Investors: A project of the Romanian Securities Commission could demote 95% of the issuers listed on the Rasdaq

The move of the issuers from the Rasdaq to the regulated market of the Bucharest Stock Exchange or to the Alternative Trading System (ATS), which is proposed by the CNVM (in a draft of the Romanian National Securities Commission, is affecting the rights and the confidence of investors and could lead to the demotion of over 95% of the issuers listed on the Rasdaq, a press release sent yesterday by the Association of Capital Market Investors (AIPC) states.

Thus there is the risk of investors taking the BSE and the Romanian National Securities Commission to court, claiming damages which, in the case of the Romanian National Securities Commission would have to be paid out of the state budget, the aforementioned press release states.

The number of companies listed on the Rasdaq tier of the Bucharest Stock Exchange (BSE) decreased from 1,561 in 2009 to 1,309 in 2010. Last year the Rasdaq saw 247 companies, with just one new listing, whereas four of the most liquid issuers - Cemacon Zalău, Electroargeş, Prefab Bucharest and Ropharma Braşov moved to the BSE.

The Association of Capital Market Investors considers that the draft by the Romanian National Securities Commission illegally changes the terms for being admitted on a regulated market included in articles 213 and 217 of the law no. 297/2004 into terms for being eliminated from such a market, namely the Rasdaq market.

Furthermore, the AIPC considers that the project violates the decision of the CNVM no. 1092/1996 which authorized the Rasdaq regulated market. "This decision is currently in effect because there currently isn"t any legal act that explicitly invalidates it. Contrarily to the informal statements by the representatives of the CNVM, the Law on the Capital Market no. 297/2004 does not have any provisions that would affect the Rasdaq market or that would cancel the decision of 1996 which states that the Rasdaq is a regulated market", the AIPC states in its press release.

The restructuring of the Rasdaq has been on the agenda of the BSE for years. In 2007 the Bucharest Stock Exchange proposed the creation of a special category of issuers, which would be called Rasdaq-Star, which would include the issuers traded on the Rasdaq that met the legal eligibility criteria for a regulated market. However, in 2008, the CNVM rejected the proposal of the Bucharest Stock Exchange.

• The contents of the project of the CNVM

At first, the Bucharest Stock Exchange would select the issuers that met the requirements for being admitted on a regulated market as of December 31st, 2010, according to the draft by the Romanian National Securities Commission, to which the list would then be sent. Then, the BSE would inform the companies that meet the requirements, while at the same time notifying the Romanian National Securities Commission, and the companies concerned would then be required to summon and hold General Extraordinary Shareholder Meetings in order to decide on the admission on the regulated market, within nine months from the date of the notification.

If the shareholders approve the admission for trading, the issuer in question would have to send the prospectus for the listing to the Commission, within six months from the date of the General Extraordinary Shareholder Meeting.

The shares of the companies that do not meet the requirements for being listed on the main market will be traded on the alternative trading system within 18 months from the coming into effect of the instruction of the CNVM.

According to the Romanian Securities Commission, until the date of beginning trading on the main regulated market or on the ATS, the issuers from the Rasdaq or from the unlisted tier, would continue to file their financial reports based on the current reporting rules.

The delisting from any market or alternative trading system of the companies that were part of the Mass Privatization Program would be done exclusively via a public takeover bid addressed to all the shareholders.