AS Baltika fails to comply with requirements for public disclosure of inside information
The Financial Supervision Authority has applied sanctions on AS Baltika for two misdemeanours, fining the company a total of 11,000 euros. The fines were levied on Baltika for releasing inaccurate and misleading information through the NASDAQ OMX Tallinn stock exchange system on 16 December 2011 as well as releasing misleading information on 3 February 2012 and subsequently failing to immediately release information until 29 February 2012.
In doing so, Baltika was in violation of the requirements for public disclosure of inside information. In the Baltika press release of 16 December 2011, entitled “Information on the status of AS Baltika’s net assets and resolutions of the supervisory board”, the company disclosed, inter alia, that thanks to 1.1 million euros of net profit posted in October and November and in connection with conversion of claims of KJK SICAV-SIF claims into an equity instrument, the company’s net assets as at 30 November 2011 stood at over one-half of its share capital volume.
The Financial Supervision Authority’s misdemeanour proceedings established that conversion of claims into an equity instrument had not actually taken place as at 30 November 2011 and that the loan specified in an agreement signed between Baltika and KJK Fund SICAV-SIF should have been recognized in Baltika’s accounting as a financial obligation. Had the alleged conversion of the said claims into an equity instrument not taken place, Baltika’s net asset level would have been in conflict with the requirement set forth in the Commercial Code, which states that a company’s net assets must make up more than half of its share capital.
Baltika also disclosed, in its press release of 16 December 2011, inadequate information on a possible bond issue and its conditions, failing to disclose some of the conditions that were relevant from the standpoint of the bond issue.
On 3 February 2012, Baltika disclosed, via the Tallinn stock exchange information system, a press release entitled “Status of net assets”; according to it, the net capital of the company stood at less half of its share capital, due to a significant loss. Misdemeanour proceedings conducted by the Financial Supervision Authority found that Baltika released inadequate information about major, onetime non-monetary write-offs and provisions that caused a significant loss, failing to promptly disclose the precise circumstances of these events.
The violation of the requirements for disclosing inside information is a misdemeanour under the Securities Market Act, punishable in the case of legal persons by a fine of up to 32,000 euros.
Baltika’s shares have been traded on the Tallinn stock exchange since 5 June 1997.