Bank of Russia advises firms on increasing shareholder value

The Bank of Russia has issued recommendations for companies whose shares are traded on the exchange and those planning future IPOs. The guidance is aimed at helping these companies devise strategies to increase their medium- and long-term shareholder value. This, according to the bank, will aid investors and shareholders in forming expectations regarding share prices and dividend payments.

The recommendations suggest a unified approach to developing, structuring, approving, and disclosing documents related to shareholder value strategy. The strategy should be concise and clear, encompassing information about the company’s business activities, products, services, key financial reporting metrics, operational performance indicators, market capitalization data, dividends declared and paid over the last three to five years, as well as securities issued and in circulation. Total shareholder return is recommended as a key target indicator for these strategies.

Companies are advised to set development objectives spanning three to ten years based on current shareholder value assessments. These objectives should be ambitious yet realistic. If deviations from targets occur, companies are expected to explain the reasons behind them and outline measures planned to return to their target path.

Additionally, the recommendations emphasize communication between issuers and investors—particularly retail investors who dominate the secondary stock market—to enhance confidence in company strategies.

The Bank of Russia believes that public companies' efforts in raising shareholder value will ultimately boost the capitalization of the Russian stock market.