Franklin Templeton tries to stave off the lawsuits against the Proprietatea Fund

• The shareholders of the Fund, summoned to approve the Fund"s Articles of Incorporation for the second time

Assaulted by the angry shareholders who are going to court requesting the cancellation of the decisions of the last General Meeting of the Shareholders of the Proprietatea Fund (FP), Franklin Templeton, the manager of the Fund, is trying to counteract part of the arguments of the unhappy shareholders, by summoning a new Extraordinary General Meeting of Shareholders, for the approval of the Articles of Incorporation of the Fund for the second time.

The lawsuits began immediately after the General Meeting of Shareholders of September 6th, when Franklin Templeton was appointed as the manager of the Fund and the listing of the Fund on the Bucharest Stock Exchange was approved.

The first lawsuit was filed by a lawyer, Ioana Sfârâială, who is famous for her involvement in the lawsuit which caused the Railway Tourism Company to lose the "Astoria" hotel.

Ioana Sfârâială requested the invalidation of the decisions made by the General Shareholder Meeting because the draft including the amendments of the Articles of Incorporation was not published 30 days prior to the General Shareholder Meeting.

Sfârâială also claimed that the appointment of "Franklin Templeton Investment Management" as manager of the Proprietatea Fund is null, since it was depending on the amendment of the Fund"s articles of incorporation.

The first hearing for the trial was set for November 3rd. Meanwhile, two more lawsuits were filed, requesting the invalidation of the decisions of the General Shareholder Meeting of September 6th.

Even though they consider the lawsuits filed by the unhappy shareholders are "aberrant", market sources are worried that the Proprietatea Fund could be dragged through the courts for many months from now on, which would endanger its listing on the Bucharest Stock Exchange.

"The shareholders of the Fund have been waiting for the listing of the Fund for years, and now when it is finally approved, some people are nitpicking at the legality of the decision to publish the Fund"s Articles of Incorporation. The issue that the litigants are invoking may be just a legal technicality, but such lawsuits can last a long time. If the Articles of Incorporation of the Proprietatea Fund get approved by the shareholders again, then we can say goodbye to any lawsuits on this subject. This will remove the grounds for any similar lawsuits", market sources who wanted to remain anonymous said for BURSA.

• The Revenue and Expense Budget for 2011, on the agenda

At the end of next month, the shareholders of the Proprietatea Fund are being summoned to vote on the Fund"s Revenue and Expense Budget for 2011.

The Fund expects to make a profit of 207 million lei in 2011, for a revenue of 299 million lei and expenses of approximately 92.3 million lei.

The Revenue and Expense Budget for 2011 is rather conservative, based on the premise that the Fund will not get listed on any Foreign Stock Exchange in 2011 and it will not make any transactions involving the companies in its portfolio.

However, the representatives of Franklin Templeton said that the Revenue and Expenses Budget do not reflect the activities that the Administrators of the fund have planned for next year.

Compared to the Revenue and Expense Budget for 2010, the one for 2011 expects a 74% reduction in the wages of employees, administrators and managers, as well as an 81% reduction in rent expenses.

Conversely, insurance premiums expenses will increase 79%, as the members of the Committee of Representatives will be required to conclude mandatory liability insurance policies.

Expenses with bank services are expected to increase 122%, since the Fund will be paying approximately 24,000 Euros every month to a depositary bank.

The commissions paid by Franklin Templeton were estimated at around 60 million lei (0.479% a year of the Net Asset Value of the Fund), and they represent approximately 69.5% of the day-to-day expenses of the Fund.

The Fund has also budgeted commissions, fees and subscriptions of 13.43 million lei, which also include commissions paid to the Romanian National Securities Commission and the Central Depository.