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. Last Updated: 07/27/2016

Svyazinvest Might Not Vote on Consolidation

A change in the law on joint stock companies -- to come into effect Jan. 1 -- could lead to court battles for state telecoms holding Svyazinvest as it gears up to consolidate its 70-plus subsidiaries across the country.

Lawyers and consultants are divided as to whether Svyazinvest can vote at shareholders meetings regarding the consolidation.

Earlier, when consolidation was defined as a restructuring, Svyazinvest was able to vote on merging its subsidiaries, but in the new version of the law, restructuring is defined as an "interested-party transaction."

According to the law, an interested party is a person or company that together with affiliates controls 20 percent or more of a company's shares. Svyazinvest owns 51 percent in most operators set to consolidate.

As an interested party, Svyazinvest shouldn't take part in voting, said Dmitry Razumov, vice president of the LV Finance company, a consultant to the consolidation.

Svyazinvest is convinced, however, that the restructuring -- in the form of a merger or takeover -- does not constitute a transaction, and therefore the laws on interested party transactions should not be applied.

The only major consolidation to be voted on after the new law has come into effect is Central Telekom, and analysts are convinced the consolidation will be approved.

If Svyazinvest does not participate in the voting, the decision on the consolidation will be turned over to portfolio investors.

Analysts say most shareholders support Svyazinvest's plans. "Even without the right to vote, Svyazinvest will have the influence it needs," said Andrei Bogdanov of Alfa Bank. "I don't expect serious problems with the Central Telecom merger."