Sorainen recommends that the former minority shareholders of Eesti Telekom send an application for compensation to the representatives of Telia Company AB (hereinafter Telia), because it may still take some time to reach a final resolution in the court proceedings.
The court dispute between Telia and the former minority shareholders of Eesti Telekom regarding the amount of compensation paid to the shareholders for their shares has been ongoing since 2010. Sorainen partners Carri Ginter and Reimo Hammerberg were appointed as joint representatives of the minority shareholders by court order on 30 June 2010. After almost 7 years of proceedings, a favourable outcome for the small shareholders was achieved at the end of 2016, when a Harju County court judgment entered into force, where the court found that Telia had not paid fair compensation to the shareholders: Telia had paid EUR 5.94 instead of EUR 6.59 per share.
After the court decision entered into force Sorainen requested that Telia pay the compensation as foreseen by the court decision together with interest for late payment to all minority shareholders. Telia has currently not agreed to the payment of compensation and interest for late payment for the full 8 years that is owed to the shareholders. Instead, Teila has communicated that it will only add three years of interest for late payment and further that it will pay compensation only to those applicants who have personally filed a claim and whose claim has been processed by the law firm representing Telia.
The amount of the delay interests that Telia has agreed to pay is not sufficient in our opinion. Further, Telia should be proactive in paying the compensation and the payments to minority shareholders should not depend upon individual applications – the court-ordered representatives should have the right to claim the payment of compensation for all shareholders. Therefore, as Telia and the minority shareholders of Eesti Telekom have not reached agreement on these points, the court dispute is still on-going.
As the proceedings have lasted much longer than expected, we are recommending that the minority shareholders send their claim applications to Telia to enable them to receive the additional compensation ordered by the court and at least a part of the interest for late payment more quickly. We have prepared an application which the small shareholders can use to claim additional compensation. The application form can be downloaded here. Concurrent with the submission of the applications, we will continue the dispute with Telia as the representatives of small shareholders.
Instructions for filling in the application form:
1) Insert your name, registry code / personal identification number, bank account number, and email address;
2) Sign the application digitally and send it to firstname.lastname@example.org with a copy to email@example.com. Write in the subject line of the e-mail the applicant’s name and registry code / personal identification number;
3) If you cannot digitally sign the application, please print and sign the application and mail it to the offices of Raidla Ellex law firm at Roosikrantsi 2, 10119 Tallinn.
By filing the application, the applicants request Telia to promptly pay them the compensation in the amount that Telia currently agrees to pay. In doing so, the applicants are not waiving their rights to claim the full amount of compensation and interest for late payment, of which Telia currently refuses to pay a significant amount.
In the application the applicants also confirm the right of representation by the attorneys appointed by the court, and therefore, Telia no longer has any legitimate argument that every applicant should individually file all claims to Telia. The individual amount of additional compensation owed to many applicants is quite small: without interest for late payment, the amount of additional compensation owed to most shareholders (1,219 shareholders) is less than EUR 300. Therefore, it is likely that for many applicants it is not economically reasonable to spend resources on an individual dispute with a large Swedish corporation. However, the combined amount of the compensation owed to the applicants is considerably larger: it totals at least 951,834.88 euros, and the accumulated interest for late payment totals an additional 601,401.87 euros (from 13 January 2010 until 31 October 2017).
Why send the application form
Sending the application form to Telia enables the applicants to promptly receive at least a part of the compensation they are owed while not waiving the right to a future claim for the part of the compensation that Telia currently refuses to pay.
It is expressly noted in the application that the applicant does not waive the right to claim interest for late payment. Therefore, Telia has no legitimate argument that by accepting the amount of compensation offered by Telia, the applicants have waived their right to claim additional compensation.
The application also regulates the payment of success fees to the court-appointed representatives according to the conditions described in the court order of 30 June 2010, which stated the representatives should be paid:
a) 10% of additional compensation for each share for which the applicant payed a retainer fee;
b) 30% of additional compensation for each share for which the applicant did not pay a retainer fee.
The applicants request that Telia pay the success fee directly to the representatives – this simplifies the proceedings for the applicants by eliminating the need to make any additional payments after receiving the compensation. The representative will send separate requests for legal fees to those applicants who have received the compensation without directly paying the success fee. As the additional compensation was received as a result of a long and expensive court dispute, the representatives are entitled to remuneration for the legal services provided.
The county court has confirmed that Telia should bear all the procedural costs, and currently only the total amount of the costs is still under dispute. The representatives of the applicants have asked the court to require Telia to pay all procedural costs of the proceedings, including the success fee owed to the representatives. If the court obliges Telia to pay these costs and the judgment enters into force, Telia also has to compensate the applicants for all legal fees paid to the representatives appointed by court.
In summary, we recommend that former minority shareholders of Eesti Telekom send the application form to Telia to enable them to be paid some of the compensation owed to them more quickly, as it is likely that it will still take some time for the court dispute to be resolved. The next hearing in this matter is scheduled for 13 November 2017 at 11:00 in Harju County Court. However, this may not be the final hearing in the case, because the court has repeatedly asked Telia’s management board members to attend the hearings in order to explain the factual circumstances of the case and discuss a possible compromise. According to Telia’s lawyer, the management board members could not participate in the previous hearings and none of the members of the management board will attend the hearing scheduled for November 13. Therefore, the court may find it necessary to schedule another hearing to hear the Telia management board members.
Carri Ginter, phone +372 5 018 498, firstname.lastname@example.org
Reimo Hammerberg, phone +372 5 017 632, email@example.com