The Russian government takes control over Russian assets of Danone and Carlsberg

In April, the same measure was first introduced against the Russian energy assets of Germany’s Uniper and Finland’s Fortum under a presidential decree allowing to transfer assets and property controlled by companies or individuals from “unfriendly” states — which include the US and its allies in the EU, UK, Australia, and Japan, among other – into “temporary management” of the Russian authorities, in response to similar moves, or the threat of them, by such “unfriendly” countries (see text of decree).

The shares in the Russian companies, Danone Russia and Baltika Breweries, are transferred to the Federal State Property Management Agency into its temporary management, enabling the Agency to exercise all voting rights carried by such shares, effectively step in the shoes of their current owners, including to replace existing management and take operational control over the business. The Agency, however, cannot sell the shares which it takes control over, to third parties. The Agency may use proceeds from the businesses put under its management to compensate its costs associated with such management.

The move to expand the assets put under temporary management beyond the energy sector is expected to deal a blow to efforts by many Western companies who are still in the process of trying to exit Russia by selling their assets. Shares of companies put under temporary management cannot be sold by their legal owners, and there are fears that more assets may be put under Russian government control. The regime of temporary management may be terminated by President Putin’s decree.