Russian social media and internet services giant VK Group has announced its official move back to Russia from the British Virgin Islands, according to an official corporate register. The company has transferred its jurisdiction to a special administrative region (SAR) on Oktyabrsky Island in Russia’s Kaliningrad Region, which is considered one of Russia’s “offshore” zones. VK Group, the owner of the popular Russian social media platform VKontakte, will continue to operate as an international public joint stock company (IPJSC) in the SAR.
The decision to redomicile to Russia was initially approved by VK’s board of directors in February. In August, the board and the company’s shareholders formally announced their decision to terminate operations in the British Virgin Islands and return to Russia. The main reason behind this move is that the majority of VK’s assets are based in Russia and generate revenue in the country.
Last year, VK’s CEO, Vladimir Kiriyenko, revealed that the company was developing a new long-term business strategy that would consider external restrictions, referring to the Western sanctions imposed on Russia and its companies after the Ukraine crisis. Kiriyenko himself was targeted by US and UK sanctions, leading to Apple temporarily removing VK’s apps from its App Store in mid-2022.
In addition to its return to Russia, VK also announced its intention to delist from the London Stock Exchange (LSE) and transfer its shares to the Moscow Exchange. The listing of VK’s global depository receipts (GDRs) on the LSE was terminated on September 12.
This move by VK is part of a growing trend among Russian companies to repatriate in the face of Western sanctions. According to a recent report from the Ministry of Economic Development, 45 companies have completed redomiciling procedures in the first eight months of this year, nearly three times the number from the previous four years. The majority of these firms relocated from Cyprus (80%), followed by the British Virgin Islands (13%).
This shift reflects the increasing pressure on Russian companies to move away from offshore jurisdictions and strengthen their presence within Russia. VK’s return to Russia aligns with the broader trend of companies prioritizing their domestic market and reducing dependence on foreign jurisdictions.
As VK Group completes its redomiciliation to Russia and continues its operations as an IPJSC, the company aims to consolidate its position in the Russian social media market while navigating the challenges posed by international sanctions.