WITH THE GENERAL SHAREHOLDER MEETING OF SIF3 GETTING NEAR Fercală and Frăţilă trading salvos

The directorate of SIF3 Transilvania sent a letter to its shareholders explaining the items on the agenda of the shareholder meeting scheduled for October 20th/21st, submitted by Constantin Frăţilă, who owns 5% of the company together with other associates.

Frăţilă wants to file a liability lawsuit against Mihai Fercală, the executive president of SIF3, claiming that he did not use the special form required for the power of attorney, in the General Shareholder Meeting of August 11th, as well as for not having published the list of the 63 shareholders that have asked for the dismissal of Frăţilă from the Supervisory Board.

The Board of Directors of SIF3 says that the special power of attorney was validated through court rulings, and its legality was validated by two audits of the CNVM and of the ASF, and of top of that, Constantin Frăţilă was elected as member of the Supervisory Board based on the same special power of attorney.

On the other hand, Mr. Frăţilă claims that the ruling that the head of SIF3 is talking was rendered in 2006. He said: "The law has seen amendments since then, and in 2014, Fercală was fined for using this special power of attorney. Wouldn't it have made sense to stipulate this in the letter as well, or is he afraid of raising questions? He even should have mentioned that the ASF has specified that by using that power of attorney, the shareholders' rights have been infringed".

As for the list of the 63 shareholders, Mihai Fercală, the one who signs the letter says that in order to protect them, he can't disclose their identity. In his opinion, Mr. Frăţilă wants to file lawsuits against them.

Mr. Frăţilă reminds of the fact that the ASF has required the directorate to disclose the names of the shareholders who asked for his dismissal. Constantin Frăţilă asks: "If the secrecy concerning the identities and the holdings of the shareholders is so important, why didn't Mr. Fercală ask the shareholders who signed alongside with me whether they wanted their names and holdings to be disclosed?"

Frăţilă, who controls 5% of SIF3, is also asking for the cumulative voting method to be included in the articles of incorporation when it comes to the election of the members of the Supervisory Board.

The executives of SIF Transilvania states that the application of this method was regulated in order to protect minority shareholders from majority shareholders, and since at SIF3 there are no majority shareholders, nor can there be, the implementation of the method is unnecessary and inopportune and it would serve the interests of Constantin Frăţilă.

Mr. Frăţilă told us: "The visceral fear of Mihai Fercală when it comes to the Supervisory Board getting elected through the cumulative voting method is obvious, as well as of the secret voting by mail, which would allow shareholders to express their votes directly, without resorting to those special power of attorneys, is obvious. These methods would not allow controlling the voting process, I think that's what it is about. He says that the cumulative vote is not opportune nor necessary, and that having it implemented would serve my interests. Didn't lawmakers know, when they passed the regulation on cumulative voting without exempting the SIFs from it, whether it was opportune or not?"

The letter sent by SIF3 to its shareholders also states: "All the actions of the Frăţilă group are clearly harassment, abuse of dominant shareholder position, the exercising in ill-faith of the rights granted by its shares, going against the legitimate interests of the other shareholders. The contempt the Frăţilă group has for the small shareholders of SIF3 is well-known".

Constantin Frăţilă says that, "through this letter, Fercală actually expresses his fear of the items that are on the agenda of the General Shareholder Meetings getting approved. When he speaks about the Directorate or the Supeervisory Board, I think that Mr. Fercală is actually speaking exclusively about himself, and the others are just extensions of himself. He should not forget that nothing and no one last forever."

Constantin Frăţilă and Mihai Fercală have been involved in an open conflict for a few months, each one trying to outdo each other in statements, accusations, proposals for the General Shareholder Meetings and lawsuits.

After the confrontation in the SIF3 General Shareholder Meeting of August, when Mihai Fercală came out the winner, and Frăţilă was dismissed from the position of member of the Supervisory Board, the two are set to clash again, in the General Shareholder Meeting of October 20th and 21st, where the shareholders will have to decide on filing a liability lawsuit against the following SIF3 Directorate members: Mihai Fercală, Iulian Stan (executive vice-president and deputy CEO) and Mihăilă Ion (former executive vice-president), who, according to the group formed around Frăţilă, have exceeded their duties.