Mistreatment of Shareholders

Since the end of 2016, the Bosnalijek’s executives have been undertaking illegal attempts to dilute the stake of Haden by issuing additional shares.

Timeline for Haden’s rights violations by the management of Bosnalijek

  • Prior to the meeting of the Bosnalijek Supervisory Board scheduled for 21.12.2016, without discussing it earlier with the shareholders, the company’s management tried to expand the meeting agenda by including a question on the additional issue of 1 million shares, which were to be sold by private subscription. As the chairman of SB, Konstatin Zevlov demanded the removal of this issue from the agenda. As a result of this action, no follow-on offering was discussed at the meeting. Nevertheless, in violation of the BiH legislation Konstantin Zevlov was removed from the position of the chairman at the same meeting, and replaced with Edin Dizdar.
  • Several days later, at a special meeting on 27.12.2016, Supervisory Board made a decision to increase the capital stock by issuing additionally 1 million shares. The shares were placed by private subscription. Haden considers this decision illegal and is currently litigating it at the cantonal court of BiH.
  • The annual meeting of Bosnalijek’s shareholders was scheduled for 23.05.2017. According to the articles of association, shareholders or groups of shareholders, who own at least 5% of the company’s stock, have the right to nominate their candidates to join Supervisory Board. Haden provided its list of candidates in a timely manner. However, due to the lack of a quorum, the meeting was cancelled and rescheduled for 03.06.2017. Shortly before the new date, the management of Bosnalijek stated that Haden’s candidates were not admitted to voting due to an allegedly incorrect power of attorney issued to Haden’s representative.
  • As a result of the arbitrary action by Bosnalijek’s executives on June 3, 2017, no candidate from Haden was elected to Supervisory Board.

Possible reasons of Bonsalijek’s executives actions

Bosnalijek’s executives say that the reason for the additional issue of shares was the need to raise more funds . Meanwhile, their decisions suggest the opposite.

  • Per suggestion from Bosnalijek’s executives at the shareholder meeting on June 3, the dividend reserve was increased by one and a half times. This extra sum was basically taken from the company’s development fund.
  • Dubious deals assigning the receivables to foreign companies presumably cost Bosnalijek millions of euro in lost profits.

Thus, one can conclude that the real reason for the additional issue of shares and all subsequent actions by Bosnalijek’s executives was their desire to dilute the stake of Haden and weaken the largest shareholder, who expresses disagreement with how the enterprise is managed.