Dutch Yandex NV disclosed the terms of a non-competition agreement with the future Russian Yandex

Yandex NV has disclosed the terms of a non-competition agreement with the future “Russian Yandex” (MOEX: YNDX)”. The Dutch company, in particular, is prohibited from poaching Russian employees, both current and future, as well as from releasing products that compete with its main developments. Yandex’s technology projects abroad have traditionally been financed by highly profitable projects in Russia. Yandex NV warns of possible difficulties with independent work and raising capital. However, participants in the venture market see the company as having a number of advantages for investors.

Kommersant studied the circular for shareholders of the Dutch Yandex NV (YNV), prepared for the vote scheduled for March 7 on the sale of Yandex to a consortium of investors in Russia. The board of directors of YNV, which plans to develop some of the former foreign projects of Yandex, revealed that the company has agreed not to enter into direct competition with foreign projects of Yandex, which was restructured in the Russian Federation.

For five years after the closing of the first stage of the deal, YNV is prohibited from engaging in projects related to the “primary types of business of the Russian Yandex,” and the projects remaining behind it are prohibited from expanding their activities in these areas.

Also, YNV and its structures will not be able to hire Yandex personnel for five years. The non-competition agreement covers employees who have worked at Yandex for more than a year at the time of closing the first stage of the deal, and everyone whom the company hires over the next three years. The agreement contains “certain exceptions” (they are not disclosed in the circular).

In addition, YNV projects will not have to operate in Russia and Belarus. Yandex and YNV did not clarify to Kommersant what the companies’ current policy is regarding the employment of Yandex employees, nor did they answer questions about exceptions.

A Kommersant source familiar with the situation believes that YNV as a whole is no longer interested in luring anyone from Russian structures: “All valuable specialists moved to a foreign structure back in 2022.” He explained that in the summer of 2023, the Russian Yandex began asking employees who had left, whose work was not directly related to foreign markets, to return to the country, arguing this with the terms of the employment contract and the Labor Code. “Conditionally, the company allowed only those who worked in foreign markets to stay abroad,” says Kommersant’s interlocutor. “Yandex,” he clarified, did not limit the possibility of remote work, “but precisely within the territory of Russia.” Another Kommersant source, however, says that certain opportunities to work at Yandex from abroad, including unfriendly countries, remain.

According to previously presented division plan assets, YNV plans to develop part of the former Yandex projects that have already begun work under their own brands: Avride (unmanned vehicles), Nebius (cloud computing), Toloka (data tagging for artificial intelligence) and TripleTen (educational technologies).

In the circular, YNV’s board of directors warned that these companies have “limited experience of operating independently” and, historically, being in the Yandex ecosystem, they were funded by profitable structures in Russia. As a result, YNV will have to raise “additional equity or debt financing” and the group cannot currently guarantee that it will be able to do so.

YNV also submitted amendments to the company’s charter: it is proposed to remove from it all provisions relating to the Public Interest Fund (PIF). We are talking about a Russian structure that holds a “golden share”, created in 2019 in response to the threat to legally limit foreign ownership of large Internet companies in Russia.

The amendments, according to the company’s presentation, are intended to remove “inappropriate or no longer required mechanism” from YNV’s work; If accepted, members of the board of directors from the FOI will leave their posts. Shareholders will vote on these amendments on the same day as the deal.

The YNV circular clarifies that current Russian legislation, introduced in response to sanctions against the Russian Federation, “affects the work of the Yandex group as an international company.”

Among such laws are those that relate specifically to business (in particular, on external management in foreign companies), and general civil ones – criminal punishment for “confidential cooperation” with foreigners, declaring a foreign agent on the basis of “foreign influence”, etc. P.

In such conditions, the parent structure of Yandex considered various scenarios for working in Russia, including refusal to change. Possible options include the purchase of shares from international investors, the transfer of the corporate structure to Russia, the transfer of control over business in the country to management, and even a “merger with a Russian partner.” The last option, according to a Kommersant source familiar with the negotiations, was considered “in a very abstract way.”

In the absence of sources of funding from taxi services, e-commerce and advertising, “YNV will have to face competition in the stagnating venture capital market,” notes Konstantin Gibalo, partner at the Voskhod venture fund. But the company, according to him, also has attractive sides for investors: “The key shareholders of Yandex have significant experience in creating and launching unique products on the market.” In the case of Yandex, Mr. Gibalo notes, it was possible to “create a unicorn,” and this experience “is an undeniable advantage.”

Yuri Litvinenko, Yulia Tishina