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. Last Updated: 07/27/2016

KomiTEK Lifts Limit on Foreigners

KomiTEK shareholders approved a new charter Friday that lifts a 15 percent limit on foreign ownership and changes the company's leadership from an executive committee to a presidency.

The new charter also increases the company's authorized capital by 5 billion rubles ($856,000) to pave the way for a new share issue of 375 million ordinary and 125 million preferred shares, a KomiTEK executive said.

The terms and date of the new issue have not been determined.

Removing the foreign ownership cap brings KomiTEK up to speed with more progressive Russian oil companies like LUKoil and Surgutneftegaz, which do not limit foreign investment, oil analysts said.

In September, the State Property Committee will privatize the government's remaining 21.3 percent stake KomiTEK, parent company of regional oil producer Komineft and the Ukhta oil refinery in northwest Siberia. A KomiTEK spokesman said the privatization format has not yet been announced.

One provision in the new charter -- that legal entities, in addition to individuals, can serve as members of the board of directors -- puzzled Western lawyers.

Such practice is rare at best among Western nations, where board members are not supposed to represent outside interests but to serve the best interest of the company, said Maryann Gashi-Butler, an attorney with Price Waterhouse.

"What happens if two people from the same [legal entity] show up to the meeting and they start fighting about who gets to vote?" Gashi-Butler said.

A KomiTEK spokesman said the company's lawyers considered the move to be "more democratic," increasing the circle of participation on the board. The KomiTEK spokesman and Gashi-Butler noted that the practice is not specifically prohibited by Russia's law on joint-stock companies.

In dissolving KomiTEK's executive committee, the new charter transfers those responsibilities to company president Yevgeny Leskin. Russia's joint-stock company law mandates that a company must chose either an executive committee or a company president, Gashi-Butler said.