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Conversion of Russian ADRs and GDRs

A depositary receipt is a valuable security issued by foreign issuers that confirms an investor's right to a certain number of shares. Depositary receipts for shares of Russian issuers have traditionally been issued by major American and other foreign banks such as BNY Mellon, JPMorgan, Citibank, Deutsche Bank, and others.

Due to the current sanctions against Russian companies, those who do not exchange their depositary receipts for shares of Russian companies in a timely manner risk losing their entire investment. However, the conversion process is associated with a number of formal and practical difficulties, which many investors refuse to deal with and are willing to forfeit their investments in exchange for a lower market value of the shares. At the same time, understanding the depositary receipt conversion process can lead to the conclusion that almost all difficulties associated with it are surmountable.

Conversion of Russian ADRs and GDRs

Posted 21 March 2023

Our solutions

To address these issues, GFLO Consultancy, has developed solutions and provides successful support to investors who wish to convert their Russian ADRs and GDRs to underlying shares for which such depositary receipts were issued. What we offer:

  • free case assessment;
  • free initial consultation;
  • quick turnaround time, which is especially important due to the limited remaining conversion period;
  • an international expertise spanning across Nother America, Eupore, Middle East, and Asia;
  • one of the best offers for the conversion currently on the market – all work is done by our own lawyers, eligible in Russia;
  • actual practical expertise in Russian ADRs conversion that is up to date.

So how does the conversion process of ADRs and GDRs look like?

Step 1: Opening an account with a Russian depository or broker

In order to convert Russian ADR and obtain underlying shares, an investor must open a depositary or brokerage account with an organization that has an account with the National Settlement Depository (NSD).

Currently, there are almost no foreign organizations that have such accounts, and those that do are not willing to credit shares received through the conversion of depositary receipts that were initially held in accounts at other organizations. Furthermore, owning shares of a Russian issuer through a foreign structure carries a high risk of loss or restricted access to investments due to sanctions or counter-sanctions. Therefore, the optimal solution is to open an account with a Russian depositary or brokerage.

As a general rule, personal presence of the investor is required to open a depositary or brokerage account. However, if the investor is unable to come to Russia for the purpose of opening an account, they can issue a notarized and legalized (apostilled, if applicable) power of attorney to a representative in Russia who will have the right to open an account on their behalf.

Step 2: Submitting instructions for ADRs/GDRs withdrawal

After opening a deposit or brokerage account, an investor must fill out and send a special instruction to their depositary or broker to withdraw the depositary receipts. While forms for these instructions are published by foreign issuers who have released depositary receipts, specific information is required from the Russian depositary or broker where the account is held for the deposit of underlying shares.

As a result of filling out and submitting the instruction, the depositary or broker through which the investor holds the Russian ADR must send an instruction to the issuer of the depositary receipts to transfer the shares to the investor and initiate the process of withdrawing the depositary receipts from the investor’s account. However, in practice, this part of the process of converting depositary receipts largely depends on the willingness of the depositary or broker through which the investor holds the depositary receipts to cooperate with the investor and facilitate the conversion process.

Most American brokers are willing to work with investors for conversion purposes, but there are a number of organizations, many of which are European brokers and depositaries, that seek to distance themselves as much as possible from the conversion process, which may result in the conversion being hindered or even impossible.

Step 3: Submitting a counter-instruction

If the broker or custodian through which the investor holds Russian ADRs has accepted an instruction to withdraw depositary receipts and has sent instructions to the depositary of the depositary receipts to transfer the underlying shares to the investor, the investor can proceed to the final part of the conversion process – submitting a counter-instruction to the Russian custodian or broker.

As a general rule, the counter-instruction is submitted in person by the investor at the office of the Russian custodian or broker. However, as with opening a deposit or brokerage account, this action can be carried out by a representative of the investor with a power of attorney (which must be notarized and legalized).

If the counter-instruction is completed and submitted correctly, the Russian custodian or broker is obliged to credit the corresponding number of shares to the investor’s account, making them a direct shareholder of the Russian issuer.

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Diane, partner of GFLO Consultancy

Law 114-FZ and Its Impact on Investors

On April 16, 2022, the Federal Law No. 114-FZ (hereinafter referred to as Law 114-FZ) was passed in Russia, which prohibited Russian issuers from trading their shares outside of Russia through depositary receipts and obliged them to take measures to terminate programs for issuing depositary receipts and terminate agreements with foreign issuers of depositary receipts.

Given that, in accordance with Law 114-FZ, Russian issuers are required to ensure the termination of programs for issuing depositary receipts, foreign issuers of depositary receipts are obliged, within the timeframes established by depositary agreements between them and Russian issuers of the relevant shares, to write off the depositary receipts and pay investors the amount of money provided for in such depositary agreements, which is usually substantially lower than the market value of the shares.

However, such consequences do not apply to investors who managed to convert their depositary receipts. Moreover, although formally foreign issuers are required to write off the depositary receipts and pay investors their value, in practice, this is impossible due to sanctions and counter-sanctions restrictions.

In addition, Law 114-FZ specifies that investors who have the right to receive underlying shares will be determined on the date of entry into force of Law 114-FZ. This means that after this date, the purchase of depositary receipts does not give the right to receive underlying shares, and accordingly, the conversion of such depositary receipts is impossible.

Also, in accordance with Law 114-FZ, investors may demand payment of all unpaid dividends after converting their depositary receipts and receiving shares of Russian issuers, i.e., becoming direct shareholders of such issuers. This is particularly relevant for investors who hold depositary receipts of Russian issuers such as Gazprom and Lukoil, as these Russian issuers have distributed significant dividends that could not be paid to holders of depositary receipts due to sanctions and counter-sanctions restrictions.

To obtain previously paid dividends, an investor must apply with a special statement directly to the Russian issuer. In addition, it should be noted that the Bank of Russia has introduced temporary restrictions on operations with underlying shares received as a result of the conversion of depositary receipts. Russian depositories and brokers are now required to keep a special record of converted shares and limit the sale of these shares for each investor to 0.2% of the total number of shares.

As a general rule, Russian depositories and brokers apply these rules to all investors who received underlying shares as a result of conversion. However, if an investor acquired depositary receipts on or before March 1, 2022, they can submit a special statement to the Russian depository or broker and cancel the application of the specified restrictions.


In conclusion, it should be noted that the process of converting depositary receipts is indeed complex and requires the investor to have certain knowledge and experience. It is best to seek the help of experienced professionals who will provide qualified support at all stages of the procedure. It is not worth risking your investments and neglecting the need for consultation with professionals. GFLO Consultancy’s assistance can be invaluable for a successful conversion of Russian ADRs in your particular case.

How can we assist?

  • We will accompany you at all stages of the conversion of depositary receipts;
  • We will provide legal support;
  • We will prepare all necessary documents;
  • We will consult on any conversion-related questions.

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GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.


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Diane, partner of GFLO Consultancy