Sobolewski takes it too far; Dan Paul reacts

The admirable restraint shown by market participants for more than eight months now has been broken by the president of the Association of Brokers, Dan Paul, who just couldn't take it anymore after the aberration proposed by the CEO of the BSE, Ludwik Sobolewski, namely for the shareholders to vote in bulk, for the candidates included on a list containing seventeen names, for the Board of Directors of the Central Depository, which only has nine seats.

The Association of Brokers, whose CEO Dan Paul is also the vice-president of the Bucharest Stock Exchange, also warns that the validity of the decisions made in today's General Shareholder Meeting of the Bucharest Stock Exchange could be challenged by shareholders if the proposed voting method was used.

The unusual proposal to no longer have the shareholders of the BSE vote for individual candidates for the management of the companies in the group - The Central Depository and the Bucharest Clearing House -, but to vote for a whole list instead, came from the CEO of the BSE, Ludwik Sobolewski, and was barely approved by the Board of the BSE. However, the BSE did not provide the shareholders with any explanation on how the rightful directors would be elected, since their number exceeds that of the available seats on the Board.

One method suggested by people in the market was to do a draw, mocking the absurdity of the proposal, which prevents the shareholders from voting against the candidates they don't endorse.

The Association of Brokers considers that voting for a list of candidates, as part of the General Shareholder Meeting of the main market operator, rather than for every candidate individually, leads to the invalidation of the vote and violates the principles of corporate governance and transparency which the BSE should be the first to uphold. "Shareholders are either being forced to vote for candidates they don't approve but who are included on the list, or not to vote for the list at all, even though it may comprise candidates they approve", the Association states in a communiqué.

A group of shareholders of the BSE had a similar opinion, and they have asked for the addition a new item on the agenda of the General Shareholder Meeting concerning the selection of a new voting method.

Dan Paul, the president of the Romanian Association of Brokers, told us: "The Association of Brokers wants compliance with the Romanian stock market legislation, and considers that the procedure for the selection of candidates for the management positions of the Central Depository and the Bucharest Clearing House, as well as the list of candidates itself are outside the law".

The BSE was arrogant enough to include on the list of candidates for the Depository four currently incompatible persons - Ludwik Sobolewski, the CEO of the BSE, and three directors of the BSE - Stere Farmache, Adrian Lupşan and Robert Pană.

Currently, a decision of the Romanian National Securities Commission (currently the ASF) exists which prohibits the holding of multiple executive positions in the market operators and in the Depository.

The ASF however is working on a draft for a regulation that could eliminate those restrictions.

• The Association of Brokers: "Interest groups will get the ability to push their own candidates"

According to the Association of Brokers, the proposal of the BSE for a voting procedure opens up the possibility to have interest groups include on the lists candidates others than the shareholders of the two companies.

The representatives of the Association also said: "Through that list, the Board of the Bucharest Stock Exchange is proposing a number of 17 candidates for the Board of Directors of the Central Depository and 7 candidates for the Board of the Bucharest Clearing House, even though the articles of incorporation of the two institutions stipulate a number of 9 board members, and 5, respectively.

Under these circumstances, if the two lists were to be voted in their entirety in the General Shareholder Meeting of the BSE, the procedure contains no mentions of the criteria that would be used for to eliminate the extra candidates from the list".

The Association of Brokers warns that any decision to appoint these candidates which the shareholders of the BSE might make, based on the proposed procedure, could be invalidated by the shareholders interested in doing so, given the violation of the principles of transparency and corporate governance.

The General Shareholder Meeting of the BSE was not held yesterday on its first summoning, because the quorum was not met, so that Ludwik Sobolewski postponed his first speech to shareholders until today.

Also included on the agenda of the General Shareholder Meeting is the proposal to have the Central Depository acquire a new IT system, for a maximum price of 3.86 million Euros and empowering the Central Depository to select the provider of the software, an item requested by a group of shareholders.

This decision was placed on the agenda of the Bucharest Stock Exchange, after the shareholders of the Depository failed to make a decision on this issue at the end of March, amid a conflict between the CEO of the BSE and the management of the Central Depository.

There was talk in the market, that after the Depository had already run the selection process for the provider of the IT system, Ludwik Sobolewski had asked a for an offer from a new bidder to be included on the list, specifically from Nasdaq OMX.

Following this scandal, however, the BSE has advised the shareholders to develop an "in-house" solution for the software needed to join the "Target 2-Securities" pan-European platform.

In the meeting, the shareholders of the BSE are also being called to approve the financial statements and the distribution of last year's profit.

The management of the Bucharest Stock Exchange is proposing a gross dividend of 1.1777 lei/share out of last year's profit.