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Russia's Yandex Proposes New Governance Structure Amid Kremlin Pressure


Yandex's parent company, Yandex N.V., is registered in the Netherlands, and about 85 percent of its shares trade on the Nasdaq stock exchange in the United States.

Russian Internet giant Yandex has proposed creating a new "public interest foundation" to oversee its business operations in a move that is seen as a response to Kremlin pressure to limit foreign influence.

Yandex, the country's largest search engine, announced on November 18 that the new foundation would be controlled by a board of 11 Russian citizens and would own the company's "golden share," which is currently held by the state-owned savings bank Sberbank.

The "golden share" will give the public-interest foundation the power to block the accumulation of more than 10 percent of the company's voting interests by one entity or related group of entities.

Sberbank's press service issued a statement on November 18 saying the bank would "consider" transferring the share, which it acquired in 2009, adding that the bank's management was "positive and sympathetic to Yandex's initiatives."

Kremlin spokesman Dmitry Peskov denied that the government was involved in the decision to create the foundation.

However, an unidentified source "close to the Kremlin" told Interfax that "these kinds of decisions are not made without coordination with...the presidential administration."

Yandex co-founder Arkady Volozh also told Interfax the company had discussed the plan with the Kremlin and had received "broad support."

Russian cybersecurity analyst Andrei Soldatov posted on Twitter that the Yandex proposal showed "the Kremlin found a way to tame Yandex."

The governance revision comes in the wake of a draft law that would limit foreign shareholdings in Russian Internet companies to under 50 percent. Immediately after the Yandex announcement, the author of the bill, State Duma Deputy Anton Gorelkin, said he would withdraw the bill "for further development."

Yandex's parent company, Yandex N.V., is registered in the Netherlands, and about 85 percent of its shares trade on the Nasdaq stock exchange in the United States.

The proposed changes must be approved by a Yandex shareholders meeting set for December 20.

The Yandex dispute highlights what critics have seen as a concerted effort by the Kremlin to assert state control over the Internet that dates back to around 2010.

In 2017, Moscow restricted the use of virtual private networks (VPNs). In 2018, it passed the so-called Yarovaya Law that requires telecoms firms to store all user data for up to six months and provide the Federal Security Service (FSB) with unrestricted access to it.

Earlier this year, Russia adopted a law imposing fines for using electronic media to express "disrespect" toward officials, society, or state symbols.

And earlier this month, the so-called sovereign Internet law came into effect, which will ultimately enable the government to monitor electronic information flows in real time, cut off access to content it deems "dangerous, and isolate the Russian segment of the Internet as a defense against foreign cyberattacks.

With reporting by the Financial Times, Reuters, Interfax, and TASS
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