Newsletter: "Danone and Baltika under state control"

In accordance with the Decree of the President of the Russian Federation No. 520 dated 16.07.2023, the assets of companies Danone and Baltika (the latter owned by the Carlsberg Group) are transferred into temporary external management of the Federal Agency for State Property Management (Rosimushchestvo).


Thus, taking into account the companies Unipro and Fortum, transferred into external management earlier, four companies with foreign participation are managed by the state.


The transfer of assets of foreign companies into temporary external management is regulated by Decree of the President of the Russian Federation No. 302 dated 25.04.2023. According to this Decree, external management may be introduced in respect of movable and immovable property, securities, (equity) shares of Russian companies and other property rights. The introduction of external management must be determined by the deprivation or restriction of property rights of Russian persons abroad or a threat to the national security of the Russian Federation. Transfer into external management does not mean nationalization of the company: foreign shareholders retain their ownership rights, but temporarily lose the right to manage the subsidiary; relevant management decisions are made by the temporary manager, who ensures the safety of the company's property.


The reasons for placing the two further companies under temporary external management were not made public. Whereas earlier Unipro and Fortum were placed under the effect of the aforementioned Decree due to the introduction of similar measures against Russian companies abroad, with regard to Danone and Baltika, the media tend to explain that the introduction of external management has been necessary to prevent further weakening of the ruble exchange rate as a result of the sale of these companies.


Obviously, the expansion of the list should be regarded as a negative signal for the large companies operating globally intending to leave Russia. At the same time the Russian President Vladimir Putin stated that the placing of companies Danone and Baltika under temporary external management was a special case and further extension of the list is not on the agenda.