INTRODUCTION

From the humble beginnings at that time, the PanSlovenian Shareholders Association (VZMD) quickly grew into a movement that adopted provisions on formalizing the legal status of the Association, the Statute and its presidency in the beginning of 2006. Other remaining organs; the Executive Board, the Supervisory Board and the Court of Honour were elected at the Assembly that took place on June of 2006.

Since then, the Association opened its office in the centre of Ljubljana, which is open during workdays from 8 AM to 3 PM, and is always diligent with meetings, consultations, education, numerous phone calls and constant ongoing projects of VZMD. As a mere illustration, VZMD sent over a hundred thousand letters, received more than ten thousand phone calls, more than twenty thousand letters and more than thirty thousand individuals directly joined VZMD activities and projects so far…

We effectively organised and institutionalised the interests of small shareholders in several economic companies and in Slovenia in general. An astonishing amount of work has been done and we can be very proud of these achievements. We became a credible and regarded institution when it comes to framing of laws and accepting decisions on the future of several economic companies, as well as the broader social context. The brief summary of our activities in 2007 is the following:

A case of successful linking of small shareholders - LIP Radomlje Section

The small shareholders of LIP Radomlje found themselves on serious test, as they did not know how to obstruct the managers’ takeover for inadmissible price. With an intention to stop the sale, the small group of shareholders sent a letter to all shareholders of LIP Radomlje and the following step was closer co-operation with PanSlovenian Shareholders Association (VZMD). In addition, they resolved to establish the VZMD Section of VIP Radomlje. Over 253 small shareholders, who owned together more than 31 % of the company share, joined the Section. Their share was sold successfully to the strategic partner Mercata, d.d., for over four-times value of the original price. Management of the LIP Radomlje is now trying to liquidate the company using legally questionable methods, to move the production to Bosnia and Herzegovina and to sell out real estate property. The strategic partner is successfully thwarting these plans and momentarily numerous law-suits are taking place.

Slovenia’s attitude towards small shareholders - cheated workers, that sanitized Slovenian iron industry with their salaries

VZMD has also actively involved in solving problems of steel companies’ small shareholders. Although steelmaking companies were making profits, small shareholders did not get their share in profits distribution. All the way since 1998, they did not have their representative in the organs of management and supervision as they could only act as 'teasers'. Among others, the president of VZMD participated in indignation - meeting in front of governmental palace, where he addressed and supported the mass of impaired small shareholders of Slovenian steel industry.

Turbulent assemblies of Lameta - an authorized company, that alienated itself from its purpose

In january the president of VZMD, authorised by small sharholders, actively participated at stirring assembly of Lameta, which is one out of three companies, authorized by Slovenske železarne (SIJ), that gathers 5.437 small shareholders. At the assembly some of the motions, introduced by the management and would not be in the interest of small shareholders, were rejected. The president of VZMD was also negotiating about possibilities to establish the Section of small shareholders of Lameta and other authorized companies inside of SIJ sistem.

An exciting assembly of Terme with inadmissible practice

Another stirring event took place in january, the assembly of Terme, d.d., which president of VZMD also attended as the deputy of small shareholders. The assembly was marked by the squeeze - out of small shareholders, several complications, inadmissible actions of management’s deputy and president of assembly, and seriously concernable was the nonconsideration of small shareholders’ authorizations. About possibilities for small shareholders president of VZMD also spoke with representative of majority owner of Terme, d.d., from Austria (Heraklit AG), Richard Kroner, Ph.D.

Pomorska company - another authorized company in the nation’s interest - lawsuits and charges for stock issuing

Pomorska družba, d.d., was established in 1996 with an intention of solving the problem of outstanding depts towards workers in Splošna plovba, d.o.o. and Genshipping Corporation from Monrovia. Workers exchanged their depts for shares of the authorized company, Pomorska družba, d.d., and became 20 % owners of Splošna plovba, d.o.o. An insight into economic operation of the company was anabled to the workers, and the director did not register a sharholders book in KDD. Small shareholders and VZMD made several law-suits, and in 2007 the company and its director were charged with fine.

Aktiva Invest - open capitalization, squeeze-out and express payment for the VZMD shareholder agreement signers

Aktiva Invest is considered to be the first oustanding project of VZMD, because this was the first time that small shareholders organized and step together towards anticipated growth of the share value from 4,17 € to 4.170 €. Consequently would be those, who did not own enough shares, pay out for 1,25 € per share. Owing to the preassure Aktiva Invest pulled back to the starting point and after two years they managed to squeeze - out small shareholders in the proces of open decapitalizacion for the pirce of 6,26 € per share. In this procedure the main role was also played by VZMD.

Important role of VZMD in the case of Vzajemna, that directly concerns half of the Slovenian citizens

Vzajemna, d.v.z., is the largest medical insuranece company in Slovenia, which offers additional medical insurance and covers over 80 % of entire insured population. Vzajemna arranged merger with AdriaticSlovenika, but the small shareholders did not approve it, because of incorrect exchange ratio and the risk of righteous social sistem destruction. For that, was VZMD exposed to media blockade and we have to pay for numerous advertisments in order to present our second thoughts and opposite oppinions. In spite of blockade and continuous agitations in media we managed to draw attention of governmental representatives, who obstructed the harmful merger with passing a particular law. Thus, VZMD defended the rights of almost every other citizen of Republic of Slovenia.

Vipa Holding - Assembly’s counter proposal and endeavours for a fair exit

On the march 29th,the assembly of Vipa Holding, d.d. was convened and each member of the VZMD Vipa Holding Section received an authorization to register for participation and voting. At the assembly, the deputy of the Section, Kristjan Verbič, M. Sc., put in a counter proposal, which was unfortunately denied.

Satisfied small shareholders of ETRA 33, KAD and SOD richer for 900.000 €, meritorious VZMD reported

The members of ETRA 33 Section at VZMD received an important Statement about take-over offer by Zlata Moneta II, on march of 30th. As the price offered was resolutely too low, they demanded of SOD and KAD to sell their shares in ETRA 33 for fair price. They were delighted to hear that SOD and KAD followed the arguments interposed by the Section, and gained a new competitive offer by Pom-Invest, which offered 20 % more than Zlata Moneta II.

Appointment of the Supervisory Board members of Petrol and Assembly’s counter proposal

On 10th of November 2006, VZMD mediated to Petrol the proposal for appointment of Miran Mejak, Ph. D., for the member of Supervisory Council. That way he would be able to represent a considerable part of small shareholders in proprietorial structure, but Petrol proposed another member. In period previous to the last assembly one of the significant questions was also planning the transmission of Petrol’s resources in the matter of establishing a joint company with Lukoil.

Pioneering contract between Mercator and VZMD on gathering authorizations for Assembly

Accordant with recommendations of Code for management of public shareholders companies, Mercator, d.d., in the biginning of June informed their shareholders and public that they signed a contract about counseling and organized collecting of shareholders’ authorizations for the 13th regular assembly, with VZMD on Maj 31st. According to this contract, which by all means is pioneer in our country, Mercator and VZMD each selected three deputies, who small shareholders could authorize to carry out their rights.

Assembly of Intereuropa - counter proposal on disputable acquisition of own shares

At the 17th annual assembly of Intereuropa, d.d., shareholders among others decided upon authorization of management to gain 10 % of it’s own shares within 18 months. Against this authorization the deputy of Intereuropa Section at VZMD passed a counter proposal, which the management did not agree with. The explanation for unequal treatment of the shareholders has not been presented.

Istrabenz squeeze-out from Droga Kolinska - judicial authentication of a fair price and an important complaint for the future practice of all squeeze-outs

On May 21st the Assembly of Droga Kolinska, d.d., accepted the resolution that all shares, which were not owned by Istrabenz, the Holding group, should be transmitted to it through payment of redundancy. Because the offered price was inadmissible, the judicial trial of the redundancy was submitted, but the Court of law in Koper rejected it entirely. VZMD and submitters of the trial are now anxiously waiting for the decision of the Complaints court.

Mercators positive practice of constructive negotiations and satisfied small shareholders of Pekarne Grosuplje

In may also the Section of small shareholders of Pekarne Grosuplje was established at VZMD. The gathered small shareholders agreed that they will not sell their share for the low price, offered by one of the stockbrokers’ concerns. VZMD prepared shareholders’ agreement and formed the parcel of shares, which would enable shareholders’ withdrawal from proprietorial structure of Pekarne Grosuplje for fair price. After months of hard and sustainable, but constructive negotiations, the final agreement beetwen the VZMD, the Section of small shareholders of Pekarne Grosuplje and Mercator was accepted in July. This is a shining example of how it is possible to achieve all-round contentment in Slovenian capital reality.

Iskra Avtoelektrika - counter proposal, inadmissible actions and demand for an authentic explanation of the law

Joint Stock Company Avtoelektra convened the 13th Assembly of shareholders on August 22nd at which also the secretary of VZMD was present. As the deputy of one of the shareholders of the company, the secretary passed the counter proposal, because the company should not be acquiring its own shares exclusively with the intention of sale.

Strenia - lawsuits, demand for a special revision and a compensation, lawsuit against the Administration and the Supervisory Board members

The authorized company SCT Strojegradnje owned over 42 % of Strenia, d.d., but did not have any impact on its economic operation. The shareholders apply to VZMD in order to come out of the shareholders’ structure of the company. Through negotiations with the major owner, professional team of VZMD achieved, that mutual charges were dropped and that shares of the authorized company were sold to Strenia for three-times value of original price. This is how 1985 shareholders gained proper compensation for the shares, that were unliquid and highly undervaluated. The business was closed in January of 2008.

Delfi - mass and thoughtful appearance on the Assembly and endeavours for a fair price

VZMD carried out the collecting of authorizations and assured organized performance of small shareholders at the Delpfi assembly on August 31st. At the assembly the president of VZMD Kristjan Verbič, M. Sc., and representative of Delfi Section at VZMD Alekseander S. Kucler, M. Sc., warned about questionable inscriptions in shareholder’s registry of the company directly before the assembly. They also pointed out irregularities in the case of appointing members of Supervisory council for the four years mandate. With a purpose of uniting in the case of sale, VZMD sent shareholders’ agreement to all shareholders.

Assembly of SCT - squeeze-out and demand for judicial authentication of a fair price

At almost the same time as the Delfi assembly, the SCT assembly was taking place on different location. Kristjan Verbič, M. Sc., and Alekseander S. Kucler, M. Sc., participated also at that assembly, and VZMD announced judicial authentication on resolution on transference of all SCT shares to the principal shareholder Delfi company, and resolution on distribution of profit.

Velana - record rise of share price with the shareholder agreement sending

After the 13th assembly of Velana, d.d., initiative group of Section of small shareholders of Velana at VZMD decided to form shareholders’ agreement together with VZMD and to join VZMD with a purpose to sale shares for the fair price. In that way, the first step towards clearly defined goals was sucessfuly made. Among others, after years of stgnation and misery, the value of Velana shares grew for ten times of the original value in just a few days, and for the first time came up to the values, which were represented as fair at shareholders’ agreement.

Alpetour Bandag - exit of all small shareholders at a fair price

With an aim of exercising interests of small shareholders of Alpetour Bandag, d.d., in September the small shareholders received contract on forming and selling parcel of shares. In the beginning of October all shareholders of mentioneg company signed their contracts and for they shares received an entire purchase price. One-year negotiations, carried through by the secretary of VZMD and the deputy of Alpetour Bandag Section, were completed successfully .

In the represented year of 2007 VZMD brought an action against resolutions, passed by the assemblies of Pomorska družba, d.d., Kurivo Nova Gorica, d.d., Aktiva Naložbe, and others, and also put in some claims for judicial authentication of a fair pay-out in Donit Tesnit, d.d., Droga - Kolinska, d.d., Ilirija, d.d., etc.

Along all the activities mentioned, the president of VZMD Kristjan Verbič, M. Sc., and vice president Ludvik Toplak, Ph. D., participated at the Euroshareholders General Meeting in Brussels, and the president of VZMD was also present at Euroshareholders General Meeting in Villnius on the 15th of June. In October Kristjan Verbič, M. Sc., for the first time joined the General Meeting of World Federation of Investors Corporation (WFIC).

On June 22nd the VZMD Association established the Institute. The first council of the Institut in September unanimously appointed representative of VZMD Miran Mejak, Ph. D., for president, and adopted the Statut of the Institute.

CONCLUSION

We are especially glad of the fact that we managed to establish a qualitative dialog with practically all actors on the capital market in Slovenia. Simultaneously we also managed to place our endeavours on the international scene.

The tasks that lie ahead are growing in numbers with each day and they are also gaining on responsibility and pretentiousness. This can be justified as another conformation of the usefulness and necessity for organised actions of small shareholder and the growth and development of our Association. In order to deal with these challenges at hand, the work of VZMD has been fortified with more competent outside associates and pristine experts and we also started work on constructing an integral information system.

In the end, it is worth mentioning that our Association does not enjoy an all-wide support, mainly because of its consistency, the visible successes and effectiveness. On the contrary, our activities are frequently conflicted with the interests of those who hold economic power and media influence. Thus, the representatives of VZMD are periodically subjected to serious pressures and attempts of discreditation.

Yet, like we managed to establish VZMD as a regarded institution, without budged or public assets and despite the pressures and the not-so-pleasant circumstances, we will continue to follow our goals, visions and mission with an even greater spirit. Furthermore, VZMD will continuously strive and endeavour for; the protection of interests of small shareholders, the balancing of decision making processes within joint-stock companies, the general improvement of the capital market and last but not least, for a more favourable position for individuals and society.