Results of Extraordinary General Meeting of Shareholders of Ukrnafta
Results of Extraordinary General Meeting of Shareholders of Ukrnafta

The Extraordinary General Meeting of shareholders of PJSC Ukrnafta took place on March 28, 2019 to consider a number of issues regarding the management and activities of the company.

The shareholders gave their consent to enter into sale and purchase contracts between Ukrnafta and Naftogas for 4.062 bln m3 of gas. The shareholders’ consent was mandatory, given that this is a transaction between related parties. As an independent expert, KPMG-Ukraine has confirmed that the terms and conditions of these contracts are in line with the usual market conditions.

The contracts envisage that Naftogas will buy 2.062 bln m3 of gas which was transferred by Ukrnafta to the underground gas storage in the past and will buy additionally 2.0 bln m3 of gas to be produced in the future. It is envisaged that the payments for the gas will be made with the money received by Naftogas from the Cabinet of Ministers as compensation for its public service obligations in the gas market to supply gas to the private consumers and utility companies.  In its turn, Ukrnafta is obligated to allocate all proceeds to repay the tax debt and other tax obligations arising in the course of execution of the contracts.

This arrangement has been put forth to eliminate Ukrnafta’s legacy outstanding tax debt, including all fines and penalties, which will open the way to increasing investments, modernizing production assets and achieving sustainable growth in production of hydrocarbons. However, Ukrnafta will be able to fully repay the tax debt only if these gas contracts have been fully executed.

Presently, the company continues to pay all taxes and even paid off a portion of the outstanding tax debt. However, accumulation of penalties leads to continual increase in the total amount of tax debt constraining Ukrnafta’s ability to invest and develop its business.

The shareholders voted to introduce amendments to the Statute of Ukrnafta and approved a new version of the Supervisory Board Charter. In particular, the Supervisory Board shall consist of 6 independent members and 5 members representing the shareholders. Besides, the Supervisory Board shall have the powers to appoint and dismiss the Chairman of the Executive Board (earlier, these powers were exercised by the shareholders’ meeting). These changes are designed to bring the corporate governance at Ukrnafta in line with the law of Ukraine on joint-stock companies.

The shareholders elected new membership of the Supervisory Board of Ukrnafta. The Supervisory Board members will include Yuriy Vitrenko, Yaroslav Teklyuk and Polina Zagnitko as per NAK Naftogas’ quota, Yana Manuilova and Uriel Tzvi Laber will represent the interests of the minority shareholders. The positions of six independent board members were filled by Andriy Boytsun, Olena Makeyeva, Oleg Mozhovyi, Mykola Pochapskiy, Andriy Protsyk and Pavlo Zagorodnyuk. The shareholders also approved the terms and conditions of the contracts of Supervisory Board members.

In line with the abovementioned changes the shareholders decided to terminate early the contract of current Chairman of the Executive Board of Ukrnafta, Mark Rollins, on April 30, 2019. The purpose of this is to allow the newly elected Supervisory Board to exercise its powers to select and appoint the Chairman of the Executive Board of Ukrnafta. According to the shareholders’ decision, Oleg Gez, currently Deputy Board Chairman, Executive Vice President for Downstream, will become interim Chairman of the Executive Board from May 1, 2019, until a permanent Chairman is elected in accordance with the procedure provided for by the new Statute of the company.

The company announced earlier that the regular General Meeting of Shareholders would take place on April 25, 2019.

 

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