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Unraveling the Energoprojekt saga: Turmoil in Serbian corporate governance

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The article delves into the intricate situation surrounding the takeover of Energoprojekt in Serbia and the multitude of issues stemming from it. Here are the key points:

  1. Ownership Change and Stock Value: Seven years ago, the Serbian government held a stake in Energoprojekt valued at 5.5 billion dinars, which has since plummeted to only 1.16 billion dinars, nearly five times less. The shift in ownership has led to a significant decrease in the company’s market value.
  2. Reduced Activities and Business Changes: Following the takeover, there have been notable changes in Energoprojekt’s operations. The company’s construction activities have been curtailed, and there’s been a decline in overseas business, with only Entel maintaining relevance. Additionally, there’s been a drastic reduction in revenue and workforce, from over 2,000 employees to 700-800. Consequently, the market value of shares has plummeted by four-fifths.
  3. Dividend Policy and Financial Impact: The new owner has introduced new dividend policies, withholding profits from distribution. This move has deprived all shareholders, including the government, of dividends, resulting in accrued undistributed profits amounting to nearly three billion dinars or 25.3 million euros by the end of 2022.
  4. Legal Battles and Minority Shareholder Rights: Minority shareholders are contesting the actions of the new owner and seeking fair compensation for their shares based on prevailing laws. However, legal battles have ensued, with conflicting judgments from the courts. The Supreme Court’s reversal of previously favorable judgments has left minority shareholders in a precarious position, with some being forced to return funds received following legal victories.
  5. Regulatory Oversight: The article questions the efficacy of regulatory oversight, particularly the Securities Commission, which initially rejected then later approved takeover bids at significantly lower prices than those advocated by minority shareholders.

Overall, the situation surrounding Energoprojekt’s takeover serves as a stark example of the challenges faced by minority shareholders and the complexities of corporate governance in Serbia.

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