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Saturday, November 04, 2006

Quorum Quake Averted
Yu Takes a Stand for Minority Stockholders

Equipped with an all-seeing eye, Bankova has embarked on a countrywide minesweeping mission.

Recently, President Yushchenko has vetoed a freshly-minted corporate governance bill that lowered the stockholder quorum requirement from 60 to 50 percent plus 1 share. Few independent analysts would disagree that the vetoed bill cut corners on the rights of minority stockholders, leaving them powerless in the corporate decision making process.

Undoubtedly, such an extreme regulatory zigzag would have hurt Ukraine’s investment outlook. Therefore, for his rescuer role, Yu deserves a thank-you note from the investment community.

Where did this abortive initiative originate? Analysts point to the corporate warlords of the anticrisis coalition. These they believe may be a little too anxious to reslice the equity pie in their favor.

At the very least, the intervention Yushchenko undertook has made him the personal hero of Pryvat’s Ihor Kolomoisky, one of the richest men in Ukraine, who allegedly holds a minority stake in the UkrNafta oil company, with the controlling stake being held by the government. The quorum quake engineered by the anticrisis coalition could have resulted in the ouster of Pryvat-friendly UkrNafta CEO Ihor Palytsya.

In light of the Cabinet’s crackdown on grain exports, the calculated risk taken by the anticrisis crowd has significantly added to the outrage already present in the investment community.

Up close and personal, the Yanukovych gov't has become a synonym for the comeback of unbridled vested interests to Ukrainian institutions, unmatched by the lyubi druzi experience.

One doesn’t have to go too far to reach that conclusion. Take the barebones 2007 budget proposal. That’s the gist of Yanukovych's BLT formula. (“Better Living Today”)

Lower taxes in 2007, maybe? Uh, forget about it too. Regionomics rules!
Ukrainian courts, overloaded as they are with takeover litigation, merit a separate discussion.

The Battle of Kyivstar has reinforced their reputation as warring fiefdoms that sell their services to the highest bidder. As long as Ukrainians of all walks of life continue shelling out on justice while keeping their lips sealed, justice will bear a very close resemblance to the oldest profession.

For Yu, it’s the anticrisis adventure that brought home the truth: Being a silent observer doesn’t pay.

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