Head of the State Committee on Financial Markets: the 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 to achieve victory. However, after the end of the war, an analysis will need to be conducted to assess its cost and find out how compensation or return will take place, believes the chairman of the National Securities and Stock Market Commission (NSSMC) Ruslan Magomedov.

“It's like when your car is confiscated for military purposes: if it remains in working order, it is returned to you, if not, you are paid its fair value. This is the approach we need to take. This will give all investors a clear signal that the state respects corporate governance, adheres to the principles of the stock market, and seeks to restore the rights of investors,” Magomedov said in an interview with Interfax-Ukraine.

Magomedov emphasized that although these companies were among Ukraine's blue chips and were included in index baskets before the war, corporate governance standards and treatment of minority shareholders left much to be desired. Therefore, the state's acquisition of these shares may even be beneficial for minority investors.

“It's like a game of chess, after which there is a shift on the chessboard. And I don't mean the state, but the previous leadership. Now the state controls the “chessboard” and, as a responsible player, must fulfill its obligations from previous periods,” added the chairman of the NCSM.

He cited Ukrnafta as an example, where selective dividend payments led to minority shareholders filing a lawsuit against the company.

“I am convinced that the duty of the current management is to ensure that past dividend commitments are met so that investors can see that the issuer is now truly ‘playing chess’ by the rules,” Magomedov emphasized.

As reported earlier, on November 5, the Supreme Commander-in-Chief's Headquarters made a decision on the temporary nationalization of shares of PJSC Ukrnafta, PJSC Ukrtatnafta (excluding shares of NAK Naftogaz of Ukraine), JSC Motor Sich, PJSC AvtoKrAZ and PJSC Zaporizhtransformator as military assets for the duration of martial law. The National Securities and Stock Market Commission regulated the process, completing the transfer on November 6.

The controlling stake in Ukrnafta, amounting to 50% plus one share, belongs to the NAK Naftogaz of Ukraine, another 42% is controlled by the so-called Privat Group, headed by Igor Kolomoisky and Gennady Bogolyubov.

Trading in Motor Sich shares, previously owned by the company's former president Vyacheslav Boguslayev (arrested in 2022), has been blocked since April 2018 following the sale of a controlling stake in the Chinese Skyrizon and related structures in 2017.

In the years preceding the war, AvtoKrAZ and Zaporozhtransformator, which were under the control of Konstantin Zhevago and Konstantin Grigorishin, respectively, went through bankruptcy proceedings.