DR;
 Is applicable for Dividend distribution, Buy-back proceeds
distribution, Spin off or Liquidation proceeds distribution;
Dividend notification distributed by the Depository contains
information about Cash distribution fee, Dividend is paid by
Depository less cash distribution fee;
Service FEEs for DRs – Market Practice

9. 9
o Local shares:
 Dividends are distributed in RUR; no FX conversions, fees are not
applicable.
o DRs:
 Within max 2 days since receipt of Dividends from the issuer
Depository should convert them into USD at the current market FX
rate and transfer to the DRs holders less cash distribution fee.
Dividend distribution for local shares and DRs

10. Dividend Taxation for Russian locals and DRs
Instrument / Market
Shareholder - resident
of Russia
Shareholder - non
resident of Russia - no
Tax treaties
Shareholder - resident
of Cyprus - Tax treaty
Shareholder - resident
of UK - Tax treaty
Local shares 9% 15%
5 % (position cost
more than 100000
EUR), 10 % for all
other cases
10%
ADRs/GDRs on
Russian local shares
15% 15% 15% 15%
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11. Dividend Taxation for Russian locals and DRs hold by BCS
in name of its Clients
Shareholder – BCS Cyprus - resident of Cyprus
Local shares 10 %
ADRs/GDRs on
Russian local shares
15%
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BCS could not guarantee 10 % Dividend taxation rate for its Clients because:
 Decision about which dividend rate is to be used is taken by Tax Agent which is
the Issuer in case of Dividend distribution;
 Documents proving status of BCS as Tax Resident of Cyprus are submitted to
the issuer via the chain of nominal holders what could cause delays or losses of
documentation.
 Status of BCS as Tax Resident of Cyprus could be subject of different
interpretation by the BCS, Issuer, Tax Authorities and could be disputed;
If applied Higher Dividend Tax rate could be disputed by BCS in court or to
the Tax Authority but BCS could not guarantee TAX difference is reversed.

12. Comparing of costs to receive dividends
on Russian local shares or DRs
12
ADRs/GDRs Russian Local Shares
Currency USD at market FX rate RUR, no FX conversion
TAX - Resident of Russia 15% 9%
TAX - Resident of Cyprus 15% 10%
Cash distribution fee up to USD 0,02 per DR No
Annual service fee up to USD 0,03 * per DR No
* Subject to the Depository Agreement could be more

13. THANK YOU
In case of any questions regarding Dividends
or any other Corporate actions
please address them to
Anton Kashkin
Head of Corporate Actions
Investment Bank
BCS Financial Group
phone: +7 (495) 785 53 36 (ext. 7891)
mob: +7 (916) 564 63 58
akashkin@msk.bcs.ru