14 December 2018
Tolexis Trading Limited to challenge unlawful decision of the appeal court on ZTMC
The Cyprus company Tolexis Trading Limited, being a part of Group DF, strongly disagrees with the decision of the appeal court regarding the termination of the agreement on the establishment of Zaporizhzhia Titanium and Magnesium Combine LLC. The agreement was concluded between the State Property Fund of Ukraine with Tolexis Trading Limited. The decision of the court is politically motivated, baseless and completely negates the legitimate rights of Tolexis Trading Limited as an investor.
Tolexis Trading Limited is certain to be right, and will challenge this decision in the Ukrainian and international courts.
As an investor, Tolexis Trading Limited has fully fulfilled its commitments, having invested 110 million US dollars in ZTMC in exchange for 49% of the authorized capital of the plant.
Thus, today Tolexis Trading Limited is the legal owner of a 49% stake in ZTMC, which by law cannot be alienated without its voluntary consent.
Despite this, the courts of first and appeal instances, completely ignoring the legislation of Ukraine, decided to return all 100% of the integral property complex of the enterprise to the state without returning the investor the invested funds ($ 110 million).
Such a violation of the basic rights of a foreign investor looks like outright raiding under the cover of court decisions.
During the existence of the contract between Tolexis Trading Limited and the State Property Fund, the state and the Fund have never made any claims against Tolexis Trading Limited regarding the fulfillment of its commitments.
At the same time, having the control over the management of ZTMC, the state by its representatives from the State Property Fund systematically ignored its obligations for managing ZTMC. For instance, for two years in a row, the State Property Fund representatives were missing the meetings of the company’s founders. As a result, the voting on strategic issues, including the adoption of a new and more effective strategic program for the development and modernization of ZTMC was disrupted.
At the same time, thanks to the investments of Tolexis Trading Limited, ZTMC from a loss-making state enterprise with multi-million debts to suppliers and employees began to work with profit and for the first time in the history of the combine to pay dividends to the state.
Since 2013, ZTMC received over UAH 480 million of net profit, while the state received over UAH 135 million of dividends. At the same time, the founder of ZTMC itself, the company Tolexis Trading Limited, decided not to pay dividends to itself, but sent them to support the company’s operating activities.
The decisions of the courts by the case of ZTMC are evidence of the failure of the investment-seeking policy and demonstrate the lack of government interest in the development of the investment environment.