Foreigners will lose control over the companies X5, Acron Group, UNS-Holding, AB Holding, City Supermarket and Razrez Arshanovsky
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The government has identified the first six economically significant organizations: X5, Acron Group, UNS-Holding, AB Holding, City Supermarket and Razrez Arshanovsky. According to the White House order, the Ministry of Finance, the Ministry of Industry and Trade and the Ministry of Energy will be able to file claims in the arbitration court to suspend the corporate rights of foreign holding companies in these EZOs: they will be deprived of the right to vote at shareholder meetings, the ability to receive dividends and dispose of shares and shares. In exchange, foreign holdings will be offered compensation for the value of assets now or the return of rights someday. The possibility of removing foreigners from control of Russian assets, explained by sanctions, will make it possible to restore controllability of such companies, and will help the government avoid accusations of taking someone else’s property.
The government, by order No. 491-r of March 1, approved a list of economically significant organizations (ESO) of six large companies: X5, Acron Group, UNS-Holding, AB Holding, City Supermarket and Razrez Arshanovsky. Now the Ministry of Finance, the Ministry of Industry and Trade and the Ministry of Energy will be able to file claims in the arbitration court to suspend the corporate rights of foreign holding companies (IHC) in relation to these organizations. For now, we are talking about a suspension until the end of 2024. Indirect Russian beneficiaries will have to take direct ownership of shares and interests, and undistributed assets will be taken into account as their own shares (shares in the authorized capital) of the EZO. As a result, according to the law on economically significant companies (470-FZ of August 4, 2023), IHCs will lose the right to vote at shareholder meetings, receive dividends, and dispose of shares and shares in EZO.
Thus, by approving the list, the White House launched a mechanism for restrictive exemptions and the process of returning controllability to Russian companies. Let us recall that previously it was repeatedly stated that the work of Russian companies with foreign participation was blocked due to sanctions – the foreign “registration” of parent companies interfered with the payment of dividends and slowed down redomiciliation to the Russian Federation.
Under the law, foreign holdings whose rights will be suspended will be offered the choice of demanding compensation in the amount of the market value of undistributed assets or waiting for the assets to be returned after the unfreezing of corporate rights.
According to lawyers, foreigners will find themselves in a situation of “bad” choice: the unfreezing of rights may be delayed, and compensation may go to “type C” accounts with restrictions on the use of funds. The mechanism, on the contrary, protects the Russian side from accusations of seizure of assets and from the risks of prosecution.
First Deputy Head of the Ministry of Economy Ilya Torosov explains that the list of companies was formed based on proposals from industry departments and can still be replenished. According to 470-FZ, companies that meet three criteria can apply for EZO status: finance (revenue volume over 75 billion rubles or asset value over 150 billion rubles), type of activity (in critical industries), share of direct or indirect participation of Russian beneficiaries in IHC (as a general rule – more than 50%). Earlier, the RSPP reported that more than two dozen companies could receive EZO status. Among the potential ESOs were Rusagro, CIAN, Ozon and HeadHunter.
Representatives of five of the six companies that received EZO status declined to comment on Monday. Only Azbuka Vkusa (City Supermarket LLC) told Kommersant that the company is still determining further steps in accordance with the requirements of current legislation. They added that inclusion of EZO in the list will not have a negative impact on the company’s operating activities and “Azbuka Vkusa” continues to develop strategic directions.
IN LLC “City Supermarket”, according to the Unified State Register of Legal Entities, 99% is owned by Cypriot Demanor Investments Ltd. According to the company, founders Maxim Koshcheenko and Oleg Lytkin own 25.7% and 17.2% of the company, 39.6% are owned by Russian investment funds.
X5 Group is the largest grocery retailer in Russia in terms of turnover. The parent structure of X5 Retail Group NV is registered in the Netherlands. As of April 20, 2023, 47.86% of X5 was owned by CTF Holdings SA, associated with Alfa Group, and 11.43% belonged to Axon Trust.
“Akron” is one of the largest producers of mineral fertilizers in the Russian Federation. The main beneficiary of Acron is Vyacheslav Kantor (34.16% of shares through the Luxembourg Redbrick Investment Sarl and another 10.9% through AcronGroup JSC), he came under EU and US sanctions in the spring of 2022, but did not withdraw from the manufacturer’s capital.
“AB Holding” (authorized capital 71.56 billion rubles) is a 100% subsidiary of ABH Financial Limited (Cyprus), in turn 100% controlled by Luxembourg ABH Holdings SA (ABHH); the seven shareholders of the latter as of mid-March 2022 included Andrei Kosogov (40.96%), Mikhail Fridman (32.86%), Petr Aven (12.4%). At the beginning of 2024, according to information on the ABHH website, other investors were on the list, such as UniCredit Bank and The Mark Foundation for Cancer Research. AB Holding’s priority is managing the stake in Alfa Bank it owns (more than 99.9999%, with a book value of 127.3 billion rubles).
UNS-Holding LLC registered in 2001, its authorized capital is 6.4 billion rubles, the founders are Alfastrakhovanie Holdings Limited, Alliance Plus, AS Finance, as well as AS-Holding and UNS-Invest. The company is a beneficiary of AlfaStrakhovanie.
Owner LLC “Razrez Arshanovsky” is Cyprus Zimber Investments Ltd, the ultimate beneficiaries of which are not disclosed. The Arshanovsky open-pit mine at the Beyskoye coal deposit was put into operation in February 2015.
Head of the international legal practice of K&P.Group Anastasia Simonova notes that the presence of foreign shareholders now interferes with the full management of the company and creates additional difficulties. According to the expert, the EZO mechanism is an alternative to restoring management through the formal purchase of assets from foreign owners (Decree No. 618 of September 8, 2022) – with no less time frames and difficulties. “In my opinion, most companies will be happy to take advantage of this opportunity to get rid of the complexities associated with the participation of foreign parties in a simplified manner by filing a claim in court,” she says.
We note, however, that the introduction of such “quick” mechanisms for solving the problem of restoring the manageability of Russian companies owned by foreign investors does not fully correlate with the government’s ideas for attracting investment in the future.
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