Press releases

Basic Element 'loses' control over Ingosstrakh

2/1/2011 | Moscow | Back

The Ninth Commercial Court of Appeal has upheld a decision made by Moscow’s Commercial Court which denied the case of Ingosstrakh OJSIC’s minority shareholders, controlled by PPF Investments, sustaining a ruling that failed to find related party transactions that favored Basic Element illegal. The transactions were approved by a December 18, 2009 extraordinary meeting of Ingosstrakh OJSIC shareholders; the insurance company’s minority shareholders had voted against them.

PPF Investments has been attempting to dispute the results of an extraordinary shareholders’ meeting held by Ingosstrakh OJSIC on December 18, 2009, when a range of related party transactions were approved in violation of the procedure stated by existing regulations pertaining to corporate governance. According to representatives of PPF Investments, shareholders who voted to approve the deals were affiliated with structures controlled by Basel Group, which includes Ingosstrakh OJSIC. Thus, according to existing legislation, these votes should have been invalid. It is assumed that the legal regulation protects minority shareholders’ interests, and PPF Investments (a minority shareholder which owns almost 40% of Ingosstrakh OJSIC’s shares) demanded that the courts uphold these regulations.

During today’s session, the court agreed with the arguments provided by the defendant (representing Basic Element, or BasEL), which argued that Basic Element is not related to Ingosstrakh OJSIC and thus does not participate in decisions made by the insurance company. The plaintiffs (PPF Invstments), in turn, presented a whole range of evidence that alleged the affiliation of Basel Group and Ingosstrakh OJSIC. However, the court did not take arguments given by PPF Investments into consideration, such as the information placed on the site of Basel Group pointing out its connection with the insurance company, as well as numerous personal statements by top managers of Basic Element and Ingosstrakh that prove their direct affiliation.

“The court’s decision contradicts the real state of things in the company,” noted Yan Piskacek, PPF Investments’ media relations representative. “The behavior of Basel and Ingosstrakh’s management goes counter to the generally accepted corporate ethical and managerial standards, and may harm investments made by foreign investors. We are not going to give up on this process and will keep striving for justice at higher courts.”

PPF Investments’ press spokesman, Jan Piskáček
jan.piskacek@ppfinvestments.com