High-risk ads – Newspaper Kommersant No. 167 (7368) dated 09/12/2022
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RSPP has criticized the draft law on limiting the share of foreign participation to 20% in Russian classifieds. The initiative of Deputy Anton Gorelkin, adopted in the first reading, threatens public companies with a loss of capitalization and a restriction in attracting foreign investment, including from the EAEU, according to the RSPP. In addition, due to restrictions on the circulation of Russian securities abroad, companies such as HeadHunter, CYAN and Ozon simply cannot fulfill the requirements. Experts believe that the problem can be solved through an additional issue or division of shares into classes with different rights.
Kommersant got acquainted with the letters of the President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin to Prime Minister Mikhail Mishustin, Chairman of the State Duma Vyacheslav Volodin, Head of the Presidential Administration Anton Vaino and Head of the Central Bank Elvira Nabiullina dated September 8. The head of the RSPP proposes to abandon bill State Duma Deputy from United Russia Anton Gorelkin, adopted on July 5 in the first reading, or seriously finalize it with the participation of business. The press service of the government and the Russian Union of Industrialists and Entrepreneurs did not respond to Kommersant, the Central Bank declined to comment.
The bill amends the law “On Information”, which limits the maximum share of foreign ownership in large Russian classifieds to 20% of the authorized capital. Resources with a monthly audience from Russia of more than 10 million will fall into the category. Also, classifiers will have to install an audience counter approved by Roskomnadzor.
The RSPP believes that the changes pose serious risks to the competitiveness of companies that have a high systemic significance, since they limit the attraction of investments both on the open (stock) market and in the framework of interaction with financial institutions from friendly jurisdictions.
The largest ad placement services (CIAN, HeadHunter, Ozon, Yandex, etc.) are public companies whose shares and depositary receipts are traded on the Moscow Exchange, as well as on the American NYSE and NASDAQ. A significant share of their securities is in free circulation, some of which is owned by foreign persons.
Moreover, now it may be simply impossible to fulfill the requirements. After the outbreak of hostilities in Ukraine, NYSE and NASDAQ suspended trading in shares and depositary receipts of Yandex N.V., Cian PLC, HeadHunter Group PLC, Ozon Holdings PLC, LSE – VK Company Ltd DRC securities. Also, international depository-clearing systems stopped settlements with the National Settlement Depository. As a result, the RSPP letter emphasizes that the reduction of the share of foreign ownership by public companies “will be difficult in the foreseeable future.”
HeadHunter agrees with the RSPP’s assessment, noting that 59.4% of the company’s shares are in free float. CIAN (28% of shares in free float) also support the arguments of the RSPP. Ozon clarified that AFK Sistema (31.8%) and Baring Vostok fund (31.3%) are the largest shareholders, the rest are in free float. VK declined to comment, Yandex did not respond to a request.
All companies, except for Yandex, have either a significant share of funds in the shareholder structure (Baring Vostok in Ozon, Elbrus Capital in CIAN), or a high free float, it is not possible to estimate the real shares of foreigners, the analyst of Ingosstrakh Investments Management Company noted Evgenia Nesterenko.
In her opinion, “judging by the reaction to reports about this bill,” the document is not directed at public companies, but at the Avito service, owned by the Prosus foundation. Avito declined to comment.
At the same time, Ms. Nesterenko admits, there are ways out of the situation for public companies: for example, they can carry out an additional issue to reduce the shares of foreigners, or divide shares into classes with different rights. According to her, we can talk about the introduction of a special approval procedure for a share of more than 20% or the forced conversion of securities into non-voting receipts. This is how, the expert notes, the restriction on foreign ownership in Thailand is circumvented.
In Russia, there have already been precedents for similar measures. In 2014, a law was adopted to limit the share of foreigners in the media (up to 20%). Then CTC Media had to delist from NASDAQ, 75% were bought by the National Media Group. Yandex changed its ownership structure in 2020 due to a similar initiative by the same Anton Gorelkin, which was then withdrawn: 49% of voting shares (class B) were transferred under special conditions to the trust of the Arkady Volozh family. The Public Interest Fund was created under the company, which received a “golden share” and the right to veto the consolidation of more than 10% of voting shares in one hand.
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