Increase of the shareholding threshold in the SIFs’ share capital to 1%

25 October 2005 (Insight)

SIFs still have a very much dispersed shareholding, that being mainly due to shareholding threshold initially set at 0.1% of the share capital and established at maximum 1% of the share capital, by the Government Ordinance no. 41/2005 (the “GO 41/2005”, published in the Official Gazette of Romania no. 677 of July 28th 2005) that amends the Capital Markets Law, by providing the increase of the above mentioned threshold.

SIF is the Romanian abbreviation for the Financial Investments Company (Societati de Investitii Financiare) and have been at origins (1993) set up as investment funds. All the five SIFs representing all major regions of Romania (Muntenia, Moldova, Transilvania, Oltenia and Banat-Crisana) have resulted from the implementation of the Romanian Mass Privatization Program under which all adult Romanians having received privatization coupons, which could have been swapped with shares in state-owned companies, have opted to swap such coupons with SIF shares. Thus, the SIFs became shareholders in hundreds of state-owned companies, having in their turn millions of Romanian individuals as shareholders. In 1995, SIFs have been converted into closed funds investors in securities and further listed with the Bucharest Sock Exchange. They have been always regulated by means of special law and benefited from a special treatment from the monitoring and supervisory authorities.

In accordance with the new art. 2861 of the Capital Markets Law, any person may acquire under any title or may hold shares issued by the SIFs, up to the limit of 1% of the SIFs’ share capital. In case that the mentioned threshold is exceeded, the voting right attached to the shares held in breach of the legal provisions, is suspended. Moreover, the shareholders who exceed the legal shareholding threshold have to sell the shares over this shareholding limit.

The new enactment provides the obligation for the SIFs to make all endeavours in order to change their statutes within 60 days as from the GO 41/2005 entering into force, by repealing any provisions contrary to the provisions under the new art. 2861. The sanction for the failure to observe the above referred provision consists in deeming the statutes as amended complying with the 1% limit of the share capital. For the implementation of the new provisions, the National Securities Commission shall further issue supplementary regulations.

SIFs are currently investors in 200 to 300 Romanian companies each, mainly in significant and “blocking minority shareholding positions”, but they also hold some majority positions.



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