FCMC imposes penalties for violation of the Law on the Financial Instruments Market on Kirovs Lipmans and Filips Lipmans – a fine and obligation to make a mandatory share buy-back offer
The Financial and Capital Market Commission (FCMC) Board has taken a decision to impose the fine on the shareholders of AS “Grindeks”, Kirovs Lipmans – in the amount of EUR 14 200 and Filips Lipmans in the amount of EUR 10 650 for breaches of the Law on the Financial Instruments Market (the Law). Besides, both shareholders have to make a mandatory share buy-back offer to other AS “Grindeks” shareholders.
The decision has been taken based on the sufficient evidence at the FCMC disposal that since October 2010 Kirovs Lipmans has been acting in concert with his son Filips Lipmans. Considering that Kirovs Lipmans and his spouse Anna Lipmane, whose acting in concert was proved by the FCMC already in 2003, together own 49.98% of “Grindeks” shares, but Filips Lipmans holds 0.04% shares, 50.02% of total number of voting rights attached to “Grindeks” shares are directly owned by the Lipmans family, thus ensuring control over the company. Since AS “Grindeks” shares are listed on the regulated market, Official List of NASDAQ OMX Riga, the company’s shareholders have to comply with the provisions of the Law regarding the mandatory share buy-back offer. Therefore, when acquiring controlling interest (i.e. 50% or more), a person or persons acting in concert have to make a mandatory share buy-back offer to other shareholders. As no share buy-back offer was made, the FCMC decided to apply sanctions.
For the breach of the financial instruments market rules and regulations, in this case – a failure to meet the requirements of Article 66 (1) of the Law, the FCMC is entitled to impose a fine up to EUR 14 200, as well as the person has an obligation to make a buy-back offer to minority shareholders. In the light of the actual circumstances, as well as assessing proportionality and appropriateness of the penalty, the maximum fine has been applied to Kirovs Lipmans, while the fine of EUR 10 650 has been applied to Filips Lipmans.
According to the Law a person is not entitled to exercise the voting rights attaching to the shares it owns, if the person fails to make the mandatory share buy-back offer after the effective date of FCMC decision.
Both Kirovs Lipmans and Filips Lipmans may appeal the FCMC decision to the Administrative District Court within one month of the announcement of decision.
Head of Communications Division
Financial and Capital Market Commission
Telephone: +371 67774808; email: email@example.com