Information for the PJSC "LUKOIL" ADR holders
According to the Federal Law No. 114-FZ of April 16, 2022, (hereinafter, the "Law") Russian issuers were obliged to take actions aimed at terminating depositary agreements, underpinning circulation of depositary receipts issued for shares of Russian issuers.
In accordance with the Law, the issuance of new depositary receipts is prohibited starting from April 27, 2022. Only those persons who were holders of depositary receipts as at April 27, 2022 are entitled to receive ordinary shares (hereinafter, the "Shares") through conversion of their depositary receipts.
Until the receipts are converted into Shares, the holders of depositary receipts do not have voting rights and rights to receive dividends.
On May 5, 2022, PJSC "LUKOIL" notified the depositary bank Citibank N.A. (hereinafter, the "Citibank") on its intention to terminate from December 30, 2022 depositary agreements under the Level 1 and Rule 144A American Depositary Receipt programs (hereinafter, the "ADR") (https://www.lukoil.com/PressCenter/Pressreleases/Pressrelease?rid=584526).
In its turn, Citibank notified ADR holders about its intention to terminate ADR programs on its website (https://depositaryreceipts.citi.com/adr/common/file.aspx?idf=5975).
There are two options for converting ADRs into Shares:
1) conversion in standard mode with use of foreign clearing systems;
2) declarative conversion through Russian clearing system https://www.citibank.ru/russia/corporate/rus/pdf/drconversion/information.pdf.
Applications for the Declarative conversion are no longer accepted by AO CITIBANK. The Declarative conversion through Russian clearing system is not possible.
1. Conversion in standard mode
We recommend to contact your broker/depository for information about the possibility to carry out the conversion procedure in standard mode for depositary receipts, the rights to which are recorded in foreign clearing systems (Euroclear, Clearstream and DTC).
Before opening a brokerage account with a Russian broker/depositary, an ADR holder is recommended to seek advice from his/her existing broker/depositary regarding the possibility of converting ADRs into Shares and the possibility of retaining Shares with the existing broker/depositary (in case if the broker/depositary operates on the Russian market).
Next, you need to perform the following steps:
Step 1. An ADR holder provides its broker/depositary, which keeps records of ADR, with a filled Certificate and Agreement of Person Receiving Shares of Russian issuers underlying Depositary Receipts (DRs) Pursuant to No Change in Beneficial Owner Requirement (hereinafter, the "Certificate"). The form of the Certificate to fill out is available on the Citibank website:
https://depositaryreceipts.citi.com/ADR/COMMON/FILE.ASPX?IDF=5925
To initiate the conversion procedure, the Certificate (or information from it) must be submitted by the broker/depositary to:
1. drcerts@citi.com and drbrokerservices@citi.com or
2. clearing systems.
The information that needs to be included in the Certificate is available on the Citibank website at the following link: https://depositaryreceipts.citi.com/ADR/COMMON/FILE.ASPX?IDF=5925
Along with the Certificate submission, give to your broker/depositary in the Russian Federation an instruction to receive Shares.
If the Shares are received to account with AO CITIBANK, the instruction shall include the following information:
• Counterparty's BIC code or Counterparty's name: CITIRUMX or AO CITIBANK
• Account number format: 10 digits (account opened at AO CITIBANK, Russia)
• Name of Beneficial Owner (individual or entity)
If the Shares are received to account with another custodian, the instruction shall contain the following information:
• Name of Beneficial Owner (individual or entity)
• Account number format: 12 digits/17 digits
• Name of Beneficial Owner (individual or entity)
Step 2. Pay the conversion fee
Citibank conversion fee is $0.05 per one ADR. More detailed information and the fee payment details are available on the Citibank website:
https://depositaryreceipts.citi.com/ADR/COMMON/FILE.ASPX?IDF=5925
Questions related to the conversion can be directed by representatives of broker/depositary or clearing agent to Citibank using following contacts:
drcerts@citi.com and drbrokerservices@citi.com.
If an ADR holder's broker/depositary clears through clearing systems, all inquiries should be made directly to those agents.
Citibank only corresponds with the broker/depositary/clearing agent that applied for the conversion.
2. Declarative conversion through Russian clearing system
If conversion in the standard mode was not possible, you could use the declarative conversion procedure provided for by the Law.
To do so, you had to submit an application to AO CITIBANK for the conversion of ADRs into shares of PJSC "LUKOIL" no later than November 10, 2022.
Detailed information and application forms (solely in Russian) are available at AO CITIBANK website:
https://www.citibank.ru/russia/corporate/rus/pdf/drconversion/information.pdf
You may find English translation of this information conducted by LUKOIL here:
https://www.lukoil.com/FileSystem/9/594629.pdf. Please draw your attention that all the application forms and lists of required documents are provided at AO CITIBANK website solely in Russian language, and must be completed and submitted only in Russian as well.
For legal entities, the documents were accepted at the office of AO CITIBANK: Moscow, 8-10 Gasheka Street, building 1, 6-th floor, Department of reception and issuance of documents.
For individuals, the documents were accepted with personal visit at one of the branches of AO CITIBANK (https://www.citibank.ru/russia/branches/rus/branches.htm).
By no later than November 24, 2022, and in the absence of reasons for rejection, AO CITIBANK had to open the holder's custody account for the applicant and deposit the Shares in the amount equivalent to convertible ADRs.
In case of further questions related to the conversion, you may contact shareholder@lukoil.com or ir@lukoil.com.
Questions and Answers
The ADRs will remain on your account until Shares are sold by the depositary bank and the funds received from the sale are distributed to you. Please note that due to restrictions introduced by the Central Bank of Russia, the depositary bank is currently prohibited, for an indefinite period of time, from undertaking a sale of the Shares. ADRs will not receive dividends and will not provide voting rights.
When converting in the standard mode, it is necessary to start the procedure before the date of termination of depositary agreements (December 30, 2022). It is recommended to start the conversion process as early as possible due to possible delays and restrictions from the clearing system.
In the event of a declarative conversion through Russian clearing system, Applications for the Declarative conversion are no longer accepted by AO CITIBANK. The Declarative conversion through Russian clearing system is not possible.
How can a non-resident of the Russian Federation open a brokerage account and a banking account in Russia?
This information should be specified directly with the broker/depositary or banking organization in the Russian Federation. If necessary, you may also contact shareholder@lukoil.com or ir@lukoil.com on this issue.
In accordance with the Law, starting from April 27, 2022 the dividends on ADRs cannot be paid. However, after converting the ADRs into Shares, you will have the right to claim unpaid dividends in accordance with the procedure established by Russian law.
As a non-resident of the Russian Federation, will I be entitled for votes and dividends with the Shares received through the conversion?
The Shares received through the conversion have voting rights and receive dividends.
Can I convert my ADRs into Shares using a third party brokerage account already opened in the Russian Federation?
No, you cannot use third party accounts. Brokerage and banking accounts in Russian Federation must be opened for beneficial owner of ADRs.
In the meantime the standard regulations and the regulations of Bank of Russia assume restrictions in relation to the operations and transactions with the shares received in the aftermath of depositary receipt conversion. The information on the procedure for disposing of your Shares received as a result of the conversion of ADRs should be clarified with your broker/depository.
