10:32 30.10.2020

Stateowned "Khmelnitskoblenergo" asks the President to initiate the formation of the State Property Fund of the Supervisory Board with independent directors

4 min read

To influence the State Property Fund of Ukraine to form a capable Supervisory Board with independent directors, as required by the legislation on joint-stock companies and state property management, asks the President of Ukraine in his address to him the management of JSC "Khmelnitskoblenergo". This is stated in the address to Vladimir Zelensky  as a guarantor of the execution of the Constitution and the laws of Ukrainse

"We ask you to pay attention to the situation with JSC Khmelnytskoblenergo in order to prevent the loss of one of Ukraine’s most important strategic state enterprises, a successful energy company, a leader among public sector enterprises and an extremely important critical infrastructure, matters of national security depend on the normal operation of this enterprise. What is at stake here is a question of ensuring implementation of norms of the current legislation on joint-stock companies and management of state assets, especially with regard to the selection and appointment independent directors to the Supervisory board of Khmelnytskoblenergo", - said in a statement.

On April 28, 2020, the Supervisory Board, consisting exclusively of SPFU employees (two of whom are non-authorised members), illegally, with numerous violations of applicable laws, decided to change the acting General Director of the Company. This decision is made secretly, without notifying the representatives of the Company and without the participation of the Secretary of the Supervisory Board. The minutes of the meeting were handed over only to the supposed "newly appointed" acting General Director, and the Company was granted access to the same minutes the only a month later, after numerous appeals, demands, and parliamentary as well as legal inquiries. From the moment of adoption of this specific decision the SPF removes itself from management of the Company, without making any decisions and not allowing the Supervisory board it controls to make such decisions.

"Currently, the SPF is not taking any measures to form a new Supervisory Board. At the same time, the SPF completely ignores the reform of corporate governance in Ukraine, which requires the appointment of independent directors – i.e. members of the Supervisory Board who are not related to shareholders - in accordance with Art. 53 of the Law of Ukraine "On Joint Stock Companies" and Art. 112 of the Law of Ukraine "On Management of State Property, - noticed in the statement.

"In order to implement this flawed decision to change the management of the Company, the leadership of the SPF is ready to sacrifice a successful strategic enterprise and even jeopardise its very existence. The question arises whether the actions of the SPF are anything but corruption in this regard?", -  said in the appeal

The transition a new financial year in the absence of a Supervisory Board will actually put an end to the financing of all activities of the Company from January 1, 2021, a date worryingly just two months away. If that happens we will see the emergence of problems in the energy supply of consumers in Khmelnytsky region, among which are military units and the only missile brigade in Ukraine. The SPF, although a body authorised to manage state property, in no way seeks to preserve and improve such property. In this case the opposite is true, the SPF deliberately tries to worsen its condition, neglects its management functions and acts only in the private interests of its management despite this endangering the country’s defence capabilities.

In order to preserve a strategically important enterprise, and to continue its successful and highly profitable activity, the financial performance of which exceeds the performance of all other state energy distribution companies combined,  management Khmelnitskoblenergo appeals to  President of Ukraine VOLODYMYR ZELENSKYY as the Guarantor of the implementation of the Constitution and Laws of Ukraine, with the following requests:

1. Initiate, within the framework of current legislation, the fair and open selection of candidates for the positions of members of the Supervisory Board of JSC Khmelnytskoblenergo, including independent directors, including representatives of international organizations, independent experts and specialists, and oblige the State Property Fund of Ukraine to conduct such selection in accordance to the requirements of Art. 53 of the Law of Ukraine "On Joint Stock Companies" and Art. 11.2 of the Law of Ukraine "On Management of State Property";

2. To oblige the State Property Fund of Ukraine to convene an Extraordinary General Meeting to raise the issue of electing a new Supervisory Board of Khmelnytskoblenergo, and to send its representatives to that Extraordinary General Meeting with the order to vote for the election of new members of the Supervisory Board.

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