The Riga office of Eversheds Sutherland has represented Euromin Holdings Limited before the Court of Justice of the European Union in a proceeding with the Financial and Capital Market Commission.
According to Eversheds Sutherland, “On December 10, 2020, the Court of Justice of the European Union adopted a judgment in a preliminary ruling case that was initiated by the questions asked by the Senate in proceedings between Euromin Holdings Limited and the Financial and Capital Market Commission. The domestic proceedings relate to methods applied for calculation of a share price in AS Ventspils Nafta’s mandatory share repurchase offer. The Senate must rule, inter alia, on whether, for the purposes of calculating the share price, company's net assets include a minority (non-controlling interest). Minority (non-controlling interest) is the parent company’s unrelated part in the subsidiaries, thereby effectively artificially increasing the parent company's share price. Euromin Holdings Limited filled an application to the court requesting to declare the FCMC's decision unlawful and to retrieve the overpaid amount as damages arguing that the FCMC had incorrectly calculated the price of the AS Ventspils Nafta share. The Regional Administrative Court upheld Euromin Holdings’s claim but reduced the amount of damages by 50%. Both parties filed an appeal-on-point-of-law to the Senate, which, in turn, asked the CJEU to interpret certain aspects of the of the European Union law.”
Also, Eversheds Sutherland added that the CJEU has, first, “decided that Latvia’s state liability rules are incompatible with the principles of European Union law” because the rules are “incompatible with the principle of effectiveness.” Second, the firm reported, the court declared that “in accordance with Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, the rules governing the pricing of shares in a mandatory share buy-back offer must be clear and precise.” And, third, that the CJEU clarified that “the Directive does not allow the value of a share to be obtained for the purposes of a takeover bid by dividing the parent company's net assets, including non-controlling interests, by the number of shares issued, unless it is a method of determining the share price which is based on an objective valuation criterion commonly used in financial analysis and which can be considered as ‘clearly defined.’ The CJEU also stated that it is for the domestic court to assess whether the inclusion of a non-controlling interest in the net assets of the parent company for the purpose of calculating the share price meets the objective assessment criteria commonly used in financial analysis.”
Eversheds Sutherland reported that “it is now for the Senate to rule on the matter with due regard to the conclusions of the CJEU. It is expected that the final ruling in the case will form the first significant example of case law in Latvia on the issues of limitation of the amount of damages and determination of the share price in the mandatory share repurchase process.”
Eversheds Sutherland’s team includes Partner Ilze Kramina, Senior Associate Krista Berzina, and Paralegals Zelma Lapina and Rainers Svoks.