FOR THE NEW REPRESENTATIVES OF THE SHAREHOLDERS The hard part is just beginning at SIF Muntenia

The 34 hour gathering of SIF Muntenia, which took place this weekend, which overthrew the Council of Representatives of the Shareholders (CRA), is just the beginning of the struggle between the group of shareholders which sought the change, together with businessman Gheorghe Iaciu and Gabriel Filimon, who helms the SAI Muntenia Invest, who manages the SIF.

Most likely, after the two days of "war", the new Council of the Representatives of Shareholders and its supporters allowed themselves at least one day of rest to recharge their batteries, meaning that work may begin today.

The "revolutionaries" voted for a change in management, aimed first of all at Gabriel Filimon, and Gheorghe Iaciu, the largest shareholder of the SIF, with a 5% stake, said that the first step might be an audit of the SIF.

The head of SAI Muntenia has already been accused of siphoning off the money of the shareholders of SIF4 through the companies which the latter has in its portfolio, but he has never publicly discussed these accusations, saying he would only answer before the shareholders of the company.

Following the General Shareholder Meeting, Gabriel Filimon expressed his willingness to cooperate with the new Council of the Representatives of Shareholders, in spite of the obvious mutual dislike.

At the General Shareholder Meeting, the "Iaciu" faction clearly dominated that of "Filimon", both in the size of their combined stakes in the company, as well as in terms of legal expertise, as the interminable verifications required by the lawyers of the "revolutionaries" led to an outcome of the meeting which seems extremely difficult to dispute, even though there were shareholders who even during the meeting announced that they would go to court, as they claimed that the General Shareholder Meeting did not meet the legal requirements for being held.

What will be interested from now on will be how, when and if the "revolutionaries" will succeed in making their will prevail over the complicated maze which consists of SIF Muntenia, SAI Muntenia and Grupul Financiar Muntenia.

• The maze

According to its bylaws, SIF Muntenia is managed by SAI Muntenia Invest, led by the Board of Directors which has Petre Pavel Szel as chairman, and by CEO Gabriel Filimon.

SAI Muntenia Invest is owned by Grupul Financiar Muntenia (GFM), which has Gabriel Filimon as president.

The shareholders of GFM are, for the most part the employees of SAI Muntenia, and their voting rights and stakes are capped at 5%.

An option which the "revolutionaries" probably considered would be the change of the management company, as several shareholders support the idea of bringing in professional management, perhaps a foreign company, like in the case of the Proprietatea Fund.

For that to happen though, the bylaws of SIF4 must be changed first, which requires a quorum of 50% plus one share in the General Shareholder Meeting and a majority of 50% plus one share of the present members to approve it.

Unlike most of the companies on the BSE, the SIFs have millions of shareholders, therefore it is basically impossible to have half of them physically attend the General Shareholder Meeting and it is very hard to meet the quorum using other means (proxies or by mail).

At this weekend's General Shareholder Meeting, the quorum was 32.62% of the share capital, one of the biggest ever seen at any General Shareholder Meeting of the SIFs.

Even if it were to achieve a never before seen quorum, the decision of the Investment Management Company (SAI) is needed for any potential amendments to the company's bylaws to be recorded with the Trade Registry.

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Article 286, paragraph 3, of the Law 297/2004 concerning the capital market

"(3) By exemption from the Law no. 31/1990, the amendments which will be made from the articles of incorporation of the SIFs, in order to make them compliant with the provisions of the present law, will be recorded with the Trade Registry based on the decision of the Board of Directors or of the Investment Management Company (S.A.I.), as applicable, after obtaining the prior authorization issued by the CNVM".

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A working solution would be for the new Council of the Representatives of Shareholders (CRA) to initially challenge the management contract, which can be modified through the agreement of the parties.

The result can be influenced by the "chemistry" between the new Council of the Representatives of Shareholders and directors.

The first reason plot for the confrontation/understanding might be represented by the value of the management fee.

Still, it seems that the management contract leaves a lot of wiggle room in favor of the Council of Representatives of the Shareholders, according to some sources, meaning that besides the fee, the "revolutionaries" might also start off new changes.

An example would be the policy for the appointment of the representatives of SIF4 on the Board of Directors of the companies in its portfolio, on which the "revolutionaries" may want to have a say.

The shareholders of SIF Muntenia have entrusted the mission of "changing" the management to the 11 representatives: Adrian Andrici, the only "survivor" of the former CRA, Olimpiu Blăjuţ and Răzvan Lefter, employees of brokerage firm Swiss Capital, Marcel Gheorghe, lawyer specializing in the stock market, Daniel Pandele, shareholder and director of Doraly Mall, a company controlled by Gheorghe Iaciu, economist Gabriel Vasile, brokers Florin Cazan and Ştefan Gioga, Cristian Alexandru Ştefănescu - the owner of the first Subway restaurant in Romania, Catălin Mancaş and Dan Sârboiu.

This weekend's battle at SIF Muntenia has only set the stage for a war which seemed previously impossible.