Seven of Russia's leading industrial firms and investment funds stepped in to fill a legal vacuum left by the government Wednesday, creating a bill of rights to protect their shareholders in the country's chaotic securities market.


Despairing of quick government action, managers of the seven firms signed a Declaration of Shareholders' Rights, which aims to restore flagging confidence in Russia's securities market and encourage a growing stream of foreign investment.


The declaration, signed by such giants as United Energy Systems, LUKoil and Pervy Vaucherny, the country's largest investment fund, guarantees the property rights of the companies' 8 million investors and requires the companies to provide shareholders with detailed financial disclosure.


"We want to push the government to come up with stricter rules to regulate the market," said Andrei Volgin, general manager of the Derzhava investment fund, who helped draft the convention. He said he expected other industrial giants, such as the gas monopoly Gazprom, to join the convention in the future.


"Our investors need to know the rules of the game," added Anatoly Dyakov, president of United Energy Systems, which has 1.42 million shareholders.


Foreign and Russian investors have long suffered from lack of regulation in Russia's still wild securities markets, where purchasing shares in a company does not necessarily mean becoming a legitimate shareholder.


Enterprise managers, reluctant to share property rights in their companies, have been known to delay or even refuse registration of new shareholders. Hiding financial activities from shareholders and barring principal outside investors from shareholders' meetings has also become common practice.


Government officials have estimated that foreign portfolio investment in Russia has risen to $600 million a month from a mere $150 million at the start of the year. But they have also warned that the government must secure property rights to maintain the inflow of foreign capital.


Under the new convention, which was also signed by optics manufacturer LOMO and textile factory Tryokhgornaya Manufaktura, shareholders' registers must be held by independent managers in order to ensure timely registration of new shareholders. The declaration also requires enterprises to provide shareholders with full company information, including all share transactions and quarterly financial reports confirmed by an independent auditor.


"It is unacceptable when a company like MMM attracts huge sums of money and no one knows what they do," said Derzhava's Volgin of the alleged pyramid scheme that attracted millions of dollars before crashing this summer.


"Unfortunately, quite often entire factory divisions are sold off by the general director without even informing shareholders," he added.


The convention also introduces the principle of proportional voting, in which the weight of each shareholder's vote depends on the number of shares held. This, according to company representatives, would help outside investors get a seat on the board of directors.


Companies would allow shareholders to vote by proxy if they cannot attend a meeting, according to the agreement. Dyakov, of United Energy Systems, said his company's Moscow branch had already used proxies at a recent shareholders' meeting.


The convention also prohibits companies from issuing shares to cover losses or debts, and bans company directors from using insider information for personal profit.


President Boris Yeltsin was expected to sign a tough securities law last month, but neither the decree nor any other legislation has yet appeared.


"All these rules seem quite natural, but we cannot get anything like them from the government," Volgin said. He added that the authorities themselves often breach regulations by failing to provide information about investment tenders and sell-offs.