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. Last Updated: 07/27/2016

Far East Battle Brewing For Shareholders Rights

VLADIVOSTOK, Far East — Two of the best-known brand names in Russia are squaring off over the rights of minority shareholders in a leading Far East brewery.

A subsidiary of No. 2 brewery Sun Interbrew, Sakatini Ltd., vowed Monday to sue juice and dairy giant Wimm-Bill-Dann for physically blocking its representatives' attempts to attend the annual shareholders meeting of Pivoindustria Primorya.

Sakatini owns a blocking stake, more than 25 percent, of Pivoindustria Primorya. Wimm-Bill-Dann gave its controlling stake in the Vladivostok-based brewery, which it bought last year for $4 million, to a new holding, TSEPKO, or the Central Europe Beer Company.

The trouble began at an extraordinary shareholders meeting in November, when Pivoindustria managers refused to admit Sakatini's representatives. At that meeting, shareholders led by TSEPKO — which owns 67 percent of the company — passed a new charter and filled all seven board seats with Wimm-Bill-Dann executives.

"The November meeting caused irreparable harm for Sakatini," said the company's lawyer, Zhanna Bulatova.

Among other changes to the charter was the removal of the stipulation that board meetings must be held at company headquarters in Vladivostok, making it easier for Wimm-Bill-Dann executives in Moscow to attend future meetings.

Sakatini representatives were also denied admission to the annual shareholders meeting April 4. Both times the official reason for the denial was "not confirming the authority of the person that issued the power of attorney."

Sakatini filed a lawsuit in Primorye arbitration court to have the November meeting annulled. In December, the court ordered Pivoindustria's new board of directors to cease making any decision on behalf of the company. However, Pivoindustria ignored the ruling and held its annual meeting April 4.

Pivoindustria also allegedly denied admission to minor shareholders like Tiger Securities, a Vladivostok securities firm. Andrew Fox, chairman of the Tiger Securities board, said two guards blocked his way to the registration table and kept him away until the registration deadline passed.

"Two big guys say you can't register because their bosses say so. What am I supposed to do?" Fox said. "This is a caveman level of doing business."

Pivoindustria executive director Igor Mukhachyov denied that there had been a deliberate policy of keeping foreign investors away from the meetings. "Tiger Securities was late," he said. "It is all lies about the guards. Had Fox arrived on time, he would have been registered."

Mukhachyov said Pivoindustria is obliged to protect the rights of all its shareholders, Sakatini included. "That is why we can't let in to the meeting someone who can't prove he is the company's legitimate representative," he said, adding that Sakatini didn't have its paperwork in order.

"It is a bright example of how Russian partners deal with foreign shareholders," said Fox. "How can the authorities talk about encouraging foreign investments here?"

Sakatini is a part of the international brewing concern Sun Interbrew, created in 1999 by the Indian company Sun Brewing and Belgian firm Interbrew to reach Russian and Ukrainian markets.