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On 30 July 2007, a lawsuit was filed by Manchester Securities Corporation ("MSC"), with the registered office in New York, against PZU regarding cancellation of the General Meeting of Shareholders of PZU’s Resolution no. 8/2007 of 30 June 2007 on distribution of PZUs’ profit for 2006 as non-compliant with best practices and acting to the detriment of the plaintiff, a shareholder of PZU.
The contested resolution of the General Meeting of Shareholders of PZU distributed the 2006 profit of PLN 3,280,883 thousand in the following manner:
- PLN 3,260,883 thousand to the supplementary capital;
- PLN 20,000 thousand to the Social Benefits Fund.
Through its ruling, on 22 January 2010, the District Court in Warsaw cancelled the aforementioned resolution. PZU appealed against the judgment in its entirety, including final appeal to the Supreme Court with respect to the aforementioned decision, which dismissed the cassation complaint on 27 March 2013. The judgment is final and non-appealable.
PZU believes that cancelation of the above GSM resolution does not give rise to shareholders’ claim for dividend.
Following the decision cancelling resolution No. 8/2007 becoming effective, the agenda of the PZU GSM of 30 May 2012 included a Note regarding distribution of profit for 2006 in a manner corresponding to the cancelled resolution No 8/2007. Manchester Securities Corporation objected to the resolution of 30 May 2012, which was recorded in the minutes.
On 20 August 2012, PZU received a copy of the lawsuit filed by MSC with the District Court in Warsaw, which stated that said company seeks the cancellation of the resolution of the General Meeting of Shareholders of PZU dated 30 May 2012 on the distribution of profit for 2006, and the value of the subject of dispute was determined by the plaintiff at the amount of PLN 5,054 thousand. PZU filed its response to the lawsuit seeking the dismissal of the lawsuit in its entirety.
On 17 December 2013, the District Court pronounced a judgment whereby the claims were accepted in their entirety and the costs of the proceedings were awarded from PZU to MSC. On 4 March 2014, PZU appealed against the judgment in its entirety. On 11 February 2015, the Appellate Court in Warsaw passed a judgment that changed the judgment of the District Court dated 17 December 2013 in its entirety, dismissed the action filed by MSC and ordered MSC to pay the costs of the proceedings. The judgment of the Appellate Court is final and non-appealable. MSC filed a cassation appeal on 9 June 2015 against the judgment of the Appellate Court in its entirety. PZU filed its response to the cassation appeal and appealed to the Supreme Court to refuse accepting the cassation appeal, or dismiss it.
On 16 December 2014, MSC requested PZU in the letter to pay PLN 264,865 thousand of compensation due to the cancellation of the resolution No 8/2007 of the General Meeting of Shareholders of PZU dated 30 June 2007 on the distribution of profit of PZU for 2006. PZU refused to fulfill the obligation.
On 23 September 2015, PZU received a copy of a motion with attachments regarding the action initiated by MSC against PZU for the payment of PLN 169,328 thousand with statutory interest accrued from 2 January 2015 until the date of the payment. The action includes a claim for compensation for the deprivation of MSC and J.P. Morgan (MSC acquired the claim from J.P. Morgan), as minority shareholders of PZU, a share in the profit for the year 2006, in connection with a Resolution no 8/2007 adopted by the General Shareholders' Meeting of PZU on 30 July 2007. The case is being handled by the District Court in Warsaw, XX Business Division. On 18 December 2015, PZU filed its response to the lawsuit seeking the dismissal of the lawsuit in its entirety.
According to the Management Board, MSC's claims are unfounded. As a result, as at 31 December 2015, no changes in the presentation of PZU capitals were made that may result from cancellation of the resolution of the General Meeting of Shareholders on the distribution of profit for 2006, including "Supplementary capital" and "Previous year profit (loss)". The funds appropriated to the Company’s Social Benefits Fund were not adjusted.
53.3.1 Other demands for payment concerning the distribution of profit of PZU for 2006
On 17 December 2014, Wspólna Reprezentacja SA called PZU to pay the amount of PLN 56,281 thousand and the amount of PLN 618 thousand as claims compensation acquired from the shareholders as a response to their deprivation of the right to a share in the profit of PZU. PZU refused to fulfill the obligation.
Apart from the above mentioned documents, the shareholders or the former shareholders presented PZU with a request for payment based on the facts presented above. The parties requesting the payment did not indicate specific amounts, but a number of shares, or simply request the payment. PZU submitted a response in writing indicating that such claims did not exist and they would not be taken into account.
53.3.2 Other legal proceedings concerning the distribution of profit of PZU for 2006
On 19 January 2015, the District Court of Warsaw delivered a copy of a motion with attachments regarding the action initiated by Wspólna Reprezentacja SA for a summons to a conciliation hearing concerning the amount of PLN 56,281 thousand. At the hearing on 19 February 2015, PZU refused to conclude a settlement.
On 2 February 2015, the District Court of Warsaw delivered a copy of a motion of MSC for a summons to a conciliation hearing concerning the amount of PLN 264,865 thousand. The claim covered in the application is tantamount to the request filed by MSC on 16 December 2014. At the hearing on 24 February 2015, PZU refused to conclude a settlement.
PZU received other copies of motions to summon a conciliation hearing concerning settlement agreements consisting in the payment of the amount due to the share in the profit of PZU for 2006. Some of the proceedings have already ended. PZU refused the conciliation proposal indicating that such claims did not exist and they would not be taken into account.
7 legal actions were initiated against PZU for the payment of dividends or compensation. PZU consistently responds to such requests demanding their cancellation in their entirety. In four proceedings, The District Course for Warszawa Śródmieście in Warsaw dismissed the claims in their entirety (judgments are final). In one case, the District Court discontinued the proceedings due to the withdrawal of the claim (the decision is final).
