Tudor Ciurezu has presided for the last time the General Shareholder Meeting at SIF Oltenia

Tudor Ciurezu has presided, yesterday, the last General Shareholder Meeting of SIF Oltenia. Tudor Ciurezu, Anina Radu, Carmen Popa and Nicolae Stoian have been dismissed as directors of SIF Oltenia (SIF5), in the general shareholder meeting, which also approved the termination of the Ciurezu's mandate as CEO, items included on the Agenda upon the request of SAI Certinvest.

The decisions were made with 67.9% of the votes expressed in the event of the dismissals of the four directors, whereas in the event of the termination of the mandate of the CEO, 68% of the votes were in favor, out of the quorum of 50.12%.

On the other hand, the item concerning the personal liability action, including vice-president Cristian Buşu as well, did not meet the necessary majority to be approved, with 22.5% of the votes in favor, 24.4% against and 48.68% abstentions.

Essentially, SIF Oltenia currently no longer has a Board of Directors, and anything pertaining to the activities of the board is suspended, and the company's activity proceeds with deputy CEO Cristian Buşu in charge, according to some opinions in the room.

Cristian Buşu said: "Shareholders are sovereign, and I have done nothing else but acknowledge what has happened and act accordingly. The general message is that we need to ensure the transition until the GSM of October 29th, when a new Board of Directors gets elected. Let us hope that the ASF will move quickly when it comes to the interviews of the new members of the Board of Directors that get elected, so that we can enter normalcy and do business as usual".

The SIF5 CEO declined to comment item 27 on the agenda, which involved the action in liability of every shareholder, including his, and only said the following: "The shareholder has made the proposal, everybody came to the GSM, there was a vote held, that is the result and we go on forward".

The items on the agenda concerning the revocation of the decisions made by the two general shareholder meetings of April 28th were approved by the shareholders, while the items concerning the approval of the financial statements for 2019, the profit allocation, the release and discharge of the managers and the approval of the Revenue and Expense Budget and of the Strategy for this year have been rejected.

On the other hand, the items concerning the recording as "revenues" of dividends that have not yet been collected after more than three years from the date of their collectability date and the steps needed to implement the aforementioned measures have been approved.

Tudor Ciurezu, the former head of SIF Oltenia, said: "First of all, the company will be left without an administrative and executive management, because law 74, concerning the functioning of the AFIA, stipulates in article 8 that, in order to be authorized, the company needs to have at least two executives. At the present time, there is only one. The company is led by a Board of Directors, according to the new Articles of Incorporation, consisting of new members, prior to that there were seven, and now there is only one. So it cannot function, the Board is not functional, and the upper management essentially does not exist".

Secondly, the fact that the balance sheet was not approved and the allocation of the profit have not been approved will generate a wave of lawsuits, Tudor Ciurezu further said.

"It is outrageous how some of the shareholders have voted and are voting against the approval of the balance sheet, against the allocation of the profit, essentially against the approval of the distribution of the dividends, but they have nevertheless collected those dividends. They challenge their allocation, but they still keep the dividends on. They have been received four months ago, in July. But the other shareholders are unable to receive them, because their payment has been suspended, can't even hope to receive them, four months later. There is a discrimination promoted by the shareholders of SIF1, SIF 4 and the investment funds which they are backing. The dismissal of the decisions by another general shareholder meeting cannot take place, there is no institution of dismissal. So there are items that have not been placed on the agenda illegally, they are also the ones who put those items up for approval in the GSM, and they are also the ones that rejected them", Tudor Ciurezu says.

When asked whether SIF Oltenia now has a claim against shareholders, given the rejection of the distribution of dividends in the GSM, the former SIF5 CEO said: "For now, the decision of the GSM of April 28th, which I chaired, which decided the approval of the balance sheet and the allocation of the profit in the form of dividends, is still in effect. It is suspended, but it is not canceled. It depends on the court. If it gets rejected by the Court, than indeed, SIF Oltenia will become a creditor for its shareholders".

Tudor Ciurezu further said: "I've never found a precedent like this in corporate history. This action has no other role than to weaken the shareholders' confidence in the SIF Oltenia stock, to drive down the market price, to allow SIF1 and SIF4 together with the funds in question to acquire significant volumes at prices as low as possible".

Other than that, the general shareholder meeting consisted for the most part of a speech by former SIF Oltenia CEO, who presented the achievements of the company in the last few years, in a presentation sprinkled with jabs at SIF Banat-Crişana.

"SIF Oltenia has fewer companies in its portfolio that are under reorganization or insolvent than SIF Banat-Crişana does", Ciurezu said. "What performance are we talking about?"

Dan Paul, the president of the Association of Brokers and Liviu Ungureanu, CEO of Flaros, were the only shareholders to speak during the GSM.

Liviu Ungureanu said that, without disputing the right of SIF1 and SIF4 to summon the shareholders, in his opinion the meeting was illegal. The first reason would be the absence of the quorum, the head of Flaros said.

"We should have a tender offer, prior to summoning this meeting. (...) Certain items on the agenda are against the law. Doctrine and case law state that the Ordinary General Shareholder Meeting of a company cannot cancel its own decisions, except under specific circumstances. The institution of the revocation of a decision made by a General Shareholder Meeting does not exist in Law 31", Ungureanu further said.

He has asked for clarifications for retail shareholders about what is going to happen to the company in the future, more specifically the direction the SIF will be taken towards. The representatives of SIF Banat-Crişana and SIF Muntenia did not comment on the statements of the Flaros CEO.

Dan Paul's speech was brief, and he said that according to the legislation in effect, the shareholders are acting in concert.

Basically, everything was just a formality. A meeting which had as its only goal the dismissal of the board members of SIF Oltenia, with the exception of Cristian Buşu, by the group coordinated by SIF Banat-Crişana, in an action which several market participants viewed as acting in concert, but which the ASF refused to acknowledge.

"The current request for the summoning of the general shareholder meeting is considering (....) the revocation of the decisions that can be canceled and the remaking of those decisions, in conditions of legal compliance", the argumentation for the summoning of the General Shareholder Meeting said, submitted by SIF Banat-Crişana and SIF Muntenia on August 13 said.

Nothing of the kind happened, as no decision was re-validated. Even if any one of them would have been, at the very least the one concerning the allocation of the profit could not be implemented, because the registration date and the dividend payment date preceded the date of the general shareholder meeting, which goes against the law, as stated by SIF5 in its press release of September 18.

The justification for the personal liability proceeding alleged by SIF1 and SIF4 is without merit, as the former management team of SIF5 states in the September 17 report, which shows that the amount spent on the 30-million lei loan from Banca Transilvania, to be used for the payment of dividends, was 0.198 million lei. It was a measure taken following the change in the conditions which, prior to the summoning of the Ordinary General Shareholder Meeting of April 28, would have ensured the funds needed for the payment of the proposed dividends. The decision of the Board of Directors avoided the sale of some of the liquid holdings of the company, in a rush, during times of low market liquidity, SIF5 said.

If, for instance, instead of resorting to a loan, the company had resorted to securing that amount by selling Banca Transilvania stock between June - July 2020, at a maximum price of 2.235 lei/share reached during that period (something that would have been very difficult to do), the operation would have involved the sale of 12.975 million shares. But, by holding on to those shares, SIF Oltenia will collect on October 16, 2020, 1.417 million lei as dividends and will receive a number of 1.297 million free shares.

"As a result, by resorting to funding via a loan agreement which incurred an insignificant total cost 0.198 million lei, there was no loss, instead that amount represents an opportunity cost that generates benefits for the company and its shareholders", the report by SIF5 of September 17 states, which was read by Tudor Ciurezu in during the meeting.

Again concerning the action in liability for the executives, it has been revealed that the decision of the Board of Directors of June 25, 2020 for the approval of the loan was made with the unanimous vote of all the directors, including that of vice-president Cristian Buşu, and the entire paperwork submitted to the bank for the purposes of securing the loan was signed both by CEO Tudor Ciurezu, as well as by vice-president Cristian Buşu. But the request submitted by SIF1&4 concerning the personal liability proceeding did not include Buşu, who also signed the paperwork. Why shouldn't Cristian Buşu be held liable as well?

On the other hand, the reasons invoked by Certinvest for approving the dismissal of the directors, excluding Cristian Buşu, were the non-observance of the shareholders' right to make additions to the agenda of a general shareholder meeting and the non-observance of the ASF decisions. Defiance of shareholders' rights is a good reason for the desire to dismiss the directors, but defiance of the ASF?

In a lawsuit in court concerning the «defiance against the ASF», the Certinvest funds would be denied their position as parties in the lawsuit,", the article "The attack on SIF Oltenia - a financial crime in broad daylight, in complicity with the ASF", posted in BURSA, on October 12th.

The General Shareholder Meeting at SIF Oltenia was just a formality, as things had already been decided in advance. Now, SIF5 has been left without a Board of Directors, until the approval by the Financial Oversight Authority of the appointees elected in the General Shareholder Meeting of October 29th.