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. Last Updated: 07/27/2016

Court Forbids Norilsk Trading

The courts in Kemerovo have again sided with an individual shareholder over a major Russian company.

A local court in the Kemerovo region last week ordered RTS and MICEX to cease trading in shares of Norilsk Nickel and MMC Norilsk Nickel. Because of mistakes in the order, RTS did not suspend trading in either company and MICEX suspended trading in MMC shares only.

The court also forbade Norilsk Nickel from using the company name for advertising its products and from listing shares of Mining and Metals Co. Norilsk Nickel on Russian or foreign stock markets.

The company plans to take legal action, but as of Friday, it had not received any legal documents explaining the case and would not comment on its strategy.

The suit had been brought by an individual who owned three shares in Norilsk, said Yelena Kovaleva, spokeswoman for Norilsk. The shareholder, identified by Kommersant newspaper as Andrei Richter, was unlisted in the registers of either company.

Richter sued over "illegal actions by the administration of the Taimyr region in registering a new version of Norilsk Mining Co.'s charter, renaming the company MMC Norilsk Nickel" and "MMC's actions in using the brand name of Norilsk Nickel," according to Kommersant.

The holding is in the midst of a restructuring, swapping shares of Norilsk Nickel for MMC Norilsk Nickel shares. MMC will replace Norilsk Nickel as the umbrella company in the holding.

Neither company has yet been seriously affected by the order to stop trading. "The liquidity of their shares dropped sharply about a week ago," said Mikhail Seleznyov, metals analyst at United Financial Group. "Most shares have already been traded for ADRs. Trade is concentrated in ADRs."

The company still plans to finish the Norilsk share swap by the end of August. "This situation will not affect the pace of restructuring," said Alexei Zhdanov, deputy general director of MMC Norilsk Nickel, in a statement Friday.

MMC Norilsk shares will be actively traded only after the restructuring, planned for the fall, and after the Federal Securities Commission registers the additional share issue under which the swap is being carried out, Kovaleva said.

"If the issue with listing shares is not resolved by the beginning of October, it could be a major problem," said Kakha Kiknavelidze, metals analyst at Troika Dialog. He was optimistic that the company could get the injunction lifted soon.

Analysts were stumped for an explanation of the plaintiff's motives. "I don't see how anyone could gain from this," Seleznyov said.

They agreed, however, that a rival company was most likely behind the suit.

Norilsk condemned the suit in a statement: "Once again, it shows the strong need in Russia for judicial reform that would preclude even the possibility of using the law for immoral goals."

Kemerovo courts have been active on behalf of small shareholders over the past year. Another local court arrested part of a 28 percent blocking share held by jailed Krasnoyarsk entrepreneur Anatoly Bykov in the Krasnoyarsk Aluminum plant, or KrAZ, at the end of July. Minority shareholders of Sidanko, Konversbank and Mosenergo have also won cases this year.

"It almost gives the impression there's a price list on the door," Seleznyov joked.