What started a year ago as a shareholder dispute within VKontakte (VK.com), Russia’s largest social network, appears to be emerging as a full-blown war of litigation.
The faction most actively fanning the legal flames is United Capital Partners (UCP), a major Russian fund active in various sectors that acquired a 48% stake in VK a year ago.
In an initial foray two months ago UCP took on VKontakte’s other shareholders – which then included Mail.ru Group, an LSE-listed Russian Internet giant, and Ivan Tavrin, the CEO of mobile operator Megafon and a member of the Mail.ru Group board.
(VK founder Pavel Durov had sold his 12% stake to Tavrin in late 2013; the latter ultimately sold it to Mail.ru Group, which could thus acquire a majority stake in the company).
UCP chastised Mail.ru Group and Tavrin for “blocking the company’s development” and “taking decisions which are not in its best interests.”
The move prompted Mail.ru Group spokesman Ivan Streshinsky to brand UCP’s action “pressure exerted by force” and Group GM Dmitry Grishin to term it a “tactic of corporate trolling that only harms the business.”
From conflict of interest to acquisition target
A second attack, this time directed against Pavel Durov and Mail.ru Group, came recently, when UCP filed a lawsuit in the British Virgin Islands “to protect its economic rights following the launch of the Telegram instant messaging application.”
Durov had launched this project last year outside of Vkontakte – entailing potential conflicts of interest, according to UCP, which sees Telegram as a VK competitor.
That the Telegram project was founded and developed by Pavel Durov and his brother Nikolai while the two were the CEO and CTO of VKontakte, respectively, is enough for UCP to claim that “VK.com is the proper owner of the Telegram business” – thus clearly suggesting that the Russian fund is an owner as well.
Moreover, the fund stated it was “taking steps to protect VK’s interest (…) and ultimately placing Telegram under VK’s control” by acquiring “control over three companies that manage certain aspects of the Telegram business with the intent to transfer these companies to VK.”
Illegitimate acquisition?
In a concerted effort, Mail.ru Group and Pavel Durov counter-attacked last week by going to court and challenging the legitimacy of UCP’s purchase of its 48% stake in VK in April 2013.
UCP appears to have acquired legal entities that controlled 48% of VKontakte – not shares in VKontakte directly. This “dubious scheme,” as Streshinsky put it this past February, allowed the sellers to get round their obligation to first offer their stakes to existing shareholders.
Should the arbitration judge strike down a decision favorable to the plaintiffs, the VK.com founder hopes the litigated 48% will return to what he terms the true shareholders – and he himself will “be able to return as a board member and co-owner of the company.”
