OREANDA-NEWS. On July 13, 2007 UniCredit S.p.A. has instituted an action to challenge the resolution adopted at the 130th Annual General Meeting of HypoVereinsbank on June 27, 2007 in favour of having claims for dam-ages asserted by a special representative pursuant to Sect. 147 Sub-sect. 2 of the [German] Stock Corporation Act, reported the press-centre of  HypoVereinsbank.

In supplementation of the agenda of the Annual General Meeting, at which a resolution for the transfer of the minority shareholders of HypoVereinsbank to UniCredit had been adopted, several minority shareholders had filed a motion to assert claims for damages. This motion was directed against the current and former members of the Management Board and Supervisory Board of HypoVereinsbank as well as against UniCredit S.p.A. and its affiliates, including the respective legal representatives. The motion was approved under agenda item 10. As a result, Dr. Thomas Heidel of Bonn was simultaneously appointed as special representative.

He is to assert alleged claims for damages relating to financial losses sustained due to the sale of equity interests in Bank Austria Creditanstalt AG, in determining the appropriate selling price, in connection with the non-performance of an auction process as well as on account of the Business Combination Agreement entered into with UniCredit.

The Management Board of HypoVereinsbank and UniCredit remain convinced that the claims for damages alleged in the resolution on agenda item 10 are unfounded. The Management bodies of HypoVereinsbank took careful and prudent decisions regarding the sale of Bank Austria Creditanstalt and of the CEE holdings and did so only after comprehensive consultancy and discussions had taken place. The transactions were not only based on an expert opinion from the auditing company PricewaterhouseCoopers, but also on a fairness opinion expressed by a highly reputable investment bank.

None of the auditing companies that subsequently subjected this matter to critical scrutiny, i.e. KPMG as auditors of the dependency report, Ernst & Young as independent appraisers and Warth & Klein as auditors appointed by court to verify the appropriateness of the transactions, has come to the conclusion that the Management Board had sold the shares in Bank Austria Creditanstalt AG and the equity interests in the other units to UniCredit S.p.A. at a reduced value. The cash compensation fixed in return for the transfer of the minority shareholders stakes to UniCredit is therefore based on a fair valuation.

UniCredit and the Management Board of HypoVereinsbank explicitly emphasise that they respect the resolutions adopted at the Annual General Meeting. Nevertheless, at present the Management Board of HypoVereinsbank will not implement the resolution adopted at the Annual General Meeting on agenda item 10 as there are substantial doubts concerning the lawfulness of the resolution. It is the express duty of the Management Board to verify the lawfulness of resolutions adopted at a General Meeting and not to implement any unlawful resolutions.

UniCredit has filed an action to challenge this resolution. In the opinion of both banks, the resolution is far too indefinite in terms of its content, for instance with regard to the circle of entities and persons against whom the alleged claims for damages are to be made. In addition, in view of the circle of addressees and the actions already pending to challenge the resolution for the transfer of Bank Austria Creditanstalt, the assertion of claims for damages represents a violation of the duty of loyalty to which all shareholders are obliged. Moreover, the authority and privileges of the special representative have neither been clearly worded in legislative terms, nor is there a clear body of case law on the subject. Moreover, hardly any relevant practical experience has been acquired in this context, and in the lending industry the appointment of a special representative would even constitute a precedent. Against the backdrop of the particular sensitivity of banking operations, therefore, a review would appear to be urgently required.

Notwithstanding the above, the Management Board of HypoVereinsbank has already conducted an initial talk with Dr. Heidel and expressed its intention not to deny any form of cooperation in principle. Accordingly, the Management Board has already made an extensive volume of documents available, without prejudice to its legal position.