Norilsk Nickel will digitize the value of shares – Newspaper Kommersant No. 66 (7511) dated 04/15/2023

Norilsk Nickel has hired Rosbank-linked counterparty Vladimir Potanin to buy up to 0.27% of the companies’ shares, which will be the first step in implementing the Digital Investor program. The essence of this program is to issue tokens tied to the value of shares, digital assets will then be transferred to employees. This will allow them to receive dividends, but they will not be able to dispose of the shares themselves. The shares and related rights will be with the structure of Vladimir Potanin, who, by the way, is the main shareholder of Norilsk Nickel anyway.

Norilsk Nickel has revealed the details of the so-called “people’s capitalism” (officially called “Digital Investor”), which was announced by the company’s president and co-owner Vladimir Potanin last year. The essence of the idea is that 25% of the shares of Norilsk Nickel should be returned to employees, as it was before the privatization of the MMC in 1994. Vladimir Potanin himself, through Interros, owns a 37% stake in Norilsk Nickel.

As follows from the disclosure, Nornickel, through its subsidiary, hired a counterparty in the person of Digital Assets (CA), which is not part of the Norilsk Nickel group. According to Spark-Interfax, 40% of Digital Assets belongs to Vladimir Potanin’s Rosbank, 40% belongs to SD Partner, where Rosbank owns 19%. The remaining 20% ​​of Digital Assets is owned by ANO Digital Investments, which is owned by five individuals, including Oleg Budargin, the former head of the Rosseti power grid state holding.

“Digital Assets” at the expense of Norilsk Nickel and through a broker will buy up to 0.27% of the shares of the metallurgical giant worth 6.3 billion rubles on the Moscow Exchange. The CA will then issue tokens pegged to the value of the shares, which will allow them to receive dividends. According to the program parameters, all employees working in the company for more than a year will receive from 2 to 10 digital financial assets (DFA), depending on the length of service. It will be possible to sell assets in a year. “Repayment of the CFA in five years. This is a pilot project, and if employees are interested in this tool, the continuation of the program may be considered,” Norilsk Nickel said, emphasizing that the Digital Investor program has passed all corporate approvals. Rusal (which controls 26.39% of Norilsk Nickel’s shares) did not give Kommersant any comments.

Previously, Rusal demanded that the initiative should not be used in the interests of any individual shareholder or management. Elena Bezdenezhnykh, a member of the Board of Directors of MMC, Vice-President of Rusal, spoke about this in an interview with Kommersant. “It is forbidden to issue CFA on shares of public companies,” she said in March. “So, Norilsk Nickel employees can only receive some indirect claims tied to the value of shares and the amount of dividends. The question arises, who then will be the owner of the shares themselves? Who will vote on them?

The formal shareholder of Norilsk Nickel in this case will be Digital Assets with all the relevant rights – participation in shareholder meetings and voting, receiving dividends, says Alexander Garmaev, head of the Vegas Lex corporate project group. “Employees who receive tokens will not have any rights directly in relation to Norilsk Nickel shares,” he explains. “The amount of payments to employees will simply depend on the capitalization and dividend flow of Norilsk Nickel. Such motivation mechanisms for key employees are called “phantom options”: employees do not receive shares in the company, although they benefit from the growth of its capitalization. The CFAs issued by Norilsk Nickel certify only the cash claim for dividends, agrees Maria Lyubimova, head of the legal support for foreign economic activity practice of the Regionservis bar association, the rights to the shares will belong to Digital Assets. “The Law on Digital Financial Assets allows the issuance of digital financial assets, which are shares and provide their owners with all relevant corporate rights,” she emphasizes. “However, this regulation applies only to non-public JSCs.” Norilsk Nickel is a public company.

According to Kirill Chuiko from BCS, the buyout of 0.27% of the shares is a relatively minor step, and the balance of power should not change: Interros already controls the company and its strategy.

Evgeny Zainullin