Grimaldis steamroller minority shareholders at Finnlines general meeting

Ilmarinen considers ordering special audit

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The shareholders of the Finnish shipping company Finnlines were taught the basics of industrial democracy on Tuesday when the company’s annual general meeting continued after a break of more than four weeks.
      The minority shareholders led by the Finnish mutual pension insurance company Ilmarinen, Finnlines’ second-largest owner, tried to change the plans of the Italian Grimaldi Group, the majority owner of Finnlines with a 58.8% stake in the company.
      Needless to say, all proposals made by the minority stockholders were rejected when put to a vote.
     
After voting, the general meeting decided that only the minimum dividend of approximately EUR 180,000 or around EUR 0.004 (0.4 cents) per share will be paid, while the opposition would have wanted a dividend of 42 cents per share.
      After a vote, the Board of Directors was also authorized to carry out a directed share issue of 10 million shares. The minority shareholders opposed the proposal but were defeated.
     
Director Mikko Mursula, who is in charge of equities and fixed income at Ilmarinen, reported that the pension insurance company is now considering two measures to be taken in the course of the next four weeks.
      An application is likely to be submitted to the State Provincial Office in order to carry out a special audit in the company. Moreover, an action for annulment could be sought in order to declare the decision on profit sharing invalid.
      In connection with profit sharing, a minimum dividend is a right that is guaranteed by the law - it is not a matter of voting, argued Mursula.
      A special audit would also clear certain contentious issues that were mentioned at Tuesday’s meeting for the first time. Examples of such issues include the use of the group contribution as well as investment plans.
     
The core questions were the dividend and the related group contribution of EUR 34 million paid by Finnlines. As a result of the contribution, the company’s profit for 2007 is close to zero, and the possibilities of taking home profits are minuscule.
      Christer Antson, the President and CEO of Finnlines Plc, started the discussions, saying that the group contribution had been given to the shipper’s three subsidiaries, which have invested in five Finnlines vessels. Without the payments, Finnlines would have had to pay EUR 9 million in taxes.
      According to Ilmarinen and other minority shareholders, there were no appropriate grounds for the paid group contribution.
      According to a statement given by Risto Nuolimaa, a professor of business law and the chairman of the Association of Finnish Lawyers, it was questionable whether or not the group contribution could be taken into account when calculating the size of the minimum dividend. In his view, large investments are not a sufficiently good reason.
      Contrastingly, another professor Jukka Mähönen had given a different statement, saying that it was completely legal and appropriate to take into consideration the group contribution, as the measure backed up the company’s business operation and the company’s ability to make profit in the longer term.
     
Prior to the follow-up investor meeting, the minority shareholders had read the interview of Emanuele Grimaldi in last Sunday’s Helsingin Sanomat, interpreting his comments in such a way that the real aim is to persuade the Finnish minority shareholders to sell even the rest of their Finnlines stock to the Naples-based Grimaldi Group.
      Ilmarinen’s Mursula says that Grimaldi’s statements were a sign of cultural differences as well as of an "alarming" attitude towards the minority shareholders in general.


Previously in HS International Edition:
  Grimaldi Group plans to purchase remaining Finnlines shares (11.10.2006)

Links:
  Ilmarinen
  Finnlines (Wikipedia)
  Finnlines Press Release 20.5.2008

Helsingin Sanomat