Blackmail or protection of rights: Transneft’s war with a minority shareholder. Case study, case № А40-56150/2016

20 july 2018

KEY MATTER IN DISPUTE

Are owners of preferred shares in oil companies entitled to receive dividends in the same amount as owners of ordinary shares? In other words, shall a company compensate the difference between dividends received by preferred shareholders and dividends received by ordinary shareholders to the former? Respective rule is set by the President’s Decree №721 of 1 July 1992 on arrangements for transformation of state enterprises, voluntary unions of state enterprises into joint-stock companies.

BACKGROUND

In 2013 Transneft for the first time in its history paid out larger dividends to ordinary shareholders than to preferred ones – RUR 1221.38 vs RUR 724.21 per share (and RUR 6.8 billion vs 1.1 billion in total, respectively). One of the shareholders, United Capital Partners fund (owner of 75% preferred shares), filed a claim on recovery of RUR 100.9 million in lost profits and interest.

CLAIMANT'S POSITION

According to the President's Decree №721 of 1992 owners of preferred shares shall get compensation for the difference if they receive smaller dividends than ordinary shareholders. Such a provision could have been found in one of the previous versions of Transneft articles which was later unlawfully struck out.

RESPONDENT'S OBJECTIONS

President's Decree shall not apply to oil companies since companies in this sector have been privatized under separate, specific rules. Specific procedure for privatizing oil companies excluded application of standard rules set by the Decree to which the claimant referred. Moreover, Transneft has never been a state enterprise – it was re-established in 1993 as a joint-stock company from the very beginning.

RULING BY THE COURT OF FIRST INSTANCE

The court agreed with the respondent: Transneft was created ab initio, and oil industry was privatized under specific rules. Effective version of the company’s articles does not violate legal norms.

MEANWHILE

In another case (А40-25808/16) a fund sought to obtain internal documents of the company, including information on assets and management structure. Transneft treated it as corporate blackmail. Shareholder promised to abandon its claims with regard to documents in return for larger dividends, the company's lawyers said in court.

OUTCOME

UCP abandoned both claims in the court of appeal.

COMMENT BY S&K VERTICAL

Legal reasoning of the fund is rather unusual, therefore one could have foreseen that the court would reject such an creative claim. At the same time, the court was to answer a number of questions – whether it shall apply certain provisions of privatization and corporate legislation, how to correlate the above with Transneft constituent documents. What is also important is how the parties' behaviour shall be assessed from the standpoint of good faith. In any case, the claimant apparently achieved the result out of court, since it abandoned all the claims.

 

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