Parliament Adopts Law Reducing Shareholder Meeting Quorum to 50%

Parliament today adopted a bill that would reduce the minimum quorum for shareholders meetings to 50% plus one share, from the current minimum of 60% plus one share. Currently, large minority shareholders with stakes of at least 40% are able to block shareholders meetings from being held, and thus to block crucial decisions including changes of management. The law was proposed by Regions party MP Yury Voropayev, who was previously the personal lawyer of Rinat Akhmetov, owner of System Capital Management. After the law is signed by the speaker and sent to the president (which usually takes a few working days), the president has up to 15 days to either sign it into law, or return it to parliament with his suggestions, which can be either to amend the bill or to reject it. A vote of two-thirds of parliament can override the president’s veto. If signed, the law would take effect on January 1, 2007. Tom Warner: There is a high chance that President Yushchenko will veto this bill, as he has recently allied himself with the Privat Group, which would be the biggest loser if this bill became law. Before the bill was approved, Olexander Bondar, a close Yushchenko ally, proposed an amendment to water down the bill, which was rejected. The traded companies that could be affected 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%.