Gen-I’s operations have been controversial for years; there are whispers that the state-owned energy giant is involved in both the abuse of its monopoly position and taxpayers’ money. Behind the complex ownership structure, where various owners and shares of GEN-I intertwine, lies a fundamental legal question: who actually controls the company – and, more importantly, is the current arrangement even legal? A legal analysis published on the Zanima.me portal concludes that Gen-I is a kind of ownership Potemkin village, managed behind a façade of legitimacy by a group of oligarchs.
The company GEN-I is formally 50% owned by GEN energija, which is 100% state-owned, and by GEN-EL. But here the matter gets complicated: GEN-EL is in turn 50% owned by GEN-I. This is so-called circular ownership, where the two companies own stakes in each other. According to the documents, including the articles of association certified by notary Barbara Andrič Velkovrh, both owners are supposed to be equal and without the possibility of one controlling the other. Such corporate structures are permitted (a similar structure existed for a time between Porsche and Volkswagen), but the question is why they are created at all.
On paper, everything appears balanced. Both partners hold 50% of the shares, profits are split equally, the supervisory board is composed on a parity basis, and key decisions are taken by consensus. The articles of association even explicitly state that management operates “without the possibility of one partner controlling the company.” But this is precisely where the key legal issue arises.
What does the Companies Act say?
The Slovenian Companies Act (ZGD-1) in Article 554 imposes restrictions on companies that are mutually ownership-linked. If two companies hold stakes in each other, neither may exercise more than 25% of the voting rights in the other. The purpose of this rule is to prevent company managements from evading owner control and mutually reinforcing their positions.
Crucially, this is a mandatory – i.e., cogent – rule. This means that the partners cannot exclude or modify it by mutual agreement, even if they write it into the articles of association.
When we apply this rule to the case of GEN-I and GEN-EL, the picture becomes quite different from the one presented by the formal arrangement. Although GEN-EL holds a 50% stake in GEN-I, it can actually vote with a maximum of only 25%. The remaining stake is legally “frozen” and does not count in decision-making.
This has significant consequences. At the general meeting of GEN-I, there are therefore not 100% of the votes available, but only 75%. In this ratio, GEN energija, with its 50%, actually holds two-thirds of the voting power. This means a stable and permanent majority that arises directly from the law, not from any agreement between the partners.
The manoeuvre that pushed the state out of decision-making
From a legal perspective, GEN energija – and thus indirectly the state – should therefore control GEN-I. This includes appointing management, supervising operations and responsibility for directing the company.
In practice, however, the picture is different. According to the analysis and public reports, the company GEN-I is actually not under the control of any of the owners. What is more, there are indications that its management plays the key role, securing influence over the other side – GEN-EL – through ownership links.
This creates a situation that legal theory describes as the autonomous entrenchment of management – a state in which company management operates practically without effective owner supervision. Simply put, private management has, through corporate measures, become the de facto “owner” of the company, pushing the state (or taxpayers) out of decision-making.
Is the articles of association even null and void?
Such a situation raises another important question: the validity of the articles of association. If they contain provisions that contradict mandatory statutory rules, those provisions may be null and void. This applies particularly to parts that allow GEN-EL greater influence than the law permits, or that presuppose complete equality between the two partners.
The paradox of the whole story is obvious. The structure, which was clearly designed to balance power and prevent state oversight, is turned in exactly the opposite direction by the statutory rules. The law itself establishes the dominance of management, regardless of what the articles of association say.
Is this preparation for tycoon privatization?
The analysis clearly shows the following: in Gen-I there exists a structure that can in practice weaken direct state control; there is a risk that management has more actual influence than it is legally allowed; and such a situation can be problematic from the perspective of governance and supervision. These are facts that lawyers and prosecutors will have to confront.
The next important question in this equation is: has management, through this instrument, abused the resources of the state-owned company? What happened to the cash transfers to the Serbian branch of Gen-I that were withdrawn by Martin Berishaj? Will Robert Golob and his circle carry out a tycoon privatization similar to those carried out at the end of the 1990s and beginning of the 2000s by the first national-interest tycoons from Kučan’s “Forum 21”? The key question is this: is the current structure of the company such that it pushes out the state, or indirectly the taxpayers, and gives preference to a narrow circle of Gen-I insiders gathered around Robert Golob?
All these questions will receive their epilogue after the elections, when Robert Golob will be just an ordinary citizen and no longer a man who controls the entire repressive apparatus of the state, similar to Aleksander Lukashenko and Vladimir Putin.
I. K.
