ROMANIA"S GOVERNMENT AGENT WITH THE EUROPEAN COURT OF HUMAN RIGHTS: "I see no problem if the shares of the Proprietatea Fund were to trade below 1 leu on the Stock Exchange"

The possibility of the shares of the Proprietatea Fund falling below the par value when they start trading on the Bucharest Stock Exchange on January 25th, doesn"t seem to worry the officials of the state at all, even though some of the former asset owners warned that they would sue the Romanian state if this were to happen, considering that they were compensated with shares with a par value of 1 leu.

"I don"t thinj anybody would have a problem if the shares of the Proprietatea Fund were to trade not at 1 leu, but at 0.9 lei/share", Horaţiu Radu, the agent of the Romanian Government with the European Court of Human Rights said yesterday, and he added: "Likewise, I don"t feel that anyone will have a problem if the stock were to trade above the par value. According to the case law of the European Court, fair compensation does not imply full compensation".

According to the law, the conversion of the compensation deeds into stock was made, until last week, at a fixed parity (1 leu of the amount requested as compensation equaled one share in the Fund).

However, after the Fund gets listed on the Stock Exchange, the conversion will be done at the mean weighted price of the shares calculated based on the first 60 trading sessions, as provided by the law. Thus, the value of the stakes that the future shareholders will receive from the Fund will depend on how the shares will do in the market.

Horaţiu Radu answered that the listing of the Proprietatea Fund on the Stock Exchange, with a delay of almost six years, could reduce the number of lawsuits filed against the Romanian state with the European Court on the issue of the compensation. He said:

"Until now, the ECHR had been saying that the compensation system of offering shares in the Proprietatea Fund was all right, except it was theoretical and illusive, rather than concrete and effective because the Fund was not listed. Now that the fund is getting listed, the compensation system will be concrete and effective because the former owners will be entitled to receive money in exchange for the shares".

In mid October last year, the ECHR issued a CEDO a pilot-ruling which stated that the Romanian state had 18 months available to make order in its legislation for compensating the asset owners whose assets were nationalized during the communist regime.

The decision of the Court was issued in a case in which three former asset owners, born before 1940, were complaining that the Romanian authorities delayed for years paying them the compensation for their buildings and plots of land that the state seized from them during the communist period.