Russia Seizes Japan Tobacco's Management Rights
The Chosun Ilbo · Ryu Jung ·
Russia Seizes Japan Tobaccos Management Rights Targets Japanese governments stake, impacting dividends and Sakhalin-2 energy security
Russia has forcibly taken over the management rights of four local subsidiaries of Japan Tobacco Inc. (JT), the top company in Russia’s domestic tobacco market. Amid Russia’s continued hostile measures against Japan, Russia has even initiated procedures to confiscate assets of a company in which the Japanese government is the largest shareholder.
According to the Nikkei Shimbun on the 6th, Russian President Vladimir Putin signed a presidential decree on the 5th placing four JT subsidiaries under temporary management by Russian companies. While ownership remains, management rights are lost. JT, well-known in South Korea for brands like ‘Mevius’, ‘Camel’, and ‘Winston’, holds a 37% share of Russia’s tobacco market. Russia accounts for 10% of JT Group’s revenue and 25% of its operating profit. The Japanese government, holding 37.55% of JT shares through the Ministry of Finance, receives annual dividends worth approximately 1 trillion Korean won. Russia is effectively targeting the Japanese government’s financial lifeline.
Once designated for management, the companies fall under the control of Russian government-designated entities, with management replaced. Profit remittances become difficult, leaving JT as a ‘nominal owner’ in name only. To sell, the assets must be offered at 40% of their market value for approval, with most of the proceeds going to the Russian treasury. This is effectively akin to confiscation.
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