Elliott, Uniper's No. 2 shareholder with 17.84 percent, wants investors to decide at the group's next annual shareholders' meeting on May 22 on whether Uniper should enter discussions with Fortum over a so-called domination agreement.

Otherwise the fund will ask for an extraordinary general meeting on the domination proposal, which, if successfully concluded, would give Fortum control of Uniper's profits and cashflow.

Elliot's statement confirms what people close to the situation told Reuters in November.

The proposal comes a month after Uniper and Fortum announced fresh cooperation talks in an attempt to repair their relationship, which has been strained ever since the Finnish state-owned group launched a hostile takeover attempt in 2017.

"Elliott believes the thus-far ill-defined and ambiguous nature of the relationship between Uniper and Fortum has created an unsatisfactory and unsustainable dynamic, which is detrimental to Uniper," it said.

Fortum last year acquired a 47 percent stake in Uniper from E.ON and recently raised it to 49.99 percent. Uniper has long argued that it would be more successful as an independent company.

Fortum cannot further raise its stake for the time being, after Russian regulators ruled it is limited to holding less than half of Uniper because of a strategic water testing licence owned by Unipro, Uniper's Russian unit.

That has restricted Fortum's influence on Uniper's strategy and. Elliott's domination proposal would need to be approved by 75 percent of investors at a shareholder meeting.

Shares in Uniper were 2.5 percent higher by 1045 GMT, reflecting hopes that a positive vote could accelerate talks and ultimately remove the hurdles for a full takeover by Fortum through a sale of the water licence.

While the combined stake of Fortum and Elliott only adds up to 67.83 percent, that would likely be enough given traditional attendance rates at shareholder meetings. At Uniper's past two general meetings, shareholder turnout averaged about 74 percent.

A spokeswoman for Fortum said the company noted Elliot's statement but it was not party to the request and declined further comment. Uniper said it would assess the request and prepare a statement, and also declined to say anything further.

(Editing by David Holmes)

By Christoph Steitz and Arno Schuetze