The Finnish Financial Supervisory Authority (FIN-FSA) has obliged Afarak COO Danko Koncar to launch a takeover bid for Afarak Group shares, and imposed a running conditional fine to enforce the obligation.

LSE- and Nasdaq-listed Afarak on Thursday published a statement issued by the FIN-FSA, which states that the authority considers that Koncar and entities controlled by him have acted together with Hino Resources, Finaline Business and Koncar's spouse Jelena Manojlovic to exercise control in Afarak.

“This conduct has been long-standing and systematic, and investors operating in the markets have been unaware of it. The voting rights of the persons acting together have exceeded the bid obligation threshold continuously at least as of October 22, 2009. Their combined voting rights in Afarak amount to approximately 41.56%,” FIN-FSA said in a statement on Thursday.

The base amount of the conditional fine is €40-million and a supplementary amount of €10-million for each full month during which the obligation is not complied with, will apply.

The purpose of the imposition of a conditional fine is to force Koncar to comply with the main obligation.

FIN-FSA expects him to publish a mandatory bid referred to the Securities Markets Act within a month of the FIN-FSA decision being served to him. He has not yet been served with the decision as required by the law and the period is not yet running.

In setting the conditional fine and determining its amount, FIN-FSA has also taken into account that Koncar has failed to comply with one of the key provisions of the Securities Markets Act – protecting minority shareholders – which has served to undermine confidence in the securities markets, the statement noted.

The purpose of the obligation is to protect other shareholders of the company in a situation where control in the company is concentrated to a single shareholder or a group of shareholders by agreement or other form of common understanding.

The decision of the FIN-FSA is not yet legally binding.

Koncar has the right to appeal the decision to the Helsinki Administrative Court within 30 days of the date of service of the decision.

Afarak noted that its parent company Kermas Resources, of which Koncar is the founder, intends to appeal the FIN-FSA decision.