Raider capture of Motor Sich: Bohuslaiev on attack on a well-known enterprise

Богдан Петришин

Viacheslav Bohuslaiev, Chief Designer of Motor Sich, assured that he hadn't received an official notification about holding an extraordinary general meeting. Bohuslaiev considers it an attempt of the enterprise raider capture.

It's stated in his official address, published on the website of the plant.

"On December 31, 2020, information appeared on the Internet regarding the convening of an extraordinary general meeting of the Company by certain legal entities as of January 31, 2021. The procedure by which these individuals try to convene a meeting is accompanied by numerous violations of the law. Neither the Company, nor I, as its shareholder (president, chief designer – ed.), nor other shareholders, employees of JSC "Motor Sich" received any official notifications about the meeting from these persons. As a result, shareholders are deprived of the legal right to review the materials of the meeting, make their proposals to their agenda, nominate their candidacies to the management of the Company and participate in other important corporate issues," the statement reads.

Bohuslaiev also noted that the meeting, initiated by Chinese investors' Skyrizon Aircraft Holdings Limited and MS-4 LLC of Ukrainian entrepreneur Oleksandr Yaroslavskyi, would be held outside the enterprise.

"Their illegally proposed agenda for re-electing management bodies indicates their purpose to remove the current board of directors from the current management of financial activities of the Company and gain control over it. Thus, there's an illegal attempt to raid JSC "Motor Sich" for further destruction of its unique industrial complex," the "Motor Sich" website reads.

The president of the company assured that he intended to defend his rights legally and called on all shareholders to do so.

To recap, the US Department of Commerce has imposed sanctions against the Chinese company Skyrizon Aircraft Holdings Limited, an investor in the Ukrainian PJSC Motor Sich.

Zelensky approves sanctions against Chinese investors in the Motor Sich case

The President of Ukraine Volodymyr Zelenskyi signed Decree №29/2021, which imposes sanctions against Chinese investors of the Ukrainian company Motor Sich.

With his decree, Zelenskyi put into effect the decision of the National Security and Defense Council of Ukraine on January 28. The decree comes into force from the publication date. The sanctions list is published on the president's website in two annexes of the National Security and Defense Council. One of the three annexes is classified.

According to Annex II to the decision of the National Security and Defense Council of December 14 last year, sanctions were imposed on four Chinese companies, investors of Motor Sich: Skyrizon Aircraft Holdings Limited, Hong Kong Skyrizon Holdings Limited, Beijing Skyrizon Aviation Industry Investment, Beijing Xinwei Technology Group. Sanctions were imposed for three years, including restrictive measures like blocking assets, restricting trade, and preventing the outflow of capital from Ukraine. Sanctions prohibit companies from using property in Ukraine, partially or completely cease transit of resources, flights, and transportation through the country.

Annex I lists Wang Jin, a Chinese citizen (he is listed on the DCH website as the main shareholder of Beijing Xinwei Technology Group and Beijing Skyrizon). He was also included in the list of sanctions; he was banned from entering Ukraine. Restrictions were imposed at the suggestion of the Security Service of Ukraine, and control over implementing the decision was placed on the Secretary of the National Security and Defense Council Oleksii Danilov.

Zelenskyi assigned responsibilities for implementing and monitoring sanctions to the Cabinet of Ministers, the Security Service, and the National Bank of Ukraine. The Ministry of Foreign Affairs of Ukraine must inform the competent authorities of the European Union, the United States of America, and other states about imposing sanctions and ask them about applying similar restrictive measures, according to the decree of the President of Ukraine.

Before that, on January 15, 2021, the Bureau of Industry and Security of the US Department of Commerce included Skyrizon in the list of "end military users for whom a special regime of cooperation with American companies has been established." In response, the company stated the inadmissibility of politicization of trade and economic relations and unjustified pressure on enterprises from China.

Note

In April 2018, the Shevchenkivskyi District Court of Kyiv seized 56% of Motor Sich shares owned by foreign investors. Until the end of the pre-trial investigation, the court prohibited any actions with the seized assets that could lead to a change of ownership. The shares are still under arrest.

In 2019, the company's former shareholder Viacheslav Bohuslaiev confirmed to Ukrinform that he had sold the company to a Chinese company. According to the entrepreneur, the Chinese pledged to invest $250 million in the company within two years.

The Antimonopoly Committee of Ukraine has repeatedly rejected the application of Chinese investors to purchase Motor Sich. Skyrizon tried to obtain such a permit together with the DCH, Ukrainian entrepreneur Oleksandr Yaroslavskyi's company. After the AMCU rejected another application in November 2020, the Chinese company stated that it intended to sue Ukraine for $3.5 billion for lost investments in Motor Sich.

The United States opposed the sale of Motor Sich to Chinese investors. During a visit to Ukraine in 2019, then-US National Security Adviser John Bolton said he would try to convince the Ukrainian authorities that cooperation with China was dangerous.

In early August 2020, the DCH Group announced the beginning of a partnership with Chinese investors representing Skyrizon Aircraft Holdings Limited. However, the Antimonopoly Committee of Ukraine didn't allow DCH, owned by Oleksandr Yaroslavskyi, to buy shares in the Zaporizhzhia plant.