Shareholders of the Tobacco Plant demand payment of dividends

The  shareholders of Baku International Tobacco ASC held a picket outside the building of the company, a former Soviet Tobacco factory, demanding payment of dividends due to them for 25 years of operation of the enterprise. 

According to the shareholders Khanim Huseynova, Turiya Rahim and others, the tobacco plant was privatized in 1999, when part of the shares were distributed to the company's staff on condition that 15% of the company's profit was paid to shareholders annually. According to the condition, 85% of the profit remains to the plant. But since then, shareholders and former employees of the company have received 10 manats per year, whereas every year production at the plant grows and the market price of tobacco products increases.  

Shareholder Varaz Muradov confirmed to the YouTube channel “Azad Media” that he has been deceived for 25 years. "We were employees of the company, owners of shares. Gradually, under various pretexts, we were fired, none of the participants of the action works at the plant.  The management constantly offers to sell shares for 5,000 manats each, many agreed with the proposed amount and sold their shares, but 230 people do not agree, we demand dividends."

Shareholder Heiransa Eyvazova stressed that since 1999, at shareholder meetings, managers, falsifying the decisions of the collective, lowered the contractual payment of the dividend from 15% to 0.1% of the company's profit. The shareholders do not agree with this amount, some admitted that they signed the acts of the meeting without knowing about what was written. "We demand to come to us and clarify on what basis our share has been reduced to 0.1%," she said.

The deceived shareholders appealed to President I. Aliyev, Vice-President, Ombudswoman, and the Cabinet of Ministers. The Cabinet of Ministers suggested that they contact the Ministry of Economy, and they answer that the problem of the tobacco plant is not within the competence of the Ministry. The shareholders appealed to the court, which ruled in favor of the plaintiffs, but the management of the plant refuses to comply with the court's decision and does not pay the dividend in full.

The management of the plant, director Azer Suleymanov, does not meet with dissatisfied shareholders. The deputy head of the Security Service, Guloglan, came out of the gates of the enterprise, and said that he was fulfilling the instructions of the management;  he promised to pay 300 thousand manats to all shareholders, provided that the conflict would end there. He said that the nominal value of one share is 20 manats. But, as the shareholders explained, considering the number of participants in the action (25 people) a little more than a thousand manats will be needed for each, which is much less than the amount they require. 

Yesterday, shareholders informed Turan that the management of the Tobacco Plant invited them to a meeting, and an agreement is expected to pay compensation to employees. If the parties do not agree, the shareholders will continue to protest.

Akram Hasanov, co-head of the Akram Hasanov&Partners Law Firm, said in an interview with Turan that most joint-stock companies in Azerbaijan deceive shareholders not paying them dividends. This is explained by the imperfection of the relevant legislation, which does not protect the rights of shareholders. The law "On Joint-Stock Companies" needs to be amended.  The current version of the law does not create a desire in citizens to invest in the purchase of shares. For this reason, the country's economy is not developing, since the development of the economy is based on the activities of JSC, and not banks and insurance companies.  A.Hasanov gave a historical example of the construction of railways in the United States, paid for by joint-stock companies.

"There are joint-stock companies in Azerbaijan that regularly pay dividends to their shareholders. There are also joint-stock companies in which illegal business schemes are used, or enterprises earn little by resorting to such schemes with artificially inflated costs, illegal "kickbacks" during purchases and concealment of profits from taxation. In such cases, dividends are not paid or shareholders are given insignificant amounts. As a result of this practice in Azerbaijan, the population does not believe in JSC and does not want to purchase shares.

Most likely, Baku International Tobacco ASC has increased its authorized capital. Small shareholders did not buy additional shares and as a result, their share of the total profit decreased. Also, the majority of shareholders could decide to recalculate profits, which does not suit the participants of the protest action," the expert explained.

According to A.Hasanov, the wrong system was created during the time of Minister of Economy Heydar Babayev. He was an incompetent minister, he didn't have a professional team. The State Chamber of Financial Market Supervision, which was created later, failed to fulfill its duty. Now the same task has been assigned to the Central Bank of Azerbaijan, the new leadership of the Central Bank is busy creating an effective financial management system for the country.

"In 2014, a Working group was established under the Ministry of Taxes to develop a package of amendments to the Law On Joint Stock Companies using international experience. Experts from Germany, domestic specialists, including me, were invited to the group. In 2016, the group submitted to the Cabinet of Ministers a draft of amendments, which was discussed in the government for 8 years and has not been adopted so far," Akper Hasanov said.

Returning to the dissatisfied shareholders, he suggested that they contact the Central Bank, which protects the rights of small shareholders, and also complain to the state tax service under the Ministry of Economy.