Yandex, the NASDAQ-listed Russian Internet leader, is planning a major overhaul of its governance structure, answering a long-standing government pressure over its governance and ownership.
Under the plans announced yesterday, Yandex will create a new “Public Interest Foundation” which will control Yandex’s so-called golden share, providing veto power over significant ownership transactions.
Since 2009, this golden share has been owned by Sberbank, the state-controlled financial giant.
Through this and other provisions, the new ownership structure seeks to address the Russian government’s concerns that the company — seen as a critical piece of Russia’s national online infrastructure — could be controlled one day by foreign shareholders.
The Public Interest Foundation will also be able to:
- Veto Yandex’s business deals and transactions relating to intellectual property or the transfer of Russian users’ data;
- Block the company from entering into any kind of agreement with a foreign government, government agency or intergovernmental organization
- Appoint two of Yandex’s 11 board members.
Yandex management will be outnumbered on the board of the new body, with only three of the seats being held by executives at the tech company (Arkady Volozh, Tigran Khudaverdyan and Elena Bunina). The remainder will be divided between representatives of five top Russian universities and other organizations including the Russian Union of Industrialists and Entrepreneurs (RSPP).
The foundation will also have the right to suspend Yandex’s CEO, Arkady Volozh, Vedomosti reported. The Russian government was involved in putting the proposals together, the paper added.
The restructuring is a direct response to disagreements between Yandex and the Russian government over how the company should be governed. The latest tussle came over plans, endorsed by the presidential administration, to limit the amount of shares foreign citizens can own in Russia’s most important technology companies.
Draft bill suspended
Anton Gorelkin, the lawmaker who introduced the draft legislation, welcomed the proposals, calling them a “win-win” situation for Yandex, investors and Russia’s national security.
That legislation will now be put on hold, said in a Facebook post today, in order to take into account Yandex’s proposals and other industry feedback.
“I said a thousand times that my bill is not about Yandex,” Gorelkin wrote. “The bill aims to protect our digital sovereignty … I will continue to work on it.”
“But given that there is no urgency, I have decided to withdraw the initiative to allow revisions [to the draft bill]. I plan to do this in the near future. I believe my bill is necessary … and I am confident that it will be adopted after completion.”
“The proposed amendments are good for Yandex and good for our shareholders,” said John Boynton, Chairman of the Board of Yandex. “It is clear that Yandex has to adapt to the evolving legal and regulatory environment in Russia. The proposed amendments balance the concerns of public authorities in our core market with the interests of our shareholders, our employees and our users.”
CEO Volozh said the proposal would “leave the management of the company in our hands, preserve the confidence of international investors in the prospects of Yandex and protect the interests of the company.”
He added: “With this behind us, we can get back to doing what we do best.”Shareholders will vote on the proposals at a special meeting in December. The plan needs to secure 75% approval to go ahead.
Yandex also announced it is launching a $300 million share buyback scheme Monday. Shares were up 7% on the Russian stock market in early trade, taking Yandex’s share price above the level it was before rumors of the Kremlin’s support for a restriction on foreign ownership wiped out one-fifth of the company’s value in a single day last month.
