VALUATION Corp. Provides Professional Valuation Services in Regard to Securities in Moscow and Russian Regions

Types of Securities in Russia

According to the definition given in Article 142 of the Civil Code of the Russian Federation:

“Security is a document, issued with all mandatory details present and in compliance with the established form, certifying property rights, the exercise or transfer of which is possible only upon presentation.”

So, the Russian law states that securities are documents (could be traditional paper documents or e-documents) certifying property rights, therefore valuation of a security means appraisal of the property rights that this document provides to its owner.

Depending on the type of property rights guaranteed, all securities can be divided into two main categories:

• debt securities – confirm rights to receive money that must be repaid. Debt securities differ mainly by rules set by applicable laws and agreements that determine how and when the borrowed money and interest must be paid out. Examples of debt securities are bonds (both government and corporate), promissory notes, bills of exchange. There are also derivative debt securities – like collateralized debt obligations (CDOs) and collateralized mortgage obligations (CMOs).


• equity securities – confirm property rights in legal entities (companies, investment funds, trusts or partnerships). Well known examples of equity securities are shares in company’s capital stock (both common and preferred) and shares in the investment funds. Equity securities give the owner some degree of control over the issuing entity, as well as the right to share its profit. There are also derivative equity securities – like forwards, futures, options which using stocks as the underlying asset.

According to the established financial practice and Russian law, securities can be issued by different entities:

• government and municipal bodies - most often issue bonds, but also able to issue promissory notes;
• business legal entities - depending on their legal status can issue all kinds of securities - shares, bonds, promissory notes, bills of exchange, etc.;
• private individuals - can issue promissory notes.

Securities on the Russian financial market are mainly represented by stock, bonds, promissory notes and shares in investment funds. With these types of securities two main tasks of financing the economy are solved: attracting investment capital and attracting borrowed funds.

Futures, options and other derivatives are not very widely used in Russian financial system.