Equity

The nominal share capital of the Company recorded on its incorporation has been indexed, to account for the effects of hyperinflation from that date through 31 December 2002. The share capital of the Company in the Russian statutory accounts at 31 December 2012 and 2011 amounted to 7,965,224 nominal (uninflated) RUB (2010: 2,428,819).

The authorized share capital of the Company as at 31 December 2012, 2011 and 2010 comprised 6,628,696,320 ordinary shares and 242,832,000 non-redeemable preferred shares. The par value of both ordinary and preferred shares amounted to RUB 0.0025 per share.

On the 2010 Annual General Meeting, the shareholders of OJSC Rostelecom resolved to increase the number of shares available for additional issue to 5,900,000,000 ordinary shares with par value of RUB 0.0025 with the same rights as previously issued ordinary shares. Of them 2,214,561,949 ordinary shares were issued on 1 April 2011 to the shareholders of IRCs and OJSC Dagsvyazinform as part of the merger.

As at 31 December 2012 and 31 December 2011 the issued share capital of the Company was as follows:


Type of shares Number of shares issued Total par value Carrying value
Ordinary Shares, RUB 0.0025 par value 2,943,258,269 7.358 81
Preferred Shares, RUB 0.0025 par value 242,831,469 0.607 25
Total 3,186,089,738 7.965 106

As at 31 December 2010 the issued share capital of the Company was as follows:


Type of shares Number of shares issued Total par value Carrying value
Ordinary Shares, RUB 0.0025 par value 728,696,320 1.822 75
Preferred Shares, RUB 0.0025 par value 242,831,469 0.607 25
Total 971,527,789 2.429 100

Ordinary shares carry voting rights with no guarantee of dividends. Preferred shares have priority over ordinary shares in the event of liquidation but carry no voting rights except on resolutions regarding liquidation or reorganization, changes to dividend levels of preferred shares, or the issuance of additional preferred shares. Such resolutions require two-thirds approval of preferred shareholders. The preferred shares have no rights of redemption or conversion.

Owners of preferred shares have the right to participate in and vote on all issues within the competence of shareholders’ general meetings following the annual shareholders’ general meeting at which a decision not to pay (or to pay partly) dividends on preferred shares has been taken.

In case of liquidation, the residual assets remaining after settlement with creditors, payment of preferred dividends and redemption of the par value of preferred shares is distributed among preferred and ordinary shareholders proportionately to the number of owned shares.

Accordingly, the preferred shares of the Company are considered participating equity instruments for the purpose of earnings per share calculations (refer to Note 30).

Treasury shares

As at 31 December 2012, 2011and 2010 total number of treasury shares held by the Group was as follows:


Type of shares 31 December 2012 31 December 2011 31 December 2010
Ordinary Shares 242,213,829 127,060,744 135,508,107
Preferred Shares 69,432,721 70,384,795 70,384,795
Total 311,646,550 197,445,539 205,892,902

As at 31 December 2010 number of shares represents equivalent of shares of the Combined entity.

At the 2010 Annual General Meetings of Shareholders of the Companies, comprising the Group, which took place in May - June 2010, shareholders approved the merger of the seven Interregional Companies and OJS Company of Telecommunication and Information of the Republic of Dagestan with and into OJSC Rostelecom. Shareholders dissenting with the decision, could require redemption of their shares at predetermined rates for both ordinary and preferred shares. According to applicable law, funds allocated for share redemption were limited to 10% of net assets of the companies comprising the Group determined in accordance with Russian accounting principles. As at 31 December 2010, the Group had completed the repurchase of its shares from dissenting shareholders. Total number of treasury shares purchased was an equivalent of 79,356,780 ordinary and 70,384,733 preferred shares of the Combined entity. As at 31 December 2010, all repurchased shares were held by the Group.

During 2010, the Group also purchased share of the companies comprising the Group of an equivalent of 112,434,672 ordinary shares of the Combined entity for 10,850 as a part of a management motivation program (refer Note 29).

In October 2011 the Board of Directors of the Company approved decision on shares buy back up to the amount of USD 500 million.

During 2011 total number of ordinary shares realized as an exercise of the options under the management motivation program constituted 18,122,013. During 2012 the Group realized 83,635,424 ordinary shares, including 25,389,645 shares realized as an exercise of the options under the management motivation program and 56,287,425 shares transferred in exchange of acquisition of a 50% stake in Sky Link from OJSC Svyazinvest (refer to Note 5). During 2012 total number of preferred shares realized as an exercise of the options under the management motivation program constituted 952,074.

During 2012 and 2011 the Group purchased 142,501,084 and 9,674,650 ordinary shares, respectively, for 22,126 and 1,487, respectively.

Dividends

According to the charter of the Company a preferred share carries dividend amounting to the higher of 10% of the net income after taxation of the Company as reported in the Russian statutory accounts divided by 25% of total number of shares and the dividend paid on one ordinary share.

Total amount of dividend paid on ordinary shares should be not less than 20% of net profit of the Group as reported under IFRS.

In June 2012 the General Meeting of Shareholders approved the dividends for the year ended 31 December 2011 in the amount of 4.6959 roubles per ordinary share and 4.6959 roubles per preference share.

The total dividends payable amounted to the following:


Category of shares Number of shares Dividends per share, roubles Total sum of dividends, roubles
Declared and approved for 2011      
Preference shares 242,831,469 4.6959 1,140,312,295
Ordinary shares 2,943,258,269 4.6959 13,821,246,505
Total 3,186,089,738 14,961,558,800

The difference between the dividends declared and the dividends presented in the statement of changes in equity is explained by the treasury shares, held by the subsidiaries of the Company.

History

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