Tallinna Börs                 NEWS RELEASE                      05/31/2004



COMMITTEE'S DECISION ON FARMAATSIATEHAS



An extraordinary general meeting of shareholders of Tallinna Farmaatsiatehase 

AS was held on 10 November 2003, in which Mr. Valdis Jakobsons, chairman of 

the management board of the company’s majority shareholder AS Grindeks 

and chairman of the supervisory board of Tallinna Farmaatsiatehase AS, 

announced that in short run AS Grindeks will make a decision to buy out 

the shares of Tallinna Farmaatsiatehase AS held by minority shareholders, 

and relevant offer will be made. Tallinna Farmaatsiatehase AS published this 

information in a stock exchange announcement in the next day.



The management board of the Stock Exchange adopted the position that 

the information published in the announcement unambiguously implied a 

potential commencement of the delisting procedure stipulated in clause 

3.5.4.5 of the part of the TSE Rules titled "Supervision" within the 

following six months. The management board of the Stock Exchange therefore 

decided on 11 November 2003 to supplement the bases of the watch 

notation added to Tallinna Farmaatsiatehase AS share.



In response to the Stock Exchange’s inquiry about the delayed bid, Mr. 

Valdis Jakobsons, member of the supervisory board of Tallinna 

Farmaatsiatehase AS (chairman of the management board of Grindeks) has 

given contradicting explanations and also stated that Grindeks was not 

intending to make a takeover bid to the minor shareholders of Tallinna 

Farmaatsiatehase AS at the moment.



According to § 142 (1) of the Securities Market Act, information 

communicated to the operator shall be accurate, clear, precise and 

complete. According to clause 1.2.3 of the RI, the information disclosed by 

an Issuer shall be accurate, exact and unambiguous, its content must not 

be misleading and it shall not exclude or omit anything that may influence 

the substance or meaning of the information presented. According to clause 

1.2.2 of the RI, and Issuer is obliged to immediately disclose the details of 

any major circumstances relating to the Issuer which are not public 

knowledge and which may, by virtue of their effect on the Issuer, affect the 

price of its listed securities.



The information contained in the reply of Tallinna Farmaatsiatehase AS to 

the Stock Exchange’s inquiry has material implications for the information 

published in the stock exchange announcement of 11 November 2003, as it 

affects the content and meaning of the information stated in it.



According to clause 2.1.1 of the RI, members of the supervisory board and 

management board of an Issuer are under the obligation to scrutinise on an 

on-going basis, within the scope of their competence, all the events and 

changes taking place in the Issuer’s operations to assess what information 

is subject to immediate disclosure according to the requirements.



As Mr. Jakobsons, member of the supervisory board of Tallinna 

Farmaatsiatehase AS, is at the same time the chairman of the management 

board of Grindeks, the Stock Exchange finds that he cannot be said to have 

lacked information about the fact that Grindeks was not intending to make a 

bid at that moment.



Therefore, the circumstances of the conduct of Tallinna Farmaatsiatehase 

AS prove that the conduct of Tallinna Farmaatsiatehase AS was contrary to 

the obligations set out in clauses 1.2.2, 1.2.3, and 2.1.1 of the part of the 

TSE Rules titled "Requirements for Issuers".



Considering the materials submitted and having reviewed the explanations 

given by Tallinna Farmaatsiatehase AS, the Listing and Surveillance 

Committee of the Stock Exchange 



concluded:



1. Tallinna Farmaatsiatehase AS should have published information about 

not making a takeover bid immediately after becoming aware of it. 

Becoming aware should also be understood as the learning by a member of 

the supervisory board of the issuer of the fact that no takeover bid was 

going to be made.



Therefore, we have to assume the position that Tallinna Farmaatsiatehase 

AS has not performed the obligation to assess and publish information in 

accordance with the requirements. Tallinna Farmaatsiatehase AS has violated 

the obligations set out in the RI, which oblige an issuer to disclose 

all the important circumstances concerning the issuer, which may influence 

the price of securities. Considering all the facts, this information should 

be regarded as extremely important.



According to the assessment of the Committee, there are no objective 

circumstances which would have prevented Tallinna Farmaatsiatehase AS 

from duly and timely performing its obligations in the disclosure of 

materials about the issues discussed at its special general meeting.



Proceeding from the above, the Committee concluded that the activities of 

Tallinna Farmaatsiatehase AS have been contrary to the provisions of clauses 

1.2.2, 1.2.3, and 2.1.1 of the RI.



Based on clauses 10.1 and 10.2 of the part of the TSE Rules titled 



"Requirements for Issuers", clauses 4.1.2.1, 4.3.1, 4.8.1, 4.8.2 of 

"Supervision" and clause 2.1 of "Rates of Fines", the Listing and 

Surveillance Committee of the Stock Exchange



decided:



1. to impose a fine of two hundred and fifty thousand (250,000) kroons on 

Tallinna Farmaatsiatehase AS for the violation of clauses 1.2.2, 1.2.3, and 

2.1.1 of the RI;



2. to oblige Tallinna Farmaatsiatehase AS to disclose via the information 

system of the Stock Exchange information about the takeover bid, the 

reasons for its delay and the potential time schedule, or the waiver of a 

takeover bid and the reasons for the waiver, by 7 June 2004 at the latest.





Tallinn Stock Exchange

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