The customer refuses to accept the work

Client

A minority shareholder contacted us, as a deal took place on May 13, 2016, as a result of which the majority shareholder acquired more than 90% of the shares. A minority shareholder contacted us, as a deal took place on May 13, 2016, as a result of which the majority shareholder acquired more than 90% of the shares.

Problem

The deal was priced at 36.45 rubles, but the majority shareholder decided to circumvent the law and pay the minority shareholders only 17.42 rubles.

Our work

According to Article 84.2, a person who has acquired more than 30 percent of the total number of shares of a public company specified in paragraph 1 of Article 84.1 of this Federal Law, taking into account the shares owned by this person and its affiliated persons, is obliged to send to the shareholders within 35 days from the date of making the relevant entry in the personal account (depo account) a public offer to purchase such securities from them (hereinafter referred to as the mandatory offer).

That is, the law defines the essential conditions of the Mandatory Offer.:

The term is 35 days
the price (for which it is necessary to protect the rights of minority shareholders)

The most important question is, how is the price formed in the Mandatory Offer?

If, during the six months preceding the date of sending the mandatory offer to the public company, the person who sent the mandatory offer or its affiliates, the price of the securities to be purchased on the basis of the mandatory offer cannot be lower than the highest price at which the specified persons purchased or assumed the obligation to purchase these securities.

That is 36.45 rubles.

In order to circumvent the law, this LLC (the majority owner) did not comply with the requirements of the legislation and made a mandatory offer only a year later in order to circumvent the requirements of clause 4 of art.84.2.

Since the transaction was a year ago, the majority shareholder insisted on applying the price in accordance with clause 1 of Article 84.2, namely: the price of the securities to be purchased on the basis of a mandatory offer cannot be lower than their weighted average price determined based on the results of organized auctions for the six months preceding the date of sending the mandatory offer.

That is, at a price of 17.42 rubles per share.

However, we managed to recognize that the completed Mandatory Offer in a year is not such, since 2 of the 2 essential conditions have not been fulfilled: more than 35 days have passed and the wrong price has been applied.

Why is the price wrong? Because the Majority owner deliberately waited a year and made a simple voluntary offer under the guise of a mandatory offer. What for? To act unscrupulously, bypassing the law, which does not comply with the norm of art.10 of the Civil Code of the Russian Federation.

The logic was that since the price of the Mandatory Offer is formed within 6 months, and taking into account the fact that the majority shareholder has not made any share purchase transactions for the past 6 months, paragraph one of Article 84.2 applies accordingly, namely, the price is formed on the basis of the weighted average price on the stock exchange (organized auctions (

Thus, the majority owner abused his right and acted in circumvention of the law.