Lack of Information about Shareholder in Register of Owners of Nominal Securities (through no Fault of the Shareholder) May not Be the Grounds for Refusal to Pay Dividends

An individual, who is the shareholder of a private joint-stock company, applied with a claim to this company on the recovery of shareholder dividends. Commercial court satisfied the claim; appeal commercial court confirmed the judgment.

While justifying the cassation appeal, the private joint-stock company, particularly, noted that courts had not taken into account the fact that the claimant at the moment of fixing the date of composing the list of persons, who had right to get dividends, had not had the status of the shareholder; she obtained it only on 10 November 2017 – the date of renewal of information about her in the system of the register of owners of nominal securities of the defendant, resulting into the lack of grounds for receiving dividends by the claimant pursuant to the decision of extraordinary general meeting. The Commercial Cassation Court within the Supreme Court by its Resolution in the case No. 922/677/18 dismissed the complaint of the private joint-stock company and confirmed the judgments of courts of previous instances.

Panel of judges of the Commercial Cassation Court within the Supreme Court noted that the right to receive the part of profit (dividends) by an economic partnership member was provided by Article 116 of the Civil Code of Ukraine, Article 30 of the Law of Ukraine “On Joint Stock Companies”, Item 82 of the Statute of Defendant. The general meeting of the defendant adopted a decision concerning this issue. The payment of dividends to the claimant, who was a shareholder of the company as of the beginning of the term of paying dividends, was not held due to the lack of information about her in the register of nominal securities owners as for 3 October 2017. The information about the claimant as the owner of nominal securities of the joint-stock company had been lost lost through no her fault and was restored only in November 2017. Consequently, the lack of information about the claimant as the shareholder in the register of nominal securities owners as for 3 October 2017 may not the grounds for non-payment of dividends on her shares.

The Commercial Cassation Court within the Supreme Court confirmed the opinion of the appeal court as for the fact that failure to restore the information about nominal securities owners (including the claimant), who owned 7.3943 % of total emission, and failure to include them into the register of nominal securities owners (the responsibility as for the restoration of which had been vested in the registrar by the judgment of commercial court, and the registrar had been obliged to provide the register of owners of nominal securities of the defendant) should not deprive shareholder(s), whose shares had not been timely transferred into non-documentary form, from the right to receive dividends, since as for the moment of the adoption of decision on the payment of dividends and at the moment of their payment the claimant had been and was the shareholder and had profit participation rights.

Follow the link http://reyestr.court.gov.ua/Review/79589029 to see the full text of the resolution.