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. Last Updated: 07/27/2016

Komineft To Resolve Shares Row

USINSK, Far North -- Komineft, the main subsidiary of Russia's KomiTEK oil company, plans to settle a row over a secondary share issue at a special board meeting March 2 in Moscow, KomiTEK President Valentin Leonidov said.


KomiTEK angered some big foreign shareholders when it failed to inform them about an 18 billion ruble ($4 million) issue in May 1994, which shareholders said had violated their rights.


Leonidov at the weekend told reporters visiting Russia's Arctic Komi republic that Komineft share trading had been suspended earlier this month, and the company's share register is being transferred from Ukhta, about 1,200 kilometers north of Moscow, to the Russian capital.


"Trading should resume when all problems regarding the secondary emission are settled with the shareholders," he said. "We will agree on a solution, taking into account the work of both Western and Russian legal experts," he said.


Foreign investors in Komineft, including international investment bank CS First Boston, have complained that they were not informed of the new issue, which brokers said would dilute existing shareholdings by a third.


Leonidov said the issue was the result of a government decision to re-evaluate the company's charter capital, and of inadequate legislation in Russia covering securities.


He pointed to contradictions among various laws. "One set of instructions says we are right, another says we are not. Current legislation is imperfect," he said.


"We consider that we acted in accordance with existing Russian legislation. But law is law. At the same time there is the shareholders' charter, and we should also defend the interests of shareholders," he said.


A shareholders' meeting on May 6, 1994, decided to increase the charter capital from 3 billion rubles to 38 billion rubles, and then to 58 billion rubles, achieved through the secondary issue of 18 billion rubles and a tenfold increase in the face value of one share.