Sergei Bakeshin commented for RBC on what the court’s decision to seize shares of the Plant from private investors may be based on

Sergei Bakeshin - Counsel

On 22 March 2024, Commercial Court of the Perm Region satisfied the claim of the prosecutor’s office to seize shares from all private investors of Solikamskiy Magnieviy Zavod plant (Solikamsk Magnesium Plant). The reason was the illegal privatisation of the enterprise in 1992. The court’s decision for the first time also extended to minority shareholders, including those who purchased securities on the Moscow Exchange.

“In its position, the prosecutor’s office refers not to the bad faith of the purchasers, but to the circumstances of the loss of property from the possession of the owner – the Russian Federation,” Sergei Bakeshin, Counsel, Head of Dispute Resolution & Insolvency Practice at Maxima Legal, explained to RBC. At the same time, there is part. 7.3 of Article 18 of Federal Law No. 325-F3 of 21 November 2011 “On organised trading”, which states that “property acquired under an agreement concluded at organised trading cannot be reclaimed from a bona fide purchaser”. This norm was earlier drawn attention to in its explanation of the case on the seizure of the plant’s shares by the Moscow Exchange, which came out on the side of the minority shareholders.

“In general, a special norm takes precedence over a general one, in this case the special norm is contained in the law on organised trading,” Sergei Bakeshin pointed out. According to the expert, it will be possible to find out how exactly it was possible to exclude the application of paragraph 7.3 of Article 18 of the law on organised trading from the motivation part of the decision.”Perhaps the court will refer to the fact that the norm of the law on organised trading introduced significantly later than the moment of withdrawal of property from the possession of the Russian Federation and even later than the moment of issue of shares, the decision on which the legal owner (the Russian Federation) did not take”, Sergei Bakeshin suggested.

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