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13.05.2011 Decisions of Annual General Meeting of Shareholders Arco Vara AS

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The Annual General Meeting of Shareholders of Arco Vara AS was held on May 12,
2011 at Sokos Hotel Viru, Viru square 4, in Tallinn. 



The Annual General Meeting of Shareholders of Arco Vara AS started at 9.10 a.m.
and ended at 11.00 a.m. and it was competent to pass decisions regarding the
items on the agenda. The agenda of the Annual General Meeting of Shareholders
of Arco Vara AS was published in April 20, 2011 and supplement of agenda was
published in May 4, 2011 in the newspaper Eesti Päevaleht and in the
information system of the Tallinn Stock Exchange and on the website of Arco
Vara AS http://www.arcorealestate.com. 



The following decisions were passed at the Annual General Meeting of 
Shareholders of Arco Vara AS: 



  1. To approve the year 2010 Annual Report of Arco Vara AS.


  1. To cover the net loss for the year ended 31 December 2010 of 4,591 thousand
     kroons (293 thousand euros) to retained earnings.


  1. To appoint 1 auditor for one year (until the next Annual General Meeting of
     Shareholders) and to appoint KPMG Baltics AS as auditor, to appoint Eero
     Kaup as auditor in charge and to pay to the auditor the fee for the
     auditing of 2010 financial results according to the agreement to be signed
     between Arco Vara AS and KPMG Baltics AS.


  1. To amend clauses 2.1. and 2.3. in the articles of association of Arco Vara
     AS as follows:
     „2.1. The minimum amount of the Company's share capital shall be 2,500,000
     Euros and the maximum amount of the share capital shall be 10,000,000
     Euros.” And
     “2.3. The Company only owns registered shares of one type with a nominal
     value of 70 (seventy) Eurocents. Each share provides 1 (one) vote in the
     general meeting. No share certificate is issued for the shares.  A share
     grants the shareholder the right to participate in the general meeting of
     shareholders and in the distribution of the profit and the remaining assets
     of the Company upon its termination, as well as other legal and statutory
     rights.”
      
  2. The par value of existing shares of Arco Vara AS shall be rounded off to
     0.7 euro, i.e. to the closest possible value, to which purpose the share
     capital of Arco Vara AS shall be increased by 288,631.79 euro through a
     bonus issue on account of retained earnings, so that the size of the share
     capital will be 3,319,194.90 euro. The recalculation of the par value of
     shares as a result of rounding off shall not have any legal consequences.
     The basis for the bonus issue is the Arco Vara AS annual report 2010 that
     was approved by the general meeting of the shareholders. The list of
     shareholders entitled to take part in the bonus issue shall be the list as
     of 23.05.2011 at 23:59.   The par value of shares shall be increased by an
     entry in the commercial register, which will presumably take place before
     01.06.2011


  1. To perform a special audit in relation to Arco Vara AS participation in
     sales transactions as follows:
  2. To appoint the persons conducting a special audit (special auditors)
     Ernst&Young Batics AS, Rävala str 4, Tallinn 10143, ph + 372 611 4610,
     fax + 372 611 4611, e-mail [email protected] leading consultant and manager
     of the area of internal control and risks Taavi Saat and Ernst &
     Young´s partner in charge and member of management board, sworn auditor
     Ivar Kiigemägi.
  3. To charge the auditor for a special audit with the task of investigating
     the circumstances per each sales transaction and to present the auditor for
     a special audit with the following questions for each sales transactions
     (except in cases where the question itself is limited to the specific
     transaction):
     1. To whom did Arco Vara sell its share in S.C.L-Base Project S.R.L
        (Romania), Tallinna Olümpiapurjespordikeskuse AS, Floriston Grupp OÜ,
        Arco Ärikeskuse OÜ and Saare Kinnistute OÜ and Wilson Kinnisvara OÜ?
     2. On October 21, 2009, according to a publicly disclosed stock notice Arco
        Vara sold its shares in Tallinna Olümpiapurjespordikeskuse AS, Floriston
        Grupp OÜ and Arco Ärikeskuse OÜ to companies related to Marcel Vichmann
        and Olav Miil. To whom specifically where the aforementioned shares
        sold?
     3. What was the sales price for the shares in UAB IKAS Projekt (Lithuania)
        and S.C.L-Base Project S.R.L (Romania)?
     4. For what reasons were the shares in the daughter companies transferred?
     5. Was the sale of shares more profitable for Arco Vara and/or shareholders
        than declining to sell the shares?
     6. Did Arco Vara also offer the shares for sale to other potential buyers
        and what were the competing offers? On which grounds were the specific
        buyers chosen?
     7. Have the conditions for the transfer of shares been fulfilled completely
        by this time? If the conditions for the transfer transactions have not
        been fulfilled then:
     8. what kind of claims does Arco Vara have against the share buyers?
     9. what kind of methods has Arco Vara implemented to satisfy or ensure the
        claims?
    10. Was the sale of shares planned in Arco Vara financial year action plan,
        budget or other such document? If yes, then what kind of management body
        has approved or coordinated the budget or other such document?
    11. Was the sale of shares approved by the supervisory board and, if yes,
        when?
    12. How was the proposal and economic usefulness of the sale of shares
        justified to the supervisory board?
    13. Did the supervisory board members present any dissenting opinions
        concerning the transfer of shares and, if yes, which?
    14. Who among the Arco Vara management body members participated in the
        valuation of the share values and in the sales negotiations?
    15. As of what date was the price of share determined?
    16. What kinds of valuation methods were used to valuate the share prices
        and who carried out this valuation?
    17. What was the share price per used valuation methods?
    18. Was the right of pre-emption valid in the sale of shares? If yes, did
        other shareholders use the right of pre-emption?
    19. Was the repurchase of shares by Arco Vara also stipulated in the
        contracts?
    20. Can the Arco Vara management board confirm that the transactions did not
        damage the interests of the shareholders?
    21. Was the approval of a person of a credit institution or other such body
        required to make a transaction and were the transactions coordinated
        with such a person?
  4. According to Arco Vara AS stock notices, the largest sale of shares is the
     transaction disclosed on October 21, 2009 within the framework of which
     Arco Vara sold its shares in (1) Tallinna Olümpiapurjespordikeskuse AS, (2)
     Floriston Grupp OÜ and (3) Arco Ärikeskuse OÜ (henceforth all 3 units to be
     referred to as the joint entrepreneurs) to undisclosed companies for a
     total of 172 MEEK (11 MEUR), of which 55 MEEK (3,5 MEUR) is the amount paid
     for the sale of the joint entrepreneurs' shares and stock (henceforth the
     shares) and 117 MEEK (7,5 MEUR) is the amount for which claims against the
     joint entrepreneurs were transferred.

On the basis of the above and in addition to the questions listed in item 2 of
this special audit questionnaire, the auditor for the special audit is charged
with answering the following questions about the sale of the shares and stock
of the aforementioned joint entrepreneurs: 

  1. Who presented the management board with the proposal for the sale of
     specific shares and what was the reasoning behind this?
  2. For what reason where the shares in the three joint entrepreneurs under
     question transferred in 2009?
  3. On what grounds was the share of 12,5% in Floriston Grupp OÜ left unsold?
  4. Why was the sales price of a 37,5% share in Floriston 5 500 000 kroons, if
     the Arco Vara prospectus and the May 26, 2010 Arco Vara stock notice valued
     the consolidated Floriston Grupp OÜ retained profits in the amount of a 12%
     share to be 37 943 987 kroons? According to the 2009 annual report of
     Floriston Grupp OÜ, Floriston had - as of December 31, 2009 - retained
     profits of 151 489 722 kroons, shareholder's equity of 151533 722 kroons
     and maximum net dividends of 119 676 880 kroons, of which 37,7% was 44 878
     830 kroons. Please to explain the principles of price formation in this
     transaction by Arco Vara.
  5. How does the total loss of 150 MEEK (9,6 MEUR) from the sale of the shares
     listed in the October 21, 2010 stock notice come about and what are the
     reasons?
  6. How does the total loss of 150 MEEK (9,6 EUR) described in the October 21,
     2010 stock notice divide by shares sold? What is the transaction result
     when broken down by the sales of Tallinna Olümpiapurjespordikeskuse AS
     stock, Floriston Grupp OÜ share and Arco Ärikeskuse OÜ share?
  7. What kind of claims have been relinquished along with the sale of shares
     and on which grounds was this considered to be necessary in the sales
     transactions?
  8. Has the fulfillment of claims relinquished to Arco Vara been guaranteed and
     how?
  9. Does the acquisition of claims by Arco Vara against the joint entrepreneurs
     improve Arco Vara's liquidity position and does the acquisition of claim
     enable getting financial instruments to finance the construction of new
     residential building projects in Tallinn?
 10. Did Arco Vara finance any residential building projects - and, if yes,
     which - from the money gained from the sale of stock/shares in Tallinna
     Olümpiapurjespordikeskuse AS, Floriston Grupp OÜ and Arco Ärikeskuse OÜ?
 11. Are the residential building projects described in the October 21, 2010
     stock notice more profitable from the position of Arco Vara, compared to
     the projects by the joint entrepreneur Tallinna Olümpiapurjespordikeskuse
     AS, Floriston Grupp OÜ and/or Arco Ärikeskuse OÜ?
 12. Is the October 21, 2010 stock notice claim that during the next 10 years
     Arco Vara may receive additional income from the realization of the
     construction rights on estates that belong to Tallinna
     Olümpiapurjespordikeskuse AS, Floriston Grupp OÜ or Arco Ärikeskuse OÜ true
     and justified?
 13. What kind of additional income would Arco Vara receive from the realization
     of construction rights on estates that belong to the joint entrepreneurs?
 14. What is the size of the additional income Arco Vara may receive from the
     realization of construction rights on the aforementioned estates that
     belong to the joint entrepreneurs?
 15. Is the alleged (additional) income gained by Arco Vara from the realization
     of construction rights of the joint entrepreneurs larger than the income
     that Arco Vara would have received in the situation where Arco Vara had not
     transferred its shares in the joint entrepreneurs?
 16. What was the dynamic of the joint entrepreneurs' stock and shares during
     the three years prior to the sale of the shares?
 17. How big were the retained profits of Floriston Grupp OÜ at the moment the
     shares were valuated?
 18. Was/is there a shareholder contract that applies to the shares?
 19. To charge the management board with signing a contract for performing a
     special audit between Arco Vara AS and the auditor for a special audit or a
     respective company of auditors under the following conditions:
     1. the deadline for preparing a special audit report is 3 months;
     2. the maximum size for performing a special audit is 18 000 euros.
 20. Every shareholder is entitled to review the special audit report and to
     make copies of it at the expense of Arco Vara AS. The special audit report
     shall not include information which damages the rights or business
     interests of Arco Vara AS.

The Annual General Meeting of Shareholders of Arco Vara AS was held according
to law and Statute of Arco Vara AS. 

Lembit Tampere
CEO
Arco Vara AS
phone: +372 614 4630
[email protected]
http://www.arcorealestate.com/