SIF1, PATIENCE! Mircea Ursache proposes allowing the SIFs to hold the extraordinary shareholder meetings with lower quorums

The decision of the management of SIF1 Banat Crişana to reduce its share capital has no legal power, considers Mircea Ursache, the vice-president of the stock market division of the ASF, who claims, however, that the SIFs should align with the Law of Companies, which allows the meeting of the General Shareholder Meetings with lower quorums than the ones stipulated in the articles of incorporation.

According to the vice-president of the Financial Oversight Authority, in 2006, the law no. 31/1990 concerning companies has been amended to account for the European directives, meaning that all the companies have the right to hold the General Extraordinary Shareholder Meeting with a quorum of 25% on the first summons, and 20% on the second, but four of the five SIFs can not do that, simply because they have different minimum requirements stipulated in their articles of incorporation.

Mircea Ursache told us: "My first concern, now that Government Ordinance 32 (ed. note: concerning the collective entities that invest in securities) will go up for debate with the parliamentary commissions, both in the Senate and the Chamber of Deputies, is to send to the Parliament the request to discuss the elimination of this barrier which is unnatural, counterproductive, that would allow the SIFs to hold the Extraordinary General Shareholder Meetings just like all the other companies in Romania".

In his opinion, at SIF Banat Crişana, it has come to the situation where the Board of Directors would decide the reduction of the share capital, precisely as a result of the inability of "the old structure that regulated the stock market" to get the SIFs in line with the Law 31/1990 concerning companies.

Mircea Ursache went on to say: "In the articles of incorporation of this SIFs it says that it is the right of the Board of Directors to act like that. I say it's not! I say that they should get in line with the Law no. 31/1990 and that they can hold a General Extraordinary Shareholder Meeting with 25%".

Besides, the ASF has recently rejected the request of the Board of Directors of SIF Banat-Crişana to lower the quorum for the Extraordinary General Shareholder Meetings. The request for authorization had been transmitted by adapting the "bylaws to the new provisions of the new stock market law, as stipulated through Government Emergency Ordinance no. 32/2012 concerning the collective bodies that invest in securities and the investment management companies".

Mircea Ursache told us that the request of SIF1 was rejected because there was no legal basis for it.

The vice-president of the ASF has also said that in his opinion, the request to approve the reduction of the share capital of SIF1, approved by the General Shareholder Meeting, should be rejected.

SIF Moldova has also proposed the making of some additions to Emergency Government Ordinance 32/2012 to allow the amendment of the articles of incorporation of the SIFs, according to a recent statement given to BURSA by Costel Ceocea, the president of SIF2.

"Since the SIFs are created through an administrative deed and originate from the reorganization of the former State Property Funds (FPPs) and the process of the SIFs complying with the specific legislation is almost completed, the making of additions to the Emergency Government Ordinance (OUG) no. 32/2012/ was proposed, or the issuing of another law that would stipulate that by exemption from the law No. 31/1990, the Boards of Directors/ the Supervisory Boards / the Investment Management Companies that manage a SIF should be required to adopt through a decision the deeds for amending the Articles of Incorporation of the SIFs, in order to align them with the quorum requirements for holding the meetings and making decisions in the General Shareholder Meetings stipulated in the Law no. 31/1990", Costel Ceocea told us.

• The vice-president of the ASF: "The SIFs should be able to buy other SIFs"

Another proposal which Mircea Ursache is promoting is allowing the SIFs to be able to invest in the shares of other SIFs.

He told us: "I am consternated that the only "Other Types of Investment Companies" that are not allowed to buy shares in others institutions of that nature are the SIFs. The Proprietatea Fund and any other foreign funds are allowed to buy shares in the SIFs, as long as they abide the holding cap set for the SIFs. In Romania there is this legislative decision which has endured for years, which nobody has been able to explain to me. Whose interest is it to place this Chernobyl-like concrete bell around the SIFs, instead of letting the market move how it wants?"

In 2010, the five Financial Investment Companies (SIFs) have asked the former Romanian National Securities Commission (CNVM) to allow them to buy stock in each other, and the same action was taken on the next year.