The 1% holding threshold per threshold in the SIFs goes before the Constitutional Court

• Lawyer Gheorghe Piperea: "The prosecutor has admitted the unconstitutionality claim of the 1% limit"

The judges of the Constitutional Court had yet to decide yesterday on the issue of the unconstitutionality claim against the 1% limit applied to the stakes of its shareholders, which had been set through an emergency ordinance in the summer of 2005, lawyer Gheorghe Piperea said for BURSA, one of those representing SIF "Transilvania" in this lawsuit, a few minutes prior to the closing of the edition.

The maximum holding limit in the FICs, has come to the attention of the Constitutional Court, in the context of a lawsuit between SIF "Transilvania" and the Romanian National Commission (CNVM). Two years ago, the capital market watchdog rejected the raise of the holding limit two years ago from 1% to 5% in the case of SIF "Transilvania", which had been decided in the General Shareholder Meeting of March 2009, claiming that such a decision was in violation of the law. At the time, the shareholders of SIF3 decided to keep the 1% holding limit.

"The prosecutor sustained the admission of the unconstitutionality claim" said Gheorghe Piperea, who added that the judges of the Constitutional Court may make a decision in a few days.

"Things are not so easy; there are many aspects that need to be taken into consideration, which is why I expect a ruling to be issued within a week or two. For now, there is no solution in the trial on this matter, as the decision still lies with the judges of the Court", lawyer Piperea said.

The Constitutional Court had two lawsuits from SIF Transilvania on trial. One was rejected by the court, and the second one, concerning the maximum allowed holding threshold, still awaits the decision of the Court.

Investors are anxiously awaiting the verdict of the Court as a ruling that would favor SIF "Transilvania" could have a major impact on the dynamic of investments in the five SIFs, which are currently limited at 1%.

According to lawyer Gheorghe Piperea, the admission of the unconstitutionality claim would allow the shareholders of the FICs to set the holding threshold in their General Shareholder meetings.

A holding threshold of 0.1% was set in 1996, by the first General Shareholder Meetings of the five SIFs, when the five Private Property Funds (FPP) turned into investment companies.

At the time, the law did not provide any holding threshold, as it was included in the bylaws of the SIFs.

The reason invoked for setting the limit of 0.1% was the worry of the PDSR (the ruling party at the time) that foreigners would gain control of the 30% of Romania"s assets which had been allocated to the five Private Property Funds.

In the summer of 2005, the holding threshold was raised to 1%, through an Emergency Ordinance, issued during the Parliamentary holiday. The draft law which the Emergency Ordinance had been based upon had been approved by the Senate, but there was no longer time for it to be discussed in the Chamber of Deputies.

The SIFs were required to change their bylaws to change the holding threshold from 0.1% to 1%, within 60 days from the passing of the Emergency Ordinance.

The threshold in the SIFs was discussed again in the Parliament about three years ago, when Senator Ovidiu Marian drew up a draft bill for eliminating the threshold limit. The version that passed the Senate had raised the threshold to 5%, but is currently stuck in the Budget and Finance Commission of the House of Deputies.