Company news in July 2009 | |||
Votes Came Short
The shareholders of TNK-BP Holding did not approve multi-billion deals of the company with its subsidiaries for absence of quorum. For almost all companies, the main issue for minority shareholders is low dividends, but TNK-BP Holding, which incorporates the Russian assets of the group, is an exception. The dividends paid by the company in 2008 grew 1.7 times up to 82.5 billion rubles. The holding will pay its shareholders nearly 100% of its revenues according to the Russian Accounting Principles (RSBU) and 42% according to the Generally Accepted Accounting Principles (US GAAP) (after conversion to US dollars at the current exchange rate).The only requests of the minority shareholders to the company management were paying the dividends faster (within three months and not at the end of the year) and providing payment statements for taxation purposes.
During the break of the meeting, shareholders shared their disappointment that they Gerhardt Schroeder, former Chancellor of Germany, did not come to the meeting. Gerhardt Schroeder is on the Board of Directors of TNK-BP Ltd. and not of the holding.
TNK-BP Holding is an oil and gas company. Novy Investments Ltd. is a shareholder of TNK-BP Holding with 89.7% of votes (with BP and AAP consortium being its equal beneficiaries). The capitalization of TNK-BP Holding is $17.1 billion. The financial indicators of TNK-BP Holding according to US GAAP in 2008 included $45.1 billion of earnings and $6.4 billion of income.
Almost all issues on the agenda – incorporation of four subsidiaries owning 5.02% of the holding shares, a €30,000 reward to independent director David Lasfargue for six months of work, and reelection of the Board of Directors (with four representatives of AAP and fours representatives of BP apart from David Lasfargue) – were approved by more than 99% of votes.
The only exception was non-arms-length transactions. The shareholders were proposed to approve 34 transactions for the holding during the year, which imply borrowing a maximum of 85 billion rubles from subsidiaries, lending up to 135 billion rubles to subsidiaries, buying oil for and oil products for 1.6 trillion rubles and $1.475 billion from subsidiaries, and selling oil and oil products for a maximum of $81.8 billion and 138 billion rubles to subsidiaries.
Non-arms-length transactions costing more than 2% of the value of assets (the holding owns assets with a total value of 476.5 billion rubles) must be approved by a majority of votes of all disinterested shareholders. This issue did not get a quorum as only 43.12% of minority shareholders owning 5.1% of the charter capital took part in voting. One of the representatives of the holding recalls that the holding did not approve non-arms-length transactions last year for the same reason. However, according to him, the holding is not going to abandon non-arms-length transactions as they are necessary for “normal economic activities” of the company. Alexander Chernyshov, lawyer of Vegas-Lex, notes that there is a risk that minority shareholders may try to challenge the transactions that were not put to voting. This should not bother TNK-BP though, because all such transactions, including purchase and sales of oil and oil products, meet the market conditions and, therefore, as the company representative explains, cannot cause any damage to the company.
Source: Vedomosti