Gala BURSA 2018

EXCLUSIVE - FERCALĂ TELLS ON BÎLTEANU IN A LETTER ADDRESSED TO RUŞANU"Attempts at hostile takeovers of the SIFs, by factions of interested shareholders"

ADINA ARDELEANU (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section /

"Attempts at hostile takeovers of the SIFs, by factions of interested shareholders"

The groups of Cătălin Chelu, Dinel Staicu, Constantin Frăţilă, Gheorghe Iaciu, Dragoş Bîlteanu - provided as examples by the CEO of SIF3 Transilvania 

In a letter from February 19th, Mihai Fercală, the CEO of SIF3 Transilvania, warns the chairman of the ASF, Dan Radu Ruşanu, against the manner of voting in the General Shareholder Meetings of the SIFs and against the proposals to raise the holding limit, and he mentions that over the last ten years, there have been hostile takeover attempts against the SIFs.

It would seem that Dan Radu Ruşanu did not get the chance to answer Fercală's letter, given the fact that he was indicted by the DNA, in the "Carpatica" case, and he was arrested yesterday for 29 days.

Mihai Fercală mentioned as examples the faction of Cătălin Chelu, at SIF Moldova and Oltenia, the Dinel Staicu group, at SIF Oltenia, the Constantin Frăţilă group, at SIF Transilvania, the group of Gheorghe Iaciu, at SIF Muntenia and the Dragoş Bîlteanu faction, at SIF Banat Crişana.

"This latter faction, by taking over control, has decided not to pay dividends, has decided operations that conflict with the law and the with the interest of the other shareholders, has dictated SIF1 making operations involving companies within the group, transfers of assets abroad etc, facts which are known by the ASF and which it reported to the General Police Inspectorate and about which complaints have been filed and which have been disputed by various shareholders in various institutions", the aforementioned letter writes.

Mihai Fercală begins his letter, which was obtained exclusively by BURSA, by reminding that in the beginning, the SIFs were intended to manage the stakes of over 7 million citizens, as part of the privatization process: "Today, in each of the five SIFs there are still about 500,000-600,000 shareholders that are active, that trade shares, who are interested, who monitor the activity of the SIFs and who vote electronically and/or by mail on the occasion of the General Shareholder Meetings".

Mihai Fercală accuses the regulations of the ASF of not being in compliance with the law

According to Mihai Fercală, considering the fact that the SIFs have been classified and registered as "Other types of collective placement institutions (AOPC)", which pay monthly fees of 0.1% of the value of their net assets, they are not regular companies, even though the former CNVM has applied that kind of regulations to them.

"There are two possibilities: either the SIFs are not required to pay taxes, if the CNVM/ASF qualifies them as regular companies and the provisions of Ordinance 32/2012 apply to them, or the provisions of Ordinance 32/2012 and the Directive 2007/36/CE, don't apply to them, if it wants them to pay that fee, because it has classified them as < < Other Collective Placement Organisms > >", the chairman of SIF3 says, who said that this situation needs to be resolved.

He also says that another regulation - of an administrative nature - which goes against the law governing companies and even against the law governing the stock market and, the application of which is particularly disruptive to General Shareholder Meetings, is represented by the provisions of art. 125 of the Regulation 1/2006 of the CNVM which stipulates that any shareholder or group of shareholders that own 5% of the equity of a SIF can request the application of the cumulative vote method in the election of the members of the Board of Directors, and that they can propose a new resolution with a minimum of 10 days prior to the holding of General Shareholder Meetings, thus violating the right to full and complete information of the shareholders that vote by mail or electronically.

According to the Law no. 31/1990 republished, the proposals of the shareholders who want to make additions to the agenda must be submitted to the Board of Directors within a maximum of 15 days from the publication of the notice to attend, Fercală writes in the letter.

Mihai Fercală also says that, by preserving the provisions of article 125 of the Regulation 1/2006, things can come to the situation where the shareholders that have voted by mail /electronically/by proxy, prior to the making of the new proposals, will no longer have the possibility to find out about them, which thus lays the groundwork for discrimination: "Illegal regulations, such as this one have generated, and will probably generate arguments, and major disagreements in the general shareholder meetings of the SIFs, controversies and challenges, which impact the prices of their stocks, a danger which can be easily eliminated by keeping the regulations issued by the CNVM-ASF in line with the laws".

The chairman of SIF3 says that urgent action is required, considering that the General Shareholder Meetings for the Approval of the balance sheets are getting closer.

Cumulative voting, another thorny issue

Mr. Fercală also warns the chairman of the ASF on the conditions for requesting the cumulative vote, as a measure intended to protect the minority shareholders, in the event of the election of the members of the Boards of Directors.

Given the 5% holding limit at the SIFs, Mihai Fercală states that, in these companies, there can be no minority or majority shareholders, within the common meaning of the term, and thus the method of the cumulative vote is not applicable. Thus, in his opinion, the application of this method "will favor certain shareholder groups, interested in promoting certain policies which are not compatible with the specific nature of this kind of companies".

Also, the president of SIF Transilvania considers: "The statements made by interested persons in promoting certain policies when it comes to the SIFs, according to which the majority of shareholders aren't getting involved in the voting in the General Shareholder Meetings of the SIFs, because they don't even know they are stockholders in the SIFs, is false and ill-intentioned. At SIF Transilvania, for example, in each general shareholder meeting, every year, about 350,000 - 370,000 shareholders vote electronically, through powers of attorney or by physically attending the meetings, which is something that can be verified and proven at any time through the contents of the minutes of the meetings concerning the quorum. It's only those that have other interests and don't want an appropriate quorum being achieved at a specific shareholder meeting that can't ensure the legal and physical quorum requirements, to allow the making of decisions that are of general interest rather the kind that favor small groups of shareholders, such as those of Cătălin Chelu, Dinel Staicu and others that have caused serious problems to the CNVM, in relation to the SIFs which they were shareholders in".

"There are some offshore companies acting in concert"

Also, Mihai Fercală reminds that the law of companies stipulates that there is a holding limit, which is intended to protect the shareholders from the risk of having a SIF being hostilely taken over, through the board of directors/supervisory board, by a number of interested shareholders, saying that this kind of attempts have occurred in the last ten years.

The president of SIF 3 considers that claims that eliminating the holding and voting restrictions will increase the traded volumes are false, "perhaps even likely to heavy-handedly manipulate the stock market, because they are being thrown around precisely by the ones who want to enslave the SIFs to their own interests".

The letter also writes: "Besides, since the holding limit has been changed from 1% to 5%, nothing significant happened, except for a day or two. There are currently no more than 1-2 shareholders with a limit of a maximum of 5% for each SIF. On the contrary, there are concerted holdings, of offshore companies, companies owned by the same shareholders who, in this way want to avoid being accused of acting in concert in their attempts to take over the SIFs, which still hold interesting assets in their portfolios".

According to Mihai Fercală, any intervention of the lawmaker to set up or eliminate the holding limits, an the amendment of the articles of incorporation of the fully-privately owned companies is in violation of the terms of the Treaty for the Functioning of the European Union.

At the end of February, Mircea Ursache, the vice-president of the capital market division of the ASF said that for this year, he has dropped the idea of raising the holding limit in the five financial investment companies (SIFs), due to the strains caused by the fact that we are in a year of political elections. He has stated, however, that he wants to resume talks on this subject next year.

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