As part of the enrichment of the Cyprus Stock Market with new products and brokerage services, Regulatory Decisions prepared by the Exchange concerning the operations of Depository Receipts have recently been approved.

These Certificates represent ownership of a stake in a company and are traded in US dollars and euros. Instead of listing the securities of a company on a Stock Exchange, a part of them is deposited to a custodian (Depository), who in turn undertakes to adopt and introduce for trading the evidence that is the Depository Receipts of this deposit.

These certificates are addressed to specialized financial institutions while providing significant benefits for both investors and for companies interested to issue and introduce Depository Receipts in the Stock Exchange.

As such advantages can be determined the following:

(a) Low cost of listing trading and settlement.

(b) Spread of investment risk while increasing their liquidity.

(c) Alternative means of raising capital.

Depository Receipts can be introduced in both Regulated and Non-Regulated Market (E.C.M.) of Cyprus Stock Exchange.

The application for admission of Depository Receipts concerns the cases where:

• The underlying Shares corresponding to the Depository Receipts are shares already listed on the Cyprus Stock Exchange or a Stock Exchange of a foreign jurisdiction (EU Countries, Third Countries) and
• In exceptional cases by special permission of the CSE Council when the underlying shares are not listed on the Cyprus Stock Exchange by an approved by the competent authorities stock market.

The issuer that wishes to introduce Depository Receipts can do so in one of the following ways:

(a) With the placement of Depository Receipts which have been issued and allocated before the official announcement of the CSE for their introduction.

(b) With the listing of Depository Receipts which have been issued or should be issued and offered through public offering to the public.

(c) With the parallel listing of Depository Receipts which have already listed on a Stock Exchange of a foreign jurisdiction, recognised by a competent authority and shall be listed simultaneously with any of the abovementioned ways.

The issuer that will introduce Depository Receipts which represent its underlying shares, has to overcome to separate these underlying shares in the share register and to keep separate from its remaining shares, if retained and/or not has redeemed the appropriate certificate representing shares.

Consequently it should come to a retention agreement of the underlying shares with a Depository of Depository Receipts in its capacity as a trustee.

A Depository of Depository Receipts may be incorporated and have its seat in the Republic of Cyprus only if it is a financial institution operating under the Banking Operations Law of 1997 No.66(I)/1997 or a CIF operating under the Investment Services and activities and Regulated Markets law of 2007 as in force at the time.

A Depository of Depository Receipts may be:

• A credit institution authorised under the Banking Operations Law or the corresponding legislations of the other Member States enacted for purposed of compliance with European Directive 2006/48/EC, provided that this is allowed by its authorisation.
• An investment firm authorised under the Investment Services and activities and Regulated Markets law or the corresponding legislations of the other Member-States enacted for purposes of compliance with European Directive 2004/39/EC, provided that this is allowed by its authorisation.
• A Credit Institution of an Investment firm of a Third Country which, while acting as a Depository in the Republic, falls within the provisions of the Banking Operations Law or the Investment Services and activities and Regulated Markets Law, is authorised under the said laws and its authorisation allows it to act as such.

The issuer either via a trust agreement or a subsequent special decision can authorise the Depository to proceed itself with the briefing and/or publication to the beneficiaries of Depository Receipts in relation to the corporate developments of the issuer, including the information regarding its continuous obligations towards the Stock Exchange.

The basic listing requirements of Depository Receipts are among others:

• Their transfer to be free so that the Depository Receipts may be traded and transferred without any obstacles and constraints.
• To be fully paid for listing.
• The issuer ensures the equal treatment of the beneficiaries of the Receipts of the same class in relation to all rights or obligations relating there to.
• It is not bound against anyone in a manner which is incompatible with the interest of the holders of the Depository Receipts.
• The issuers Depository should be ready and capable of handling over its registers of Depository Receipts to the Central Depository and Registry of the Cyprus Stock Exchange.
• Depository Receipts should be distributed to the public up to a percentage of at least 25% of the number of Receipts of the same class, or when the smooth operation of the market is ensured with a lower percentage due to the large number of Receipts of this class and the extent of their free float to the public as the Council deems justified at its absolute description. For the Non-Regulated Market there should be a reasonable number of investors under the Council judgement.
• The issuer of Depository Receipts should have audited accounts for a period of two years prior to listing. In the case of a recently incorporated issuer, the CSE Council should have the power to provide an exception, if it deems that sufficient information is given to investors allowing for the correct estimation of the value of its titles.

The preliminary interest from foreign investors especially from Russia, has led the CSE to prepare the translation of the Regulation Decisions of GDRs in the English and Russian language. These translations