THE CEO OF THE BSE, SURPRISED AT BEING QUESTIONED IN THE GENERAL SHAREHOLDER MEETING Sobolewski has finally come down from the heavens

Accustomed as he was to the reverence that he was received with in the beginning, Ludwik Sobolewski, the CEO of the BSE, must have had a shock on Friday, at the General Shareholder Meeting, when the market community, which he remembered to be kneeling before him in admiration following his achievements in Poland, assaulted him with a flurry of questions, which hinted at the anger at his conceit, but also because some of the shareholders of the Bucharest Stock Exchange consider that he is disregarding the regulations of our market and that he is ignoring the institutional and market culture.

What is interesting is that the questions asked by the BURSA newspaper were reiterated in the General Shareholder Meeting, and they were the climax of the meeting.

On April 8th, BURSA published an open letter addressed to Ludwik Sobolewski, by which it was asking him to disclose his management contract and to reveal the achievements which led to his being awarded a bonus, at the end of last year (see the open letter at https://www.bursa.ro/an-open-letter-to-the-ceo-of-the-bse-ludwik-sobolewski-234488&s=english_section&articol=234488.html).

These issues were also broached by BSE shareholder Lucian Dobre, who addressed to the BSE, in writing, a list of 32 questions, as recommended by the convening notice for the General Shareholder Meeting of the BSE of April 24th/25th. But, through that very same convening notice, the management of the BSE was also promising it would provide answers in writing to those questions, by April 18th at the latest. One week after the deadline, between the first and the second notice to attend the General Shareholder Meeting, the BSE posted a document which dismissed all of the questions asked by Lucian Dobre, claiming confidentiality or the fact that those issues were not information that should be disclosed to shareholders (see the letter of Lucian Dobre at https://www.bursa.ro/raspunzand-actionarilor-cu-o-intarziere-de-8-zile-sobolewski-gandeste-incet-235731&s=piata_de_capital&articol=235731&editie_precedenta=2014-04-25.html).

The management of the BSE behaved similarly in Friday's meeting which lasted almost 9 hours. Most of the questions asked by the shareholders were diverted to Ludwik Sobolewski, even though some of them were addressed to the Board of Directors directly.

Some people have commented that president Lucian Anghel gave a cheesy speech about "how great it is to have a CEO like Ludwik Sobolewski and we need to do our best to keep him with us".

Some of the shareholders think that many of the answers to the questions asked have been muddy, and they were left with the impression that the executives of the BSE have things to hide.

The salary of the CEO, the bonuses he collected and the criteria based on which they were awarded have remained a mystery, even though the questions about them were asked insistently.

"If they feel that those compensations are fair, then why are they hiding them?", one shareholder said, who added that he is not disputing the amounts, but he does want to know the criteria based on which they were awarded.

The management of the BSE has used the confidentiality of the contract as an excuse to avoid answering these questions.

But that answer caused Sobolewski a different problem: a few shareholders said that according to the regulation in effect, if Ludwik Sobolewski is not part of the staff of the BSE, like he claims, then he should make his contract public, if it exceeds 50,000 Euros.

Sobolewski also did not clarify whether or not he had other commitments in Poland.

An unusual question came from Marius Plugaru, who asked whether the manager of the BSE intends to keep his job, considering that he is considered the candidate most likely to become the CEO of the Polish television.

In response to the question addressed by Mr. Plugaru, Sobolewski responded that he was nominated as a candidate on the Supervisory Board of the company that manages the Polish public radio and television network.

According to him, the election process is under way. The CEO said that his potential nomination for that position would not affect his activity at the BSE, which is arduous, making work even the week-ends - a response which MAKE, the president of the BURSA press group later commented on sarcastically: "It would seem that Sobolewski doesn't need the employees of the BSE, since he manages it during the weekend; that's good news - he has essentially informed us that the BSE is open for trading on Saturdays and Sundays as well".

The shareholders have also asked about the mandate that he CEO of the BSE was given for the participating in the General Shareholder Meeting at the end of March.

The management of the BSE was also asked to explain why salary expenses have increased, even as the staff has been downsized.

• The rejection of the list-based voting, a slap for Anghel and Sobolewski

The shareholders of the Bucharest Stock Exchange said " no" to Sobolewski's initiative (supported by some of the members of the Board of the Exchange), to use the list-based vote to designate the candidates of the companies in the group - the Central Depository and the Bucharest Clearing House, proving that they could only put up with aberrant proposals up to a certain point.

For the Central Depository, the BSE had drawn up a list of 17 candidates, whereas the Board only has 9 seats, without explaining the criteria which would be used to determine the rightful candidates.

Prior to the General Shareholder Meeting, the Association of Brokers warned that this voting procedure, which prevents the shareholders from electing the candidates they favor and voting against those they disapprove, is illegal and that it can lead to the General Shareholder Meeting of the BSE being challenged in court.

A warning sign also came from the Financial Oversight Authority, which sent a letter to be read in the General Shareholder Meeting. Without wanting to "meddle" with the shareholders' affairs, the ASF did warn them about the ambiguities of the list-based vote, as it wanted to make sure that they vote knowingly.

During the meeting, Dan Paul, the president of the Association of Brokers (and vice-president of the BSE) and Lucian Anghel, the president of the BSE, argued over the issue of the voting procedure to be used for electing the executives of the companies in the BSE group.

Anghel claimed that the articles of incorporation allow voting for lists of candidates, whereas Dan Paul said that the articles of incorporation only allow voting for individual candidates, and "if Florin Pogonaru wants to have 2-3 representatives, that is a whole different matter to discuss" (ed. note: the list of candidates featured several people who are considered close to businessman Florin Pogonaru).

Some of the shareholders consider that rejecting the voting procedure proposed by the BSE represents a slap for Ludwik Sobolewski and Lucian Anghel, in particular, demonstrating a shift in the strength of the factions within the shareholder structure of the BSE compared to the time when the current Board of Directors was elected. According to them, no opposition has taken shape, but it is clear that the "coalition" that has supported the current management has broken apart, and the path is clear for more negotiations.

Referring to the rejection of the list-based voting, Dan Paul was harsh: "This is a victory against illegal practices. The BSE has asked for voting to be done based on lists, a system which doesn't even exist in the Parliament, as it is a communist practice".

• Four incompatible candidates, for the management of the Central Depository

Even without the list-based voting, the shareholders of the BSE have designated among the candidates for the Central Depository for people who are currently incompatible with the positions they were nominated for - Ludwik Sobolewski, the CEO of the Bucharest Stock Exchange, and board members Stere Farmache, Robert Pană and Adrian Lupşan.

Cumulating positions is prohibited through a decision of the former CNVM, currently merged into the Financial Oversight Authority.

Even though the Authority is working on draft regulation which could eliminate those restrictions, some lawyers also feel that even at the time when they were nominated, the candidates in question should have met the eligibility criteria. Considering that in order to run for the elections at the Central Depository, the candidates were supposed to file statements concerning compatibility, the candidates were asked during the General Shareholder Meeting "whether they lied in their statements".

Their answer was that "they would become compatible" by the time the elections for the Depository took place.

Lucian Anghel said in the General Shareholder Meeting that it is true that some of the candidates are currently incompatible, but that the situation would change by the time the elections came around.

Concerning this statement, the president of the "BURSA" press group, MAKE, made the following comment: "This kind of < skirting > of the law, based on regulations that have not yet been implemented, by bending the current ones, paves the way for arbitrary decisions.

Based on this precedent, it is now possible to make any decision that goes against the law, as long as you promise to change the law, in order to make legal the decision that is currently illegal.

I think that such an action makes a mockery of the principles that underlie legality.

If this is the culture of the stock market that Ludwik Sobolewski brings, then I would rather be accused of going against that culture, but at the same time abide by the law".

The other five candidates of the BSE for the depository are four of the current directors - Cecilia Manta, Adrian Simionescu, Dana Mirela Ionescu and Carmen Dumitrescu, as well as Răzvan Paşol, the president of Intercapital Invest.

Because she was nominated by the BSE as well as by SIF Moldova, Cecilia Manta appeared twice on the voting bulletins, meaning that in the ranking by the number of votes, she came both first, as well as eighteenth. The mistake was noticed by the president of SIF5 Oltenia, Tudor Ciurezu, who expressed his discontent at the bad organization of the meeting.

It would have been interested to see how would the BSE have handled this had Cecilia Manta won two of the first nine positions - would they have granted her two mandates?!

• The software of the Depository rejected; Agalopol was not received in the General Shareholder Meeting of the BSE

With a majority of 67.4%, the shareholders of the BSE have rejected the proposal for the Central Depository to acquire a new IT system, for an amount of up to 3.86 million Euros and to grant the Central Depository the mandate to select the provider, an item requested by a group of shareholders.

This decision made it to the General Shareholder Meeting of the Bucharest Stock Exchange, after the shareholders of the Depository failed to make any decision on that matter, at the end of March, amid a conflict between the CEO of the BSE and the management of the Central Depository.

In the market, there was talk that after the Depository held the call for tenders for selecting the provider for an IT system, Ludwik Sobolewski had intervened for a new bid by Nasdaq OMX to be included on the list.

Following the whole scandal, however, the BSE advised the shareholders to opt for developing a software solution needed for joining the pan-European "Target 2-Securities" "in-house".

In the General Shareholder Meeting, Ludwik Sobolewski supported the development of an "in-house" software, as shown in a presentation of the BSE.

The BSE executive told the officials of the Depository- president Cristian Agalopol and general manager Adriana Tănăsoiu - that they were unwanted at the General Shareholder Meeting of the BSE, where it would have been common sense to have their alternative be presented.

In the lobby of the meeting room, some shareholders saw that act as unusually hostile and an abuse of power.

In the absence of the executives of the Depository, it was Adrian Simionescu, one of its board members, who argued the opinion of the Depository. He said that the acquisition of a new software is a strategic project for the stock market and he said that the amount proposed in the General Shaareholder Meeting for the acquisition of the software was established to comprise all the bids in the selection process, including that of the provider which was taken under consideration at the request of the BSE, through its CEO Ludwik Sobolewski.

After the announcement of the vote on that item of the agenda, Adrian Simionescu asked for the votes to be made available to the General Shareholder Meeting and for the votes to be recounted, as he had suspicions over the outcome of the vote. After the recount, the vote was validated.

Some of the participants in the General Shareholder Meeting consider that incurring such a high expense with the software for the Depository at this time was not justified, and he estimates that the decision concerning the software was the correct one.

Ludwik Sobolewski did not clarify whether or not he lobbied for the offer made by Nasdaq OMX for the new software of the Depository, even though the selection had ended. Some people are wondering why he didn't recommend the idea of developing the software "in-house" from the beginning, and only took to supporting it now, when the bid of the Nasdaq OMX was withdrawn.

In the lobby, some shareholders said that this conflict around the software is "a struggle over grafts", between the executives of the BSE and those of the Depository.