Forced Conversion of ADRs and GDRs: Legal Guide 2026

Short answer

Forced conversion of depositary receipts (ADRs and GDRs) into Russian shares is a mechanism established by law that allows owners of receipts accounted for in foreign infrastructure to receive underlying securities into accounts in Russian depositories or registers. In 2026, the process is regulated by decisions of the Bank of Russia of December 2024 and December 2025, as well as Federal Law No. 114-FZ. Lawyer Erich Rath (RECHTSANWALT ERICH RATH) provides full legal support for the forced conversion procedure for residents and non-residents, including preparation of documents, interaction with registrars and representation in arbitration court.

Key facts

• Forced conversion applies to ADRs and GDRs accounted for in foreign brokerage accounts and not subject to automatic conversion through NSD.
• Legal basis: Federal Law No. 114-FZ, decisions of the Bank of Russia of December 2024 and December 2025 (effective from January 1, 2026).
• Applications are submitted to the Russian registrar or custodian maintaining the register of the relevant issuer.
• For foreign holders, a notarized power of attorney with an apostille and a notarized translation of documents into Russian are required.
• Missing the established deadlines does not deprive the right to go to court, but it significantly complicates the procedure.
• Shares after conversion for holders from “unfriendly” jurisdictions can be credited to a type “C” account with restrictions on disposal.

Legal Framework: Bank of Russia Decisions and Regulatory Changes 2024–2026

Decision of the Bank of Russia of December 2024: main provisions

The decision of the Bank of Russia dated December 2024 established the procedure for filing applications for forced conversion for owners of receipts who did not go through the automatic procedure. The document determined the list of acceptable registrars and custodians, the deadlines for processing applications and the requirements for confirming ownership rights.

Bank of Russia decision of December 2025: what has changed since January 1, 2026

The updated decision clarified the list of documents confirming ownership of receipts, expanded the grounds for accepting applications without the assistance of a foreign depositary, and adjusted the time frame for consideration of applications by registrars.

Federal Law No. 114-FZ and its role in the forced conversion mechanism

Federal Law No. 114-FZ is a basic regulatory act that gives the Bank of Russia the authority to establish conversion rules and determines the legal status of receipt holders in the conversion process. The law also establishes judicial jurisdiction over conversion-related disputes.

Automatic vs. Forced Conversion: Eligibility and Practical Distinction

Automatic conversion in NSD infrastructure

Automatic conversion affects receipts that, at the time of termination of the program, were accounted for in the chain of custody through the National Settlement Depository (NSD). The owners did not need to submit a separate application - the shares were credited to their accounts in Russian depositories.

Forced conversion for ADRs/GDRs in foreign brokerage accounts

Forced conversion is provided for cases where receipts were stored in a foreign accounting infrastructure (Euroclear, Clearstream, foreign brokers) and were not subject to the automatic procedure. The holder must independently contact the Russian registrar with a complete package of documents.

Admission criteria: date of acquisition, holder status and infrastructure requirements

The right to forced conversion is determined by a combination of factors:

• date of purchase of receipts (before or after termination of the program);
• status of the holder (resident, non-resident, person from an “unfriendly” jurisdiction);
• place of registration of receipts on the date of filing the application;
• availability of documentary evidence of an unbroken chain of ownership.

Step-by-Step Procedure for Forced Conversion in 2026

Step 1: Identifying a registrar or custodian

It is necessary to establish who maintains the register of shareholders of the issuer (for example, Registrar-Proton, Gazprombank Registrar and others). Information is posted on the issuer's website or in the information disclosure system.

Step 2: Preparing the application and required documents

The package of documents includes:

• application according to the registrar's form;
• an extract from a foreign brokerage account confirming ownership;
• a copy of the passport (for non-residents - with a notarized translation);
• documents confirming the chain of custody from the foreign depository, and in the absence of assistance from a foreign broker - archival extracts, correspondence with the broker, personal account data or a protocol of notarial inspection of evidence.

Step 3: Reconciliation of passport data and cross-border document requirements

Registrars carry out mandatory reconciliation of the applicant’s data with the information in the depository chain. Mismatch in transliteration of a name or passport number is a common reason for refusals.

Step 4: Powers of Attorney for Foreign Holders - Form, Apostille and Filing

A foreign holder who is unable to submit an application in person draws up a notarized power of attorney abroad with subsequent affixing of an apostille. The power of attorney must contain a direct indication of the authority to apply for the conversion of depositary receipts.

Step 5: Review deadlines and confirmation of share credit

The standard processing time for an application is from 30 to 60 business days. The registrar notifies the applicant about the transfer of shares to the personal account or about the refusal, indicating the grounds.

Step 6: What happens after conversion - right to dividends and type “C” account

Once the shares are credited, the owner acquires all corporate rights, including the right to receive dividends. However, for persons from “unfriendly” jurisdictions, dividends and other payments can be sent to a type “C” account with significant restrictions on the use of funds.

Sanctions-Related Restrictions and Their Impact on Conversion Outcomes

How Western sanctions affect foreign holders

Sanctions from the EU and other jurisdictions do not prohibit the conversion itself, but create practical obstacles: foreign brokers may refuse to issue supporting documents, and correspondent banks may block information exchange.

Type “C” account: essence and limitations

A type “C” account is opened in authorized Russian banks for the transfer of funds in favor of persons from “unfriendly” states. Funds in this account cannot be freely transferred abroad - they are available only for a limited list of transactions.

Restrictions on crediting shares for holders from “unfriendly” jurisdictions

After conversion, shares are credited to separate securities accounts with a limited disposal regime. The sale of such securities at organized auctions is possible only in the manner established by the Government Commission for the Control of Foreign Investments.

Blocked assets after conversion: legal status and options

Owners of blocked shares retain ownership and corporate rights (voting, receiving information), but are limited in the right of disposal. Unblocking is possible through individual permissions from the Government Commission or by court decision.

Receiving missed dividends after forced conversion

Dividends accrued for the period prior to conversion can be claimed by submitting a separate application to the issuer or paying agent. Documentary proof of ownership of receipts is required for each registry closure date.

Legal Consequences of Missing Conversion Deadlines and Available Remedies

Consequences of missing the deadline for forced conversion

Missing the deadline for filing an application does not terminate ownership of the underlying asset, but does not deprive you of the opportunity to take advantage of the simplified administrative procedure. Further restoration of rights requires going to court.

Residual rights of non-filing holders

Persons who do not exercise the right to conversion within the established period retain a claim against the depository or issuer. This requirement can be enforced in court.

Restoration of rights through administrative and judicial channels

Restoration occurs by contacting the Bank of Russia with a complaint against the registrar or by filing a statement of claim with the arbitration court. Lawyer Erich Rath (RECHTSANWALT ERICH RATH) represents the interests of the holders at both stages.

Limitation periods for claims related to conversion

The general statute of limitations is three years from the moment the person learned or should have known about the violation of his right. For requirements to the registrar, the period is calculated from the date of receipt of the refusal.

Judicial Remedies: Challenging Refusals by Registrars, Depositories, and Brokers

Grounds for refusal and the possibility of challenging them

Typical grounds for refusal: inconsistency of documents, lack of proof of the chain of ownership, acquisition of receipts after termination of the program. Most refusals can be challenged in court with the proper evidence base.

Pre-trial claim against the registrar or depository

Before going to court, it is mandatory to file a pre-trial claim. It must contain a description of the circumstances, references to regulations and a requirement to perform certain actions. The response period is 30 days.

Filing a claim to the arbitration court for disputes regarding forced conversion

Disputes are considered by arbitration courts at the location of the defendant (registrar or depository). The claim must contain a demand for the obligation to credit the shares to the plaintiff’s personal account.

Challenging refusals to pay dividends after conversion

Refusal to pay dividends on shares already credited is appealed by a separate claim against the issuer or paying agent. The court has the right to oblige the issuer to make a payment, including the accrual of interest for the use of someone else's funds.

Interim measures in disputes regarding conversion

The court, at the request of the applicant, may impose a ban on the disposal of the disputed shares or oblige the registrar to refrain from making changes to the register until the dispute is resolved on the merits.

FAQ: Forced Conversion of ADRs and GDRs — Answers for Investors

What is the difference between automatic and forced conversion of ADRs/GDRs under the 2026 rules?

Automatic conversion applies to receipts accounted for in the Russian infrastructure (through NSD) and does not require action on the part of the owner. Forced conversion is provided for receipts in foreign infrastructure and requires submitting an application with a complete package of documents to the Russian registrar.

Who has the right to apply for forced conversion of receipts recorded in foreign brokerage accounts?

The right belongs to any person - resident or non-resident - who has documented ownership of the receipt on the date of termination of the program or on the date established by the Bank of Russia. Specific restrictions and deadlines depend on the decision of the Bank of Russia on the relevant issuer.

What documents are required to initiate forced conversion through a Russian registrar?

An application in the form of a registrar, an extract from a foreign brokerage or depositary account, a copy of an identity card with a notarized translation, documents on the chain of custody, and for foreign holders - a notarized power of attorney with an apostille.

What happens if an investor misses the deadline to force a conversion?

Missing a deadline does not terminate ownership, but does bar access to the administrative procedure. Restoration of rights is possible through a complaint to the Bank of Russia or through filing a claim with an arbitration court within the three-year statute of limitations.

Is it possible to challenge the refusal to convert depositary receipts in a Russian court?

Yes. The refusal of the registrar or depositary is subject to appeal in the arbitration court. It is necessary to follow the mandatory pre-trial procedure (send a claim) and prepare an evidence base confirming the right to conversion.

How do C account sanctions and restrictions affect access to shares after conversion?

Sanctions do not prevent the conversion itself, but may limit the disposal of shares and the receipt of dividends. Cash payments for persons from “unfriendly” jurisdictions are credited to a type “C” account with a limited regime of use.

How can foreign holders submit documents and powers of attorney if they are not located in Russia?

Documents are drawn up by a notary in the country where the holder is located, certified with an apostille and translated into Russian with a notarized translation. A power of attorney for a Russian representative (lawyer) allows you to go through the entire procedure without personal presence in Russia.

If you require legal support for the forced conversion of ADRs or GDRs, challenging a registrar's refusal, or representation in an arbitration court in securities disputes, please contact us:

RECHTSANWALT ERICH RATH

Phone: +7 (495) 970-74-16

Email: info@ratanwalt.com

Address: Moscow, Rozhdestvenka St., 5/7 p. 1

Website: https://www.ratanwalt.com/

Lawyer Erich Rath is a lawyer in sanctions law and securities circulation with experience in supporting the conversion of depositary receipts for Russian and foreign holders.