Share Issuers' Liability for Register Fraud Upheld

The Constitutional Court rejected a challenge by several of Russia's largest corporations to legislation providing that although registers of open joint stock companies with over 50 shareholders must be maintained by independent registrars, the issuer remains liable for theft of shares through register fraud. The Court stated that corporations "must exercise adequate care in choosing a registrar." The challenge arose from a 717 million ruble (~$25 m.) claim against Gazprom to compensate for the theft of 50 million shares that belonged to shareholder Rosgasifikatsia. Critics of the decision argue that a corporation may not own more than 20% of the registar's shares and thus do not control it, while supporters contend that registrars of major corporations often lack real independence or assets to satisfy fraud claims.
www.vedomosti.ru/newspaper/article/2010/01/29/224162