Head of Ukraine's Stock Market Commission: state must fulfill its obligations to minority shareholders of Ukrnafta, Motor Sich, ZTR
The transfer of corporate rights from private shareholders of Ukrnafta, Motor Sich, and Zaporizhtransformator (ZTR) to the state at the end of 2022 was necessary for victory. However, after the war, an analysis will be needed to determine its cost and how compensation or restitution will be handled, according to Ruslan Magomedov, head of the National Securities and Stock Market Commission (NSSMC).
"It's akin to what happens when your car is requisitioned for military needs: if it remains intact, it is returned to you; if not, its fair value is compensated. This is the approach we should take. It will send a clear signal to all investors that the state respects corporate governance, adheres to stock market regulations, and is committed to restoring investor rights," Magomedov stated in an interview with Interfax-Ukraine.
Magomedov noted that while these companies were among Ukraine's blue chips and included in index baskets before the war, corporate governance standards and treatment of minority shareholders were far from satisfactory. Therefore, state acquisition of these shares might even be beneficial for minority investors.
"It's like playing chess, only to be struck with the chessboard. And I'm not referring to the state here, but to the previous management. Now the state has taken control of the 'chessboard' and, as a responsible player, must fulfill its obligations from past periods," the NSSMC head said.
He cited Ukrnafta as an example, where selective dividend payments led minority shareholders to take legal action against the company.
"I firmly believe it is the duty of the current management to ensure that past dividend obligations are honored so that investors can see that the issuer is now truly 'playing chess' by the rules," Magomedov stated.
As reported earlier, on November 5, the Supreme Commander-in-Chief's Staff decided to temporarily nationalize shares of PJSC Ukrnafta, PJSC Ukrtatnafta (excluding Naftogaz of Ukraine's stake), JSC Motor Sich, PJSC AvtoKrAZ, and PJSC Zaporizhtransformator as military assets during the state of war. The NSSMC regulated the process, completing the transfer on November 6.
Ukrnafta's majority stake of 50% plus one share belongs to Naftogaz Ukrainy, while an additional 42% was held by the so-called "Privat Group" controlled by Ihor Kolomoisky and Hennadiy Boholiubov.
Trading of Motor Sich shares, previously owned by the company's former president Viacheslav Bohuslaiev (arrested in 2022), has been blocked since April 2018 following the sale of a controlling stake to China's Skyrizon and related entities in 2017.
AvtoKrAZ and Zaporizhtransformator, controlled by Kostiantyn Zhevaho and Konstantin Grigorishyn, respectively, were undergoing bankruptcy proceedings in the years leading up to the war.