Minority shareholders of PJSC Ukrnafta represented by the Privat group have given up the right to appoint the chairman of the company's board only from their nominees in exchange for forming a supervisory board with a majority of independent directors, Executive Director of NJSC Naftogaz Ukrainy Yuriy Vitrenko has said.

"We've agreed with minority shareholders that they waive this right voluntarily in exchange for making up a supervisory board where independent directors will constitute a majority," he said in an interview with the Ekonomichna Pravda ezine.

According to him, the corresponding change in the shareholder agreement was made in March 2019. Vitrenko recalled that the right of minority shareholders to actually appoint their CEO at Ukrnafta was stipulated in a shareholder agreement signed in 2010.

"We tried to take this right from [Ihor] Kolomoisky through the London arbitration, but lost on this count," he said.

As reported, Ukrnafta from June 2007 to 2010 failed to hold a meeting of shareholders over a dispute between them. Accordingly, Naftogaz, which was in dire need of money then, could not receive dividends from the company's activities. To unlock the situation, Naftogaz agreed to sign a shareholder agreement within the jurisdiction of British law.

In January 2010, Naftogaz and Ukrnafta's minority shareholders (Littop Enterprises Limited, Bridgemont Ventures Limited, Bordo Management Limited, Balliotti Enterprises Limited, Renalda Investments Limited, which are affiliated with the Privat group) entered into a shareholder agreement, which, in particular, determined the procedure for the election of the head and members of the board, as well as the supervisory board and the necessary quorum of the country's largest oil producer.

According to the document, the head of the board was to be elected from the candidates proposed by minority shareholders, while six out of 11 members of the supervisory board and its head should be nominated by Naftogaz.

In June 2015, Ukrnafta's minority shareholders filed a lawsuit with the London Arbitration Court demanding that Naftogaz adhere to the terms of the shareholder agreement, even despite the limited rights of Naftogaz as a controlling shareholder, in comparison with the rights provided for by applicable law.

The decision was made by the arbitration in April 2018. After this, Naftogaz stated that the tribunal recognized the agreement on corporate governance of Ukrnafta as valid, but canceled its key provisions.

NJSC Naftogaz owns a 50% + 1 share of Ukrnafta, and a group of companies associated with former shareholders of PrivatBank owns about 42% of the shares.