Photo from UNIAN
The court ruling dated June 27 was published on July 1.
Kyiv's District Administrative Court has suspended the provisions of a Cabinet resolution under which National Joint-Stock Company Naftogaz of Ukraine was to pay 90% of its net profit for 2018 as dividends to the national budget before July 1, 2019.
The relevant court ruling dated June 27 was published on July 1.
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In particular, the court suspended the Cabinet resolution of April 24, 2019, to approve the basic standard of deducting part of profit to pay dividends following business entities' financial and economic activities in 2018, whose charter capital includes the corporate rights of the state. This refers to Naftogaz of Ukraine exclusively in the part where a 90% basic rate for dividends to be paid is set for companies that received more than UAH 50 million (US$1.9 million) in net profit in 2018.
The document approved the basic rate depending on profit received in 2018. That is, if such profit exceeds UAH 50 million, the rate is set at 90%, while it is established at 50% for lower profit received. Noteworthy, the dividends must be paid out no later than July 1 of the year following the reporting period.
At the same time, a 30% rate without reference to profit in 2018 was approved for four business entities, namely State-run Savings Bank of Ukraine, or Oschadbank; Private Joint-Stock Company Ukrhydroenergo; Ukrainian national railways company PJSC Ukrzaliznytsia; and the United Mining and Chemical Company.
The court says such an approach may indicate a violation by the Cabinet of provisions of the Economic Code of Ukraine by securing at the legislative level business entities' unequal position, which, due to the nature of their position or status, should be in equal conditions.
In 2018, Naftogaz, as a separate legal entity, received UAH 13.6 billion (US$519 million) in net profit, according to the company's financial statements.
The court ruling is subject to immediate execution from the date of its adoption, regardless of appeals and the opening of enforcement proceedings.
As UNIAN reported, as early as in August 2019, Naftogaz may halt imports of gas, which is now being purchased for injection into the country's underground storage facilities if it fails to find financial resources for the next month. In particular, the payment of dividends by instalments was considered.
On April 24, the Cabinet of Ministers increased the share of state enterprises' net profit to be channeled into the 2019 national budget from 75% to 90%.