Article part 224 Apr 2025 12:35
With Evraz already entangled in sanctions and geopolitical uncertainty, the introduction of Russia’s Economically Significant Organizations (ESO) Law has further complicated the situation. The law, which came into effect on September 4, 2023, grants the Russian government the authority to suspend the corporate rights of foreign shareholders in designated companies and transfer ownership to Russian beneficiaries.
In January 2025, Evraz’s Russian subsidiary, JSC Evraz NTMK, was officially added to Russia’s ESO list. This designation places Evraz Plc, the UK-listed parent company, at risk of losing control over its Russian operations. While the ESO process has not yet been initiated, the inclusion on the list signals that further restrictions may be imposed, creating additional uncertainty for shareholders.
Foreign shareholders, including Evraz Plc, face the possibility of losing their ability to vote on company decisions. If the ESO process proceeds, it could remove any influence foreign investors once had over the governance and strategy of Evraz’s Russian operations. Additionally, all dividends due to foreign shareholders would be frozen indefinitely, meaning that while Evraz’s Russian business continues to generate revenue, foreign investors may be unable to access any portion of the company’s profits.
The law also prohibits foreign shareholders from selling, transferring, or liquidating their shares. This leaves UK investors in a situation where they still own Evraz shares but have no ability to exercise their rights or cash out their investments. Meanwhile, Russian shareholders are required to convert their indirect holdings into direct ownership within the Russian subsidiary, shifting control away from the foreign parent company.
At first glance, these measures resemble a form of nationalization. However, the Russian government has framed them as a suspension rather than outright expropriation. This distinction is significant because, in theory, foreign investors retain ownership of their shares, but their ability to exercise any of their rights remains on hold until the Russian government decides otherwise.
One of the biggest concerns for investors is the fate of dividends. The ESO law indicates that dividends owed to foreign shareholders will be withheld rather than permanently seized. If sanctions are lifted or a geopolitical agreement is reached, these dividends could potentially be paid out retroactively. However, there is no guarantee of when, or if this will happen, leaving foreign investors in a prolonged state of uncertainty.
As it stands, Evraz’s Russian assets remain operational, but they are now under increasing scrutiny from Russian authorities, with limited input from foreign shareholders. Whether these suspensions will be lifted in the future or extended indefinitely depends on the evolving geopolitical landscape. Without intervention or resolution, UK-listed Evraz Plc may remain permanently disc
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