The Board of Directors of Crnogorska plovidba AD Kotor opposes the announced adoption of the Agreement on Business and Technical Cooperation between Crnogorska plovidba AD Kotor and Barska plovidba AD Bar.
The board announced that at a meeting held on Friday, prior to the Extraordinary Shareholders' Meeting scheduled at the request of the majority shareholder, they considered the draft agreement, and that they are dissatisfied with the fact that they were completely excluded from the process of drafting the draft agreement, and that they were not formally informed of the intentions to adopt the said agreement, nor were they given the opportunity to express their comments on the text thereof.
"The draft agreement on business and technical cooperation is in conflict with the Law on Business Companies, given that the agreement entrusts management to Barska plovidba AD Bar, and in this regard, we remind you that the law clearly stipulates that the Board of Directors manages the company and provides guidelines to the executive director regarding the management of the company's affairs, and that tasks within the competence of the Board of Directors cannot be transferred to other persons.
Article 1 of the Agreement on Business and Technical Cooperation stipulates that the subject of the Agreement is the management of the ships of Crnogorska plovidba AD Kotor, which, among other things, includes support and consulting services in operational matters, while Article 3 states that Crnogorska plovidba AD Kotor is obliged to act according to the instructions of Barska plovidba AD Bar, in connection with the implementation of the aforementioned services. Therefore, the aforementioned articles of the Agreement are contradictory, given that Article 1 stipulates one relationship, in terms of consulting and support, and Article 3 already establishes the opposite relationship of the contracting parties, i.e. one contracting party must act according to the instructions of the other contracting party," the statement of the Board of Directors of Crnogorska plovidba, which was submitted to the media by the Chairman of the Board, Jovo Lazarević, states.
In addition to the above, the statement emphasizes, it is unclear how the management bodies of Barska plovidba AD Bar can advise, or give instructions to the management bodies of Crnogorska plovidba AD Kotor, given that, as they say, according to the publicly available biographies of the members of the Board of Directors and the Executive Director of Barska plovidba AD Bar, none of the members of the Board of Directors, nor the Executive Director, have previous work experience in the maritime industry, while the members of the Board of Directors of Crnogorska plovidba AD Kotor are two long-distance captains, a chief engineer and a nautical officer, most of whom have decades of experience working on ships.
"It is particularly unclear why it is necessary for Barska plovidba AD Kotor to advise and give instructions to Crnogorska plovidba AD Kotor, when, by analyzing business data for the period from 2021 to the end of 2024, it can be seen that Crnogorska plovidba AD Kotor achieved a positive income statement score of 3,5 million in the aforementioned period, and Barska plovidba AD Bar achieved a negative score of 730 thousand euros, despite the fact that the ships of Barska plovidba AD Bar are two and four years younger than the ships of Crnogorska plovidba AD Kotor, and have a greater carrying capacity and a more favorable draft, as a result of which the ships of Barska plovidba AD Bar are valued 20%-25% higher on the maritime market."
Also, the proposed contract, contrary to internationally known ship management contracts, does not specify a number of issues from key segments of ship management, i.e. technical management and maintenance of ships, commercial and personnel affairs, and due to the specifics of shipping business, it is certain that the failure to define the aforementioned key segments of ship management, and the relationship of responsibility of the contracting parties, will certainly lead to difficulties in business," the statement states.
In addition to the above, Article 3, the board points out, stipulates that Crnogorska plovidba AD Kotor is obliged to pay Barska plovidba AD Bar a management and service fee in the amount of 9% of the revenue generated from ship rentals, which the members of the Board of Directors consider unacceptable.
"Namely, it clearly follows from the content of the business and technical cooperation agreement that Barska plovidba AD Bar does not take over the management of the ships of Crnogorska plovidba AD Kotor, nor does it assume responsibility for management, but only provides support and advice or issues instructions. Such a high amount of management and service fees cannot be justified even by taking all necessary actions to negotiate ship charters by Barska plovidba AD Bar, or more precisely, by employing the ships, bearing in mind that negotiating the charter is not the only segment of the ship charter agreement.
This is because the ship hiring operations, both for Barska plovidba AD Bar, and for Crnogorska plovidba AD Kotor, are carried out by professional brokers who charge a standard brokerage commission of 1,25% of the contracted rent for their services. This means that the contractual fee that Barska plovidba AD Bar will receive based on the contract on business and technical cooperation will amount to 9% of the total revenues of Crnogorska plovidba AD Kotor, and that they will act exclusively as an intermediary in communication between the broker and the management body of Crnogorska plovidba AD Kotor," the Board of Directors points out.
From all of the above, they add, it is clear that the contract in question is detrimental to Crnogorska plovidba AD Kotor, given that giving up 9% of total revenues, especially in unfavorable market conditions, could certainly jeopardize operations.
"In accordance with all of the above, the Board of Directors of Crnogorska plovidba AD Kotor opposes the announced adoption of the agreement on business and technical cooperation. At the same time, we would like to emphasize that the Board of Directors of Crnogorska plovidba AD Kotor does not oppose technical cooperation with Barska plovidba AD Bar, but exclusively on an equal basis, with full respect for both contracting parties and on the basis of applicable legal regulations," the statement concludes.
Bonus video:
