Hanfa: Atlantic can seek reimbursement from minority shareholders of Kalničke vode

Due to the ruling of the Supreme Court of the Republic of Croatia, the Croatian Financial Services Supervisory Agency (Hanfa) on Tuesday annulled its decision from July 2011, which ordered the Atlantic Group to pay minority shareholders of Kalničke vode Bio Natura 89.32 kuna per share, thus Atlantic has the right to seek reimbursement of that amount from the shareholders.

This decision was made by Hanfa in July 2011 because it determined that Atlantic after the obligation to publish a takeover bid for the target company acquired a certain number of shares at a price higher than that offered in the takeover bid (97.02 kuna per share compared to the offered 7.7 kuna per share).

Namely, the Atlantic Group acquired a majority stake, 96.73 percent of the shares, of the company Kalničke vode Bio Natura for 82 million kuna from the Capital Fund and Badel 1862 in September 2010. In the process of squeezing out minority shareholders, Atlantic also acquired the remaining 3.27 percent of the shares at a price of 7.70 kuna per share and subsequently merged Kalničke vode with its company Cedevita.

Dissatisfied with the paid ‘severance payment’, a group of 35 small shareholders then filed a lawsuit at the Commercial Court in Bjelovar, and Atlantic paid them an additional 89.32 kuna per share through a settlement.

After reviewing the aforementioned transactions, Hanfa ordered the Atlantic Group in July 2011 to pay the same amount to the other small shareholders within 90 days. Atlantic paid the minority shareholders of Kalničke vode Bio Natura 89.32 kuna per share, which caused it an additional cost of 7.7 million kuna.

However, a lawsuit was filed against Hanfa’s decision at the High Administrative Court of the Republic of Croatia. The lawsuit was rejected on November 13, 2013, and against that ruling, Atlantic filed a constitutional complaint, but it was dismissed due to exceeding the deadline for its submission.

Subsequently, in March 2014, the State Attorney’s Office of the Republic of Croatia, at the proposal of Atlantic, submitted a request for extraordinary review of the legality of the final ruling of the High Administrative Court of the Republic of Croatia from November 13, 2013.

This request was accepted by the Supreme Court of the Republic of Croatia with a ruling on July 9, 2019, and it amended the contested ruling of the High Administrative Court of the Republic of Croatia in such a way that it acknowledged the administrative lawsuit of the company and annulled Hanfa’s decision.

Hanfa emphasizes that its further actions regarding this takeover are not possible, and against the decision of the Supreme Court in this case, no further legal remedies are allowed, so Atlantic has acquired the right to seek reimbursement of the amounts paid to minority shareholders.

As further stated by this regulatory agency, the reasoning of the Supreme Court’s ruling implies implications related to the actions and powers of Hanfa regarding the procedures for the takeover of companies upon their completion.

They state that the protection of rights and the regulation of shareholder relations upon the completion of the takeover of companies is exclusively within the jurisdiction of the court, and initiating a dispute is a matter for the shareholders themselves.

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