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RESOLUTION OF THE SUPREME ECONOMIC COURT OF UKRAINE

of May 21, 2007

About recognition invalid purchase and sale agreements and donation of shares of Avtoremont Private company

(determination of Trial chamber on economic cases of the Supreme Court of Ukraine of 26.07.2007 it is refused to open production on review)

Case No. 2-17/2006

NAME OF UKRAINE

The Supreme Economic Court of Ukraine as a part of board of judges: Karabanya V. Ya. - chairman, Kovtonyuk S. V., Shepherd V. V.

having considered claims in proceeding in open court materials of cassation H.H.C., C.O.C., M. V. I., X.Yu.P., M. of P.V., B.C.B., K.I.I., T.B.B., K.A.D.

on the decision of Energodarsky city court of the Zaporizhia region of 04.05.2006 and determination of Appeal Court of the Zaporizhia region of 10.07.2006

on case N2-17/2006

in the claim of H.H.C., C.O.C., M. V. I., X.Yu.P., M. P.V., B.C.B., K.I.I., T.B.B., K.A.D.

to K.K.B., K.B.B., K.B.M., K.T.B., K.O.O., L.I.M., M. M. I., K.S.G., F.L.I., S.P.V., K.S.I., K.V.H., L.V.V., G. V.S., G. V. S.

with the assistance of the third parties on the party of the defendant without independent requirements: Avtoremont private company Enerhodar, K.L.M.

about recognition invalid purchase and sale agreements and donation of shares of Avtoremont Private company, partially invalid decisions of shareholder meeting of the same society and other agreements of the same society which were signed from 09.04.2004 on time of consideration of the case, compensation of material and moral damage

ESTABLISHED:

In June, 2005 H.H.C., C.O.C., G. V. I., X.Yu.P., G. P.V., B.C.B., K.I.I., T.B.B., K.A.D. (claimants) addressed in Energodarskiyo city court of the Zaporizhia region with the claim for recognition invalid purchase and sale agreements of shares of Avtoremont Private company of prisoners of 04.09.2003 between K.K.B. and K.V.H. on 98 shares, 04.06.2003 between K.K.B. and F.L.I. on 45 shares (the first group of agreements), 05.03.2004 between L.I.I. and S.P.V. on 31 shares,

05.03.2004 between K.S.I. and S.P.V. on 31 share, 18.03.2004 between K.K.B. and K.T.B. on 59 shares, 18.03.2004 between K.K.B. and K.B.B. on 551 share, 06.04.2004 between K.T.B. and K.K.B. on 1 share, 05.06.2004 between K.B.B. and K.K.B. on 350 shares, 09.06.2004 between K.O.O. and K.V.H. on 1 share, 18.06.2004 between K.O.O. and K.S.I. on 31 shares,

05.11.2004 between K.K.B. and K.B.B. on 349 shares, 28.12.2004 between K.K.B. and M. N. I. on 4 shares, 30.12.2004 between K.K.B. and K.S.G. on 18 shares (the second group of agreements), motivating with the fact that the specified agreements contradict requirements of item 5.7 of the Charter of Avtoremont Ltd - shareholders can implement (to sell) the shares only to society. At the same time the second group of agreements is imprisoned with violation and the p. 3 of Art. 81 of the Economic code of Ukraine according to which shareholders of the closed society have the overwhelming right to share acquisition which are on sale other shareholders of society. Sellers of shares did not inform society on the intention to sell shares which they own on the property right and society in turn did not inform shareholders of whether there are among shareholders persons interested to acquire shares. Claimants considered that gross violation of the regulation of the Economic code of Ukraine operating since 01.01.2004 entailed fundamental breach of their rights. Also claimants asked to recognize invalid the gift agreements of shares signed 19.04.05 between K.B.M. and K.K.B. on 741 share, 20.04.05 between K.O.O. and S.P.V. on 31 share, 20.04.05 between L.I.M. and S.P.V. on 31 shares as these gift agreements were performed with the shares illegally acquired according to above to the specified purchase and sale agreements.

Concerning the requirement to recognize invalid decisions of shareholder meeting of 09.04.2004 claimants specified that except that the meeting was unauthorized to make any decisions as persons who illegally acquired shares of society took part in it, in case of its carrying out also requirements of the Charter, the Law "About Economic Societies", Civil and Economic codes of Ukraine which regulate procedure for convocation, carrying out and decision making of participants by meeting were significantly violated. In defiance of these requirements shareholders were informed on convocation of meeting only in 2 weeks prior to its carrying out by cards. Shareholders did not receive any marks about the message, did not know agenda. Besides it is specified that the decision on election as the chairman of the board of K.K.B., and board members K.A.A. and L.I.N. is not legal on those bases that person who was not with society in employment relationships was elected to position of the chairman of the board of society that is violation of item 10.8 of the Charter of society and Art. 48 of the Law "About Economic Societies" - persons who are with society in employment legal relationship can be the chairman and board members of society. Besides, for election of K.K.B. to position of the chairman of the board only persons K.K.B. of 707 shares, L.I.N. - 31 share, K.S.I.31 the share voted that constitutes 51% of shares which illegally received shares in property. Considering specified, claimants asked to recognize invalid and all agreements signed since 09.04.2004-faced (K.K.B.) which illegally holds position of the chairman of the board of society and also to collect material and moral harm. 04.05.2006 the decision of the Enerhodar city court of the Zaporizhia region left without changes of 10.06.2006 determination of Appeal Court of the Zaporizhia region is refused satisfaction of claims completely. Courts recognized that till 01.01.2004 no restrictions on implementation of the property right to shares and orders them at shareholders existed (since 01.01.2004 the p. 3 of Art. 81 of the Economic code of Ukraine established overwhelming shareholder right on share acquisition of other shareholders). The charter of Avtoremont Ltd, for the period of implementation of the disputed agreements did not establish obligation on sale of shares only to shareholders or founders, also the procedure for realization of the right to purchase and sale of shares is not determined. Refusing satisfaction of requirements about recognition invalid decisions of Avtoremont Ltd general shareholder meeting, courts were specified that it is impossible to consider the rights of claimants broken because of the untimely message by it about holding meeting and neopublishing about it in the press as they were present at meeting and took part in vote. Also courts came to conclusion that K.K.B. was elected by the chairman of society competent meeting and within its competence.

In the writ of appeal applicants (claimants) asked to cancel the specified decisions as such which are accepted with violation of regulations of substantive and procedural law and to accept new about satisfaction of claims. In particular applicants drew the attention of court what was provided by the Charter of Avtoremont Ltd that shareholders can implement (to sell) the shares only to society.

Board of judges, in view of borders of reconsideration of the case in cassation instance, having discussed arguments of the writ of appeal, having analyzed based on the actual facts of the case application of regulations of substantive and procedural law in case of acceptance of the appealed court resolutions, finds the writ of appeal such which is subject to partial satisfaction for such reasons.

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