VK escapes offshore
The Board of Directors of VK Company Limited approved the possibility of re-registration of the company’s legal entity from the British Virgin Islands to Russia.
In September, VK sold the international gaming division to My.Games, and now the need to keep a staff in the BVI has simply disappeared. Experts interviewed by Kompaniya consider this step to be absolutely logical: the concept of a “global company” is being erased today, and this step will help protect VK from blocking and encroachment on its assets by representatives of unfriendly countries, they believe.
For the benefit of the company
The Board of Directors of VK Company Limited (part of VK) approved the possibility of transferring the company’s legal entity to Russia. Prior to that, it was registered in the British Virgin Islands. On Tuesday, February 14, VK published a statement on the approval by the Board of Directors of a “potential redomiciliation” (re-registration of a company in another country while maintaining the legal form, structure and assets) to the Russian Federation. It specifies that such a decision was made by the Board of Directors the day before. The condition for the transfer is “compliance with applicable legal and regulatory requirements.”
VK draws attention to the fact that most of its assets today are located and generate revenue in Russia. Recently, the number of Russian holders of the holding’s securities has also increased. Thus, re-domiciliation coincides with the interests of VK and its shareholders, and is also “best practice for public companies” in exiting foreign offshoreOh, the statement said.
If the change of legal entity occurs, VK, according to the legislation of the Russian Federation, will become an “international public company”. At the same time, she intends to maintain the status of a public organization, regularly publishing information about the stages of redomiciliation.
In 2022, there were changes in the structure of the holding. In September, VK sold the international gaming division to My.Games, and already in December, My.Games announced its withdrawal from the Russian market. In November, it became known about the gratuitous transfer of its stake in VK (25.9%) to the Dutch Prosus in favor of the Russian company.
After that, VK announced its intention to invest 300 million rubles in Russian video game studios (such information follows from the company’s presentation “Development of the gaming industry in 2023-2024”). A source close to the company in a conversation with Kommersant explained that we are talking about investments in projects that are at the stage of a prototype or early development.
“The concept of a global company is being erased”
“I think that this is a completely logical decision, given that the concept of a global company is already being erased, the concept of a global company is disappearing,” Alexey Raevsky, CEO of Zecurion, comments on the intention of VK in a conversation with the “Company”. “If earlier it was quite easy to register a company somewhere in Europe, in Cyprus or in the USA, and at the same time do business entirely in Russia, now geopolitics has intervened, and such a scenario has ceased to be possible.”
“The main business of VK is located in Russia, there is a certain attention to this company from the authorities. This is a very important resource in terms of influencing the audience, the largest Russian-language electronic media, and the largest Russian-language social network. Therefore, in principle, it acquires some features of a critical infrastructure,” Raevsky explains. The re-registration of a company in Russia reduces both geopolitical risks and the risks of some kind of blocking and obstacles to its activities, the analyst concludes.
Today, the risks associated with another jurisdiction for a company that earns money and operates in Russia increase a hundredfold, adds Eldar Murtazin, a senior analyst at Mobile Research Group. In order to avoid these risks, both capital and management companies are beginning to move to Russian jurisdiction. The scheme with registration somewhere in Cyprus or the British Isles ceases to be working due to the hunt for Russian capital by unfriendly countries, he believes.
The British Virgin Islands are included by Russia in the list of unfriendly countries. Experts do not rule out that the redomiciliation will open up new opportunities for the holding to attract financing within the Russian Federation.