English
Several future shareholders of the Proprietatea Fund (FP) plan to go to court in order to obtain the invalidation of the decision of the Fund to buy back approximately 10% of its stock, which was approved by the General Meetign of Shareholders in the beginning of September.
The future shareholder of the Fund are concerned that the buyback of the 1.37 billion shares of the Proprietatea Fund will cause the price of the stock to rise on the BSE, which paradoxically, would be detrimental to their interests.
According to the law, the conversion of the compensation rights into shares of the Proprietatea Fund is made at a set rate (1 leu of the amount to be compensated equals one share in the Fund). However, after the listing of the Fund, the conversion will be made at the average price of the first sixty trading sessions, as provided by the law. Thus, the number of shares that the future shareholders of the Fund would receive will depend on the fluctuations of the price of the stock on the stock market.
Under these circumstances, the possible buyback by the Proprietatea Fund of 10% of its own stock, in order to increase the price of the shares is sending colds chills down the spines of the Fund"s future shareholders, who consider that the law discriminates against them, compared to those who are already shareholders of the Fund.
"The current shareholders of the Fund will benefit if the price of the shares goes above their face value of 1 leu, which the price at which they received their shares, and they will be able to sell their shares at a profit, whereas future shareholders will not have this opportunity", some of those who are contesting the decisions of the Generral Meeting of the Shareholders of the Fund passed by the General Shareholder Assembly of September 6th.
Franklin Templeton, the manager of the Proprietatea Fund, explained that stock buyback is a common practice, and it is intended to increase the price of the stock. The representatives of "Franklin Templeton" have also said that the buyback of the Proprietatea Fund must be performed carefully, to avoid causing prejudice to the interests of the Fund"s shareholders.
Yesterday, the Court of Bucharest said it would reach a decision on November 17th, on the lawsuit in which lawyer Ioana Sfîrâială has requested the suspension of the most important decisions made by the Ordinary and Extraordinary Meetings of Shareholders of the Proprietatea Fund, made on September 6th, until she can get the court to annul them.
The judges had initially set the hearing in 2011, but lawyer Ioana Sfîrâială yesterday managed to get the case to be tried a few months earlier.
Among other things, Ioana Sfîrâială is contesting the decision to list the Fund on the Stock Exchange and the takeover of the Fund"s management by Franklin Templeton.
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Laywer Dumitru Mihai, the representative of the former shareholders, which are requesting the annulment of the decision to buyback 10% of the shares of the Fund, said: "Perhaps one solution to this problem could be the return to the parity conversion rule (one leu of the amount to be paid out as compensation would equal one share, regardless of the market price), which would provide the same treatment to all shareholders".
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