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‘So we aren’t shaken’ Yandex is changing its corporate structure amid concerns in Russia that the company is too vital to have significant foreign ownership

Source: Meduza
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Yandex says it is changing the structure of its corporate governance by creating a Public Interest Fund within the company. Sources told the newspaper Vedomosti that the changes to Yandex’s management structure were negotiated in detail with members of the Putin administration and approved by the Kremlin. The restructuring comes as lawmakers in the State Duma consider legislation that would limit the shares foreigners can own in Russian Internet companies, which has led to dramatic fluctuations in Yandex’s market value.

The new management structure will be established in Kaliningrad by the Dutch company “Yandex N.V.” as an international fund — a nonprofit organization that can be constituted as a “Russian offshore.” The fund will receive Sberbank’s “golden share” in Yandex N.V., as well as the 0.001-percent stake in the business owned by the Russian legal entity Yandex LLC. Spokespeople for Sberbank told Vedomosti that the transfer of its golden share will be considered on Tuesday, November 19, while noting that the bank supports Yandex’s initiatives. 

Once established, the Public Interest Fund will be able to nominate two of the board of director’s 12 members and participate in decision-making on certain issues.

Approval of transactions related to the consolidation of at least 10 percent of voting or economic shares in the hands of a single buyer, approval of transfers of material intellectual property, approval of changes to corporate policies on the protection of Russian users’ non-anonymized big data, and approval of potential partnerships with the government of other countries. The Public Interest Fund cannot influence other issues of Yandex’s operational, strategic, and economic activities.

According to RBC, the fund can temporarily replace the head of Yandex in exceptional cases, if the company’s board of directors deliberately refuses to implement the fund’s decisions, impedes the new corporate structure’s operations, or makes decisions that could affect Russia’s national security. After the situation is “corrected,” the director must be reinstated.

Yandex’s board of directors will include representatives from the universities the Higher School of Economics, the Moscow Institute of Physics and Technology, Moscow State University, St. Petersburg State University, and the Information Technologies, Mechanics, and Optics University, as well as the Russian Union of Industrialists and Entrepreneurs, the “Skolkovo” Moscow School of Management, and Moscow State School 57. Yandex’s senior directors will also join the new board: Akrady Volozh, Tigran Khudaverdyan, and Elena Bunina.

According to Vedomosti, Russia’s presidential administration will select the board’s academic candidates. Yandex reportedly far prefers scholars over representatives of Russian state corporations, since the former have no business interests.

After the new fund is created, it will in turn nominate two new members for Yandex’s board of directors: Russian Presidential Academy of National Economy and Public Administration Vice-Rector Alexey Komissarov and “VTB Capital” CEO Alexey Yakovitsky.

There will also be changes to the stock owned by Yandex’s biggest shareholder, Arkady Volozh, who has pledged not to sell 95 percent of his stocks for the next two years. Additionally, he is transferring all his shares to a special family trust, which will be created in the near future.

The changes to Yandex’s corporate-management structure should be approved at a shareholders’ meeting on December 20.

“The new structure is being created to stand for many years, so we aren’t shaken by external events as we’ve witnessed recently. It’s important that this structure aligns with public interests without preventing the company from developing its business [in Russia] and abroad,” Volozh wrote in a company-wide release

Sources at Yandex told Vedomosti that they are confident their new corporate structure eliminates the main political risks of future restrictions on foreign shareholders, and will sharply reduce state pressure on the company. 

Stock markets responded favorably to reports about Yandex’s corporate restructuring. On the Moscow Exchange, by 11:15 a.m. local time, the company’s stock price jumped nearly five percent against its closing level on Friday.

Following Yandex’s announcement, State Duma deputy Anton Gorelin, who authored the draft legislation that would have limited foreign ownership of Russian Internet companies, told The Bell that he is withdrawing the bill for further revisions.

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