GOVERNMENT OF THE REPUBLIC OF SLOVENIA - 6th anti-corona package (PKP6) should provide for online general meetings and include possibility to contest resolutions, and prevent the epidemic as an excuse for further circumvention, obfuscation, and damaging as seen in past few days in cases of TELEKOM SLOVENIJE and SAVA RE, and also Slovenian Sovereign Holding

Also, with regard to the current events at the TELEKOM SLOVENIJE, d.d., which are said to have fostered an alternative arrangement of general meetings, at the VZMD are of the opinion that the epidemic cannot serve as an excuse for failing to execute the general meeting. “Public statements (even courts) saying that general meetings cannot be held due to a large number of shareholders are simply not in place and represent a despicable misuse of the epidemic. In addition, they may be used to obfuscate the actual state of affairs and buy time,” warned the VZMD President, Mr. Kristjan Verbič. At the VZMD, they also point out that, despite statements to the contrary, it is entirely possible to organize general meetings in person, and that this is being done in practice while observing all measures taken to curb the epidemic. In the last few months, namely, despite the poor epidemiological situation, there were several general meetings held with in-person attendance from shareholders or their representatives, who observed all the guidelines and instructions prepared by the National Institute of Public Health (NIJZ). In addition, the Ministry of the Interior (MNZ) in its recent response to the Slovenian Directors’ Association (ZNS) explicitly said that this is possible with strict observance of the protection measures. This is what makes the VZMD all the more outraged at Friday’s cancellation of the SAVA RE d.d. general meeting, which represents the second unjustified and economically harmful “temporary retention” of EUR 34,705,806.06 reported profits and payment of dividends for 2019!

“The issue of not convening the general meeting at Telekom Slovenije is actually in the first place connected to the practically unexplained (!?) resignation of the President and two Supervisory board members (out of six, appointed by the capital and three employee representatives), after clearly insurmountable conflicts have taken places, after which there were certainly issues with assuring quorum and sufficient support to convening the general meeting and decisions on the candidates for the new Supervisory Board members. This would probably result in fundamental changes in the composition and balance of power in the Supervisory Board of Telekom Slovenije. Therefore, at the VZMD we are worried that this burning issue—also in the context of selling the Kosovo subsidiary (or strategic investment) IPKO Telecommunications LLC—is being taken advantage of to adopt solutions, which would enable powerful interest groups to circumvent laws and established standards of corporate governance without consulting shareholders and considering suitable general assembly decisions,” added Mr. Verbič.

According to the statements from the Slovenian Directors’ Association that such proposal for the execution of virtual general meetings was prepared and sent (signed by the Slovenian Sovereign Holding) to the Government of the Republic of Slovenia already in May, at the VZMD, they have a hard time avoiding the sensation that such proposals piggyback on strong interests to crackdown and undermine the provision and protection of interests of minority shareholders. “The proposed ban on the possibility to contest resolutions of virtual general meetings, is, in the opinion of the VZMD associates, a completely unacceptable solution. At the same time, we are bringing attention to the particularly revealing analogy suggesting that the implementation of such an arrangement would in connection to the democratic regime of the structure of the Republic of Slovenia would simply mean a complete dissolution of the judicial branch, including the Constitutional Court of the Republic of Slovenia, while the National Assembly may only be able to meet virtually and only at the suggestion of the Government and without the possibility to challenge its proposals,” said Mr. Verbič with regard to inadmissibility of excluding the contestation of resolutions of general meetings as provided for by the PKP6 according to some media outlets.

At the same time, the VZMD also warns about some other questionable aspects of virtual general assemblies as experienced in other EU countries that opted for such type of meetings at the beginning of the pandemic. According to the warning from sister associations, which the VZMD works closely with as part of the European Federation of Investors and Financial Services Users (Better Finance) and the World Federation of Investors (WFI) virtual meetings require special attention to be put on maintaining sufficient and suitable communication between owners and companies. With this in mind, shareholders must have the possibility to ask questions and secondary questions also when participating at the meeting remotely, while company representatives must not have the opportunity to avoid unpleasant questions and issues. With virtual meetings, many shareholders and their associations missed the opportunity to consult each other, search for compromise, and coordinate their proposals for voting. Due to the above, some larger shareholders, who are connected in one way or another, may be even more powerful at general meetings, while the interests of minority shareholders would be further reduced and have less representation and thus remains elusive.