Smart Holding Convenes Shareholder Meetings of Kharkivoblenergo and Kharkivenergozbut to Form Competent Supervisory Boards

SMART HOLDING (CYPRUS) LTD (hereinafter – SMART HOLDING), which holds 29.795% of the shares in KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC, has begun the procedure for convening an extraordinary general meeting of shareholders of the two companies. The meeting will be held online[1] on 3 September 2021.

SMART HOLDING exercises its right as a shareholder that holds 10 or more percent of the voting shares in the company, taking into account the requirements of Article 47 of the Law of Ukraine “On Joint Stock Companies”.

The main goal of the meeting is to build a transparent and efficient corporate governance system for KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC, which will elevate the investment attractiveness of the companies with a state shareholding. This is extremely important for their further privatization within the framework of the initiative from the President of Ukraine.

Ivan Gerasimovich, Risk Management and Security Director of Smart Holding, a candidate to members of the Supervisory Board of KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC, said:

‘We hope that the state represented by the State Property Fund (SPF) will take the opportunity to restore the legal competence of the companies’ supervisory bodies and will take part in the meeting. The establishment of the supervisory boards, which include independent members, will ensure a transparent structure of the companies’ management systems, prevent any manifestations of corruption, protect the rights and interests of shareholders, primarily the state. The "shadow" management of these companies should be terminated. Every day of delay in this matter brings considerable losses to the state.’

The agenda of the meeting includes items on the election of new members of the energy companies’ supervisory boards, as well as on the conduct of an independent special audit of the companies’ financial and economic activities for the period of 2019-2020.

SMART HOLDING, as a responsible shareholder guided by the principles of the OECD on corporate governance of state-owned companies and the National Code of Corporate Governance, earlier began the procedure for electing the Supervisory Boards of KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC with independent members. The transparency and impartiality of the open selection competition is ensured by the international executive recruitment company Boyden Ukraine.

It is a reminder that on 28 April 2021, online general shareholder meetings of KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC were held where the Supervisory Boards of the joint-stock companies were not established.

As it is known, the formation of independent Supervisory Boards in companies where 50%+ shares (stakes) in the authorized capital belong to the State is mandatory according to Law of Ukraine No. 1405-VII "On amendments to certain legal acts of Ukraine regarding the management of public and municipal property", which was adopted by the Verkhovna Rada on 2 June 2016.

In May, SMART HOLDING (CYPRUS) appealed in court the decisions made at the Supervisory Board meetings of KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC on 23 March 2021, in particular, the decisions on holding a general meeting of these companies on 28 April 2021. The Company is convinced that after 6 January 2019, the composition of the Supervisory Boards of KHARKIVOBLENERGO JSC and KHARKIVENERGOZBUT PJSC became unauthorized/incapacitated since it was not brought into compliance with the provisions of the current legislation.

Reference:

SMART HOLDING is one of the largest investment groups in Ukraine. The interests of the Group focus on the industries that are the key ones for the economy of the country. The companies of Smart Holding invest in metals and mining, oil and gas segment, agriculture, shipbuilding, real estate and energy sector. The SMART HOLDING’s strategy is aimed at efficient management of a diversified investment portfolio in order to increase its value in the long term.

SMART HOLDING (CYPRUS) LTD is the top holding company of the Group that was established and operates under the laws of the Republic of Cyprus. Its beneficiary is Vadym Novynskyi.