Markets positively welcomed the governance changes at Russian internet giant and one of Europe’s largest tech companies Yandex, with the company's shares rising by over 11% on Moscow Exchange and NASAQ on Novevember 18.

As reported by bne IntelliNews, Yandex has come to an agreement with the Russian authorities to amend its governance and give an NGO with public participation control over its “golden share” with veto powers, in an effort to allay the state’s fears that a “strategically important” technology company will fall under the control of foreign powers.

Since its introduction the bill to cap foreign ownership in internet companies has rocked the shares of Yandex in particular, as it is rumoured that the Kremlin aims for more direct control in the company.

But “the proposed share capital changes addresses all relevant concerns, voiced by state officials, while retaining current shareholder structure of the company, and with no significant impact for Yandex’s minority holders,” BCS Global Markets commented on November 18.

Should the unconfirmed reports that the governance scheme was approved at Russian state level be true, it lowers the risk of tough foreign ownership legislation going through, BCS GM believes.

The founder and CEO of Yandex Arkady Volozh told staff on November 18 that Yandex will set up a “Public Interest Foundation”, modelled on a Dutch stichting, that will get a golden share and have a veto over a defined list of issues such as the sale of material IP, or the sale or transfer of Russian users’ personal data to foreign companies – questions which are deemed to affect Russia’s “national interest”.

In addition, Yandex said it will propose a $300mn share buyback, without disclosing additional results, which should provide additional support for the share price, BCS GM suggests.

The proposed changes by Volozh also remove the “Class B share” problem, where Volozh's voting shares would have instantly transferred to the majority portfolio investors in the US if he were to die unexpectedly.

“We see the news as highly positive for YNDX’s stock. We believe the proposals (1) create scope for the long-awaited resolution of the Class B shares controversy, and (2) have the potential to significantly reduce the regulatory risk company faces. One risk here is the possible failure to obtain EGM approval (we this see as a low-probability scenario, however). The proposed measures also look much more palatable than some other possible outcomes feared by investors. We reiterate our BUY rating for YNDX,” Sova Capital said in a note.

UBS was also upbeat on the news: “We view the developments as a strong positive for Yandex' share price. We think that the proposed changes 1) address the single-man risk/outline a clear succession plan and 2) create a new layer of Russian IP and data protection; as a result recently intensified regulatory pressure on Yandex is likely to diminish, we believe.”