2024-04-21 15:03:21
ČEZ withheld information that could have affected the value of its shares on the stock exchange. The Czech National Bank fined the semi-state company for this. The largest producer of electricity in the country filed a lawsuit against her for this. Justice will thus deal with a dispute that has no analogues in the Czech Republic. Aktuálně.cz describes the details of the exceptional pre.
On Tuesday, June 28, 2022, CEZ shareholders held a meeting. More than two-thirds of the share there is held by the state through the Ministry of Finance, the rest is held by private individuals. Shareholders discussed the amount of dividends for the previous year. Part of the negotiations was the finally accepted proposal of the Ministry to increase the yield from one share by ten percent compared to the original plan of ČEZ.
ČEZ received a counter-proposal from the resort of Zbyňka Stanjury (ODS) two weeks before the general meeting. But he kept it inside the business for the next six days before releasing it. Although it is a publicly traded company. And although such information could affect its value, it could be important for investors considering buying its shares.
The Czech National Bank (ČNB), which oversees the domestic financial market, fined ČEZ a million crowns for this. It violated the European market abuse regulation. The penalty was also imposed for violating the Act on Doing Business on the Capital Market, because ČEZ did not inform the Central Bank about the Ministry of Finance’s proposal, even though it should have done so immediately.
Insider advantage
“In the opinion of the CNB, ČEZ did not inform the public about the counter-proposal, which, when published, would probably have a significant impact on the price of ČEZ shares. It threatened the transparency of the financial market and the equality of its participants,” Štěpánka Tykalová, spokeswoman for the Municipal Court in Prague, told Aktuálně.cz ČEZ will judge the fine.
She also described what other undesirable effects the actions of ČEZ, which violated European and Czech law, could have had. This is her first failure of this kind. “The information about the counter-proposal could have been used for the investment decision-making of insiders during its non-disclosure period,” the spokeswoman pointed out. So people from within the company could potentially benefit from it.
CEZ has already paid the fine. However, the lawsuit demands that the court cancel the bank’s decision on the sanction and interpret the key regulations authoritatively in the future. ČEZ explains the six-day delay in publishing the counter-proposal by the fact that the board of directors headed by CEO Daniel Beneš had to adopt an opinion on it.
“In our opinion, the counterproposal itself without the opinion of the board of directors did not allow for its full and correct assessment by the investing public, and that is why we published it together with the opinion of the board of directors,” ČEZ spokesman Ladislav Kříž explained to Aktuálně.cz why the plants filed a lawsuit against the central bank.
ČEZ has already acknowledged one mistake
The dispute is handled by judge Viera Horčicová, she ordered the meeting to be held on Thursday next week. ČEZ filed the lawsuit last December. “The court verified the fulfillment of the conditions of the court proceedings, let both participants comment on the matter and ordered a meeting during which it intends to decide on the lawsuit,” described the actions of the judge, spokeswoman Tykalová.
CNB Governor Aleš Michl. | Photo: CTK
Although the energy companies defend the delay in making the main shareholder’s counter-proposal available, they have already acknowledged one mistake. This follows from the statement of the spokesperson of the court. “ČEZ does not dispute the violation of the obligation to send the aforementioned counter-proposal to the CNB without delay,” she said. In this regard, ČEZ violated the Act on Doing Business on the Capital Market.
The Czech National Bank is reticent in commenting on the lawsuit from ČEZ. What are her arguments against the submission, she will develop only in the courtroom. “It is up to each participant in the proceedings who has been sanctioned whether to defend himself with a lawsuit. The CNB leaves the matter for the court to assess,” said bank spokesman Jakub Holas.
Market transparency is key
The Czech National Bank dealt with CEZ’s wrongdoing for almost a year and a half. The first verdict was issued by its responsible part, the licensing and sanctioning procedure section, last July. After the appeal of the energy plants, the bank board, headed by Governor Aleš Michl, decided on the final fine last November.
“Transparency of the capital market is a key condition for its effective functioning. Investors who do not have access to timely and complete information about financial instruments are exposed to the risk of making incorrect investment decisions,” states, among other things, the verdict of the central bank, which Aktuálně.cz studied.
The silenced counter-proposal of the Ministry of Finance increased the dividend from 44 to 48 crowns per share, which in total made a difference of over two billion in rewards paid to shareholders. “Early disclosure of inside information plays a vital role, as it reduces the scope for potential use of inside information by an insider,” the central bankers said.
Some minority shareholders of ČEZ believe that the company’s communication about paid dividends is insufficient in the long term. Mainly communication in advance. “This is very non-standard behavior, especially for such a large company as ČEZ,” said one of them, Michal Šnobr, to the E15 server, who drew attention to the fine from the central bank itself.