MOSCOW (Reuters) - A Moscow region court on Thursday suspended the corporate rights of X5's Russian subsidiary, a step that will effectively force Russia's largest retailer to redomicile from the Netherlands to Russia.
Many Russian companies are registered in the Netherlands or Cyprus. As Western nations discuss seizing Russian assets abroad, Moscow is keen to reduce possible foreign interference or leverage, particularly over economically important entities.
The decision by the Moscow region's arbitration court suspends X5's shareholder rights in its subsidiary, X5 Corporate Centre LLC, and transfers X5's shares in the subsidiary to the subsidiary itself, X5 said in a statement.
"The decision also means that Russian holders and ultimate owners of (X5's) depositary receipts ... will be required to accept a distribution of shares in the subsidiary proportionate to their shareholding in (X5), while (X5's) non-Russian holders and beneficiaries ... are granted an option to do so," it said.
The X5 case, brought by Russia's industry and trade ministry, is the first of its kind since a list of "economically significant organisations" was approved by Prime Minister Mikhail Mishustin in March.
Russia's finance ministry took a similar step on Wednesday with regard to the Cyprus-registered holding companies of private lender Alfa Bank and its insurance arm.
"Forced is the most unfriendly form of redomiciling, which separates and deprives of corporate rights all external holders who have not had time to transfer GDRs from the external perimeter to local brokerage accounts," Aigenis Investment Company said in a report.
X5 said it was examining legal options and noted that the court's decision has no impact on its retail operations.