Convertible preferred shares. Preferred and Ordinary Shares - What's the Difference Transferring Preferred Shares to Ordinary

1. Shareholders - owners of preferred shares of the company do not have the right to vote at the general meeting of shareholders, unless otherwise provided by this Federal Law.

(see text in previous edition)

ConsultantPlus: note.

The requirements of paragraph 2 of Art. 32 do not apply to preferred shares of credit institutions acquired in cases established by law.

2. The charter of the company must determine the amount of the dividend and (or) the value paid upon liquidation of the company (liquidation value) on preferred shares of each type. The amount of the dividend and the liquidation value are determined in a fixed amount of money or as a percentage of the par value of preferred shares. The amount of the dividend and the liquidation value of preferred shares are also considered certain if the company's charter establishes the procedure for their determination or the minimum amount of the dividend, including as a percentage of the company's net profit. The amount of the dividend is not considered certain if the charter of the company specifies only its maximum amount. The holders of preferred shares, for which the amount of the dividend is not determined, are entitled to receive dividends on an equal footing and in an equal amount with the holders of ordinary shares.

(see text in previous edition)

If the company's charter provides for preference shares of two or more types, for each of which the amount of dividend is determined, the company's charter must also establish the order in which dividends are paid for each of them, and if the company's charter provides for preference shares of two or more types, for each of which liquidation value, - the order of payment of the liquidation value for each of them.

(see text in previous edition)

The charter of the company may establish that the unpaid or incompletely paid dividend on preference shares of a certain type, the amount of which is determined by the charter, is accumulated and paid no later than the period specified by the charter (cumulative preference shares). If the charter of the company does not establish such a period, preference shares are not cumulative.

(see text in previous edition)

(see text in previous edition)

2.1. The charter of the company may provide for preferred shares of a certain type, dividends on which are paid first of all - before the payment of dividends on preferred shares of any other types and ordinary shares (hereinafter referred to as preferred shares with an advantage in the order in which dividends are received).

The amount of dividend on preference shares with priority in the order in which dividends are received is determined in a fixed amount of money or as a percentage of the par value of such shares. Preferred shares with an advantage in the order in which dividends are received do not have a liquidation value and provide shareholders - their owners with the right to vote at a general meeting of shareholders only on issues specified in this Federal Law. Preferred shares with an advantage in the order in which dividends are received are not taken into account when counting votes and when determining the quorum for making a decision on issues within the competence of the general meeting of shareholders that are not specified in subparagraph 3 of paragraph 1 of Article 48 of this Federal Law, including in cases provided for in paragraphs 4 and of this article, as well as on issues, the decision on which, in accordance with this Federal Law, is taken unanimously by all shareholders of the company.

Change of rights on preferred shares with priority in the order of receiving dividends after the placement of the first such preferred share and reduction of the authorized capital of the company by reducing the nominal value of such preferred shares are not allowed.

Each shareholder who owns preferred shares with priority in the order in which dividends are received in the event of a company reorganization in the form of a merger or acquisition must receive in the company created by reorganization in the form of a merger, or in the company to which the merger is carried out, preferred shares granting the same rights, as well as preferred shares belonging to him in the reorganized company with an advantage in the order in which dividends are received.

3. The charter of the company may provide for the conversion of preference shares of a certain type into ordinary shares or preference shares of other types at the request of shareholders - their owners or the conversion of all shares of this type within the period specified by the charter of the company. In this case, the charter of the company, prior to the state registration of the issue of convertible preferred shares, must determine the procedure for their conversion, including the number, category (type) of shares into which they are converted, and other conditions for the conversion. It is not allowed to change the said provisions of the company's charter after the placement of the first convertible preferred share of the corresponding issue.

(see text in previous edition)

The conversion of preferred shares into bonds and other securities, with the exception of shares, and the conversion of preferred shares with priority in the order of receiving dividends into ordinary shares and other types of preferred shares are not allowed. The conversion of preference shares into ordinary shares and preference shares of other types is allowed only if it is provided for by the charter of the company, as well as when the company is reorganized in accordance with this Federal Law.

(see text in previous edition)

Shareholders - owners of preference shares participate in the general meeting of shareholders with the right to vote when deciding on issues of reorganization and liquidation of the company, issues provided for in paragraph 3 of Article 7.2 and Article 92.1 of this Federal Law, as well as issues on which decisions are made in accordance with this Federal Law unanimously by all shareholders of the company.

(see text in previous edition)

Shareholders - owners of preference shares of a certain type acquire the right to vote when deciding at a general meeting of shareholders on the introduction of amendments and additions to the charter of the company that restrict the rights of shareholders - owners of preference shares of this type, including cases of determining or increasing the amount of dividend and (or) determining or increasing liquidation value paid on preferred shares of the previous order, providing shareholders - owners of preferred shares of a different type of advantages in the order of dividend payment and (or) the liquidation value of shares, or introducing provisions on declared preferred shares of this or another type, the placement of which may lead to an actual decrease the amount of dividend and (or) liquidation value determined by the charter of the company, paid on preferred shares of this type. The decision to make such amendments and additions shall be considered adopted if at least three-quarters of the votes of shareholders - owners of voting shares participating in the General Meeting of Shareholders, except for the votes of shareholders - owners of preferred shares, the rights to which are limited, and three-quarters votes of all shareholders - owners of preference shares of each type, the rights to which are limited, unless a larger number of votes of shareholders is established for such a decision by the charter of the company.

(see text in previous edition)

Shareholders - owners of preferred shares of a certain type acquire the right to vote when deciding at the general meeting of shareholders the issue of filing an application for listing or delisting of preferred shares of this type. The said decision shall be considered adopted provided that at least three-quarters of the votes of shareholders - owners of voting shares participating in the general meeting of shareholders, except for the votes of shareholders - owners of preference shares of this type, and three-quarters of the votes of all shareholders - owners of preference shares are cast in favor of it. shares of this type, unless the charter of the company establishes a greater number of votes of shareholders for the adoption of the said decision.

(see text in previous edition)

Shareholders - owners of preference shares of a certain type, the amount of dividend for which is determined in the company's charter, with the exception of shareholders - owners of cumulative preference shares, have the right to participate in the general meeting of shareholders with the right to vote on all issues of its competence, starting from the meeting following the annual general meeting of shareholders, at which, regardless of the reasons, a decision was not made to pay dividends or a decision was made to pay incomplete dividends on preferred shares of this type. The right of shareholders - owners of preference shares of this type to participate in the general meeting of shareholders shall be terminated from the moment of the first payment of dividends on the said shares in full.

6. The charter of a non-public company may provide for one or more types of preferred shares, granting, in addition to or instead of the rights provided for in this article, the right to vote on all or some issues within the competence of the general meeting of shareholders, including in the event of the occurrence or termination of certain circumstances (commitment or failure to by the company or its shareholders of certain actions, the occurrence of a certain period, the adoption or non-adoption of certain decisions by the general meeting of shareholders or other bodies of the company within a certain period, the alienation of the company's shares to third parties in violation of the provisions of the company's charter on the pre-emptive right to acquire them or on obtaining the consent of the company's shareholders to their alienation and other circumstances), the preemptive right to acquire shares of certain categories (types) placed by the company, and other additional rights. Regulations on preferred shares with the said rights may be provided for by the charter of a non-public company upon its establishment, or included in the charter or excluded from it by a decision adopted by the general meeting of shareholders unanimously by all shareholders of the company. The specified provisions of the charter of a non-public company may be changed by a decision taken by the general meeting of shareholders unanimously by all shareholders - owners of such preferred shares and by a three-quarters majority of shareholders - owners of other voting shares participating in the general meeting of shareholders.

Filimoshin P.M. Advisor to the Department for Regulation of Issue and Circulation of Equity Securities of the Federal Securities Commission of Russia http://www.profconsalt.ru

The legislation of the Russian Federation on securities does not contain a definition of conversion. The author considers it possible to define conversion as the acquisition of ownership rights to placed securities due to the alienation of ownership rights to previously placed securities.

It follows from this definition that only persons who, prior to its implementation, have ownership rights to already placed securities, can take part in the conversion.

It may seem that the conversion is a special case of placing securities by closed subscription, in which the payment for securities is carried out in non-monetary funds - other securities. However, this assumption is wrong. The fundamental difference between the conversion lies in the fact that this method of placement is accompanied by the cancellation (redemption) of the securities “transferred as payment” for the placed securities. Moreover, cancellation (repayment) of “old” previously placed securities occurs on the basis and at the time of placement of “new” securities. Thus, the owner loses the ownership rights to the “old” securities, acquiring similar rights to the “new” securities being placed, but the “old” securities do not acquire a new owner.

This means that a joint-stock company, in the course of conversion - unlike a subscription - does not raise funds as a result of the issue of securities, and the owners of securities do not pay for them upon placement and are not, in this sense, investors of the joint-stock company.

The legislation of the Russian Federation on securities contains various ways for a joint-stock company to place its securities through conversion. Let us give a classification (Author's classification) of types and types of securities conversion.

In general, conversion can be divided into the following types:

• conversion of shares into shares with a higher par value;
• conversion of shares into shares with a lower par value;
• conversion of shares into shares with other rights;
• converting bonds into shares;
• converting bonds into bonds;
• conversion of securities during the reorganization of commercial organizations (Conversion of securities during the reorganization of commercial organizations is regulated by the Standards for the issue of shares and bonds and their prospectuses during the reorganization of commercial organizations, approved by Decree of the Federal Commission for the Securities of Russia of November 11, 1998 No. 48.

The conversion of ordinary shares into preference shares of any type is prohibited.

In addition, the legislation of the Russian Federation on securities does not provide for the possibility of converting shares into bonds, which in fact also means that such conversion is prohibited.

Conversion of shares into shares with a higher or lower par value may be carried out both with a change in the size of the authorized capital of a joint-stock company, and without such a change.

When converting shares into shares with other rights, it is necessary to distinguish between the conversion of preferred shares of a certain type into preferred shares with a different scope of rights of the same type, and the conversion of preferred convertible shares of a certain type into ordinary shares or preferred shares of another type (conversion as the exercise of rights under a security ).

Thus, the proposed classification of conversion types needs additional detail. But, before moving on to such detail, we classify these types according to the terms of conversion.

Depending on the timing of the conversion, there are lump sum and not a one-time(postponed or extended in time (Terminology of the author)) conversion.

At lump sum conversion in accordance with paragraph 11.1 of the Standards (Standards for the issue of shares when establishing joint-stock companies, additional shares, bonds and their emission prospectuses, approved by Resolution of the Federal Securities Commission of Russia dated September 17, 1996 No. 19 47)) The FCSM of Russia placement of shares of a joint-stock company (bonds do not participate in a one-time conversion) by conversion must be carried out on one day, which cannot be earlier than the date of state registration of the issue of shares and later than one month from the specified date, according to the register of registered owners securities of this joint-stock company on the day of conversion.

The mentioned paragraph of the Standards provides for one exception: in the case of the conversion of shares into shares with a higher par value, accompanied by an increase in the authorized capital of the joint-stock company at the expense of profit from the previous year, directed to the payment of dividends, this conversion must be carried out among the shareholders included in accordance with paragraph 4 Article 42 of the Federal Law “On Joint Stock Companies” to the list of persons entitled to receive dividends for this year. However, such conversion also cannot be carried out earlier than the date of state registration of the share issue and later than one month from the specified date.

At not a lump sum(deferred or extended in time) conversion in accordance with the same clause 11.1 of the Standards, the placement of shares or bonds of a joint-stock company by converting securities convertible into them must also be carried out on one day, which cannot be earlier than the date of state registration of the issue of such shares or bonds and later than one year from the date of approval by the joint-stock company of the decision to issue them, according to the register of registered securities holders of this joint-stock company on that day.

Another fundamental difference of the deferred conversion is the necessity to have declared shares of a certain category (of a certain type) in the charter of a joint-stock company, only within the limits of which the placement of shares of this category (of this type) can be carried out by converting the securities convertible into them.

Having identified two fundamentally different types of conversion, we present the final classification scheme conversion methods:

I. One-time conversion:

• conversion of shares into shares with a higher nominal value, accompanied by an increase in the authorized capital of the joint-stock company;
• conversion of shares into shares with a higher par value during their consolidation;
• conversion of shares into shares with a higher par value without increasing the authorized capital of the joint-stock company;
• conversion of shares into shares with a lower par value, accompanied by a decrease in the authorized capital of the joint-stock company;
• conversion of shares into shares with a lower par value, not accompanied by a decrease in the authorized capital of the joint-stock company (share split);
• conversion of preferred shares of a certain type into preferred shares with other rights of the same type;

II. Non-one-time conversion:

• converting preferred convertible shares of a certain type into ordinary shares or preferred shares of another type;
• conversion of convertible bonds into ordinary shares or preferred shares of a certain type;
• conversion of convertible bonds of a certain series into bonds of another series.

Article 28 of the Federal Law “On Joint-Stock Companies” (Federal Law No. 208-FZ of December 26, 1995 “On Joint-Stock Companies”) refers the decision to increase the authorized capital of a joint-stock company by increasing the nominal value of shares (the decision to place securities) to the competence of the general meeting of shareholders or the board of directors of the joint stock company, if the right to make such a decision is granted to the last charter of the joint stock company or the decision of the general meeting of shareholders.

In accordance with clause 6.7 of the Standards, an increase in the authorized capital of a joint-stock company by increasing the par value of shares is possible only through:

• funds received by the joint-stock company from the sale of its shares in excess of their nominal value (share premium);
• balances of special-purpose funds (accumulation fund, consumption fund, social sphere fund) of the joint-stock company based on the results of the previous year;
• retained earnings of a joint-stock company;
• funds from the revaluation of fixed assets of the joint-stock company.

An increase in the nominal value of shares that is not accompanied by an increase in the authorized capital of a joint-stock company

Clause 3 of Article 72 of the Federal Law “On Joint Stock Companies” provides for the possibility of converting shares of a joint stock company into shares with a higher nominal value without changing the size of the authorized capital of a joint stock company by decision of its general meeting of shareholders, but only at the expense of shares previously acquired by the joint stock company.

In accordance with clause 6.8 of the Standards, an increase in the par value of shares by redeeming shares while maintaining the size of the authorized capital is carried out if there are unsold shares on the balance sheet of the joint-stock company acquired from shareholders by decision of the board of directors of the joint-stock company in accordance with clause 2 of Article 72 of the Federal Law "On joint-stock companies".

Consolidation is also a case of converting shares into shares with a higher par value without changing the size of the authorized capital of the joint-stock company.

In accordance with paragraph 1 of Article 74 of the Federal Law “On Joint Stock Companies”, a decision to consolidate the outstanding shares of a joint stock company (i.e. a decision to place securities during consolidation) can only be taken by the general meeting of shareholders of this joint stock company.

Upon consolidation, two or more outstanding shares of a joint-stock company are converted into one new share of the same category (type). The nominal value of a new share is formed by summing up the nominal values ​​of two or more previously placed shares of a joint-stock company converted into it.

Obviously, during consolidation, a situation is possible when shareholders - owners of shares of a joint-stock company own a smaller number of shares than is necessary for consolidation. In this case, the Federal Law “On Joint Stock Companies” provides that such shares must be redeemed by a joint stock company, moreover, at a market value determined in accordance with Article 77 of the said Federal Law by the board of directors of the joint stock company with the obligatory involvement of an independent appraiser (auditor). At the same time, the Federal Law “On Joint-Stock Companies” does not provide for any exceptions to the above rule, and, therefore, the repurchase of these shares must be carried out even if their owners refuse to present demands to the joint-stock company for the repurchase of their securities.

Given this circumstance, the consolidation procedure is often used to cut off (compel to withdraw from participation in a joint-stock company) small shareholders.

To avoid the negative consequences of consolidation, shareholders - owners of a number of shares insufficient for their consolidation, as well as owners of such a number of shares, the consolidation of which produces fractional parts (remains) of a new (consolidated) share, can be recommended to issue in accordance with Chapter 16 of the Civil Code of the Russian Federation for such shares, common ownership jointly with other shareholders in a similar position. Moreover, joint shared ownership of the said shares must be formalized before the moment of consolidation - conversion, which is carried out according to the register of registered securities holders of the joint-stock company on the conversion date specified in the registered resolution on the issue of securities.

In accordance with Article 29 of the Federal Law “On Joint Stock Companies”, a decision to reduce the authorized capital of a joint stock company by reducing the par value of shares (a decision to place securities) can only be taken by the general meeting of shareholders of this joint stock company.

At the same time, according to clause 1 of the said article, a joint-stock company is not entitled to reduce the authorized capital if, as a result of this, its size becomes less than the minimum authorized capital of the joint-stock company, determined in accordance with Article 26 of the Federal Law “On Joint-Stock Companies”.

In addition, in accordance with Article 30 of the Federal Law “On Joint-Stock Companies”, if a joint-stock company decides to reduce its authorized capital, it is obliged to notify its creditors in writing no later than 30 days from the date of the said decision. Creditors have the right, no later than 30 days from the date of sending them the said notice of the reduction of the authorized capital of the joint-stock company, to demand from the latter the termination or early performance of its obligations and compensation for the related losses.

A share split is a case of converting shares into shares with a lower par value without changing the size of the authorized capital of a joint-stock company.

In accordance with paragraph 2 of Article 74 of the Federal Law “On Joint Stock Companies”, a decision to split the placed shares of a joint stock company (i.e. a decision to place securities in the event of a split) can only be taken by the general meeting of shareholders of this joint stock company.

In case of splitting, one placed share is converted into two or more placed (new) shares of the joint-stock company of the same category (type). The nominal value of each new share is formed by dividing the previously placed share by the number of new shares into which it is converted upon splitting.

The economic meaning of a share split often lies in the desire of a joint-stock company to revive the secondary market for its securities. It is obvious that shares with a lower par value may be available for purchase by a larger number of persons.

In accordance with paragraph 2 of Article 25 of the Federal Law “On Joint Stock Companies”, a joint stock company has the right to place ordinary shares, as well as one or more types of preferred shares. At the same time, each category (each type) of shares of a joint-stock company corresponds to a certain, differing volume of rights assigned to them.

In accordance with Article 2 of the Federal Law “On the Securities Market” (Federal Law of April 22, 1996 No. 39-FZ “On the Securities Market”), the totality of securities of one issuer that provide the same amount of rights to their owners is an issue of securities papers.

Therefore, in order to change the scope of rights for already placed shares, a joint-stock company needs to issue (release) securities with other rights.

This type of security as a share secures the rights of its owner (shareholder) to:

• receiving part of the profit of the joint-stock company in the form of dividends;
• participation in the management of a joint-stock company; and
• part of the property remaining after the liquidation of the joint-stock company.

It is obvious that it is impossible to change these rights for ordinary shares of a joint-stock company. Therefore, when we talk about changing the scope of rights on shares, this should be understood as a change in the scope of rights exclusively on preferred shares, and only within the framework established by the Federal Law “On Joint Stock Companies”.

At the same time, it should be taken into account that preferred shares can be converted into ordinary shares or preferred shares of another type only if the possibility of such conversion is included in the rights to these preferred shares. Otherwise, we can only talk about the conversion of preferred shares of a certain type into preferred shares with a modified scope of rights but of the same type. This means, for example, that in order to convert preferred shares into ordinary shares, if the possibility of such a conversion is not provided for by the rights to these preferred shares, the joint-stock company must issue preferred shares of the same type with a modified scope of rights, placing them by converting preferred shares, not providing for the possibility of their conversion into ordinary shares, into preferred shares, providing for the possibility of such conversion.

Conversion into shares or bonds of securities convertible into them is the realization (exercise) of the rights secured by convertible securities.

In accordance with Article 18 of the Federal Law “On the Securities Market”, a document certifying the rights attached to a security is a certificate and a decision on the issue of securities, and for a non-documentary form of issue of securities - only a decision on the issue of securities. It is obvious that the right (possibility) of conversion in this case, as well as other rights for each security of the issue, must be contained in the decision on the issue of securities, which in turn is approved by the joint-stock company on the basis of and in accordance with the decision on the placement of securities .

It follows from the foregoing that conversion as the exercise of rights under convertible securities is possible only if it is provided for by the decision to place such convertible securities, which is provided for in clause 6.3 of the Standards.

The decision on the placement of convertible securities must also unambiguously determine the procedure and conditions for converting securities, including the number of securities into which each convertible security of a joint-stock company is converted.

At the same time, in accordance with paragraph 6.4 of the Standards, the following condition must be met: the nominal value of a share (shares) of a certain category (of a certain type), convertible (convertible) into a share (shares) of another category (of a different type), must be equal to the par value of the share ( shares) into which it (they) is convertible.

This means that during the conversion of convertible securities there should not be a change in the size of the authorized capital of the joint-stock company. Note that this restriction does not apply to the bonds of a joint-stock company.

The conversion procedure established in the decision on the placement of securities may provide that the conversion is carried out:

• at the request of their owners; or
• upon the expiration of a period determined by a calendar date, or the expiration of a period of time.

Conversion carried out at the request of the holders of convertible securities is used by joint-stock companies, as a rule, if the rights under convertible securities give their holders the right to choose:

a) convert preferred shares of a certain type into ordinary or preferred shares of another type; convert bonds of a certain series into ordinary or preferred shares of a certain type, or bonds of another series; or

b) refrain from such conversion, preferring to retain ownership of preferred convertible shares of a certain type in order, for example, to receive the amount of dividend determined on them, or to redeem convertible bonds in another way (if such a method is provided for by the decision to issue such convertible bonds).

The right of choice may also consist in giving holders of convertible securities the option of converting them into different types of preferred shares or different series of bonds.

In this case, in accordance with paragraphs 6.4 and 11.15 of the Standards, the placement of securities must be carried out on the basis of applications from the owners of securities convertible into them, and the decision to place convertible securities, as well as the decision to place securities placed by converting securities convertible into them securities, a period must be established during which the holders of convertible securities may submit the relevant applications, as well as the period during which, on the basis of such applications, the conversion must be carried out, taking into account that the latter cannot be more than one year from the date of approval of the decision on the issue of securities placed by converting securities convertible into them. The conclusion of any contracts in this case is not required.

Note that the conclusion of any contracts is not required in other cases of conversion.

If the conversion is carried out after the date specified by the calendar date, or after the expiration of the period of time (i.e. without giving the holders of convertible securities the right to choose), in accordance with paragraph 11.1 of the Standards, it (the conversion) must be carried out on the date specified calendar date, or on the day of expiration of the period determined by the period of time, according to the register of convertible securities holders on that day. The date corresponding to the specified day must also not be later than one year from the date of approval of the decision to issue securities placed by converting securities convertible into them.

We also note that the description in the decision on the issue of securities placed by converting the securities convertible into them, the description of the rights under these securities, the procedure and conditions for the conversion must correspond to such a description in the decision on the issue of the securities convertible into them.

In accordance with clause 8.1.3 of the Standards, the state registration of an issue of securities must be accompanied by the registration of their emission prospectus for the following types of conversion:

• conversion of shares into shares with a higher par value, including during consolidation;
• conversion of shares into shares with a lower par value, including in case of splitting;
• conversion of shares into shares with other rights;
• if the number of purchasers of shares in the issue exceeds 500 and (or) the nominal value of the issue (volume of issue) of shares exceeds 50,000 minimum wages.

Thus, when converting into shares or bonds, securities convertible into them (exercising rights under convertible securities), registration of the prospectus for the issue of securities is not required.

In the case when the registration of the prospectus for the issue of securities is not required during the conversion, the Standards, in clause 9.8, as well as in the case of a closed subscription, establish the need to submit for the state registration of the issue of securities the financial statements of the joint-stock company - issuer for the last financial year and for the last quarter preceding the date of approval of the decision to issue securities.

In accordance with clauses 12.3 - 12.4 of the Standards, documents for registering a report on the results of an issue of securities placed by conversion must be submitted:

• in the case of a one-time conversion - no later than 30 days from the date of conversion;
• in case of non-one-time conversion - no later than 30 days from the expiration date of the conversion period.

Given that in case of a one-time conversion, the date of placement of securities (date of conversion) cannot be later than one month from the date of state registration of the issue of securities, the documents for registering a report on the results of the issue of securities in case of a one-time conversion, therefore, must be submitted no later than two months from the date of state registration of the issue of securities.

Paragraph 12.8 of the Standards also requires submission for registration of a report on the results of the issue of securities placed by conversion, a notice of cancellation of the converted securities.

The legislation of the Russian Federation on securities, normative acts of the FCSM of Russia do not contain special requirements for disclosure of information on the issue of securities placed through conversion. Therefore, for the purposes of disclosing information when converting securities, a joint-stock company must be guided by the general norms and rules for disclosing information contained in the Regulations on the procedure for disclosing information on material facts (events and actions) affecting the financial and economic activities of an issuer of emissive securities, approved by a resolution of the Federal Commission for the Securities of Russia dated August 12, 1998 No. 32, which, however, applies only to those joint-stock companies, the state registration of at least one issue of securities of which was accompanied by the registration of their prospectus.

In accordance with the said Regulation, information is disclosed by joint-stock companies in the form of notices of material facts (events and actions) affecting their financial and economic activities, which, no later than 5 working days from the moment the material fact occurs, must be:

sent to the registration authority (for non-credit and non-insurance organizations - the Federal Securities Commission of Russia or its regional branches);

published in the “Supplement to the Bulletin of the Federal Securities Commission of Russia” (Subscription index according to the catalog of the agency “Rospechat” - 47998) and other printed media distributed in a circulation accessible to most holders of securities of a joint-stock company.

Information to be disclosed:

• on the adoption by the joint-stock company of a decision on the placement of securities;
• on approval by the joint-stock company of a decision to issue securities;
• on redemption, including the cancellation of securities.

The first two cases were considered in detail in the articles devoted to open and closed subscriptions, so in this article we will dwell in detail only on the disclosure of information on the redemption (cancellation) of securities.

In the notice of cancellation of securities by a joint-stock company during conversion, the following must be indicated:

• grounds for cancellation: conversion, redemption of bonds;
• kind, category (type), form, series, state registration number of the issue whose securities are canceled (redeemed);
• the nominal value of each security of a given type (category), series, the number of securities of a given type (category), series;
• the number of canceled (redeemed) securities;
• in case of redemption (including early redemption) of bonds:

  a) term (start date, end date) of redeemed bonds circulation;

  b) the procedure, conditions, term (start date and end date) of early redemption of bonds (if early redemption is provided for by the decision to issue bonds);

  c) the procedure, conditions, term (start date and end date) of bonds redemption.

The moment of occurrence of the fact is the date of conversion (or the date of completion of conversion), the date (date of expiration) of bonds redemption.

Sending to the registering authority the said notice of cancellation (redemption) of securities may also serve as a notice to the registering authority of the cancellation of securities submitted in accordance with clause 12.8 of the Standards for registering a report on the results of the issue of securities placed by conversion.

Conclusion

In conclusion, we will give a table showing the sequence and timing of the joint-stock company's actions to place securities through conversion.

Table 1.

Sequence and terms of implementation of actions for the issue of securities placed through conversion

The charter of a non-public JSC does not provide for preferred shares. How to release them? I would like to know the procedure step by step.

Answer

The issue of preferred shares implies serious perpetual obligations of the JSC to make payments to investors, and this is possible if the company is confident in the stability of its financial position. As the analysis shows, foreign companies quite rarely and in small quantities risk issuing perpetual preferred shares. For the vast majority of issues of such shares, companies stipulate their right to withdraw them after a certain period or to convert them into ordinary shares. Formally, callable preferred shares are considered perpetual, but the issuer can redeem them, as is the case with bonds. Therefore, these shares are called revocable.

The company's right to call preferred shares must be provided for in the terms of the issue. At the same time, a specific date is specified, starting from which the company can fully or partially redeem the shares, or it is indicated how many days in advance the company is obliged to notify investors of the beginning of the redemption. Typically, a notice is sent out 30 days before the start of the redemption. The notice specifies the redemption price, which provides for reimbursement to the investor of the value of the security, dividends due and a certain amount of premium. Due to the fact that the redemption of preferred shares is an advantage for the company, and not for the investor, the company pays the holders of preferred shares a premium for the right to redeem, which is usually 1% of the value of the share.

The following valuations can be taken as the basis for determining the value of a preferred share to be repurchased:

• the par value of the share. Establishing the buyback price in the amount of the par value of a share is not entirely correct, since the market price of shares may significantly exceed the face value. In this case, when buying back shares, investors will incur significant losses, since the amount of the premium may not compensate for the difference between the market and nominal value of the shares;
• · the redemption price stipulated in the charter of the joint-stock company. In this case, as a rule, the charter does not indicate a specific value, but provides a methodology for calculating the redemption price, which is based on the net asset value per share;
• The buyback price at the market value of the shares. In this case, stock quotes on the exchange and over-the-counter markets are taken as the base. The specific buyout price is set by the board of directors with the involvement of an independent appraiser or auditor.

In order to ensure the redemption of revocable preferred shares, in a number of cases, joint-stock companies create a redemption fund. The terms of a share issue with a redemption fund provide for the obligation of the company to buy back shares if their price drops to a certain level. For example, it may be provided that the company allocates funds to a redemption fund in order to redeem 5% of the callable shares annually if their price falls to the level of the offering price. Thanks to this, the owners of revocable shares are protected. If quotes grow, then the company may not redeem shares or buy them at market prices. If quotes fall to a certain level, then the firm buys them back. In this case, the stock price stabilizes. As the buyback proceeds, fewer shares remain outstanding, increasing the value of the assets per share and increasing the market value of the shares.

Many companies, when issuing revocable shares, provide for the creation of a deferred fund. Unlike a redemption fund, it is formed by regular annual contributions in order to redeem the entire issue of callable preferred shares within a certain period of time. The deferred fund is used to purchase shares on the open market, as well as to directly buy shares directly from shareholders. The fundamental difference between a deferred fund and a redemption fund is that if a company fails to purchase shares on the open market, it has the right to offer the owners of the shares to sell them at the price of the deferred fund, which may be lower than the market price. A deferred fund, on the one hand, protects the interests of investors when shares are bought on the open market and thereby provides support for the market when market prices decrease. On the other hand, if the market price of the shares is higher than the price of the deferred fund, then the investor incurs certain losses when the shares are withdrawn. However, the remaining outstanding shares increase in value and may pay a higher dividend as the profit is spread over fewer shares.

Usually redemption of callable shares is a privilege of the company. But the investor does not have clear guarantees that these shares will definitely be redeemed. In order to increase the attractiveness of revocable preferred shares, in some cases, retractable shares are issued, the redemption right of which belongs to the investor. The owner of a share has the right to present it for redemption at a predetermined price, having previously notified the company about it.

In some cases, firms resort to the issuance of convertible preferred shares, the terms of which provide for the possibility of their exchange for ordinary shares. At the same time, the conversion period, the conversion price, the number of ordinary shares that can be received in exchange for one preferred share, and other parameters are set. By analogy with bonds, the conversion price at the initial stage is indicated below the level of market prices for ordinary shares, since otherwise the issue of convertible shares becomes meaningless. In most cases, by issuing convertible preferred shares, the company makes them callable in order to manage the conversion process.

And what to choose for several years ahead

Some companies issue two types of shares: common and preferred. The difference between them seems simple: in the first case, you are guaranteed the right to vote at the shareholders' meeting and are not guaranteed the payment of dividends, in the second, the opposite is true.

But not everything is so simple. The Law "On Joint Stock Companies" describes all possible situations where preference shares differ from ordinary ones. These differences can be divided into 3 groups: non-payment of dividends, voting at the shareholders' meeting and liquidation of the company. Let's talk about them and see what type of securities is more profitable to buy for several years.

Non-payment of dividends

Dividends are a share of a company's income divided by the number of shares. According to Article 42 of the Law "On Joint Stock Companies", the company pays dividends from net profit and special funds. Net profit is the income left after the payment of salaries, taxes, debts. And special funds are created for the payment of dividends when the company has too much money.

The amount of dividends is specified in the company's charter. This can be either an exact amount or a formula for calculating net income.

If the charter does not specify how much the owner of preferred shares will receive, then the amount of payments for these and ordinary shares is the same and it is approved by the board of directors, and the owners of ordinary shares accept it. And the size of dividends cannot be higher than the value agreed by the board of directors.

But it happens that the owners of preferred shares are not paid dividends: there is no profit, there are no special funds for payment. In case of non-payment, you will have the right to vote on all matters of the company. But other options are possible, you need to look at the charter of the company. The law allows converting shares into cumulative and converted.

Cumulative shares accumulate dividend debt for a certain period specified in the charter. In case of delay, your shares will receive voting rights. Convertible - give the right to vote until the company pays dividend debt.

Excerpt from the charter of Rosseti. Preferred shareholders receive voting rights if they do not receive dividends

That is, in case of non-payment of dividends, the company can choose from several alternatives. Of course, you can find out about all the conditions in advance. The dividend policy is described in the charter of the joint-stock company. On the site, it is usually published in the section "Investors and Shareholders".

Voting at the meeting

Most issues are voted on by ordinary shareholders only. The principle is simple: one share, one vote. For example, at the end of June 2018, Aeroflot shareholders voted on the approval of annual profits, payment of remuneration to members of the board of directors, as well as on the approval of upcoming major transactions.

The scope of the rights of holders of ordinary shares varies depending on the number of shares. However, we will disappoint those who plan to gain control in large companies: in most of them, significant stakes have been bought out by the state.

There are several topics that cannot be discussed without preferred shareholders. This is everything related to the liquidation of the company, reorganization, changes in the charter, placement of new shares on the stock exchange or withdrawal of existing ones from circulation.

Liquidation of company

The third difference is the simplest. If you own preferred shares, you will receive your share earlier in the event of bankruptcy. The shares will be redeemed and you will be paid the salvage value for them.

The same applies to dividends. Liquidation dividends are first paid on preferred shares. And only then the remainder is divided among the owners of ordinary shares.

What stocks to buy

If you do not plan to influence the activities of the company and need a stable income from dividends, choose preferred shares. Their payouts are more stable and predictable. And the securities themselves are cheaper than ordinary shares and grow stronger. When buying for several years - the best option.

Short

1. Shares are divided into 2 types: ordinary and preferred.
2. Ordinary shares are allowed to vote at the meeting of shareholders, preferred ones give fixed dividends.
3. If no dividends are paid, the preferred shares will give voting rights.
4. If it is necessary to amend the articles of association or it is a question of reorganization or liquidation of the company, all types of shares vote.
5. If there are a lot of ordinary shares, the investor receives bonus rights and opportunities.
6. If you need a more stable income, preferred shares are more profitable than ordinary ones. But only if you buy them for several years.