Armătura shares to resume trading

The Austrian company Herz Armaturen revoked, in the middle of this week, the June resolution that led to the suspension of Armătura's shares from trading, due to erroneous information, according to reports from the Bucharest Stock Exchange (BVB).

At the shareholders' meeting held on June 24, Herz Armaturen, which holds 86% of Armătura Cluj, decided on the dissolution of the company, initiation of the liquidation procedure, suspension, and withdrawal from trading of securities. According to documents published on the BVB website, the dissolution and liquidation of the company were motivated by the reduction of net assets below half of the subscribed share capital, as well as the impossibility of carrying out the company's business activities, in accordance with commercial company law.

In the report prepared by auditor Noa Tax Advisors, it was stated that the issuer's net assets (equity) had fallen in 2024 to 6.9 million lei - below 50% of the subscribed and paid-up share capital of 18.1 million lei. However, the issuer's annual report for 2024 indicates a share capital of 4 million lei, which means the legal condition regarding the reduction of net assets below half of the share capital was not met.

The company's management claims that the figure of 18.1 million lei resulted from a material translation error between the Romanian and English versions of the report prepared by Noa Tax Advisors-an error that was not flagged before the resolutions of the General Meeting of Shareholders (AGEA) were adopted. The mistake went unnoticed for a long time, and on July 21, BVB suspended trading of Armătura shares.

Now, Herz Armaturen has revoked the June resolution that decided on the dissolution of the company on the grounds of reducing net assets below half of the share capital, and has rejected dissolution and initiation of liquidation proceedings based on the impossibility of carrying out business activities under the provisions of company law. Consequently, trading of Armătura shares will be resumed "in accordance with legal provisions,” as stated in the company's reports.

The problem is that, from the announcement of the shareholders' meeting in June until the suspension from trading, Armătura's shares depreciated by 43%, generating losses for minority shareholders.

The Armătura case raises questions regarding a possible instance of capital market manipulation, perhaps unintentional, given that decisions were based on erroneous information.

"In the sense of this title, market manipulation represents the following types of activities: ... c) the dissemination of information through mass media, including the internet or by any other means, which gives or is likely to give false or misleading signals regarding the offer, demand, or price of a financial instrument (...)”, states Law no. 24/2017 on issuers of financial instruments and market operations, Chapter III, art. 120 para. (1).

Bursa newspaper reported the case to the Financial Supervisory Authority (ASF), and the market supervisor told us it is monitoring Armătura's situation and, depending on the findings of the analyses carried out, will adopt the necessary measures.

For the first six months of the year, Armătura reported revenues of 0.71 million lei, 24% below those in the January-June interval of last year, while for operating activities, the company reported a loss of 0.21 million lei, smaller than the 0.92 million lei loss recorded in the first six months of last year. Armătura's market capitalization stands at five million lei.