Two Large Holdings "Reduce Responsibility"

OJSC Ata Holding announced a change of its legal form on January 6. From now on it will be referred to as a limited liability company. That was the decision of the shareholders. This in turn means that the holding is out of the stock market.

The press statement said that, according to the decision, 62,675,500 shares will be withdrawn from circulation and eliminated. It is interesting that similar steps are being prepared by another holding company Synergy Group, headquartered in the business center Yeni Hayat. On February 1, the company's shareholders will decide on the transition of the company into the Ltd format.

The reasons that forced the shareholders to move from a JSC to an LLC are not disclosed. Both JSCs have repeatedly increased the share capital through the Baku Stock Exchange. The new shares were bought not by foreign entities, but by the shareholders themselves.

In July last year, Azerbaijan adopted the law On Securities. In addition, the Civil Code has tightened a number of requirements for the organization of joint-stock companies.

Open joint-stock companies (OJSC) should be audited and publish their financial and other reports in the press. Requirements for an LLC are relatively soft.

According to reports, Ata Holding OJSC and JSC Synergy Group finished with a loss. The loss of Ata Holding was 2 million 229.8 thousand manats, while the loss of Synergy Group was 66 million 563.1 thousand manats.

The two holdings individually have a share in almost 25 companies. Most of these companies are leaders in their fields.

The loss of Ata Holding OJSC by the beginning of January 2015 exceeded 37.6 million AZN and the loss Synergy Group exceeded 69.5 million manats.

The Training Center of the State Committee for Securities for Capital Markets has not commented the decision of such a credible and leading holding for Radio Azadlig. The Association of Stock Market Participants of Azerbaijan has not commented on this either.

Vugar Ismayilov, who has minority shares in several small public companies, told Radio Azadlig that Ata Holding’s transition from the format of a JSC to LLC is not a positive signal for the equity market. "Several joint-stock companies, of which I am a shareholder, violate my rights. After the measures taken by Ata Holding, I am concerned that they will move to an opaque legal regime. At the present time I can somehow control the price of the shares. If we become shareholders of Ltd., my rights will be limited," said Vugar Ismayilov.

Ata Holding OJSC was founded in 2003. Its shareholders are Hughson Management Inc. (51%), Asbet Limited (25%) and International Inc. Clonmel (24%) registered in Panama and the Seychelles. According to the independent auditor Deloitte & Touche, control of the holding company is carried out by a third-year student of the University ADA Ilham Heydar Oglu Aliyev.

99% of the existing shares of Synergy Group existing for more than five years are owned by Ashraf Kamilov. He is also a member of the Supervisory Board of Ata Holding. Moreover, Kamilov is a shareholder of Bank VTB Azerbaijan, where Ata Holding is a shareholder.

Ata Holding OJSC assets amount to 632 million manats, while assets of Synergy Group are 120 million manats. -0-