Kernel Holding violated principles of Good Practices for companies listed on WSE

29 January 2024

Kernel Holding violated the principles of Good Practices for companies listed on the Warsaw Stock Exchange - the independent committee on corporate governance of the WSE.

The Independent Corporate Governance Committee operating at the Warsaw Stock Exchange has published its position regarding Kernel Holding's violation of Rule 4.13 of the WSE 2021 Rules of Good Practice for Listed Companies, reports

The Committee notes that in the introduction to Chapter 4 of Good Practices of WSE Listed Companies 2021, it is emphasized that when making decisions, listed companies should first of all take into account respect for the "legitimate interests of certain groups of investors".

At the same time, in the opinion of the Committee, by carrying out a new issue of shares in August 2023, the company violated the principles on the basis of which the capital market functions, and the fundamental rights of the company's shareholders, including the right to equal treatment.

The shares issue carried out by the company served the specific goals of one of the shareholders, thus denying the essence of a public company as a commonality of interests of separate groups of its owners, including minority shareholders and financial shareholders who manage the funds entrusted to them. Such practice cannot be accepted by the Committee under any circumstances, we read in the statement.

Kernel Holding issued 216 million shares in August 2023, and the share issue price was set at $0.2777 (1.15 PLN), which was well below the market price of the company's shares at the time. The issue was one of the unfriendly steps taken by Kernel founder Andriy Verevskyi and the company's Board of Directors in relation to other shareholders.

The WSE Advisory Committee on Corporate Governance is a permanent advisory body on the application of the principles of corporate governance on the markets managed by the WSE. It includes representatives of Polish financial regulatory bodies, CFA Society Poland, different Polish ministries and agencies.

According to our preliminary estimates, the decision of the corporate governance committee will not have additional legal consequences for the company, however, it may be taken into account during consideration of the legal cases of Kernel's minority shareholders to the company's Board of Directors, as well as considering Kernel's application for delisting from the Warsaw Stock Exchange. There is also, of course, an impact on the company's overall reputation.

As a reminder during October-December 2023, the Kernel group demonstrated quite strong operational results, the analysis of which is given at the link.

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