November 18, 2019, 09:33 / Updated November 18, 2019, 13:41 / Technologies

Yandex, together with officials, came up with a new company management structure

The Kaliningrad offshore fund will be able to give instructions to its board of directors and even temporarily remove CEO Ksenia Boletskaya

Mikhail Metzel / TASS

Yandex . has found a compromise with the state: it is creating a special Public Interest Fund, to which the company will transfer part of its management functions Yandex . will coordinate with him the consolidation of 10% or more of its shares, the transfer of significant intellectual property, as well as personal data of users The Fund will even be able to temporarily remove the CEO of the Russian Yandex.

The company's board of directors decided to create such a fund, Yandex reported. On December 20, shareholders will be asked to vote for this decision - the company needs the approval of the owners of 75% of the voting shares.

The launch of the fund is an optimal solution for three parties, Yandex co-founder Arkady Volozh insists in a letter to employees: “This will leave the management of the company in our hands, maintain the confidence of international investors in the prospects of Yandex and protect the interests of the country.” Volozh calls changes in company management “golden share 2.0.”

The new structure for managing Yandex has been agreed in detail with the presidential administration and approved by top officials of the state, a person close to Yandex shareholders knows. The company expects that it has removed the main political risks and the pressure on it from the state will sharply decrease, he adds. The presidential administration participated in the development of the Public Interest Fund mechanism, a federal official confirmed to Vedomosti.

Presidential press secretary Dmitry Peskov said that the administration did not approve changes in the corporate structure of Yandex and should not have done so.

How the Public Interest Fund will be structured

It is assumed that the fund will own a “golden share” of the Dutch Yandex NV (the parent company of Yandex) and 0.001% of the shares of the main Russian legal entity – Yandex LLC .

The “golden share” will be transferred to the fund by Sberbank , agreements have already been reached with it, a person close to Yandex shareholders knows. A source at Sberbank confirmed to Vedomosti that the bank is ready to transfer the “golden share” to the new fund. A Sberbank representative confirmed that he had received a request from Yandex to transfer the “golden share” back to them. The request will be considered by the board of Sberbank on Tuesday, November 19. “In general, we have a positive and understanding attitude towards Yandex’s initiatives,” added the bank’s representative.

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The fund itself will be established by Yandex NV in Kaliningrad in the form of an international fund - a new form of non-profit organization for Russia, a representative of the Internet company specified. Such funds will soon be able to be created in Russian offshores - special administrative regions in Kaliningrad and the Primorsky Territory; the necessary amendments for this purpose were recently adopted by the State Duma. The Public Interest Fund will be managed by a board of directors, the core of which will be representatives of five state universities: the Higher School of Economics, the Moscow Institute of Physics and Technology, Moscow State University, St. Petersburg State University and ITMO University. Three independent directors will be represented on the board by the Russian Union of Industrialists and Entrepreneurs, the Skolkovo School of Management and the Support Fund for the 57th School in Moscow, Yandex said in a statement. Three more seats on the board will be held by top managers of Yandex itself - Volozh, managing director of the company Tigran Khudaverdyan and general director of LLC " Yandex » Elena Bunina.

Employees of state universities will directly ensure that the interests of the state are respected in the fund, a person close to Yandex shareholders explained to Vedomosti. For Yandex, representatives of universities are also much more comfortable than representatives of state-owned companies: the former should not have their own business interests, and they do not compete with Yandex’s business. has not yet named any names of directors on the board other than its own top managers Yandex . Candidates from universities will be presented by the presidential administration, Vedomosti’s interlocutor knows, independent directors have been agreed upon with the Internet company, so that the necessary balance is maintained on the fund’s board between the interests of the state and the Internet company.

How the fund will Yandex limit

The main task of the fund's board is to elect two new members of the board of directors of Yandex itself, whose board, accordingly, will grow from 10 directors to 12. As such directors, Yandex proposes to the fund the director of the Higher School of Public Administration, Alexei Komissarov, and the general director of VTB Capital. Alexey Yakovitsky.

It is these two directors who will coordinate the consolidation of 10% or more of Yandex shares, monitor how the Internet company processes users’ personal data and to whom it transfers significant intellectual property. One director from the foundation will also serve on one of two new nomination subcommittees. Through this subcommittee, the other four members of the Yandex board of directors will be elected; the director from the fund will have the right to veto any candidacy. Thus, the fund will also be able to control the appointment of half of the board of directors of Yandex.

The Yandex Board of Directors is obliged to follow the decisions of the fund - but only on those issues that are within its competence. If decisions are deliberately not implemented or the Yandex board makes decisions that could affect national security, the fund has the right to take extreme measures - temporarily replacing the general director of Yandex LLC , the company’s message states: “After correcting the situation, the head will be reinstated.”

It turns out that the launch of the fund will allow the interests of the state to be respected and will give officials the tools to resolve extreme situations, but will not in any way affect the shareholder structure of Yandex - the distribution of capital or votes, the company’s presence on the stock exchange, a source close to Yandex shareholders is pleased.

What will happen to the Volozh package

According to the scheme common in Internet companies, Yandex has two types of shares - type A, which gives their owners one vote at the shareholders meeting, and type B, which gives 10 votes each. The latter are usually received by employees and founders of the company.

Almost 85% of Yandex's Class A shares are traded on the American NASDAQ exchange, which raises many questions for the government. The largest foreign shareholders of Yandex, according to company disclosures at the beginning of 2019, are investment companies OppenheimerFunds (6.41% of class A shares), Harding Loevner (5.47%) and Wellington Management (5.2%).

Another sore point in the discussions between officials and Yandex is the package of Volozh himself. On the one hand, he is the company's largest shareholder - according to the latest disclosure, he owns 10% of Yandex's capital and 48.4% of the votes. Together with several other company employees, Volozh controls more than 51% of Yandex votes. On the other hand, according to the company's charter, when shares of type B are sold to their new owner, not 10 votes are transferred, but only one, the same thing happens during inheritance - in the event of the death of the owner of such shares. This means that after Volozh’s death or when shares are sold to him, foreigners will receive control over votes in Yandex, officials worried.

Now Volozh has pledged not to sell 95% of his shares for two years - until January 2022, Yandex reported . In addition, Volozh is transferring all his shares to a special family trust, which will be created in the near future. In the event of his death, the trust will retain ownership of Class B shares for two years and undertakes to vote on them at shareholder meetings in accordance with the recommendations of the Yandex board of directors. All these changes are again intended to relieve tension in relations between Yandex and the state and guarantee the stability of the company’s management in the coming years, says a person close to its shareholders.

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Pressure Yandex on

Over the past few years, Yandex and other Russian Internet companies have regularly faced government pressure. Officials are constantly introducing new regulations for RuNet regulation. One of the most common complaints against Yandex is that the majority of the company’s capital is owned by foreigners. This means that foreigners directly influence the company, which is unacceptable in the case of such a strategic company as Yandex, some officials and State Duma deputies said. In 2018, officials and Yandex began to discuss options for getting out of this situation, Vedomosti sources from both sides told Vedomosti, in particular, the transfer of a large block of Yandex shares under the control of the state corporation. was conducting negotiations to gain greater control over Yandex A year ago it became known that Sberbank . Discussions between officials and Yandex were long and difficult, Vedomosti’s interlocutors said.

This summer, State Duma deputy Anton Gorelkin introduced a bill to parliament that would prohibit foreigners from owning or controlling more than 20% of “significant information resources” in Russia. Gorelkin directly indicated that one of the main targets of his amendments was Yandex . Most likely, Gorelkin’s amendments are another way to force Yandex to quickly agree to strengthening state influence on its work, experts reasoned then.

Investors reacted to Gorelkin’s amendments very nervously - after the first public discussion of the bill in the State Duma, Yandex lost $1.5 billion in capitalization. During this discussion, officials talked a lot about how it was time for Yandex to take care not only of its business, but also of the interests of the country.

Maria Istomina contributed to the preparation of this article