APPEAL COURT SUPPORTED FAS INVALIDATING BUY-UP OF THE SHARES OF A STRATEGIC COMPANY

The antimonopoly body proved the fact of unlawfully acquiring shares of “Krasny Oktyabr” Volgograd Integrated Iron-and-Steel Works” by a foreign investor

FAS carried out an investigation based on materials obtained in the course of an unscheduled inspection. The outcome was filing a claim to the Arbitration Court of the Volgograd region to declare related transactions for acquiring shares of  “Krasny Oktyabr” Volgograd Integrated Iron-and-Steel Works” JSCby foreign investors null and void and depriving them of the voting rights at the general shareholder meeting.

For instance, in 2013, 2016 and 2017, foreign investors established full control over “Krasny Oktyabr” Volgograd Integrated Iron-and-Steel Works” Shareholding Company without pre-approval from the Government Commission for Control over Foreign Investments in the Russian Federation.

FAS was able to prove the fact of unlawfully acquiring the strategic company by a foreign investor, which had made the enterprise bankrupt.

Appeal Court supported FAS and declared all three transactions null and void, depriving foreign investors of the voting rights at the general shareholder meeting of “Krasny Oktyabr” Volgograd Integrated Iron-and-Steel Works” JSC, and therefore, limiting their influence upon the unique company.

“Thanks to FAS prompt intervention, the control of the Russian Federation over the enterprise has been tightened and it is now executing all contracts”, said Deputy Head of FAS Daniil Fesyuk.

Background:

“Krasny Oktyabr” Volgograd Integrated Iron-and-Steel Works” JSC is one of largest manufacturers of rolled stock in Russia. It supplies unique steel used in car manufacturing and aviation industry, chemical, petroleum and power engineering industries, and oil-extracting industry.