The ASF has broken up "the concert" at SIF Oltenia

The shareholders of SIF Oltenia are meeting today in the General Shareholder Meeting to approve the balance sheet, on the second convening, which could provide a picture of the strength of the factions within the company, wherein the conflict between president Tudor Ciurezu and businessman Florin Pogonaru has come to light.

Market sources are saying that the shareholders' preference for one of the dividend proposals (0.21 lei/share, requested by a group of shareholders made up of Gheorghe Iaciu and ING funds; or 0.16 lei/share, proposed by the management) could hint at their intentions for the next elections, as three board members of SIF Oltenia, considered close to Florin Pogonaru, have resigned on March 28th.

After the resignations, the Financial Oversight Authority (ASF) has asked SIF Oltenia to summon the shareholders to elect three members on the Board of Directors, but investors are expecting elections for the whole management structure of the company to take place in the General Shareholder Meeting.

The agenda of today's General Shareholder Meeting also includes the election of a member on the Board of Directors, on the position which remained vacant after last year's elections, with the only candidate being Victor Căpitanu, a partner in investment firm Capital Partners, who is considered close to SIF Banat Crişana.

Market sources are saying that aside from the Iaciu - ING group, which would prefer the higher dividend, the BCR - Pogonaru group favors the same option.

The important shareholders at SIF Oltenia, also include the groups around SIF1 Banat Crişana and SIF2 Moldova, which entered the shareholders structure after the ASF allowed cross-holdings between the SIFs.

One of the scenarios making the rounds in the market, prior to the General Shareholder Meeting, was that the SIFs would not vote for any of the dividend plans, going for the n-dividend option backed by SIF1 Banat Crişana. However, some voices are saying that SIF Moldova would support the smaller dividend option.

Prior to the General Shareholder Meeting, the Financial Oversight Authority has identified three groups acting in concert at SIF Oltenia, which had exceeded the allowed legal holding of 5%, namely SIF Banat-Crişana, SIF Moldova and ING.

ASF did not qualify the BCR-Erste group as acting in concert, like it had done last year, even though according to some sources, the group was featured on the list sent by the management of the SIF to the Authority.

In April 2013, the Romanian National Securities Commission decided that the group of shareholders made up of "Erste Group Bank", Business Capital for Romania Opportunity Cooperatief", "Romanian Equity Partners Cooperatief", Banca Comercială Română, the BCR Private Pension Fund managed by BCR Pensii, FDI BCR Dinamic managed by SAI Erste Asset Management, FDI BCR Expert, managed by SAI Erste Asset Management and the BCR Optional Pension Fund were acting in concert by holding 8.78% of the equity of SIF Oltenia, thus exceeding the legally allowed holding limit of 5%.

The Funds have sued the ASF and the Court of Appeal rulings invalidated the concertation charges brought against them by the Financial Oversight Authority. The rulings of the Court of Appeal are not final.

The case however, concerns facts from last year, not the current General Shareholder Meeting.

Still, the ASF has applied its decision to the current situation and has no longer treated the BCR-Erste group as acting in concertation, using the court ruling as a justification for doing so, even though we are in a different moment from an economic point of view.

"The ASF has done nothing but implement an enforceable court ruling, even though it is not final", Mircea Ursache, the vice-president of the ASF told us. According to him, failure of the ASF to comply with the ruling of the court would represent an offense.

"What the ASF did is wrong", lawyer Gheorghe Piperea said: "The ASF was supposed to issue a new decision, which could then be challenged. The ruling by which the court suspended the concertation only applies to last year's decisions of the ASF, whereas for this year's situation, the ASF should have issued a new concertation decision. The General Shareholder Meeting can be challenged. The suspension of the decision of the ASF is temporary and can't apply forever".

Furthermore, some voices are claiming that the ASF is disregarding its own rules, because, compared to April last year, the Authority has issued an opinion by which the investment funds and the SIFs are considered to be acting in concert with their administrators.

Moreover, those voices are saying that excluding the BCR group from the concertation charge puts it at an advantage over the other groups of shareholders, which don't have the time to challenge the decision in court.

The ASF has stated that the group made up of SIF1 Banat-Crişana, SIF Muntenia (whose management company is owned by SIF1), Biofarm (where SIF1 and SIF4 hold the majority stake) and the administrators of SIF1 - Dragoş Bîlteanu, Najib El Lakis and Ion Stancu hold 5.70% of the shares of SIF5 Oltenia together, exceeding the allowed limit, and has forced these shareholders to pare down their holdings to 5%, within three months.

Also, SIF2 Moldova and its administrators Costel Ceocea, Claudiu Doroş and Cătălin Iancu together hold 5.03% of SIF Oltenia, and four funds controlled by ING hold 6.07%. The authority has forced these groups to pare down their holdings to comply with the allowed holding limit.

Which is normal.

Discrimination is abnormal.