18 July 2012
Egorov Puginsky Afanasiev & Partners successfully defends TogliattiAzot in a long shareholders’ dispute

The Litigation team at Egorov Puginsky Afanasiev & Partners has successfully defended the rights of JSC TogliattiAzot during a dispute with the Irish company Eurotoaz Limited, which claimed nearly a 5% block of shares, worth more than 20 million USD.

Since 2010, Eurotoaz Limited has been seeking rights recognition of TogliattiAzot shares and making an appropriate entry in the shareholders’ register. During the privatization of the chemical enterprises in 1992 the disputed block of shares was received by the Hungarian SRVP Evrotoaz. In 1995, the Hungarian company was liquidated, but it still continued to be listed in the shareholders’ register. After more than 15 years, the Irish company - Eurotoaz Limited, attempted to establish rights on shares by correcting an allegedly admitted registrar’s technical error in the shareowner’s name in the registry.

On 17 July 2012 the Presidium of the Supreme Arbitration Court of the Russian Federation (SAC) put an end to the dispute ongoing since 2010 and confirmed the Resolution legality of the Eleventh Arbitration Court of Appeals to deny the claim of the Irish Eurotoaz Limited to restore the personal account of its membership records of the specified TogliattiAzot shares, canceling the decision of the Federal Arbitration Court of the Volga District to restore the entry of the Irish company in the shareholders’ register.

Litigation Partner Valery Eremenko represented the Client at the Presidium of the Supreme Arbitration Court of the Russian Federation.

"The decision of the Presidium prevented the implementation of greenmail, using the "dead souls"- liquidated companies that continue to be listed in the shareholders’ register, and established the inadmissibility of the shareholders rights defence, who never took part in the JSC activities and tried to claim shareownership under the guise of correcting a technical error ", - commented Valery Eremenko.

"Since 1995 the Irish company has never participated in shareholders’ meetings, received no dividends and never proved to be a shareholder. Under such circumstances, SAC took an absolutely correct position on the impossibility of share ownership recognition of "non-dormant" shareholder after 15 years, under the guise of correcting the technical error, especially taking into account the fact that no adequate evidence of having any rights to the disputed block of shares was presented in the case."- added Valery Eremenko.

From EPA&P’s side the project team advising TogliattiAzot included the lawyers from the Moscow office as well as the Kyiv-based team.