RESOLUTION OF BUREAU OF INTER-PARLIAMENTARY ASSEMBLY OF EURASIAN ECONOMIC COMMUNITY

of October 8, 2004 No. 9

About Recommendations about unification of legislative conditions of issue, placement and security circulation in the stock markets of state members of EurAsEC (on the basis of the comparative and legal analysis of national legal systems and taking into account documents of the WTO, International Organization of Securities Commissions)

The bureau of Inter-parliamentary Assembly decides:

 1. Approve the Recommendations about unification of legislative conditions of issue, placement and   security circulation in the stock markets      of state members   of EurAsEC   prepared     on the basis of the comparative and legal analysis of national legal systems and taking into account documents of the WTO, International Organization of Securities Commissions (appendices 1, 2).

2. Send the specified documents to parliaments of state members of EurAsEC, the Secretariat of Integration Committee for use in practical activities.

Appendix 1

to the Resolution of EurAsEC MPA Bureau of October 8, 2004 No. 9

Recommendations about unification of legislative conditions of issue, placement and security circulation in the stock markets of gosudarstvchlen of EurAsEC (on the basis of the comparative and legal analysis of national legal systems and taking into account documents of the WTO, International Organization of Securities Commissions)

The purpose of these Recommendations is preparation of offers on harmonization of legislative conditions of issue and security circulation in the stock markets of state members of EurAsEC taking into account risk minimization on security transactions.

On the basis of results of the comparative and legal analysis of legislative operating conditions of the national security markets the main directions of harmonization (rapprochement, unification) national legal systems in the designated sphere taking into account international experience and the conventional international standards are offered.

Questions of enhancement (harmonization and unification) legislative conditions of issue and security circulation in the stock markets of state members of EurAsEC are of special importance for forming of the single capital market. With respect thereto forming of the legal base providing realization of this purpose deserves special attention of legislative and executive bodies of the countries of Community.

As showed the carried-out comparative and legal analysis of national legal systems, in the states the corresponding legal base is created and there are necessary institutional bases of enhancement of regulation of the security market, conditions for further work on enhancement and standardization of the legislation in the specified sphere are created. The carried-out work allowed to create the following conclusions and recommendations.

So far in the field of legal regulation of professional activity in the stock markets remains the EurAsEC which is not settled question of legal regime for foreign citizens and legal entities in the security markets of state members which activities for these or those signs are similar to the licensed type of activity. This circumstance creates essential technical obstacles for implementation by the foreign organizations and citizens of the specified activities in the territory of this or that state of Community, in particular professional activity in the security market, or, according to terms of documents of the WTO, when rendering "financial services" by them.

The possible solution of the matter based on subordination of foreign subjects to the requirements established for national participants concerning rules of implementation of this or that type of activity and, therefore, licensing of the foreign subject cannot be realized certainly and without effects. First, even in the presence of such regulation in the international treaty or in the legislation there is uncertain mechanism of practical realization of responsibility for violation of statutory rules. Secondly, it is represented improbable that the requirements applied to professional participants of the stock market - to residents of state member of EurAsEC, could be almost realized concerning activities of the nonresident organization. Thirdly, quite retortion, that is introduction in the relevant states of similar legal regime for the companies - residents of the state of the Community which established the principle of subordination of foreign subjects to requirements imposed to national participants concerning rules of implementation of this or that type of activity in the security market can turn out to be the most probable consequence of the similar "equalizing" approach.

The optimal variant directed at the same time to harmonization of legislative conditions of implementation of professional activity in the security markets of state members of EurAsEC is entering into the national legal system of the regulations provided by documents of the WTO concerning recognition of legal capacity of the foreign person based on licenses or other documents of title issued in foreign state (according to the Art. VII of the General agreement on trade in services).

MPA bureau recommends to state members of EurAsEC when implementing measures for rapprochement (to harmonization and unification) legislative conditions of issue and security circulation in the stock markets of the states of Community to be guided by the principles:

- compliance of internal legal acts to the universally recognized norms and principles of international law;

- reducings the regulations of indirect action requiring adoption of bylaws and development of special mechanisms of their application;

- establishments of single requirements of disclosure of information in the security markets of state members of EurAsEC;

- developments of single approaches to implementation of supervision of activities in the security market.

For the purpose of standardization of the procedure of the admission in the national stock markets of the securities emitted by resident of any state member of EurAsEC to suggest the Permanent commission of MPA of EurAsEC on economic policy to prepare for placement and the address together with Integration Committee the Agreement on the single Eurasian passport of the issuer existing in all territory of EurAsEC who will provide the unified procedure for disclosure of information on the issuer according to standards of International Organization of Securities Commissions, and also the simplified procedure of issue for issuers whose securities are already admitted to trading in the organized markets of state members of EurAsEC.

Thus, in case of registration and security circulation of the issuer - the resident of state member of EurAsEC in the security market of other state of Community and for providing legal protection of the Russian investors it is necessary to provide possibility of application of the right of that state which would provide to the owner of securities optimum legal regime.

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