Kernel Holding announced in a Monday stock exchange announcement “another legal victory in Luxembourg against a group of minority shareholders”. This concerns their application to prohibit Namsen from exercising votes from the newly issued shares. The court in Luxembourg did not accept this claim. Dr. Rafał Rzeszotarski from the group of minority shareholders, speaks of disappointment, but announces an appeal.
A Luxembourg court has rejected a request by minority shareholders of Kernel to suspend the board's decision to increase the share capital in 2023. The shareholders had challenged the issuance of new shares, but the court found their claims inadmissible, according to a Kernel stock exchange statement published on Monday before the session.
This is the second of five proceedings initiated by the same group of shareholders in connection with the planned delisting of the company's shares from the Warsaw Stock Exchange. Kernel is confident that the remaining claims will be dismissed, emphasizing its commitment to corporate governance. “The ruling is a first-instance decision and may be appealed,” Kernel wrote in a statement.
“We have received a judgment from a court in Luxembourg regarding our lawsuit to secure our claims by prohibiting Namsen from exercising votes from the new issue of shares. Unfortunately, the court in Luxembourg did not agree to our motion, so until the main case is resolved (i.e. regarding the invalidation of the issue), Namsen will be able to exercise the rights from these shares,” commented Dr. Rafał Rzeszotarski from the group of interested minority shareholders of Kernel for Bankier.pl.
“We will most likely file an appeal”
“Of course, it is a pity that we were unable to obtain this security, while the main case is still pending,” emphasizes Rzeszotarski. Let us recall that a group of minority shareholders of Kernel filed several lawsuits against the company in a court in Luxembourg, including for determining the invalidity of the resolution of the board of directors on delisting or for determining the invalidity of the resolutions of the board of directors on the issue of 216 million shares.
As part of the proceedings regarding the claim for prohibition of Namsen from exercising votes from the new issue shares, the court did not examine the case in detail – it looked at two elements: (i) whether the law was flagrantly violated – here the judge stated that this could only be decided at the stage of the main case; (ii) whether there is a risk of unavoidable loss/damage for us as plaintiffs – here we argued that such a risk exists because Namsen could carry out a squeeze-out and “push” us out of the company,” explains Rzeszotarski.
“Unfortunately, the judge decided that although such a risk exists, it is not a certainty (because Namsen has not yet announced a squeeze-out); these are just Luxembourgish legal tidbits. We are still analyzing the judgment itself, but we will definitely file an appeal,” he comments.
“I am personally very disappointed with the way the justice system works in Luxembourg. Not only did we wait over a year for a ruling on security, but in order to obtain such security in Luxembourg, a number of factors must be present that are almost impossible to achieve. I dare say that even in Poland, with our ailing judiciary, we would receive such security and much faster” – in bitter words Rzeszotarski comments on the latest reports from the front of legal battles and respect for the rights of minority shareholders.
“I will not invest in a Luxembourg company”
“I have decided that I will never invest in a company based in Luxembourg again and I will say that I honestly do not envy the shareholders of Allegro, Żabka or InPost, because if their majority shareholders want to carry out an action similar to the one Verevsky did, they are in a lost position from the start,” he concludes his comment.
Adventures with foreign companies on the WSE
“It is very important that investors, before making a decision to purchase shares in a foreign company, familiarize themselves with the regulations governing the principles of operation of such companies and the resulting differences in relation to Polish companies, and thus assess the so-called regulatory risk. The regulations of the seat of a foreign company may differently shape the rights and obligations of shareholders and the way in which this company operates, including the principles of making corporate decisions, e.g. on delisting,” reminds the KNF spokesman.
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The topic of pulling Kernel from the WSE is very controversial and highlights the investment risk associated with listing a foreign entity on the WSE. Which was not so visible in such situations in the recent past. Apart from the history of CEDC or Nova KBM, from over 10 years ago, which few people can remember anymore.
In recent years, Orphée, headquartered in Switzerland, Play Comunication, headquartered in Luxembourg, and Talanx, headquartered in Germany, have also been delisted from the Warsaw Stock Exchange. However, at that time, the largest shareholders were able to avoid causing major controversy in most cases. This does not change the fact that the stock exchange is also, or primarily, a risk in many dimensions that you have to learn about and assess for yourself.
Let us recall that Kernel is a Ukrainian company listed on the Polish stock exchange (where it operates) with its headquarters in Luxembourg, whose main shareholder is Namsen Limited registered in Cyprus. This in turn is controlled by Ukrainian multimillionaire Andriy Verevskyi, who is also the CEO of Kernel.
