Ozon Depository Receipts Forced Conversion: What Investors Need to Know
Ozon’s Move to Russia – Redomiciliation Explained
Ozon Holdings, one of Russia’s largest e-commerce companies, is in the final stages of redomiciliation – relocating its place of incorporation from abroad (Cyprus) to the Russian Federation. In fact, Ozon’s shareholders have approved re-registering the company as Ozon IPJSC in a special administrative district in Kaliningrad. The primary motive cited for this move is a “lack of adequate alternative ways to mitigate geopolitical and regulatory risks” under current conditions.
Regulatory approvals for this redomiciliation have been obtained both from Cyprus (where Ozon was originally incorporated) and Russian authorities. The relocation process is expected to be completed by the end of 2025, upon which the newly registered Ozon IPJSC will have its shares traded on the Moscow Exchange (MOEX) as a Russian company. This transition marks a significant corporate restructuring for Ozon and sets the stage for important changes affecting its shareholders – particularly those holding Ozon’s stock through American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs).
Implications for Depositary Receipt Holders – Forced Conversion
For individual investors from abroad (including the EU, UK, USA and other countries) who hold Ozon’s shares in the form of ADRs/GDRs, the redomiciliation has a critical consequence: forced conversion of those depositary receipts into ordinary MOEX-traded shares. Under Russian law, once a company becomes Russian-registered, any outstanding foreign depositary receipts must be converted into the company’s local shares within a set timeframe. This rule did not initially apply to Ozon while it was a Cyprus entity, but now that Ozon is redomiciling to Russia, it will fall under the forced conversion regime for redomiciled companies.
Ozon has indicated that all its ADRs currently held by Russian custodians or financial institutions will be automatically converted into the new Ozon IPJSC shares during the redomiciliation process. However, many international investors hold their Ozon ADRs via foreign banks or brokers (outside of Russia). Those foreign-held ADRs will not convert automatically. Instead, their holders will need to actively participate in the forced conversion procedure to swap the ADRs for the underlying ordinary shares of Ozon IPJSC.
What is “forced conversion”?
It is a special, one-time mechanism introduced by Russian legislation in response to geopolitical sanctions and market disruptions. It allows foreign investors who are unable to convert their receipts through normal channels (due to international clearing systems being blocked, etc.) to apply directly in Russia for conversion of their ADRs/GDRs into local shares. In essence, if your Ozon ADRs are stuck in a foreign custodial account because of sanctions or clearing restrictions, the Russian law provides a pathway for you to obtain the actual shares in Russia through a formal application process.
Expected Timeline and Deadlines
Although Ozon’s forced conversion window has not yet officially opened, we anticipate news in the near future. As soon as Ozon finalizes its re-registration in Russia (expected by late 2025), the company’s board will set a start date for the forced conversion period in accordance with Central Bank regulations. By law, this conversion must commence within one year of Ozon’s re-registration as a Russian entity. Given this requirement, we expect the conversion to likely begin in the first half of 2026 (if not earlier).
Once announced, the conversion period will be limited – under current rules, investors will have 120 days from the commencement date to submit their applications for conversion. It is crucial not to miss this window. If an investor fails to apply within the 120-day period, they risk their depositary receipts being canceled without receiving shares. In such cases, the depositary bank might eventually sell the underlying shares and hold the cash proceeds for the ADR holder – but the timing and price of any such sale are uncertain, and there’s no guarantee of a favorable outcome. Moreover, as long as you remain only a receipt holder, you generally have no rights to dividends or other corporate actions; those rights are restored only once you become a registered shareholder via conversion.
Summarizing: Ozon’s conversion window is expected soon, and it will be time-limited. We will keep a close eye on official announcements so that investors can act promptly once the process opens.
What Documents Will Investors Need to Provide?
Participating in the forced conversion requires preparing a set of documents to prove your ownership and satisfy Russian regulatory requirements. Based on the 2024 conversion rules and our experience, each investor will likely need to gather at least the following:
- Conversion Application Form: A formal application to the registrar for forced conversion of your Ozon ADRs. (Each Russian registrar provides its own form for this purpose.)
- Proof of ADR Ownership: Documents showing that you are the rightful holder of the relevant number of Ozon ADRs/GDRs – for example, account statements or certificates from your broker or custodian confirming your holdings. These usually need to be notarized and apostilled
- Proof of Beneficial Ownership/Interest: Documentation to verify the legitimacy of your interest in those ADRs. This may include a declaration of beneficial ownership or other evidence that you, as the applicant, are entitled to the securities in question
- Custody Chain Information: Details about the chain of custody for the ADRs. You will need information on the foreign nominee holder (the bank/broker where your ADRs are held) and any intermediaries above them up to the primary depositary. Essentially, this traces the path from you to the central depositary to confirm the records. We know this is usually difficult for foreign investors and in most cases we can provide solutions to overcome this problem
- Any Other Documents Requested: The conversion registrar might ask for additional documents depending on individual circumstances (e.g. notarized translations of passports, power of attorney for your representative, etc.). It’s important to be prepared for supplemental requests
As practice shows, in most cases the investors would need to carry out notary inspection of their personal accounts with the brokers. This is done only via Russian notaries.
Every investor’s situation can differ, and the registrar’s approach is strictly formal – only complete and correctly formatted documentation will be accepted. In our experience, providing a comprehensive, error-free document package is essential for a successful conversion application. We strongly advise investors to start compiling these materials early (even before the window opens) so that you can submit promptly once the conversion period begins.
What Happens After Conversion?
If your application is approved, your Ozon ADRs will be cancelled and you will receive the corresponding ordinary shares of Ozon IPJSC (the Russian-registered company). These shares will be credited to an account with the Russian registrar or a custodian. It’s worth noting a few important points post-conversion:
- Trading and Liquidity: For foreign investors from an “unfriendly” jurisdiction (e.g. EU, UK, USA, etc.), new shares will be held on a restricted “Type C” custody account in Russia. Current Russian regulations severely limit transactions on Type C accounts, meaning you will generally not be able to freely sell or transfer the shares. In plain terms, your investment remains relatively illiquid for now – you’ll own the shares, but converting them to cash is constrained. This situation persists until regulatory policy changes
- Dividend Rights: On a positive note, once you hold the ordinary shares, you regain the right to receive dividends (if and when Ozon pays them). Under current rules, any dividends due to “unfriendly” foreign shareholders are paid into a blocked ruble account (Type C bank account) in the shareholder’s name. You may not be able to withdraw those funds abroad immediately, but they are accruing for you in Russia. Importantly, when you convert, you also become entitled to any past dividends the company declared while you were holding ADRs (usually up to the last 3 years prior). It’s another incentive not to delay the conversion once it’s available
What will the price of OZON shares be?
We are not financial advisors and we do not possess any specific information. However, these are the approximate calculations of prices of two other DR issuers which have gone through the redomiciliation and MOEX listing, done by our team for internal purposes (may contain discrepancies, please check on your own and please advise your financial consultants).
TCS Group depository receipts prices/shares (approx.):
March 2022 – EUR 3.7
October 2025 (after redomiliciation and MOEX listing) – EUR 31.2 (+743% to March 2022)
MD Medical Group (MediGroup) depository receipts prices/shares (approx.):
March 2022 – EUR 5.3
October 2025 (after redomiliciation and MOEX listing) – EUR 13.4 (+152% to March 2022)
MAGENTA Legal’s Expertise and How We Can Help
We understand that this process is complex and may seem daunting to individual investors. MAGENTA Legal is a professional law firm with a strong focus on precisely these issues – we have been assisting foreign investors with Russian depositary receipt conversions for over three years. In 2022, when Russia first introduced forced conversion for locally incorporated companies, our team successfully guided numerous investors through both the forced conversion and standard conversion procedures. We have remained at the forefront of developments ever since, including the new 2024 rules for companies like Ozon that are re-domiciling to Russia.
Our dedicated Depositary Receipts practice group has hands-on experience preparing the necessary documentation, coordinating with Russian registrars and custodians, and navigating the legal formalities (such as notarizations, apostilles, and translations). We are well-versed in the strict formal requirements and know how to maximize our clients’ chances of a positive outcome. From verifying your documents to liaising with brokers and authorities, we provide end-to-end support to make the conversion as smooth as possible.
Why choose MAGENTA Legal?
We offer:
- Proven experience – a track record of successful conversions in 2022–2024 across multiple Russian issuers
- Up-to-date knowledge – we stay current with all legal changes and Central Bank decisions affecting the conversion regime, so you don’t have to decipher the latest regulations on your own
- Professional integrity – as a law firm, we ensure full compliance with Russian law, so your interests are protected at every step
- Individualized guidance – we understand every investor’s situation differs. Our team will assess your specific circumstances (home jurisdiction, broker arrangements, etc.) and advise on the optimal way to proceed, including handling any unique complications that may arise in your case
Register Your Interest – Stay Informed
The official launch of Ozon’s forced conversion is imminent, and acting swiftly will be essential once it begins. We encourage any interested Ozon investors to register your interest by sending us a message. Simply reach out via our contact form or telegram-bot, and we will inform you ASAP when the forced conversion window opens. By joining our notification list, you’ll receive timely updates and guidance so you won’t miss this important opportunity.
With our vast expertise and in-depth experience, our main issue in terms of forced conversion is usually the deadline: our clients address us too late and in many cases even after the deadline has passed and nothing can be done. By starting preparations in advance, you would reserve a slot in our schedule and maximize your chances to succeed with the procedure of forced conversion.
At MAGENTA Legal, we are ready to assist you as soon as the conversion process starts. Don’t hesitate to get in touch with our team for a preliminary consultation or with any questions about Ozon’s redomiciliation and conversion. Taking action now will ensure you are prepared to protect your investment in Ozon when the new regime comes into effect.
Stay tuned – we will post further news on our website as soon as Ozon or the regulators release more details. In the meantime, feel free to contact us to discuss how we can help you navigate these upcoming changes with professionalism and peace of mind. Your investment is important, and we’re here to support you through this.
Disclaimer: This material shall not be construed as comprehensive legal advice; it is intended to provide only general information. Any obligations of the consultant shall be valid only after the conclusion of a consultancy agreement and actual payment of the agreed fees. MAGENTA Legal does not accept any liability (direct or indirect) in the event that the application is rejected or depository receipts are not converted — except in cases of proven intentional misconduct on our part. We do not guarantee the outcome of the process, and the procedure may be modified or suspended by OZON, registrars, or other institutions at any time. Should that occur, we will use reasonable efforts within the scope of the mandate and agreed budget, but we are not obliged to pursue appeals or litigation in the event of rejection. Please also note that issues related to local legislation or sanctions compliance in your jurisdiction fall outside our competence. Each client is responsible for ensuring their own compliance with such rules, and we strongly recommend consulting a local legal advisor in your jurisdiction on these matters.