Andrey Mikonin comments the corporate conflict between the shareholders of OJSC Kirovsky Zavod
Minority shareholders of the Kirov Plant got another chance to challenge the transaction of sale of 35 per cent stake in the company to the entities affiliated with the main shareholder Georgy Semenenko
Minority shareholders of St. Petersburg’s largest machinery holding company OJSC Kirovsky Zavod managed to prove unlawful, before the appeals instance of the Arbitration Court of St. Petersburg, the decisions by Gennady Semenenko, the company’s general manager and main shareholder, to sell a 35 per cent stake in the OSJC. The securities were sold to the entities affiliated with Semenenko and his relatives as early as in 2005. This was shown in the materials of the court case.
The corporate conflict between the management of the Kirov Plant and its minority shareholders has already lasted for more that 6 years. The minority shareholders are CJSC Doroga, OJSC Poligrafoformleniye, OJSC Registroniks and OJSC Baltiysky Emissionny Soyuz, and behind them there are Olga Rodina, Maxim Yakovlev, Igor Ustinov and others. Together these shareholders possess around a 25 per cent stake in the plant.
Minority shareholders are trying to prove in courts that Georgy Semenenko and his relatives have most probably violated the law while accumulating around 60 per cent of the stock of the machinery holding in order to obtain control over it.
Moreover, the minority shareholders consider the prices in the transactions shares to be lower than the fair market value thereof. On this basis they are attempting to hold Semenenko liable for damages in an amount exceeding 25 billion Rubles incurred by the Kirov Plant and its co-owners. There are seven different claims altogether in this conflict. Previously, the minority shareholders were challenging the Kirov Plant stock deals without much success. Now, however, they might get the second chance, provided that the decision of the appellate court survives in cassation.
“At this time we are getting a real opportunity to have the court cases reconsidered and to invalidate the deals as to the take-out of 55 per cent stake. This court decision shows the director’s bad faith as to the plant and its shareholders” – says Pyotr Frolov, the minority shareholders’ representative. According to him, the company is planning a row of claims based upon this decision but they will be filed with the court only following the result in cassation. Meanwhile, Georgy Semenenko himself does not see any danger in the appellate decision. “It is obvious now who these minority shareholders are; as far as I know, there is an international arrest warrant issued against one of them, and another one has taken part in the bankruptcy of an agricultural holding company. It is fearful for me to imagine what would have happened with the Kirov Plant had these people taken the power over it. They have little chance for success”, - says Georgy Semenenko
We would remind that Interpol’s web-site identifies Maxim Yakovlev as a person having an arrest warrant against him; the grounds for that are the questions that Kirgiz authorities have as to his transactions with printing equipment. Igor Ustinov is a co-owner of the Pskov agricultural holding company Ecoselkhozinvest, which has turned out to be on the threshold of bankruptcy. But it may very well be so that they will be better off soon.
According to Andrey Mikonin, the partner of S&K Vertical law firm, it is very much possible to have the shares returned in this situation. “Courts more and more often tend to return the shares even if they were re-sold or ceased to exist in the course of reorganization” – he says. In St. Petersburg there already is a growing experience of retaking control over the stripped assets. For instance in 2013 in OJSC Magneton the minority shareholder of the plant Lyubov Klimanova (46 per cent of stock) managed to return the land and the premises of the plant that had been sold to third parties as early as in 2006. The minority shareholders of the Kirov Plant have the chance to get back the shares too, she says, even if they were already re-sold to somebody else. “I’ve made it, even though I was alone. They have more resources and, moreover, there is consistent jurisprudence nowadays” – she says convincingly.
Artyom Chlegov, Alexander Sologub
"Delovoy Peterburg" No. 008 (3977) dated 27 January 2014.