Issuer surveillance – НКЦПФР|НАЦІОНАЛЬНА КОМІСІЯ З ЦІННИХ ПАПЕРІВ ТА ФОНДОВОГО РИНКУ

The best corporate governance practices indicate that there should be a requirement in the laws of the countries under which a person who has acquired a significant share of the company is entitled to require minority shareholders to sell a small fraction of shares in the equity capital at a fair price.

The purpose of such mechanism is to improve corporate governance of the joint-stock company.

Apart, the mandatory sale mechanism of the shares by minority shareholders at the shareholder’s request-the owner of the control block of shares of the entity (hereinafter – “squeeze out”) is based in the fact that within public interests the price of ongoing protection of the minority shareholders rights becomes disproportionate to the majority shareholder’s expenses and risks when the remaining minority is diminished to a very low level.

Data on the “squeeze out” procedure

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The general amount of the public irrevocable requests applied to the NSSMC	The general amount of “squeeze-out” according to the public irrevocable requests	The general amount ofcomplaints amounnt on disagreement the procedures	The general amount on which escrow accounts are opened	The general amount of sharesholders gained money from the open escrow accounts	Funds disbursed to the Money shareholders
378	1 684 692 464,93	Complaints to 45 procedure	1 619 991 398	39 177	1 163 463 626

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Corporate governance is one of the key elements and a premise for successful operation of the company and for increasing investor confidence. Having an effective corporate governance system increases the cost of capital, as companies are encouraged to use resources more efficiently, which creates a basis for growth.

In course of performing its tasks, the NSSMC provides methodological support for the introduction and development of corporate governance principles in accordance with the law; conducts inspections of issuers’ activities regarding the state of corporate governance; summarizes the practice of applying corporate governance legislation.

Due to the possible ambiguous interpretation of the requirements of the legislation, the NSSMC publishes answers to the most common questions regarding the application of corporate governance rules.

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The question	The reply
Is it possible to hold an annual general meeting under quarantine?	Read the answer
Why do shareholders not receive dividends?	Read the answer
How can a shareholder get the information about the activities of a joint stock company?	Read the answer
What are the rights and obligations of a shareholder who owns ordinary shares?	Read the answer

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State control of the Commission is focused on ensuring the compliance of rules and regulations by certain stock market participants, preventing the shareholders’ rights violations.

One of the control tool undertaken by the Commission is surveillance of the shareholders registration and the general meetings, voting and summarizing its results at the general meeting of the joint stock companies.

Currently, the Commission’s oversight function means to facilitate compliance with legislation; prevention of violations (abuses) on the stock market; ensuring the compliance with investor’s rights and interests, other stock market participants; the identification tendencies and risks of the stock market functioning.

The NSSMC exercises control through scheduled and unscheduled inspections of securities issuers.

The investigation helps to identify the problematic issues in the risk-enhancing activities that may cause securities market violations and to define proposals for improving legislation in order to remove the disadvantages and gaps in the stock market functioning.