CHANGED RULES, HONORED RULES The game of the Proprietatea Fund

• A decision made on the first summoning helped with the second summoning

• The shareholders have approved the reduction of the share capital

• A dividend of 0.03854 lei/share

The shareholders of the ProprietateA Fund yesterday held three General Meetings, approving the reduction of the share capital, the buyback of 8% of its shares, a dividend of 0.03854 lei/share and reaffirming once again all the decisions made in the General Shareholder Meeting when Franklin Templeton took over the management of the Proprietatea Fund in 2010.

Before the Extraordinary and Ordinary General Shareholder Meeting which had been scheduled for yesterday began, the shareholders had the second summoning of the extraordinary shareholder meeting of April 4th, when the proposal to reduce the share capital had not been voted.

Yesterday, the reduction of the share capital with the shares bought back last year, specifically to 13.538 billion lei, was approved by the shareholders, according to the report sent to the Bucharest Stock Exchange, as the meeting had a quorum of approximately 45%.

Prior to April 4th, this decision required a minimum quorum of 50%, but on the first summoning of the general shareholder meeting (on April 4th), the shareholders have decided to amend the articles of incorporation, by reducing that limit to 25%.

Lawyer Gheorghe Piperea claims that it is illegal for the Proprietatea Fund to implement on the second summoning the decision made on the first summoning, in order to vote on the agenda, for several reasons.

Also, he explained that, since it was the same general shareholder meeting, the rules can't be changed mid-game, meaning that it is not allowed to take a different quorum into consideration when making the decision. "They should have summoned a different General Shareholder Meeting on the subject of the equity reduction", said Gheorghe Piperea.

The quoted lawyer said that the amendment of the articles of incorporation produces its effects after being submitted to the Trade Registry.

The Proprietatea Fund announced that on April 20th, the National Securities Commission approved the new articles of incorporation and that it has come into effect.

Yesterday's general shareholder meetings had different reference dates, meaning that not all of those who attended them were entitled to. The reference date for the General Shareholder Meeting of April 4th, held on the second convening, was March 22nd, and for yesterday's meetings it was April 9th.

One shareholder told us that the organizers of the general shareholder meeting did not make the distinction between the shareholders who were allowed to participate in the meeting, and those who weren't, they did not ask anyone to leave the room and they did not ask anyone to leave the room after the first meeting.

Even though several market experts expressed their conviction that the organizers couldn't have made such a mistake, the representatives of Franklin Templeton did not provide us with an answer by the closing of the edition, to our question on whether the program which counted the votes took the different reference dates into account.

• Another buyback

Yesterday, the shareholders of the Proprietatea Fund approved the buyback of 8% of the company's stock, at prices ranging between 0.2 lei/share and 1.5 lei/share.

The program will last 18 months, and the equity will be reduced by the amount of the bought back shares.

On the stock exchange the block of shares is valued at 595 million lei (135 million Euros).

"The execution of the program will depend on the availability of the necessary cash", according to the proposal accepted by the shareholders.

The shareholders have also accepted the distribution of dividends of 507.6 million lei, (almost 116 million Euros), the equivalent of 93% of the profit booked last year.

The gross amount of the dividend is 0.03854 lei/share, up 21% over last year's value of 0.03141 lei/share.

• The decisions of the shareholders made since 2010, were adopted again

On the proposal of City of London, which owns at least 7% of the shares of the Proprietatea Fund, the shareholders have decided to ratify and adopt all of the decisions passed in the general shareholder meetings since Franklin Templeton took over its mandate in 2010, even as most of those decisions are being challenged in court by a shareholder.

City of London proposed that the decision of the shareholders would give "full power and effect" to all the decisions made between September 6th, 2010, the date on which Templeton took over the management of the FP, and April 24th, 2012.

The shareholders have also approved the proposal of City of London to ratify all of the actions and operations concluded, passed or issued by Franklin Templeton on behalf of the Proprietatea Fund, including the management contract signed by the Proprietatea Fund with Franklin Templeton in February 2010 and approved in the General Shareholder Meeting.

Since October 2010, lawyer Ioana Sfîrăială, a shareholder of the Proprietatea Fund, has disputed most of the decisions of the shareholders, claiming that Franklin Templeton did not have the right to summon the General Shareholder Meeting because it is not the manager of the Fund.

On December 22ndd, 2011, the Court of Bucharest has invalidated the decision of the shareholders of the Fund by which Franklin Templeton was appointed as manager of the Proprietatea Fund, but FT appealed.

The representatives of Franklin Templeton have called the litigation with Ioana Sfîrăială as "blackmail" and said that they need to be very active, because those lawsuits involve costs for the shareholders as well. "We will request the full compensation of the legal expenses", said Mark Mobius, the head of Franklin Templeton.

• The shareholders have rejected the request to hold the manager of the fund responsible

During yesterday's General shareholder meeting, shareholder Dan Bărbulescu, has proposed that Franklin Templeton and the members of the Supervisory Board be held liable, but his proposal was rejected by the shareholders.

Dan Bărbulescu alleges losses caused to the Proprietatea Fund and the shareholders, a faulty management of the minority stakes and the appointment of passive administrators on the board of directors of the companies in the portfolio of the Proprietatea Fund.

He has also complained about the insider trading in the case of Oil Terminal stocks: notification posted to the BSE website on June 10, 2011, at 10:16:11 hours concerning the sale of Oil Terminal stock on 09.06.2011, followed by the publication of the notice to attend the Ordinary and Extraordinary General Shareholder Meetings at Oil Terminal at 11:40, which had on the agenda the share capital increase with the land owned by the state and the dilution of all the shareholders".