AB Snaigė fined almost EUR 210 thousand by Bank of Lithuania
AB Snaigė has breached the Law on Securities and failed to comply with the Bank of Lithuania’s instruction. The Company was fined almost EUR 207,250 for that; it will also have to eliminate accounting related violations identified.
‘The essence of the violation: the management bodies of AB Snaigė neglected the interests of the Company itself and of its minority shareholders. The Company has breached the provisions of the Law on Securities and failed to comply with our instruction to eliminate the non-conformity,’ says Vytautas Valvonis, Director of the Supervision Service.
Specialists of the Bank of Lithuania have identified that AB Snaigė’s financial statements were in breach of three international accounting standards (‘Presentation of financial statements’, ‘Property, Plant and Equipment’ and ‘Financial instruments. Recognition and Measurement’). The Company was already given a warning for a similar violation early last year. AB Snaigė will have to eliminate the violations identified in the preparation of its annual financial statements 2017.
The management of AB Snaigė did not act in the interests of all of the shareholders and the Company itself, and revealed incorrect information on compliance by AB Snaigė with the Corporate Governance Code for the Companies Listed on NASDAQ OMX Vilnius.
The companies affiliated with the controlling shareholder have been granted by AB Snaigė almost EUR 12 million in loans, on which they do not pay interest accrued since the loan issue date (mid-2012). This money is not used for the Company’s needs and in the interests of its shareholders. Moreover, AB Snaigė, by the decision of its management bodies, has taken out a loan from a bank to the advantage of the companies affiliated with the controlling shareholder, on which it pays interest from its own funds.
In 2016, AB Snaigė inadmissibly used part of its revaluation reserve to cover accumulated losses as a result of which this reserve was reduced by EUR 3.17 million. In the event of an unfavourable turn in the circumstances for the Company because of which its property, plant and equipment would decrease in value, this reserve may become insufficient to cover impairment of its property. Moreover, such impairment would be recorded directly in the profit and loss account and thus would reduce the profit earned or increase the losses borne by the Company.
In addition, the Company’s management have suggested the General Meeting of Shareholders to adopt a decision regarding the payment of dividends having not complied with the compulsory instruction from the Bank of Lithuania (not substantiated the recovery of loans granted to affiliated companies) and having not adequately assessed the Company’s financial condition and operating performance.
The Bank of Lithuania has also instructed AB Snaigė to make public a notice of the violations identified, the fine and the obligations imposed. The Company has already done that.
The company has lodged a complaint about the decision of the Director of the Supervision Service with the Vilnius County Administrative Court.