Businessman back in court over Staburadze

Mar 21, 2002
Ilze Arklina

The ongoing court battle between Icelandic businessman Gisli Reynisson and Latvia's equity market watchdog over shares in the Latvian confectionary Staburadze may start anew as the Supreme Court handed the case back to the Riga District Court on March 13.

Reynisson ran afoul of the Financial and Capital Markets Commission when it ruled he indirectly controlled more than half of Staburadze's shares.

Under Latvian equity market regulations he would have to make a buyout offer to the company's minority shareholders if he held a majority share.

Reynisson challenged the decision and won in district court.

In its March 13 ruling Latvia's Supreme Court said the district court did not properly consider Latvian law.

The decision to revisit the case is positive for the Latvian securities market, said Sergejs Popovs, head of the securities department at Baltijas Tranzitu Banka.

He said the case could go a long way to help set legal precedents that protect small shareholders.

"Foreign investors would feel much safer over their invested funds in Latvian companies," he told BNS "Undoubtedly this decision will increase the value of Staburadze confectionary shares on the stock market."

Reynisson directly controlled 40 percent of Staburadze's shares through his company Nordic Food, which has since been sold to an investment firm - Tomset Ventures - in which Reynisson is an owner.

Reynisson's battle with the authorities began in late 2000 when Staburadze's second-largest shareholder sold its holding - 14. 4 percent - to businessman Tryggvi Hallvardson in a deal reportedly brokered by Reynisson.

The Securities and Capital Markets Commission ruled that he was the majority shareholder.

Reynisson challenged the ruling.

The district court decided in favor of Reynisson, saying he did not personally own a single Staburadze share.

But his company, Nordic Industries, did.

The Supreme Court ruled that the district court did not fully consider the evidence presented against Reynisson.

Reynisson said he just wanted the case to be resolved and get on with his business.

"Uncertainties are one of the worst things in business as there's no possibility to plan development and make decisions," his press secretary Ineta Rudzite quoted him as saying. "This situation is like driving with brakes on."

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