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Capital Markets

Russia wrestles with transparency requirements

Russian companies are not renowned for adherence to international standards in corporate governance but several from the Russian Federation are looking to list their stock domestically and abroad. How are these companies dealing with the standards demanded by international investors? Kathryn Wells reports.

Rosneft goes for a $20 billion listing


“GOOD GOVERNANCE PRACTICE remains very much a rarity rather than the norm in the Russian corporate world.” So reads the conclusion of a Standard & Poor’s report on corporate governance in Russia published in late 2005.

But how does this square with the fact that country is bursting at the seams with companies lining up to list their stocks at home and internationally? And how, as the range of stocks on offer from Russia continues to broaden, are the growing number of companies managing to meet the higher corporate governance standards demanded internationally?

The immediate answer is that investors, lured by the high growth prospects on offer in Russia and the opportunities that its stocks offer for diversification, are turning a blind eye for the time being to management failings.

“As long as the market is hot, people put corporate governance lower down on their priority list,” says a London-based emerging markets ECM director. “Investors do want to see things like independent directors. In practice in Russia it’s great to see two on a board. One is acceptable but there have also been deals with merely the promise of independent directors to be appointed later.”


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