case study
Download
Skip this Video
Download Presentation
CASE STUDY

Loading in 2 Seconds...

play fullscreen
1 / 13

CASE STUDY - PowerPoint PPT Presentation


  • 149 Views
  • Uploaded on

CASE STUDY. THE RIGHT OF A SHAREHOLDER TO BE INFORMED AND THE RIGHT TO BE REPRESENTED ( an example of two court cases ) By Ms. Vladyslava Ryabota International Finance Corporation. DESCRIPTION OF THE SITUATION. A Joint Stock Company in Luhans’k oblast

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' CASE STUDY' - kamal


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
case study

CASE STUDY

THE RIGHT OF A SHAREHOLDER TO BE INFORMED AND THE RIGHT TO BE REPRESENTED

(an example of two court cases)

By

Ms. Vladyslava Ryabota

International Finance Corporation

description of the situation
DESCRIPTION OF THE SITUATION
  • A Joint Stock Company in Luhans’k oblast
  • A shareholder, dissatisfied with the decisions of a shareholders’ meeting, brought an action to invalidate the meeting ....
  • ... and won the case
briefly about the meeting
BRIEFLY ABOUT THE MEETING
  • The shareholders’ meeting was conducted in March, 2000
  • Quorum was – 74,5%
  • Representatives of the Securities Commission were present at the registration
  • There were no violations reported by the Securities Commission representatives
decisions of the meeting
DECISIONS OF THE MEETING
  • Supervisory Board elected
  • Changes to the charter adopted (the first since 1996!!!)
  • 11 by-laws adopted
grounds for the shareholder s action
GROUNDS FOR THE SHAREHOLDER’S ACTION
  • The shareholder was not personally informed about the meeting
  • A general notification was not published in the national press
  • Improperly issued proxies were registered at the meeting
facts established by the court
FACTS, ESTABLISHED BY THE COURT
  • There was no proof of personal notification and publicationof a notice
  • Proxies were issued by the management board improperly. Some of the violations were technical (a date was written in numbers) and some – substantial (documents were signed in the absence of the shareholders or not by the shareholders at all, etc.)
court decision
COURT DECISION
  • All proxies (that in total constituted 37% of the votes) were recognized as invalid
  • The shareholders’ meeting was recognized as invalid due to the absence of a quorum (74,5 – 37 = 37,5)
  • All decisions of that meeting were nullified
the case analysis
THE CASE ANALYSIS
  • The court decision was correct in principle, but…
  • There were no regulations for the issuance of proxies by the management board, hence, the management board might not have realized that it violated the rights of shareholders
  • The court remained silent on the issue regarding the lack of notification of the shareholder....

A chance decision or a precedent?

at the same time somewhere in zhytomyr
AT THE SAME TIME SOMEWHERE IN ZHYTOMYR
  • A shareholder, holding a 25% stake, brought an action to invalidate decisions of a shareholders’ meeting
  • The only grounds for the suit was the lack of personal notification and publication in the press
  • The shareholder lost the case
the court gave the following reasons for its desicion
THE COURT GAVE THE FOLLOWING REASONS FOR ITS DESICION:

Considering that decisions of the meeting did not violate any of the shareholder’s rights (!!!),

INDIVIDUAL VIOLATIONS OF TECHNICAL PROCEDUREScannot be a justification to invalidate such decisions

why it happened
WHY IT HAPPENED?

In Ukraine, there is no special legislation for the regulation of both issues – issuance of proxies by the management board and the consequences of not providing notice of a meeting, and, hence:

in both situations the court decided these cases by analogy, but did not consider the specifics of corporate relations

solution
SOLUTION
  • Development of special legislation (in particular, adoption of a new Law “On Joint Stock Companies”)
  • Implementation of National Corporate Governance Principles
  • Education
for additional information please contact

For additional information, please contact:

International Finance Corporation

Ukraine Corporate Development Project

4 Bohomoltsya Street

Tel. (380-44) 253-0539

http://www.ifc.org/ukraine

ad