How can I buy or sell Gazprom shares?
Shares represent a type of property shareholders can use at their own discretion. Shareholders have the right to sell their shares to any individual or entity wishing to buy them at a mutually beneficial negotiated price.
Shares are acquired pursuant to a sale and purchase agreement executed under the existing laws with subsequent re-registration of ownership rights at a relevant stock accounting organization (depository or registry).
Gazprom shares can be traded through a securities market professional. As a rule, such services are offered by investment companies and commercial banks. Gazprom shares can also be bought or sold at Gazprombank branches. To contact the Gazprombank inquiry service, please call 8 800 100-07-01 (toll-free within Russia) or +7 495 913-74-74.
Please note that Gazprom (hereinafter also referred to as the Company) does not sell or buy its own shares. The Federal Law on Joint Stock Companies No. 208-FZ of December 26, 1995, provides a limited list of reasons for transferring a company’s own shares to another party. Those reasons include incorporation of a company, placement of additional shares, and sale of shares previously acquired or bought back from shareholders (the shares must be sold at a price equal to or greater than their market value no later than one year after the ownership rights are transferred to the company). At present, Gazprom does not place additional shares. Moreover, the Company has not acquired or bought back its own shares. Summing up the above, today Gazprom has no opportunity to sell the Company’s shares to any party pursuant to the existing legislation.
You can sell all or part of your shares. Please note that the income from selling the shares is subject to personal income tax according to the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code).
The share price is constantly fluctuating. It varies depending on supply and demand in the securities market (Russian stock exchanges).
Information about the Gazprom share price in the stock market is available through mass media and the website of the Moscow Exchange (www.moex.com).
Moreover, the stock exchange’s website has a list of accredited securities market professionals acting as trading participants.
Information about the current Gazprom share price on the national stock exchanges and international trading floors is also available on the Gazprom official website. The website provides data about Gazprom’s share price performance for a chosen period and offers visitors the opportunity to compare the historical and current share prices of Gazprom and other leading Russian and foreign oil and gas companies, as well as stock indexes of major Russian and global exchanges. In addition, the website contains the key financial results, annual reports, and financial statements of the Company.
It should be noted that decisions on selling shares can be made solely by shareholders themselves. The above information is for reference purposes only.
What am I entitled to as a Gazprom shareholder?
Gazprom shareholders, similar to shareowners of other joint stock companies, have the following basic rights:
- to participate in the General Shareholders Meeting (hereinafter also referred to as the Meeting) and exercise voting rights on all issues falling within the Meeting competence; and
- to receive dividends.
A shareholder (group of shareholders) with at least 2 per cent of the Company’s share capital is entitled to nominate candidates for the Gazprom Board of Directors and Audit Commission, as well as to propose items for the agenda of the Meeting. A shareholder (group of shareholders) with at least 10 per cent of the share capital is entitled to initiate an extraordinary Meeting.
How can I take part in Gazprom’s General Shareholders Meeting?
The list of persons having the right to take part in the Meeting is drawn up on the basis of the Gazprom Shareholders Register as of the date determined by the Board of Directors in the lead-up to the Meeting.
Pursuant to Article 60, Clause 2 of the Federal Law on Joint Stock Companies, voting ballots with the Meeting agenda are sent via registered mail (no later than 20 days prior to the date of the Meeting) to the stockholders specified in the list of persons entitled to take part in the Meeting. Shareholders’ votes represented by the voting ballots are only counted if the ballots are received by the Company no later than two days prior to the date of the Meeting.
A notice of the Meeting with the registration time for participants is published, inter alia, on the Gazprom official website (www.gazprom.com) no later than 30 days prior to the Meeting.
Shareholders wishing to attend the Meeting in person must arrive at the appointed time and provide IDs for registration.
At present, Gazprom has over 500,000 shareholders. Therefore, shareholders are advised to exercise their right to take part in the Meeting via their trustees by proxy or via filled out voting ballots sent to the Company.
Does Gazprom have any preferred shares?
Pursuant to the Company’s Articles of Association, Gazprom only has ordinary registered uncertificated shares of equal nominal value. Gazprom has never issued any preferred shares.
What is an ADR?
An ADR (American Depositary Receipt) is a negotiable security issued by The Bank of New York Mellon, a U.S. depository bank, representing the Company’s ordinary shares traded in a foreign stock market. ADRs confirm the Company’s ownership of shares deposited with The Bank of New York Mellon. One ADR represents two Gazprom shares. It is possible to convert Gazprom’s ordinary shares into ADRs and vice versa.
Can I, as a Gazprom shareholder, sell my shares in a foreign market?
Shareholders need to convert their shares into ADRs before selling them in a foreign market. It is recommended to have the conversion carried out by securities market professionals, namely a brokerage company or a bank that will perform the operation upon the shareholder’s request.
How do I calculate the tax on share sales?
Pursuant to Article 208, Clause 1, Sub-clause 5 of the Tax Code, income from sources within the Russian Federation includes income from the sale of shares or other securities recognized as subject to the personal income tax under Article 209 of the Tax Code, with regard to individuals, including tax residents and non-residents of the Russian Federation.
A tax resident is an individual who spends 183 or more calendar days in the Russian Federation within 12 consecutive months (Article 207, Clause 2 of the Tax Code).
The personal income tax on share sales is 13 per cent for tax residents of the Russian Federation (Article 224, Clause 1 of the Tax Code) and 30 per cent for non-residents of the Russian Federation (Article 224, Clause 3 of the Tax Code). If a non-resident’s income is subject to tax reliefs in Russia pursuant to international treaties (agreements), the taxpayer has to provide the relevant tax agent with a written confirmation certified by the competent authority of the relevant foreign state that over a certain tax period (or part thereof) he/she has been a resident of the country that has a double taxation agreement with Russia. The papers certifying the taxpayer’s residence must be legalized or notarized with an apostille in due course (except for foreign countries that have mutual agreements with Russia on accepting papers confirming the residence without an apostille or consular legalization).
Article 214.1 of the Tax Code covers the issues relating to the tax base and the calculation and payment of the personal income tax on securities transactions.
The tax base for securities transactions is defined as the revenue calculated as the difference between the income from securities transactions and the real documented expenses borne by the taxpayer in connection with the acquisition, sale, or safekeeping of securities (Article 214.1 of the Tax Code).
The papers confirming the said expenses are issued by individuals or entities that keep a record of shares and sell them upon the shareholder’s request or buy them from the shareholder (brokers, custodians, managing companies, and others that trade shares in the shareholders’ favor).
If a tax agent (broker or custodian) does not withhold the personal income tax for whatever reason, an income statement together with other documents mentioned above are submitted to the tax inspectorate at the end of the year when shares are sold.
Do I, as a Gazprom shareholder, have to inform the relevant stock accounting organization of changes in my personal data?
Pursuant to Article 44, Clause 5 of the Federal Law on Joint Stock Companies No. 208-FZ of December 26, 1995, and Article 7, Clause 1 of the Federal Law on Anti-Money Laundering and Counter-Terrorism Financing, the Company’s registered shareholders must in a timely manner update the information about themselves, their representatives, beneficial owners, and beneficiaries (for individuals: full name and ID information, including registration address; for entities: company name, Primary State Registration Number, Taxpayer Identification Number, address specified in the Articles of Association, and full name of chief executive officer) at the relevant stock accounting organization (Gazprombank, another depository or the SR-DRAGa registrar).
Otherwise, shareholders might fail to receive information about the Meeting, voting ballots, and due dividends. Moreover, it might impede securities operations, such as purchase and sale transactions, receipt of securities account statements or account activity statements for tax services, inter-depository transfers, inheritance or gift procedures, etc.
In order to receive dividends in a timely and prompt manner, it is recommended that shareholders provide exact information on any changes in their personal data before the date when the list of persons eligible for dividends is compiled (the date is determined by the Meeting).
Modifying account information at Depository Center of Gazprombank
Gazprombank Depository Center
9 Second Verkhny Mikhailovsky Dr., Bldg. 11
Unified Call Center:
8 800 100-07- 01 (toll-free within Russia)
+7 495 913-74- 74
+7 495 719-18- 62 (fax)
All operations related to modifying client data at Gazprombank’s Depository Center are carried out at the client’s request. The depository is not authorized to process client requests sent by mail, as the client’s passport and personal signature are required for client identification at the depository. The shareholder’s presence is therefore mandatory for any and all modifications to the client data.
If the shareholder has a new passport that does not bear a stamp with the data from the previous passport, the shareholder needs to provide a certificate confirming passport replacement.
Upon modification of account information, the shareholder receives, if necessary, a depository account statement.
How are dividend amounts determined?
The amount of dividends on Gazprom shares is calculated based on the Company’s Adjusted Net Profit under IFRS.
The adjustments applied to the Net Profit in the course of dividend calculation are aimed at offsetting the effect of non-monetary items present in the Consolidated Statement on the Total Income as follows:
- Adjustment for foreign exchange rate differences on both operating items and financial items.
- Adjustment for impairment (reversal of a loss from impairment) as regards fixed assets and investments in affiliated companies.
- Proceeds from affiliated companies and joint ventures are taken into account instead of the share in the profit of affiliated companies and joint ventures when calculating the amount on the basis of which the dividend payout is determined.
Owing to these adjustments, the Company’s cash flow can be reflected more precisely in the dividend calculation, and the dividend payout can be increased or decreased depending on the increase or decrease in the above items of financial statements.
The target level of dividend payouts under the Dividend Policy is at least 50 per cent of the Company’s Adjusted Net Profit. The target level shall be achieved in stages:
- when calculating the amount of dividends to be paid based on the results for 2019, the Company’s Board of Directors shall proceed from the assumption that the amount allocated for the dividend payout shall be equal to no less than 30 per cent of the Adjusted Net Profit;
- when calculating the amount of dividends to be paid based on the results for 2020, the Company’s Board of Directors shall proceed from the assumption that the amount allocated for the dividend payout shall be equal to no less than 40 per cent of the Adjusted Net Profit;
- when calculating the amount of dividends to be paid based on the results for 2021 and in subsequent years, the Company’s Board of Directors shall proceed from the assumption that the amount allocated for the dividend payout shall be equal to no less than 50 per cent of the Adjusted Net Profit.
The Company’s Board of Directors determines the recommended amount of dividends and communicates it to the Company’s Shareholders Meeting which has the authority to make the final decision as regards the amount of dividend payouts.
What is the procedure for dividend payout?
Pursuant to the Federal Law on Joint Stock Companies and Gazprom’s Articles of Association, the right to receive annual dividends is granted to the individuals or entities owning Gazprom shares at the close of business on a date established by the shareholders meeting making the decision on dividend payout. The said date can be set no earlier than 10 days before the decision (announcement) on dividend payout is made and no later than 20 days from the date of such decision. The payout period must not exceed 10 working days from the date when the list of shareholders eligible for dividends is drawn up for nominal holders and custodians of securities that are market professionals listed on the Shareholders Register and 25 working days for other individuals or entities on the Shareholders Register.
Gazprom has Gazprombank as its dividend disbursing agent, which pays out dividends through its branches and other financial entities upon transfer of funds by the Company. Due to changes in the Russian legislation, starting with the 2014 dividend payout based on the Company’s operating results in 2013, Gazprombank serves as the dividend disbursing agent solely for individuals or entities listed directly on the Shareholders Register. The clients of depository banks, including Gazprombank’s Depository, receive dividends from their depositories (multistage dividend payout).
In order to facilitate the payout process, shareholders may submit written requests specifying their preferred payment method (bank transfer or money order) to the stock accounting organization (SR-DRAGa, Gazprombank or another depository).
To make any necessary changes to the payment methods and account details (residence address for money orders, bank account information, etc.) required to receive dividends after the list of shareholders eligible for dividends is drawn up (on the condition that a shareholder has yet to receive the dividends), shareholders need to apply to the relevant stock accounting organization (depository or registry) and change their personal information. The changes are communicated to the Company via the accounting system with the purpose of dividend payout.
How can I, as a Gazprom shareholder, receive dividends if I do not reside in the Russian Federation?
Russian issuers operate exclusively in rubles when working with security holders. If a Gazprom shareholder that does not reside in the Russian Federation holds accounts in Russian banks, the shareholder may request that dividends be transferred to one of such accounts. For this purpose, the account details must be available in the shareholder’s personal file maintained by the relevant stock accounting organization (depository bank or registry).
Gazprom does not send money orders in rubles outside Russia.
When can I buy or sell shares on the Moscow Exchange to gain the right to dividends?
Pursuant to Article 42 of the Federal Law on Joint Stock Companies No. 208-FZ of December 26, 1995, dividends are paid to the individuals or entities owning shares of a certain class (type) or exercising rights related to those shares under federal laws at the close of business on the date when the list of shareholders eligible for dividends is drawn up in accordance with the decision on dividend payout.
Subject to Article 29 of the Federal Law on the Securities Market No. 39-FZ of April 22, 1996, the buyer receives the right to a registered uncertificated security as soon as the transaction is recorded in the buyer’s depository account kept by the relevant depository entity.
In accordance with the Admission Rules to participation in organized trading on the Moscow Exchange and the Additional Provisions for trading on the Moscow Exchange, if a buyer closes a transaction on the Moscow Exchange in the main trading mode T+, the acquired securities will be deposited in the buyer’s account in the National Settlement Depository on the second trading day from the closing of the transaction.
As an example, let us look at the case of dividend payout based on the Company's operating results in 2013. As decided by the annual General Shareholders Meeting (Minutes No. 1 of June 27, 2014), the list of shareholders eligible for dividends was drawn up on July 17, 2014. So, as regards all transactions that were closed on the Moscow Exchange in the main trading mode T+ starting from July 16, 2014, the corresponding securities were deposited in the buyers’ accounts in the National Settlement Depository after the date on which the list of shareholders eligible for dividends had been drawn up; therefore, the owners of such securities were not eligible for 2013 dividends. The sellers of Gazprom shares that closed transactions on the Moscow Exchange in the main trading mode T+ on and before July 15, 2014, were also ineligible for dividends based on the Company's operating results in 2013.
How can I gain the right to inherit shares?
As with any other inheritable property, the registration of ownership of shares is subject to the existing legal norms.
In order to gain the right to inherit Gazprom shares, you should employ the services of a civil-law notary (if less than six months have passed since the shareholder’s death) or apply to the court having jurisdiction over the shareholder’s (testator’s) last known residence (if more than six months have passed since the shareholder’s death and the heirs have not consulted a notary to register ownership of the testator’s property) to receive a certificate granting the right to an inheritance of shares or dividends by operation of law or a judgment.
Based on the heir’s application, an original copy of the death certificate, and a document verifying the deceased’s ownership of the shares (e.g. an extract from the Gazprom Shareholders Register, a copy of a personal account statement from a depository bank or voting ballots for Gazprom’s shareholder meetings sent to the shareholder), the notary or judge opens a probate. The notary/judge must direct an inquiry on the number of shares registered in the account and the amount of dividends payable to the testator to the relevant stock accounting organization (SR-DRAGa, Gazprombank, other depository or, if the heir is unaware of the stock accounting organization, Gazprom). Please note that the inquiry is made using a special Russian-language application form. The notary/judge must indicate the full name, address and other available information about the shareholder in the inquiry to identify him/her on the register. The signature in the inquiry must be authenticated by a round seal.
Upon receiving the requested information, the notary draws up a certificate granting the right to an inheritance of shares or dividends by operation of law; the judge delivers a corresponding judgment.
The heir then comes to the testator’s stock accounting organization with a passport and an original copy of the certificate/judgment, whereupon he/she opens an account in his/her name, signs an order to transfer shares by inheritance, and pays for the registrar’s/depository’s services at the established rates.