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. Last Updated: 07/27/2016

AVVA Positions to Take Over AvtoVAZ

The All-Russia Automobile Alliance, or AVVA, held an extraordinary shareholders meeting on Friday and changed its charter in what appears to be a step toward taking full control of the nation's largest car maker, AvtoVAZ.

AVVA was an investment fund founded in 1993 by Boris Berezovsky and Alexander Voloshin, who is now President Vladimir Putin's chief of staff. AVVA holds about one-third of AvtoVAZ, according to a Renaissance Capital report. Both companies are believed to be under Berezovsky's control.

Meeting Friday in Tolyatti, where AvtoVAZ is based, the AVVA shareholders changed the charter to define AVVA not as an investment company but as a holding company, according to the local information agency BRiA.

AVVA will function as a holding company "with regard to companies producing cars, components and aggregates to cars and to the group of companies connected to them in a unified technological and producing cycle," a BRiA employee said by telephone, citing the new charter.

AvtoVAZ spokesman Vladimir Artsikov confirmed that shareholders met to "clarify" the charter, but refused to give details. Vladimir Kadannikov, the head of AvtoVAZ's board, said AVVA plays no role in the car maker's financial operations, Prime-Tass reported.

Yury Zektser, general director of AVVA, said the charter was changed because of the "negative attitude" toward the company and because a new law on investment companies will soon come into force, according to BRiA.

What he failed to mention is that AvtoVAZ is in the last stages of restructuring into a holding company. Under the restructuring, all of the plant's divisions are to separate into different companies and many have already done so this year.

Soon it will be necessary to create a financial control center for the created holding. With the changes to its charter, AVVA is ready to fill this role.

AVVA was originally set up to finance the investment programs of AvtoVAZ. Voloshin helped Berezovsky found the consortium, which was formed by Berezovsky's LogoVAZ car dealership and AvtoVAZ. AVVA collected money from citizens to build a "people's car," selling $50 million in shares, but few shareholders saw any returns.

AVVA's largest shareholder is AvtoVAZ, with an 80.83 percent share. A total of about 10 percent is owned by LogoVAZ and Forus, a Swiss company founded by Berezovsky, Kadannikov and Moscow Mayor Yury Luzhkov.

Forus was the only major shareholder that did not take part in Friday's meeting, BRiA said.

Forus and another Swiss company, Andava, are suspected of misappropriating nearly $1 billion from Aeroflot. Berezovsky has refused to return to Russia for questioning in the case.