Issue, standards for issuing securities and bonds, cash and additional issue of shares

Money issue

Money issuance is carried out by the Central Bank of the Russian Federation through its cash settlement centers in different regions of the country. For this purpose, revolving cash desks and reserve funds are opened in the RCC. Minting of coins and physical printing of banknotes is carried out at specialized enterprises - OJSC Goznak, the Moscow and St. Petersburg mints, and in special printing houses. There are three forms of money emission: - deposit - the Central Bank of the Russian Federation increases its credit investments by issuing loans that increase account balances; - budgetary - release of funds to cover the state budget deficit through the acquisition of government securities by the central bank; - banknote issue of money - issue of banknotes and coins.

Issuer types

Securities of domestic issuers are classified into several types. This helps investors choose the most suitable option and buy or sell bonds and shares on time. The most common issuers:

View	A comment
Blue chips	Issued by the largest and most liquid enterprises, characterized by stable economic indicators and paying high dividends. Such assets are indicators of the financial market. When the value of shares of the largest companies increases, there is an increase in the price of second-tier assets. These stocks have the highest credit profile. On the domestic market they are represented by companies such as Gazprom, Sberbank, Rosneft, Unified Energy System of the Russian Federation, etc.
Second echelon	Such assets are trusted a little less and the demand for them is lower compared to blue chips. But they are similar in many parameters. Produced by young and not very large companies
Centers	Lead in areas that influence the value of other stocks in this group. For example: Lukoil, Surgutneftegaz and RAO UES of Russia; RAO UES of Russia and Mosenergo; Moscow City Telephone Network and Rostelecom.
Defensive	They are owned by large companies that pay high dividends. In a bear market, the cost of buying and selling is the same. There are no such shares on domestic stock markets
Premium	These are securities that occupy leading positions in rate growth. Have a big difference between buying and selling
The highlight of the program	They have high liquidity. Financial transactions with them contribute to obtaining high returns, even if the value changes slightly. For example, such an asset on the Russian stock markets was a voucher
Charming	Such assets in terms of profitability are almost equal to premium shares, their value is growing rapidly. They are usually produced by young enterprises
Sleeping	Such shares are distinguished by high prospects and significant growth potential, but they have not yet conquered the financial market. There are a large number of such assets on the Russian market
Cyclical	The payment of dividends on such shares directly depends on the activity of the issuer
Speculative	They appeared relatively recently on the financial markets and do not have an established reputation or history. It is quite difficult to predict dividends and price dynamics of these shares. For example, in Russian stock markets such assets include depositary certificates. Issuers formulate the rules of the game, which helps to obtain maximum profit
Inflated	Such securities are considered overvalued
Inactive	From the point of view of investors, such shares do not have liquidity and are of no interest.

Video on the topic:

Additional issue of shares

Additional issue of shares is carried out by commercial organizations for the purpose of forming or increasing the authorized capital, reorganizing the joint-stock company, changing the scope of rights granted by previously issued securities, replenishing capital or attracting investments.

When issuing shares, the following procedure is followed: - making a decision; — approval of the decision; — state registration of the issue of shares; — placement of shares — transfer of securities to owners; — state registration of a report on the results of the issue of shares.

Tax on income from the sale of stocks and bonds

Tax on income from the sale of shares

Personal income tax of 13% on the sale of shares for residents - persons living within the country - for at least 184 days within 12 months, is charged in two ways:

when making a transaction and withdrawing funds. The intermediary withholds tax from the profit of each transaction, transferring the balance to the holder's accounts;
at the end of the tax period. At the beginning of the next brokerage organization summarizes income and losses, charging personal income tax on the resulting balance;
upon termination of the agreement with the organization.

The tax period in Russia is considered to be the period from January to December. Tax payments for transactions made during the calendar year must be transferred by the end of January of the following year.

Tax on income from the sale and redemption of debt securities

The tax base when selling a bond or receiving its face value is the difference between the cost of its purchase and sale, taking into account the accumulated coupon income (ACI) and the costs incurred.

The tax base for a sale is calculated as follows: (Profit from sales + received income tax) – (purchase expenses + paid income tax) + coupon income.

Tax base when redeeming a bond: Face value – (purchase expenses + paid income tax) + coupon income.

If an investor bought a bond at a price less than its par value and sold it after its maturity date, he or she will not have to pay personal income tax on the difference between the par value and the purchase price.

The bankruptcy of the issuer of a debt security does not reduce the taxable base.

Securities issuance standards

Standards for issuing securities are defined in Order of the Federal Financial Markets Service of Russia dated July 4, 2013 N 13-55/pz-n “On approval of Standards for issuing securities and registering securities prospectuses”, as well as “Regulations on standards for issuing securities, the procedure for state registration of issues ( additional issue) of issue-grade securities, state registration of reports on the results of the issue (additional issue) of issue-grade securities and registration of securities prospectuses,” approved by the Bank of Russia on August 11, 2014 N 428-P.

What you need to know about issuing bonds as a way to finance a business

How to replace a business loan?

At a certain stage of development, each company faces the question of the need and method of attracting additional capital. Most companies turn to credit and financial institutions to obtain funds without thinking about the possible risks. However, there are reliable and alternative options for generating additional profit, which will be a great strategic step for the future growth of the company.

Credits and borrowings imply strong dependence on one lender and low mobility in making decisions on financing parameters . In this case, when borrowing funds from banks or private funds, the main terms of the loan, such as volume, term, interest rate, are determined by the lender. In this connection, this financing is provided to companies that have confirmed their solvency and provided the necessary collateral, the cost of which is greater than the loan amount.

After the Bank of Russia over the past few years began to tighten requirements for banks to issue loans to small and medium-sized businesses (SMEs), it has become much more difficult for them to obtain financing from a bank. One of these reasons is that in a number of cases banks cannot meet the requirements of SMEs in terms of the volume of resources attracted and the period for which they can be provided. Small businesses began to look for alternative sources of financing. By this time, the infrastructure for placing bonds of such companies had appeared on the stock market. In addition, individual investors entered the public debt market en masse in search of higher returns than deposit rates.

As of the end of 2022, the volume of bonds issued by Russian companies is relatively small and amounts to about 21% of GDP. This is primarily due to historically high interest rates, which did not allow various types of debt relationships to actively develop, and to the long history of bank lending and equity financing of companies, which until recently were mentally closer to many companies as a way to attract additional funds.

At the moment, there is a steady increase in bond issues by Russian companies, since, in comparison with previous periods, low inflation allows companies and investors to predict the attraction of investments and the investment of funds for a longer period.

Part of the market growth is associated with government support for certain sectors of the economy.
The sanctions of the United States and European countries, although aimed at the external debt of Russian companies, at the same time they have an additional stimulating effect on the growth of the Russian domestic bond market. The majority owners of bonds of Russian companies are banks and investment companies, but at the same time, active demand and growth of new individual investors are observed on the stock market. Most bond issues in Russia are traded on the stock market. Since 2014, in terms of placement volume, 80-85% of new bond issues have been exchange-traded bonds. This fact only confirms the displacement of classic corporate bonds issued by companies and is associated with a more comfortable and simplified procedure for their registration on the Exchange. Commercial bonds are a new type of over-the-counter high-yield bonds (HYDOs) issued by companies that do not have a credit rating, which are an alternative to promissory note financing and will replace it in the foreseeable future.

All of the above indicates the gradual replacement of the bill market, bank lending and other classical methods of financing with bond loans.

There are two trading platforms in Russia where bonds can be placed: the Moscow Exchange and the St. Petersburg Exchange.
The Moscow Exchange accounts for the bulk of transactions in bonds of Russian companies. A company issuing bonds must meet certain parameters in order to undergo the listing procedure on the Moscow Exchange, include bonds in a certain quotation list (three levels of the list) and carry out transactions. The inclusion of bonds in the list of one level or another depends on compliance with the requirements of the Moscow Exchange and Russian legislation by the company issuing the bonds. Borrowing on the public financial market is devoid of most of the disadvantages of banking and other methods of lending, but at the same time they impose a number of obligations arising precisely from the publicity of this market (the necessary degree of transparency, obligations to disclose information, a clear strategy for behavior in the market, etc.) , while providing a number of advantages when financing long-term programs:

Larger loan volume and longer borrowing period;
Possibility of reducing the loan rate for subsequent placements (cheaper);
Unsecured financing;
Wide range of investors;
Possibility of flexible debt management.

The concept of Exchange Traded and Commercial Bonds was introduced into the Federal Law on the Securities Market dated April 22, 1996 No. 39-FZ - Federal Laws dated July 27, 2006 No. 138-FZ and July 21, 2014 No. 218-FZ.
The first issue of exchange-traded bonds took place in 2008. The main parameters required for the issue of exchange-traded bonds:

identification number of the bond issue? assigned by the Exchange;
do not provide their owners with rights other than the right to receive the nominal value or nominal value and a percentage of the nominal value;
issued in documentary form to bearer with mandatory centralized storage;
payment of nominal value and interest is carried out only in cash;
owners of exchange-traded bonds have the right to present them for early redemption in the event of delisting of exchange-traded bonds on all exchanges that have admitted them to organized trading;
issued without collateral;
posted by open or closed subscription;
without registration of the Securities Prospectus (depending on the terms of the issue);
placement within the Program is possible.

The first issue of commercial bonds took place in 2016. The main parameters required for the issuance of commercial bonds are identical to those of exchange-traded bonds, but there are the following significant differences:

Identification number of the bond issue? assigned by the Central Securities Depository (NCO JSC NSD);
posted by private subscription;
without registration of the Securities Prospectus.

Potential companies planning to issue exchange-traded or commercial bonds are: resident companies of the Russian Federation, small and large enterprises, Banks and investment companies considering the possibility of a quick and relatively inexpensive entry into the public market to attract financing for the purpose of implementing internal company projects, scaling business and refinancing of current loan obligations.
Indicative parameters required for new companies planning to issue bonds on the Moscow Exchange:

The minimum amount of revenue is 120 million rubles.
The minimum issue volume is 50 million rubles.
Net debt / EBIT (operating profit) less than 3x or output volume not more than ½ of revenue or balance sheet currency.
IFRS reporting for the last reporting year (if the issuer is part of a group of companies).
The structure of the bond issue corresponds to the actual perimeter of the business.
The company has high standards of corporate governance and stable market positions and development prospects.
Average revenue growth rate (CAGR) of at least 10% over the last 3 years.

The parameters and structure of the bond issue should be determined depending on the profile and characteristics of the issuing company and market conditions.

The amount is determined by the level of demand for the issuer's debt. Must be proportionate and fit into the company's financial model.
Currency - rubles/foreign currency (determination of the ruble payment amount linked to the exchange rate of a certain currency).
Nominal value - standard lots - 1000 rubles. Placement at nominal value or with a discount/premium.
Interest rate (coupon) - fixed/floating (there are restrictions for certain groups of investors). Must fit into the financial model of the issuer.
The maturity period depends on market conditions.

In 2022, 33 bond issues with a volume of less than 500 million rubles were placed. 26 new issuers with a total volume of 5.38 billion rubles. Almost all of these issuers belong, according to Russian legislation, to microenterprises and SMEs.
The industries of new Issuers that have placed small volumes of bonds in 2022 are transport services, production of building materials, food processing, pawnshops, companies providing microfinance services (MFOs), leasing companies, as well as construction and development, information technology, and the fitness industry.

Practical aspects of preparing a company for issuing bonds.

The life of the issuer and/or guarantors is at least 2 - 3 years.
The Issuer's commercial activities are profitable, stable and understandable for investors.
The issuer has an effective business model and a reasonable debt load.
The issuer has a clear structure of owners (beneficiaries).
The Issuer's employees are a team of professionals capable of achieving strategic goals and showing annual growth in the company's revenue.
The issuer operates in the B2C segment, if the circle of potential investors is individuals. individuals and B2B, if the circle of potential investors is legal. faces.

The Issuer must have an understanding of the cash flow from which coupon payments will be made and the par value of the bond issue (public loan) will be repaid.
Additional requirements for the Issuer when issuing exchange-traded bonds depend on the terms of the issue and the level of the Issuer's listing on the Moscow Exchange (1st, 2nd or 3rd level).

The terms of the bond issue contain standard parameters for medium-term and long-term bonds.

Disclosure of information is carried out in accordance with the requirements of Bank of Russia Regulation No. 454-P dated December 30, 2014 and the Listing Rules of the Moscow Exchange. The purpose and conditions of the bond issue are simple and clear, targeted or project borrowing (development of an existing business or financing of a separate project), and the terms of the issue contain standard parameters for bonds.

Preparation of the Issuer for the placement of bonds takes from 2 to 6 months and includes the following stages:

Search for a Consultant and Placement Organizer.
Definitions of the conditions for the upcoming placement - one-time placement or within the framework of the Program, with or without a Prospectus.
Completion of the KYC procedure (confirmation of the need to attract financing through the issue of bonds) on the Stock Exchange or at NSD.
Interaction with shareholders and management of the Issuer.
Drawing up a presentation (commercial bonds) and an investment memorandum (exchange bonds).
Preparation of issue documentation (Issue Decision, Bond Program and Securities Prospectus).
Search for Investors.
Interaction with the Exchange and NSD.

One-time expenses when issuing bonds depend on the terms of the issue and the following composition of participants who help companies issue and place bonds:
Consultant - provides services in preparing the company for the issue of bonds, advises the company on choosing the optimal terms of placement, preparing documents for the Exchange, and also helps the company after the placement of bonds and until their redemption. The cost of services is fixed and less than 0.01% of the loan amount.

Organizer - is engaged in searching for and holding meetings with Investors, the Exchange, the Underwriter, drawing up investment memorandums, and also deals with marketing activities. The cost of services is from 0.5% of the loan amount.
Underwriter - deals with the placement of bonds and is a guarantor for the placement of all or part of the bond issue. The cost of services is from 0.2% of the loan amount.
Exchange - provides services for including and maintaining company bonds in the quotation list. The cost of services is fixed and does not exceed 0.1% of the loan amount.
Depository (NSD) - maintains data records and registers changes throughout the entire bond issue period. The cost of services is fixed and less than 0.1% of the loan amount.
The state duty is 0.2 of the issue volume, but not more than 200,000 rubles.

Taking into account the trend of increase in bond loans of investors - individuals, with a bond loan the company receives a wide range of investors.

This factor is an absolute advantage - when you have many bond owners.
Due to the lack of concentration of credit resources in one hand and in the event of a change in the economic situation in the company or in the context of lower borrowing rates and inflation, as well as the presence, in accordance with the terms of the issue, of a Bondholders' Representative (BOR), it is much easier for the company to agree with investors on the repurchase of debt , additional placement or amendments to the terms of the bond issue. A favorable economic situation in Russia for the placement of bond issues of Russian companies, improvement of the legislative framework, implementation of measures to improve the financial literacy of the population and simplification of the procedure for access of new companies to enter the stock market, all this will, in the medium term, contribute to the growth of the stock market and an increase in the number of new Issuers who are in need of raising financing through bond issues.

FSBU REVIEW 6/2020, 26/2020

What specific actions should an accountant take to make the transition to the new Federal Accounting Standards correctly and in a timely manner? What entries should be made in accounting?

Only on January 31 (Monday) a step-by-step analysis of the transition to new standards in a three-hour webinar with Sergei Vereshchagin.

Sign up>>>

Bond issue

A bond is a security that gives its owner the right to receive from the issuer its nominal value in cash or in the form of a property equivalent within a specified period. The procedure for issuing is the same as for issuing other securities, but the following conditions must be met: - the par value of the bonds must not be greater than the par value of the authorized capital of the joint-stock company; — the issue can be made after full payment of this capital; - a full issue of bonds without collateral can be carried out only 2 years after the registration of the joint-stock company and if 2 annual balance sheets of the company are approved by this time; — A JSC should not place bonds that can be converted into shares if their number is less than the number of shares that can be purchased using the bonds.

Advice from Sravni.ru:
When planning to issue shares or bonds, the management of a joint stock company should seek advice from lawyers.

Content:

What is a security?
What are shares and what are their advantages?
Main features of bonds

The legislation of the Russian Federation defines a clear number and characteristics of the main securities that are allowed to be issued and sold in the country. Their circulation is carried out within the stock market. Today, this platform is one of the most profitable ways to make money - a large number of traders work there and new players appear every day.

Anyone can work in the securities market. This became possible thanks to the availability of special training courses. All you need to do is complete this training and you can significantly increase your income!

You can find suitable programs on the platform for training professional traders by Alexander Gerchik. It was organized by a specialist with 22 years of experience in successful trading on the stock exchange. Most of Gerchik’s students have already become professional traders and managed to earn their first big money, and the rest are working in this direction. They tell their stories in successful training cases.

To choose a suitable course or a specific lesson topic, just follow the link and read the detailed information. The advantage of this type of training is that it takes place online. This means that a person just needs to set aside any convenient time to complete the course, and then he can safely start trading... and start counting his profits!