The National Securities and Stock Market Commission (NSSMC) has confirmed the legality of the election procedures and the legal competence of the new Supervisory Board of KHARKIVENERGOZBUT PJSC, which was elected at the company’s extraordinary general meeting on 7 October 2021. The NSSMC is currently taking measures to bring to account the issuer’s officials for falsifying the voting results on the above matter.
Risk Management and Security Director of Smart Holding, a member of the Supervisory Board of KHARKIVENERGOZBUT PJSC Ivan Gerasimovich noted:
‘In its official response to our complaint, the regulator stated that the members of the company’s body are considered elected[1], and the body of the company is considered established. Now KHARKIVENERGOZBUT has a capacitated Supervisory Board, but we are interested in bringing its composition to compliance with the effective legislation. The Supervisory Board will address the shareholders with an initiative to convene an extraordinary meeting to also elect independent board members. We are convinced that the company’s corporate governance system must comply with the key principles of the Organization for Economic Cooperation and Development.
We are ready for fruitful cooperation with the Ministry of Energy as an agency responsible for management of the State’s corporate rights in KHARKIVENERGOZBUT PJSC. In our opinion, the first step should be an initiative to organize a special audit of the company’s activities to reveal and put an end to possible corruption schemes that have a negative impact on the company’s profitability. According to the results of the audit, all officials involved in these schemes should be held accountable according to the law. We will take every effort to make this process as transparent and public as possible.’
According to the results of the cumulative[2] voting on 7 October 2021, the extraordinary general meeting of KHARKIVENERGOZBUT PJSC, held online, elected a representative of SMART HOLDING (CYPRUS) and two representatives of another shareholder, Stock Company Avanpost Closed Non-Diversified Venture Corporate Investment Fund, to the Supervisory Board, which according to the Articles of Association shall consist of three persons. These candidates received the largest number of votes compared to others. Contrary to provisions of the law, the counting committee of KHARKIVENERGOZBUT PJSC noted that the decision on this agenda item was not made. The shareholder, SMART HOLDING (CYPRUS), appealed to the NSSMC against the actions of the counting committee, which is controlled by the company’s management.
Reference:
SMART HOLDING (CYPRUS) LTD acquired the ownership rights for 29.7950% of the shares in KHARKIVENERGOZBUT PJSC in February 2021. At the same time, the company officially closed a transaction to purchase a similar share package in KHARKIVOBLENERGO JSC.
SMART HOLDING made repeated statements on the incompetence of KHARKIVOBLENERGO’s and KHARKIVENERGOZBUT's management bodies, and about numerous corrupt practices and abuse with the energy companies’ assets and financial resources.
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.
[1] In accordance with para. 4 of Article 42 of the Law of Ukraine “On Joint Stock Companies”, when electing members of a joint stock company’s body through cumulative voting, the voting is made on all candidates simultaneously. Those candidates who received the highest number of shareholders’ votes in comparison with other candidates are deemed elected. In accordance with para. 7 of Article 53 of the Law of Ukraine “On Joint Stock Companies”, the powers of a Supervisory Board’s member are valid from the moment of his/her election by the general meeting.
[2] According to sub-para. 9 of para. 1, Article 2 of the Law of Ukraine “On Joint Stock Companies”, cumulative voting is the voting during the election of members to the company’s bodies, when the total number of the shareholder’s votes is multiplied by the number of members in the company’s body to be elected, and the shareholder has the right to cast all votes so counted for one candidate or distribute them among several candidates.