Questions and answers

Questions and answers

• Question:

• Who can own shares of the Proprietatea Fund?

• Answer:

The direct beneficiaries of the compensation process, and those who bought shares in the Fund on the informal market. Starting with January 25th, investors will be able to acquire shares on the regulated market.

• Question:

• What is the function of "Franklin Templeton", as investment manager of the Proprietatea Fund?

• Answer:

The investment manager will be responsible with the handling of the portfolio of the Proprietatea Fund in accordance with the investment policy of the Proprietatea Fund, in order to increase the value of its portfolio, for the benefit of all its shareholders. Thus, the manager will buy and sell shares in order to diversify the portfolio, to increase the net assets of the Fund, to increase the price of the Fund"s shares, to reduce or even eliminate any potential discount between the value of the net asset and the price per share, and in order to implement a sustainable dividend policy.

• Question:

• How are dividends calculated?

• Answer:

Based on the net profit for each year, shareholders can decide to allocate dividends out of the distributable profits. As long as the State is the main shareholder of the Fund, the minimum dividend payout ratio is 50%.

• Question:

• What is the argument for listing the Proprietatea Fund on the London Stock Exchange?

• Answer:

The Bucharest Stock Exchange may, in time, prove too small for the Proprietatea Fund. In order to ensure a fair price for the shares of the Proprietatea Fund, adequate liquidity is necessary. The listing of the Proprietatea Fund on the London Stock Exchange is a way of ensuring this liquidity, as well as way of introducing the shares of the Proprietatea Fund to foreign investors that may be interested.

• Question:

• What happens if, at one time, the requests for compensation would amount to a stake of 50% of the Proprietatea Fund, for instance?

• Answer:

The listing will bring changes in the shareholder structure of the Proprietatea Fund, without even considering the compensation process. Anyone will be able to buy shares and accumulate them. It someone were to receive a 10% stake in the fund following the compensation process, it will be their problem. It will not affect the other shareholders, it will not influence the holdings of private shareholders. The Romanian state is still a dominant player in the Fund, holding about 40%, but eventually this will change. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• Has the structure of the share capital of the Proprietatea Fund been finalized?

• Answer:

This issue was settled last year, by canceling the unpaid shares of the state, thus allowing the Fund to distribute. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• Were minority shareholders harmed by the Government Decree which decided that the money from Romania"s foreign claims would no longer be given to the Fund?

• Answer:

Ordinance 81 said that the money recovered from Romania"s foreign claims would be given to the Proprietatea Fund in exchange for the latter issuing new shares for the State. Had that money continued to come to the Fund, the total value of the Fund would have risen, but the book value per share would not have been impacted in any way. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• The law states that the Proprietatea Fund is entitled to receive money from the privatization of CEC Bank and that of Romtelecom... Will the Fund give up on receiving those amounts?

• Answer:

These amounts will be paid to the Fund at the time of the privatization of those companies, in exchange for issuing new shares for the state. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• Isn"t a moral dilemma created if the shareholders of the Fund which were compensated with shares valued at 1 leu won"t be able to sell their shares at the same price?

• Answer:

We did not create this compensation system. All we can do is to make sure that the price will be as high as possible and to explain to investors how things work and what they can expect from us as managers of the Fund.

The idea of compensation, which was the basis of the creation of the Fund, was a very brave one, but its implementation had a few flaws. The Fund was created more than six years ago, the law states that it should have been listed a long time ago... It will be listed more than five years after its creation, so we can say that there were some issues in implementing this idea. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• How will you buy 10% of the shares of the Proprietatea Fund without giving some shareholders an unfair advantage over others?

• Answer:

There are very strict rules over the way this operation is performed, allowing it to be made correctly. These programs are intended to avoid affecting the price too much in either direction, perhaps just to create increased demand. (Grzegorz Konieczny, fund manager at the Proprietatea Fund)

• Question:

• Is the enthusiasm of brokers and the BSE over the listing of the Proprietatea Fund justified?

• Answer:

I think it is. If the volumes of shared that the media claims were being traded through the Central Depository prior to the listing will persist after the listing, it would mean that the trading volume of the BSE would double. Especially since after the listing, the trading volume for the Fund is expected to increase. (Dana Mirela Ionescu, chairwoman-managing director of "Raiffeisen Capital&Investment")

• Question:

• Are foreign investors interested in the Proprietatea Fund?

• Answer:

There is a lot of interest abroad in the Proprietatea Fund. There are funds that are empowered to invest in all the states of the European Union, with allocation ratios for each country and region. They couldn"t meet their allocation quota for Romania, precisely because the market is so illiquid. The Proprietatea Fund could be exactly what they were looking for. Apart from that, there is interest from funds outside the European Union. (Dana Mirela Ionescu, chairwoman-managing director of "Raiffeisen Capital&Investment")

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• Question:

• Does the Fund have other significant shareholders apart from the Ministry of Finance?

• Answer:

The Malaxa family holds 7.35% of the share capital, but has only 2.87% of the votes. (Dana Mirela Ionescu, chairwoman-managing director of "Raiffeisen Capital & Investment")