TCS Group has reduced its board of directors to three people

The TCS Group has updated its board of directors, reducing it to three people. A quorum of two directors is sufficient to make decisions. Lawyers call the measures “insurance and preparatory” for the main shareholder of TCS Group of the Interros holding Vladimir Potanin before the planned re-registration of the group from the jurisdiction of Cyprus.

Shareholders of TCS Group Holding PLC (the parent structure of Tinkoff Bank) at a meeting on November 21 approved changes to the company’s charter. As follows from the disclosure (.pdf), the quorum requirement for the board of directors was reduced to two people present.

This is necessary to “ensure a quorum at any meeting” to increase flexibility, more “timely and immediate decision-making”, including taking into account the “current size of the board of directors”. The latter has been reduced to three people. Headed by the council is the ex-head of MasterCard in Russia Alexey Malinovsky, other directors are Daniel Wolf and Tatyana Kuznetsova. At the beginning of 2022, there were 11 people on the council.

Following the shareholders’ meeting, TCS Group also granted members of the board of directors the right to repurchase shares, including global depositary receipts (GDRs), in the amount of up to 10% of the share capital within 12 months from the date of this decision. The maximum redemption price can be 105% of the market average on the LSE, the minimum is $0.04. The company can sell securities within two years from the date of the buyback.

TCS Group and Tinkoff Bank did not respond to Kommersant’s request. The group is now in the process of finding the optimal solution to change jurisdiction. In November, the Russian government developed a procedure for making decisions on whether companies retain depository programs during redomiciliation.

We are talking about organizations that intend to obtain the status of an international company and “move” to a special administrative region. For example, in September VK completed re-registration from the British Virgin Islands to a special administrative region on Oktyabrsky Island in the Kaliningrad region. Shareholders of Polymetal and Fix Price approved re-registration in Kazakhstan.

According to IMPRAVO managing partner Maxim Borisov, reducing the quorum for making decisions by the board of directors is usually done for the speed and convenience of making management decisions by majority shareholders. “Now it is enough to make decisions with two members who may be loyal to a certain group of shareholders,” he notes.

“Minimizing “resistance” or passive behavior (which is more likely given the circumstances) of directors not interested in a particular decision. A smaller quorum for decision-making on the part of directors means a greater likelihood of this decision being made, including on business redomiciliation,” says Daniil Akderli, partner at Akderli Legal.

The reason for the buyback may be primarily the need to maintain the value of the company’s shares, Mr. Akderli believes.

According to him, “given the planned redomiciliation, such measures can be called safety net or preparatory.”

According to analysts at Aton (published earlier in November), TCS may fall into the perimeter of companies for which forced redomiciliation is possible. This is a more stringent scenario for foreign companies with Russian roots, in contrast to voluntary redomiciliation, which involves a special “relocation” procedure for economically significant companies.

Olga Sherunkova, Evgeniy Khvostik