SHAREHOLDERS ALLEGE OTHER IRREGULARITIES IN THE DISMANTLING OF THE RASDAQ: "The BSE is issuing permits for companies that move to the AeRO, in violation of the law"

The elimination of the Rasdaq and the transfer of the issuers to other markets are opportunities for the Bucharest Stock Exchange (BSE) to avoid the rules or to construe them as it suits it, along the lines of "we'll work something out".

Several shareholders have complained to the Bucharest Stock Exchange directly, as well as to the Financial Oversight Authority (ASF) because some issuers, which have changed their lines of business mentioned in their bylaws, are being authorized by the BSE to get listed on the AeRO alternative system, without also meeting the obligation to amend their articles of incorporation, through the General Shareholder Meeting, in other words violating Law 31/1990 of companies. With the approval of the BSE sitting on its desk, the approval of the ASF comes as a mere formality.

Investors are referring to a trick that the BSE is using, to avoid the law, specifically granting the approval to the companies which pledge that, within 12 months, they will summon a General Shareholder Meeting and will discuss the amendment of the articles of incorporation. In other words, they are allowed to postpone compliance with the law for one year.

Other voices, even though they agree with the shareholders that claim that the General Shareholder Meeting should be held to change the companies' line of business, where applicable, also say that the BSE can not oppose the listing, as it is not qualified in that regard.

By the time our newspaper had gone to print, the BSE had not sent us an opinion on the matter.

A shareholder of "Comat" Galaţi has informed the ASF and the BSE, in a letter, that, according to the Articles of Incorporation the company's objective is "the sale of raw materials, spare parts, subassemblies and other industrial products and other products", and the main line of business is Other specialized wholesale.

He says that in 2014, from the annual report which he has consulted, out of a turnover of 936,667 lei, rentals revenues account for 95%.

The shareholder says: "In fact, at Comat SA Galaţi the main line of business has changed (..) I mention that the changing of the main line of business was done without a Decision of the Extraordinary General Shareholder Meeting in that regard, which represents a violation of the Law no. 31/1990 of companies, as well as article no. 13 of the bylaws of the company, which says that «The extraordinary general shareholder meeting is called whenever necessary to make decisions on the... - changing of the main line of business of the company»".

He thinks that the shareholders of the company are prejudiced, because the Law no. 31/1990 stipulates that article no. 134 the right to withdraw from the company in the event of the change of its line of business.

"I would like to draw attention to the fact that, by not replacing the main line of business in the paperwork of the company, the registration certificate of the company is in violation of stipulation in articles of the law no. 26/1990 of the Trade Registry and the Order of the Ministry Justice no. 2594/2008".

The shareholder has asked the BSE and the ASF to make the granting of the principle agreement and the decision to allow the company to be listed, respectively, dependent the company's compliance with the legal delay of 90 days from the date of the Extraordinary General Shareholder Meeting. He also raises the issue of the credibility of the capital market, in the context of companies that break the law being allowed to get listed.

The shareholder estimates that the principle agreement to the listing on the ATS-AeRO of a company which violates its bylaws and harms its shareholders, cast a dark shadow on the companies listed on the ATS, as well as on those that are listed on the BSE: "The presence of such an issuer (due to the new format of the bvb.ro website) on the same list as banks, the SIFs, the Proprietatea Fund, the utility companies listed by the state, is first of all harming fair and transparent issuers".

The shareholder of "Comat" had the following to say to Ludwik Sobolewski, the CEO of the BSE: "The life experience and age difference (ed. note: the investor had mentioned that he was retired) grant me the right to tell you that all that is being built to be durable must have a solid base and nothing can be built on lies. To place at the foundation of the ATS issuers that violate not only the legislation of the stock market, the Law no. 31/1990 and other companies of the Romanian state does nothing but set up the base for future scandals that will occur and affect both investors' confidence, as well as of potential issuers that could find financing on the AeRO".

After presenting their situation, the shareholder told the ASF that, if it will nevertheless allow a company where he is being harmed and where the law is being broken, he will be forced to challenge the ruling in court, and we will be led to believe that the Authority is committing an abuse, hiding behind a potential principle agreement of the BSE.

A similar situation was reported by a group of shareholders at "SIFI Cluj Logistic" (CACU) as well. They have notified the following situation to the BSE: "Please note, by analyzing the documentation submitted by SIFI Cluj Logistic SA Bucureşti, that it has changed its core activity and main line of business, as specified in the articles of incorporation.

We quote: «Art 5. the core activity: Wholesale on a fee or contract basis - NACE group 461.

Art 6. The company's main line of business is: Agents involved in the sale of a variety of goods - NACE code 4619."

Upon a cursory review of the annual report of the Board of Directors for 2014 it will be easily visible that over the last three years the company has made most of its revenues (80% - 90%) from renting".

The shareholders further say: "Also, in the Revenue and Expense Budget for 2015, presented for approval in the Ordinary General Shareholder Meeting, it is stated that the company wants to achieve a turnover of 1,562,000 lei, of which rent revenues, services and transportation amount to 1,556,000 lei, in other words 99.61%, and 6,000 lei from the sale of merchandise, waste and packaging, meaning 0.38%.

The reality of the change of the main activity is shown not only by the financial statements of the previous years, but also from the Revenue and Expense Budget for 2015, which proves a character of stability and steadiness, and not just a simple accident.

It is clear that the company is making almost no revenue at all from its main line of business".

Investors claim that SIFI Cluj Logistic SA Bucureşti changed its main activity and the main line of business without a decision of the General Extraordinary Meeting in that regard, which represents a violation of the Law no. 31/1990.

"We think that this situation is a violation of our rights as shareholders and we ask you to note that fact and to take the required measures that are required until the company complies with the law", the shareholders are telling the BSE and the ASF.

They mention that the modification of the main activity and the main line of business of a company is the function of the Extraordinary General Shareholder Meeting and in the legislation it is expressly stipulated the right for shareholders to withdraw according to article 134 of the Law no. 31/1990, with the lawmaker granting shareholders who do not agree to the changing of the line of business the right to withdraw from the company and in line with the provisions of the Law no. 151/2014 (for the elimination of Rasdaq).

Some stock market investors have also reported to us the case of "Icsim" Bucureşti, which, on May 6th, received the approval of the ASF to get listed on the ATS of the BSE. They say that according to its line of business, the company does construction, but it generates revenue through letting.