On November 6, 2007, the Listing and Surveillance Committee of the Tallinn Stock
Exchange reviewed the circumstances and materials collected in the course of
supervisory proceedings carried out with respect to AS Kalev (hereinafter:
Kalev) and decided to impose a fine in the amount of 250 000 kroons to Kalev
for violation of TSE Rules.
Circumstances:
On August 30, 2007 Kalev published a stock exchange announcement about the
invitation to the annual general meeting of shareholders, where it announced
that the meeting would be held in Paide on September 20, 2007 at 15.00.
According to the announcement the agenda of the general meeting was the approval
of the annual report 2006/2007, profit allocation and appointment and
remuneration of an auditor.
The management board of Kalev proposed to introduce an amendment of the Articles
of Association, approval of the share transfer transaction and permission to
acquire treasury shares as additional topics to the agenda.
During the annual general meeting, Kalev published a stock exchange announcement
where it disclosed selling of five subsidiary companies. In addition to that
Kalev announced that on the same day it undersigned the relevant sale agreements
and that proceeding from the transaction Kalev will exit from two of its main
activities area.
Considering the materials submitted, the Committee concluded:
1. Kalev did not follow properly the information evaluation and disclosure
obligation in publication of the agenda of the general meeting. Kalev has
breached obligations set in “Requirements for Issuers” (hereinafter: RI), that
oblige the issuer to disclose information about changes in the agenda of the
shareholders general meeting immediately and circumstances that may influence
the issuer's economic activities or financial status, including transactions
with the core assets which are beyond the scope of everyday economic activities;
concluding of significant agreements or substantial change in the issuers scope
or area of activities
Kalev should have published information about changing the agenda or possible
change, also transfer of holding before than on the meeting day. Such behaviour
would have ensured shareholders opportunity to obtain complete information about
the agenda and given them opportunity to decide on utilizing their ownership
rights. Shareholders as the co-owners of a company can mainly utilize their
ownership rights in voting on the general meeting. In current situation, Kalev
left its shareholders without the possibility to utilize their main rights as a
shareholder because it did not give them opportunity to receive information
about substantiality of the topics in the agenda.
The main responsibility of a company that is listed on the stock exchange is to
fulfil the information disclosure requirements to provide the shareholders that
have legitimate expectation that all substantial information is made public
without delay, with the opportunity to evaluate the value of their holding based
on that information and also ensure the possibility to execute their ownership
rights. Information about the transfer of the operating and business units and
changing of the area of operations must be considered extremely significant
information and should be disclosed immediately and that is what the members of
the management and supervisory board of the company would have comprehended
within the limits of competence. Disclosing of significant information is the
main responsibility of an issuer on the regulated market and unjustified
withholding of the information or selective decision when shareholders have the
right to get informed of it is not permissible.
Therefore, Kalev has not fulfilled the main requirements of information
disclosure with aim is to ensure the legitimate and orderly operating and
utilization of the shareholders rights.
2. Violation of the rules has been evidenced, as assessed by the Committee, by
the circumstances identified in the course of the supervisory proceedings
carried out by the TSE.
3. There are no objective circumstances that would have prevented Kalev to
follow the obligations properly. There are sufficient grounds for legal
protection measures within the competence of the TSE.
4. The issuer did not utilize the possibility to apply the Exchange for
exception not to disclose information that contains business secret that may in
its opinion otherwise damage its interests.
Background:
According to clause 1.2.1. of RI, the Issuer is obliged to secure the disclosure
of the information specified in these Requirements in such a form and within
such time limits as specified herein.
According to clause 2.1.1. of RI, the Members of the supervisory board and
management board of an Issuer are under the obligation to scrutinise on an
on-going basis, within the scope of their competence, all the events and changes
taking place in the Issuer's operations to assess what information is subject to
immediate disclosure in accordance with these Requirements.
According to clause 2.1.3. of RI, an Issuer shall consider in its operations
that the time of disclosure of information about a transaction/act/event in the
Issuer's operations or otherwise related to the Issuer does not depend on the
official occurrence of such an event or on the performance of any formalities
necessary for its occurrence. If the event has occurred or its occurrence is
likely, but the formalities necessary for the occurrence of the event, or any
other formalities, have not been performed at the moment of disclosure of
information, or if another condition or risk relates to the occurrence of the
event, such facts shall be presented along with the information being disclosed.
According to clause 2.1.4. of RI, if the Issuer is of the opinion that the
information required by the Exchange or to be disclosed according to these
Requirements contains the Issuer's business secrets or that disclosure may
otherwise damage the interests of the Issuer, the Issuer may apply to the
Exchange not to disclose such information. The application presented to the
Exchange shall contain the information non published or required by the Exchange
and a reasoned explanation by the Issuer of the reasons why the Issuer does not
wish to make the information public.
According to clause 2.4.1. of RI, information is deemed disclosed in accordance
with these Requirements when made public as a notice through the Exchange
information system.
According to clause 3.1. of RI, any amendment to the Issuer's articles of
association proposed for ratification to the general meeting of shareholders
shall be communicated in draft form to the Exchange not later than in the same
time the notice of the general meeting is sent to shareholders.
According to clause 6.1. of RI, an Issuer is required to immediately disclose
any circumstances and events which have, or may have, a substantial effect on
the business operations or financial situation of the Issuer.
According to clause 6.2. of RI, transactions or investments or project beyond
the scope of day-to-day operations or with significant importance are understood
as transactions of the Issuer or its subsidiary for which the sum paid or to be
received for assets, including the market value of assets or securities and the
debts or loans assumed by the Issuer are equal to or exceed 10% of the Issuer's
equity according to the latest audited consolidated balance sheet.
According to clause 7.2.1. of RI, an issuer is obliged to disclose immediately
information about a decision on the date of the general meeting of shareholders.
An issuer is required to disclose all the important materials concerning the
agenda of the general meeting.
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