Fund United Capital Partners (UCP) Ilya Sherbovich, one of the largest minority shareholders “Transneft”, has filed a lawsuit against pipeline company of 97.2 million rubles., said on the website of the Moscow Arbitration court. The lawsuit was filed on March 17, preliminary hearings were held on Wednesday, may 11.
UCP argues that “Transneft” has caused him damages in the form of lost profits, underpaid dividends: “the Wrongful actions of the defendant <…> expressed in the reduction of the amount of dividends accrued in 2013 on preference shares of the plaintiff compared to the amount of the dividend on which was entitled to claim the plaintiff,” reads the lawsuit (RBC has a copy).
In accordance with the Charter of Transneft, JSC, published on the website of the company, holders of preferred shares are entitled to receive annually a fixed income, the total amount is 10% of net profit. But the company often pays more: for example, at the end of 2013 — 14,25%, 2014 — 39,7%. The amount of dividends on ordinary shares in the Charter is not spelled out, at the end of 2008, they were not paid.
At the end of 2013, “Transneft” has directed on dividends of RUB 7.9 billion (70,16% of the net profit, the company), of which 6.8 billion rubles for ordinary shares and 1.1 billion rubles — on preferred. In recalculation on one share of payments on ordinary shares (78.1% of the share capital, belong to the state) was for the first time in the history of “Transneft” is higher than for preferred (21,9% belong to private investors, are traded on the Moscow stock exchange): 1221,38 RUB against 724,21 RUB It is contrary to the Typical Charter of joint-stock companies of open type, approved by the presidential decree of 1 July 1992, No. 721 in the course of privatization of state companies, including “Transneft”, say lawyers UCP. In accordance with clause 5.3 of the Model Statute, if the amount of dividends for each ordinary share is higher than preferred, the amount of payments to owners of preferred shares “needs to be increased to the dividend paid on the ordinary”. “Transneft” has always recognized the rule that dividends on preferred shares cannot be less than dividends on ordinary, said in the lawsuit: “during the whole circulation period preferred shares, with the exception of 2013, the mentioned rule about the dividend increase was observed”.
UCP required to pay on each preference share “Transneft” owned by the Fund at the time of making the list of shareholders entitled to receive dividends for 2013 at RUB 497,17 (the difference between the payout on ordinary shares and preference). Together with any interest which may accrue on this amount (at a rate of refinasirovaniya CB), the total amount of UCP claims to “Transneft” accounts for 97.2 million rubles, follows from the claim.
How many shares have UCP
UCP did not disclose the size of its stake in Transneft. But based on the amount of claims of the Fund in the spring of 2014, when he formed the list of persons entitled to dividends by results of 2013, he was a little less than 0.2 million of preferred shares, or 2.8% of the share capital. The representative “Transneft” claims that UCP now owns more than 1 million of preferred stock of the company (14% of the share capital or two-thirds of all prefs), “accumulated during 2012-2015”. The representative of the UCP does not comment on it, but acknowledges that in 2014 its share has grown and the Fund is a “significant” shareholder of “Transneft”.
The lawsuit was filed only in March 2016, because “in the spring of 2016, there are fears of a repetition of the illegal scheme 2013,” said RBC’s managing Director of corporate communications Irina Lanina UCP. According to her, the Statute of limitations on the claim has not expired, as dividends “Transneft” for the year 2013 were announced in the summer of 2014 and the shareholder has three years to challenge this decision.
The representative “Transneft” Igor Dyomin argues that the requirements of UCP unfounded, because preference shares “Transneft” has appeared only in 1996, i.e. four years after the release of presidential decree referenced in the Fund Sherbovich, and the free treatment they received in 2007 alone. And the prospectus, approved by government decision of 2 November 1995 No. 1083 provides the holders of preferred shares are only entitled to receive annual fixed dividend of 10% of the net profit of “Transneft” indicates Demin.
The presidential decree, which approved the model Charter (with the provision that the dividends on preferred shares can not be less than than ordinary), — the document of higher legal force than the act of the Committee for property management, which approved the privatization plan and the issue prospectus of its shares, says a partner of King & Spalding Ilya Rachkov. Therefore, the right to minority shareholders, he says: “Otherwise it is discrimination against the holders of the preference shares”. Preference shares mostly gain portfolio investors who rely on regular delivery of a large proportion of net profit as dividends, and in the case of non-payment they have been promised in the decree of the President, it turns out that owners of preferred shares are not put in the best, and in a worse position than holders of ordinary shares, concludes Crustaceans.
The struggle for the dividends
UCP is not the only minority shareholder, who achieves from “Transneft” increase of dividends. In November 2015, “Spotlight”, which owns a 141 a privileged action, demanded to recognize their voting, because, in its opinion, “Transneft” intentionally understate profits, and hence dividends. For example, in 2013 the IFRS profit was 14 times higher net profit, the company, in 2014 — five times in 2015 — in 11.2 times. This is due to the fact that the company was leaving a significant portion of the profits for “daughter”, and as a result, the base for dividend payments, the company has been lower. But in April the Arbitration court dismissed the claim, concluding that the plaintiff’s arguments about the understatement of net profit of “Transneft” for 2014 (prior to this “Spotlight” was not a shareholder of the company, so they could not make demands) “far-fetched”. The mere fact of acquisition 141 preference share does not give plaintiff the right or ability to interfere in the activities of Transneft “with the company’s own vision about the proper application of IFRS and the company” decided the judge.
The representative of Transneft, said earlier “Vedomosti” that the claim “Spotlight” can be a Sherbovich, but representatives of the “Spotlight” and UCP is denied. However, it seems their interests may coincide: March 14, Prozhektor has filed a new lawsuit against Transneft, in which it demands that the applicable provisions of the former Charter of the company. A previous version of the Charter, which was amended in 1999, just assumed that dividends on preferred shares cannot be less than ordinary. The action will take place on Monday, may 16. “We are familiar with the activity of “Spotlight”, but this company has nothing to do with UCP,” — emphasizes Lanin.
Association for protection of investors ‘ rights also appealed to the government to include in the calculation of net profit of “Transneft” profit “daughters”. In April, the government decided to raise revenues to increase the mark payouts for state companies from 25 to 50% under RAS or IFRS, depending on which of the indicators more. The President of “Transneft” Nikolay Tokarev has even announced that he was ready to accept it and to pay the shareholders 50% of net profit in accordance with IFRS for the year 2015: “We don’t argue. Our main shareholder said it means that we will perform. Nothing to beg will not.” However, as reported by “Vedomosti”, the Ministry decided to make an exception, limiting the payment of 100% of the profits, the company (it is provided by norm of the law on joint-stock companies). If the government agrees with the Ministry, Transneft will save almost 60 billion rubles: its net profit, the company significantly less than the same indicator in accordance with IFRS — 12.8 billion against 143,4 bln RUB Half consolidated profit of 71.7 billion rubles.