The shareholders of Farmache and the shareholders of Ancuţa

"Aga", as an abbreviation of the term "General Shareholder Assembly", is an ambiguous word, due to the well known fact that the Turks held major influence throughout history in the three medieval Romanian states, when it also received the meaning of "boss" (its Turkish etymology indicates it means "agha = big brother"); a bit of each of these three meanings applies to the two AGAs scheduled today by the Bucharest and Sibiu Exchanges; even though they had initially been scheduled simultaneously in order to allow for their glorious merger to take place, the latter may very well fail pathetically due to fierce infighting between their respective shareholders over the attempts to replace the management of the two exchanges.

• THE AGA OF FARMACHE

The resignation of Daniel Ţepeş from the Board of the BSE, which occurred on March 25th, has left a vacant spot which will need to be occupied through the vote of the General Shareholder Meeting, as well as to provide the opportunity (awaited by about a third of the shareholders of the BSE, who say that they are unhappy with the current management of the Bucharest Stock Exchange) to raise the issue of replacing the entire board of Directors; on April 15th, several investors and brokerage firms calling themselves the "April group" and who together hold 30% of the BSE, have proposed the introduction of the cumulative vote at the General Shareholder Meeting, of April 29th, a date when the new member of the Board of Directors of the BSE, Gregorz Konieczny, (who was temporarily appointed after the resignation of Daniel Ţepeş) was supposed to be validated.

In a communiqué of April 18th, the Board of Directors of the BSE said that it was rejecting the request for the introduction of the cumulative vote due to flaws in the way it was formulated, (which is probably true), but which makes no mention whatsoever of the clear intention to revoke the Board which is implied by the request to introduce the use of cumulative voting.

Hiding behind the bush, the Board of Directors of the BSE made no mention whatsoever the issue of its revocation in the Current Report it released yesterday either, even though the report does mention that General Shareholder Meeting would be scheduled for June 24th/25th, which will discuss the issues of reducing the share capital of the BSE and the amendment of the articles of incorporation pertaining to the issue of the cumulative voting.

From a formal point of view, the Board is right; "The April Group" did not include the magic word "revocation" in the request submitted by its members; on the other hand, the management of a listed company, which is no less than the Exchange itself, can not act like nothing was happening when many of its shareholders, who are involved in trading its stock, view its management as illegitimate.

It"s possible that today"s ambience in Bucharest will be discouraging, because most of the shareholders aren"t interested in either of the two issues on the agenda: the merger with Sibex will probably take a backseat to other issues - after all, several disappointing statements have been made on that subject; the validation of Gregorz Konieczny as member of the Board will remind people that the real issue of the revocation was skilfully dodged using technicalities; the issue of the reduction of the share capital and of the increase in the amount paid out as dividends using the resulting amount will not be discussed, as it has been postponed.

Will we have a lethargic meeting in Bucharest?

It depends on the ambitions of the brokers...

A communiqué issued yesterday by the Association of Brokers mentions the laws that entitle them to be the masters of the Exchange, in Bucharest as well as in Sibiu, and calls upon the members of the Association present on the boards of the exchanges to apply the principles of corporate governance (see the press release below)

• THE AGA OF ANCUŢA

In Sibiu on the other hand, the air is rather heavy, even though the issues on the agenda are the same as the ones in Bucharest.

On April 14th, Alexandru Elian, the head of brokerage firm "Delta Valori Mobiliare", which owns almost 5% of Sibex, Bogdan Baloşan, Narcisa Grigoriu and Cornel Albu have requested the revocation of the current Board of Directors of the Sibiu Exchange and the election of a new one, using the cumulative voting method.

However, yesterday, on April 28th, Sibex sent to the CNVM a Current Report in which it states that the request to dismiss the Board does not meet the legal requirements.

Sibex must have adopted the "model" of the Board of the BSE.

However, there are some differences between the situation in Sibiu and the one in Bucharest.

First of all, the request of the shareholders of Sibiu explicitly mentions the "revocation" word, meaning that the cumulative vote is not the main issue, which doesn"t give them the room to wiggle away from the problem like the BSE did.

Secondly, some of the members of Board of Sibex claim that they haven"t been consulted on the decision to reject the request (for instance, Nicolae Filimon of SAI Muntenia, who made the following statement to BURSA: ""I have no knowledge of any decision by the management of Sibex to refuse holding a vote on the revocation of the current board and the election of another one using the cumulative voting method. I was not consulted on this matter".), which is not the case in the BSE.

And last of all, in Sibiu, it would seem that not only are the shareholders resolute in their decision to overthrow the current management of Sibex, but they seem to have already chosen Cristian Sima as a replacement for president Teodor Ancuţa; this is hinted at by the fact that Sima resigned from the brokerage firm where he was CEO, as well as by the candidacy of Paul Miclăuş, who handed in his resignation from the CNVM (under normal circumstances they wouldn"t have done this unless they were certain of their success).

However, unlike in Bucharest, there are at least three groups of shareholders, whose goals put them at odds with one another, meaning that the shareholders of the BSE have not yet passed the stage of "negotiating" the composition of a new management team.

This last difference will make the difference today between the two General Shareholder Meetings: in Bucharest, we may have apathy; in Sibiu, sparks will fly.