Cabinet Sends Draft Law Lowering Quorum & Requiring Fair Buybacks To Rada

The Cabinet has sent a new draft law on joint-stock companies to the Rada. The law includes provisions lowering quorum at shareholder meetings from 60% to 50+1%, includes provisions that will allow shareholders that object to additional share issues to demand the majority shareholder offer a buyout price of the average stock price before the announcement of the issue and will abolish closed joint stock companies. Nick Piazza: This new law will likely sail through the Rada, but the reception it will get from the President is unclear. Yushchenko has already vetoed similar laws that contained provisions lowering quorum saying they would lead to corporate conflicts. However, the President said he would be ready to lower quorum as part of a package of laws that would instill greater corporate governance standards in Ukrainian business. The additions to this law including buyback price restrictions and cumulative voting procedures for electing governing bodies are certainly a step in this direction, however, it might not be enough. The traded companies that could be affected  by lowering quorom include Ukrnafta (state owns 50% plus one share, Privat group >40%), Kievenergo (state owns 50% plus one share, city together with the Vasyl Khmelnitsky group >40%), ZaporizhCoke (SCM and ARS own >50%, Zaporizhstal group >40%), and several Oblenergos. The bill could also affect the long-running conflict at Kyivstar, where Norway’s Telenor owns 53.5% and Russia’s Alfa Group 46.5%. We will be monitoring this law as it goes through the Parliament.