Several incompatible candidates for the Board of Directors of the Central Depository

F.G. translated by Cosmin Ghidoveanu
Ziarul BURSA #English Section / 6 septembrie 2010

On Friday, Mircea Botta, the vice-president of the Bucharest Stock Exchange, withdrew his candidacy for a seat on the Board of Directors of the Central Depository, acknowledging the validity of the notification that the Association of Brokers had sent on the same day to the CNVM, which alleges that he was incompatible with the position he was running for.

To back its claims, the Association of Brokers invokes the provisions of art. 3 of the Decision of the Romanian National Securities Commission no. 17/11.11.2009:

"The members of the Board of Directors of a central depository may not be members of the Board of Directors of a company whose stock is being traded on a regulated market or on an alternative trading system, and which has a registry agreement with the depository in question".

Stere Farmache, the chairman of the Bucharest Stock Exchange (BSE) is already incompatible, a situation which the Romanian National Securities Commission has so far tolerated without any explanation.

What is even harder to explain, is the fact that the chairman of the BSE seems intent on continuing in this manner, since he will be running for chairman again.

Two other people who running for the Board of Directors of the Central Depository even though they are incompatible are Ciprian- Ioan Zah, who is also a member on the board of the Bucharest Stock Exchange, and Lucian Ovidiu Isac.

Mircea Botta: Complying with regulations is the normal thing to do

"At the time I submitted my candidacy (ed. note: for a seat on the Board of the Central Depository), I had no knowledge of the Decision of the CNVM", he said. "Abiding by the regulations in effect is the natural thing to do. I think it would have been the natural thing to do for someone from the Legal Department to warn me about my incompatibility with that position, since it is impossible for me to know all the regulations of the Romanian National Securities Commission by heart. As it is, I think it would be better if I just remained the vice-president of the BSE".

He said that "unfortunately, the Romanian capital market is marred by pride and individual interests". (A.A.)

The incompatibility was caused by the listing of the BSE

The Romanian National Securities Commission has prohibited the cumulative holding of management positions in separate companies of the BSE Group by way of the Decision no. 17 of November 2009. Later, in January 2010, probably due to the lobbying of some market members, the Commission relaxed the provisions of its previous Decision, by amending several of its articles. Whereas in November 2009, members of the board of the BSE were forbidden from serving as members of the Board of the Central Depository, in January 2010, the capital market watchdog issued a new decision which stated that "The majority of the members of the board of a market/system operator may not serve as members of the board of directors or serve as chairmen of a central depository or of a clearing house or of the Fund for the Compensation of Investors".

Because, at the time, the Stock Exchange was not a company whose stock was traded on a regulated market", Article 3 of the Decision no. 17/11.11.2009 wasn"t a cause for concern for anybody, and as such was left unchanged and is still in effect.

However, on June 2010, the Bucharest Stock Exchange became a publicly traded company, rendering its officials incompatible with the positions on the Board of the Depository they were running for. (A.A.)

Ciprian Zah: "The Bucharest Stock Exchange is a particular case"

Ciprian Zah, a member on the Board of Directors of the BSE, who is also running for a seat on the Board of Directors of the Central Depository says there is no incompatibility between the two positions.

"Had I been a member on the Board of Directors of Petrom, I would not have entered the competition for becoming a member of the Board of Directors of the Central Depository, because it is forbidden by the Ruling of the Romanian National Securities Commission, but the Bucharest Stock Exchange is a particular case", Ciprian Zah said for BURSA.

In his opinion, what sets the case of the Stock Exchange apart in this situation is the fact that the Exchange is both a listed company, and a market operator as well, and the Decision of the CNVM no.1 of January 18th, 2010 allows the majority of the members of the Board of a market operator to also serve as members on the Board of Directors of the Depository.

"I have checked with the CNVM and with the legal department of the Bucharest Stock Exchange and I was told there was no incompatibility", Ciprian Zah added.

Stere Farmache and Lucian Isac were not available for comments at the time this article was written. (Ş.C.)

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