The Ministry of Finance stopped publishing quarterly reports of JSCs and bond issuers on its website. The materials for January-September 2016 should have been published until December 2016. However, the data was not published.
It is noted in the official statement of the Ministry of Finance that the order of publication of the reports of JSCs and bond issuers was changed when the new law on the Securities Market and the guidelines of the Ministry of Finance for information disclosure in the securities market were adopted.
"Joint-stock companies and bond issuers are obliged to publish an annual statement, including by means of its publication on the unified portal of the financial market. This portal is created on the basis of the national automated information system (www.portal.gov.by) and has the Securities Market section functioning as unified information resources of the securities market," the Ministry of Finance states.
It is also stated that the issuers have a right to disclose other information permitted by the law "in the order and to the extent determined by them on their own."
"Economic entities should be interested in the disclosure of accurate and relevant information about financial results and in the additional publication frequency in order to attract resources to the financial market and to gain the investors' confidence," the Ministry of Finance is confirmed.
On the one hand, the experts support the arguments of the Ministry of Finance. On the other hand, they state that the stoppage of publication of quarterly reports of JSCs and bond issuers is a significant barrier to the development of the Belarusian financial market.
The Senior Adviser of IFC in Belarus Valery Fadeev noted in the comments to BUSINESS NEWS that the form of incorporation of the joint-stock company presupposes publicity. JSCs must prepare annual statements and notify the shareholders of the financial standing. According to Mr. Fadeev, the law empowers any shareholder to put a question of the financial standing of the company and get an answer. However, it is difficult for the minority shareholders to get information about the financial standing of the company in practice.
In the opinion of Valery Fadeev, the information publication functions should not be entrusted to the public authority, which is the Ministry of Finance. The joint-stock companies and bond issuers must perform these functions.
The Deputy of the House of Representatives of the National Assembly of the Sixth Convocation Valery Borodenya partially agrees with it. However, he states that the current state of the financial market does not allow reckoning on the companies' aspiration to openness.
In the opinion of Mr. Borodenya, the financial market should be based on the openness principle, and the Belarusian legislation formally envisages it. The administrative responsibility will be even applied to the joint-stock companies for the information hiding.
"If we are a joint-stock company, we are obliged to tell everyone about the results of our operation. It is a peculiarity of this form of incorporation. If a company does not want to tell anything, the company should become a private unitary enterprise or a limited liability company – of any other form of incorporation," Mr. Borodenya believes.
However, Mr. Borodenya thinks that the stoppage of publication of JSCs' reports is a wrong decision that significantly limits the development of the Belarusian stock market. It is not so developed currently and nobody can expect that the issuers will publish their data on their own.
He noted that the draft law on the Investment Funds is being prepared for consideration in the second reading currently. The lack of the current information about the standing of the public companies questions the practicability of the creation of investment funds in Belarus in that sense.
He also noted that when the draft law on the Securities Market had been discussed, the Securities Department of the Ministry of Finance convinced that the information would be more open thanks to the law. It was concernment that the enterprises do not disclose information to the proper degree. Mr. Borodenya mentioned his work experience at BSEU when joint-stock companies refused to provide the students undergoing practical training with the annual statements referring to the commercial secret.
In the opinion of the Lawyer of Sysuyev, Bondar, Khraputsky SBKH and the member of Minsk Regional Bar Association Andrey Shimonovich, the data published on the Unified Portal of Financial Market is currently less informative than the data published on the website of the Ministry of Finance. For example, in this specific case, the potential investor will have to study the financial standing of any JSC additionally.
He brought to notice that the information published by the Ministry of Finance, allows not only determining the special financial performance of JSCs as of the reporting date but also observing the changes of one or another indicator by the reporting periods.
"When the investment risks are estimated for the first time, this information can be enough to make a decision on the project practicality. It is obvious that the financial and legal audit of the JSC will be carried out additionally but the mentioned actions are connected with some financial expenses," Mr. Shimonovich believes.
He also gave examples when legally sound decisions were made on the basis of the clear information about the JSC's standing.
"Complainants often referred to the information about the JSC's activity published as applicable when the debt recovery claim was submitted in order to ground the application of injunctive relief in the form of freeze of settlement accounts, seizure of property, including real estate, and the commitment bans. Thus, the real estate at the cost of over USD 700 thousand was arrested as a measure to secure the claim under one of the cases on the basis of the data on the financial standing of the defendant (JSC)," Mr. Shimonovich noted.
The lawyer holds the information disclosure experience of Russia up as a model. The Russian public joint-stock companies and non-public joint-stock companies with more than 50 shareholders are obliged to disclose information.
The public joint-stock companies disclose information in the form of the annual account, annual financial statements, notifications of general meeting, and other data and documents specified by the Bank of Russia.
The non-public joint-stock companies with more than 50 shareholders can provide only annual account and annual financial statements.
The guidelines of the Ministry of Finance for information disclosure envisages that the current information of the issuers published on the official websites should be available for all interested individuals on a permanent basis within five years from the publication date.
Mr. Shimonovich noted that in general, the dissemination of information about the activities of the issuers is enough widespread world practice.
The EBRD does not comment on the actions of the government. However, the bank mentioned that based on the international practice, only those companies, whose shares are listed on stock exchanges, are obliged to publish their statements. Besides, the action reports of the state companies can be public.
Therefore, the actions of the Ministry of Finance are formally right. However, the law on the Securities Market stipulates that the Regulator determines the order of publication of the information in the market. The current development of the Belarusian financial market does not allow expecting that the JSCs will publish their reports more actively than earlier. In this regard, it is unclear why the Ministry of Finance does not want to increase the publicity in the stock market by means of the publication of the issuers' quarterly reports.