THE GENERAL SHAREHOLDER MEETING IS GETTING NEAR Small shareholders of the Proprietatea Fund, unhappy with the performance of "Franklin Templeton"

• "Forţa Civică" requests the termination of the contract with the fund management company

On Wednesday, the shareholders of the Proprietatea Fund are being asked to decide on the reduction of the share capital, as well as on other changes to the articles of incorporation. Some of the shareholders are already expressing their unhappiness with "Franklin Templeton", the manager of the Proprietatea Fund.

"The Romanian government must urgently request the termination of the contract with Franklin Templeton, due to its disastrous results and its lack of performance", Adrian Iuraşcu, the president of the "Romanian Civic Forum", the umbrella-association which brings together 11 organizations of assets owners whose properties were seized by the Communist regime.

According to him, "The Representation Committee should react to the lack of performance and the disastrous results of the manager of the fund".

The Proprietatea Fund (symbol: FP) had an unaudited net loss of 7.9 million lei, compared to a net profit of 60.1 million lei, logged in Q3 2010, according to the quarterly report of the Bucharest Stock Exchange.

On the other hand, after the first nine months, the Proprietatea Fund had a net profit of 535.2 million lei, 97.8% higher compared to last year.

Adrian Iuraşcu says that "Franklin Templeton" is acting like it were the true owner of the fund. "It is unacceptable for a foreign manager to do what it wants in strategic sectors", he said.

Marius Murgu, the president of the Association of Private Shareholders of the Proprietatea Fund (AAPFP), has a different opinion. According to him, "on principle, the shareholders are happy with the management of "Franklin Templeton", but are unhappy with the high wages of the managers, compared to the extremely unsatisfying evolution of the price of the stock". Mr. Murgu said: "About 90% of the shareholders consider that the current management of the Fund is identical to the previous one, which generated profit from the interests the Fund had in various companies".

The two representatives of the former asset owners say that shareholders are unhappy because of the drop in the price of the stock, which currently trades at 0.45 lei.

Marius Murgu said that he supports any action which would cause the price of the stock to rise, perhaps even a dual listing on the Warsaw and Vienna Stock Exchanges, but, according to him, the exchange where the listing will be performed must be carefully chosen. Mr. Murgu said: "I am waiting for Franklin Templeton to deliver the promised miracle. At the last General Shareholder Meeting, they made it clear that the price of the stock would go up".

On Wednesday, the shareholders will decide whether Franklin Templeton will have the right to manage the Proprietatea Fund in a discretionary manner, within the limit of 20% of the net value of the Fund's assets, compared to only 5%, like it currently does. The agenda also includes the proposal to grant shareholders a number of votes equal to the number of shares owned.

Adrian Iuraşcu said that "Forţa Civică" does not agree with the change of the Articles of Incorporation and of the management contract, requested by the manager of the Proprietatea Fund. "The amendment of the Articles o Incorporation will remove the ability of small shareholders to participate in the decision-making process", he said. In the opinion of Mr. Iuraşcu, the change in the voting method "benefits the large shareholders".

Marius Murgu said that "in a meeting, the management of «Franklin Templeton» said that the changes made to the Articles of Incorporation of the Fund and to the Management Contract, only concern the methodology for calculating the compensation of shareholders and not the expansion of the rights of the management".

Also to be discussed on November 23rd is the reduction of the share capital from 13,778,392,208 lei to 13,538,087,407 lei, following the cancellation of a number of 240,304,801 shares acquired by the company.

In order to compensate the former owners whose assets were abusively seized by the communist regime, in 2005, the Government set up the Proprietatea Fund, which has interests in state owned companies, including in those operating in the energy sector. Electricity, oil and natural gas account for 86% of the assets of the Proprietatea Fund.

In January, the Fund was listed on the Bucharest Stock Exchange, after the government selected American company "Franklin Templeton" to manage the Proprietatea Fund.

Through the Ministry of Public Finance, the Romanian government still owned about 2.74% of the subscribed on November 11th, and 3.25% of the voting rights, respectively, according to a press release sent by the Proprietatea Fund to the Bucharest Stock Exchange.

On that date, institutional shareholders owned 40.03% of the subscribed and paid in capital. Romanian individual investors owned 36.26% of the share capital, Romanian institutional investors owned 11.14%, and non-resident individuals owned 9.83%.

On November 11th, "Manchester Securities" Corp. owned 8.65% of the subscribed and paid in share capital, and Georgia Palade van Dusen, the granddaughter of former industrialist Nicolae Malaxa, owned 6.57%.