AMC Regranted Permission to SMART HOLDING (CYPRUS) to Buy KHARKIVOBLENERGO’s Shares


At a meeting on Thursday, 28 October, the Antimonopoly Committee of Ukraine (AMCU) for the second time granted permission to SMART HOLDING (CYPRUS) LTD (hereinafter – SMART HOLDING) to acquire a block of shares in KHARKIVOBLENERGO JSC in a number that ensures more than 25% of votes in the company’s supreme management body. During the consideration of the application, the Committee, the same way as at the beginning of this year, found that the concentration of shares would not lead to monopolization or significant restriction of competition in product markets.

In July 2021, the AMCU cancelled its earlier decision of 28 January 2021, which provided SMART HOLDING with the right to hold more than 25% of shares in KHARKIVOBLENERGO JSC. The situation with the AMCU’s reconsideration of its earlier decision was initiated by the current management of the joint-stock company. In his appeal to the Committee, a representative of the object of concentration, i.e. KHARKIVOBLENERGO JSC, called the information on KHARKIVOBLENERGO JSC submitted by the applicant “unreliable”, despite the fact that it had been received from open official sources.

In order to avoid legal uncertainty, in July of this year SMART HOLDING turned to the AMCU with a new request for permission to buy shares in KHARKIVOBLENERGO JSC. This application was considered under the unfriendly acquisition procedure, since KHARKIVOBLENERGO JSC did not provide SMART HOLDING with the information necessary to obtain permission for concentration. By the order of the state commissioner, the necessary information was requested on demand from KHARKIVOBLENERGO JSC.

Ivan Gerasimovich, Risk Management and Security Director of SMART HOLDING, a candidate to members of the Supervisory Board of KHARKIVOBLENERGO JSC, said:

‘The management of KHARKIVOBLENERGO understands that we, as shareholders, will continue to eradicate all those corruption schemes in the company that turn it into one of the least profitable enterprises in the industry. That is the reason why the energy company’s management is trying, in every possible way, to prevent SMART HOLDING from using its rights of a shareholder, hindering a comprehensive audit to scrutinize the performance of the Company’s Board of Directors, and hindering measures and steps to be taken to identify and prevent abusive practices by the management. At the same time, the establishment of the supervisory boards with independent members is being deliberately delayed. Appeals to courts and regulators on some far-fetched facts, falsification of financial statements and audit results, etc. are resorted to. But this certainly will not stop us! We use all the methods provided by law to establish proper corporate governance in KHARKIVOBLENERGO in accordance with the best world standards, as well as to ensure that all those who organized overtly corrupt schemes in the company are punished and are made to pay for the damage they caused. According to our reports on criminal offenses submitted to law enforcement agencies, 19 episodes of corrupt actions/practices by the company’s management have been registered and are being investigated. They led to possible losses of KHARKIVOBLENERGO in the amount of about UAH 112 million in the last year alone.’

For reference:

In January 2021, SMART HOLDING received permission from the AMCU to buy KHARKIVOBLENERGO’s shares in a number ensuring more than 25% of the votes in the company’s supreme management body. In February of the same year, SMART HOLDING acquired the status of KHARKIVOBLENERGO’s shareholder (holding 29.7950% of shares in KHARKIVOBLENERGO JSC).

SMART HOLDING made repeated statements on the incompetence of KHARKIVOBLENERGO’s management bodies, as a result of which the current management of the energy company is virtually beyond the control of its shareholders. The situation established in the company creates conditions for numerous corrupt practices and abuse with the company’s assets and financial resources.

In October, based on the report from SMART HOLDING (Cyprus), Kharkiv District Police Department No. 2 registered a criminal case on 19 episodes of gross violations by the management of KHARKIVOBLENERGO during the tender procedures. According to the shareholder, the damage to the joint-stock company due to these episodes amounts to UAH 111.6 million.

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 Group invest in metals and mining, oil and gas sectors, agriculture, shipbuilding, real estate and energy. The strategy of SMART HOLDING 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.