Azerbaijan to eliminate minority shareholders

The State Securities Committee has prepared a bill which would open the way to address the country's Institute of Open Joint Stock Company. Majoritarians will be granted a broad right of compulsory acquisition and unconditional shares from minority shareholders.

Under the draft law on amendments and additions to the Civil Code, a person with at least 75% of the shares, is obligated to offer to other shareholders to sell shares. In this case, it is classified as a controlling person of JSC, as any decision will depend on it. The proposal is to be sent to them by the company, which in turn notifies the holders of small shareholdings. The proposal must indicate the proposed price per share and the rationale for this cost. Acceptance of proposals from minority shareholder may be made not earlier than one and not later than two months from the date of notification of the company.

When buying shares, which is included in the quotation sheet of the stock exchange price of the offer should match the level of not less than the maximum market value for the last year. Otherwise, the purchase value of shares is determined by an independent appraiser, who is attracted by the Supervisory Board. Note that in this case, the shareholder may withdraw this offer at its discretion.

A special case is joint stock companies, which are included in the quotation sheet of the Stock Exchange. If a person or entity controls 95% of the shares, then the minority shareholders do not leave any chance. The owner of 95% of the shares entitled to require the owners of the remaining 5% of the shares to sell shares. Buying shares is carried out in the above procedure and conditions. If a shareholder does not respond to this requirement, it owed him money transferred to his bank account or sent to the email address.

Upon completion of this process the central depository transfers shares bought up to the applicant within three days. It is noteworthy that in this case, the question arises about the form of buying shares, as the existing rules on registration of transactions on purchase and sale of shares involved in the process provide depositary.

These rules for the possession of control will not apply to investment funds, privatized JSC, as well as the state's acquisition of the shares.

In Azerbaijan, joint-stock form of management has been applied mainly in the process of privatization of state property since 1997. The process was carried out in such manner and by methods that approximately 70% of joint stock companies controlled by one person or related persons. Currently, the quotation list of BSE includes only two joint-stock companies - Texnika Bank and Demir Bank. - 08B-