Foreign investitors draft law on minority shareholders

Foreign Investors Council (CIS), comprised of major companies operating on the Romanian market, has completed its version of the minority shareholders protection law.

This version is the response of the foreign investors to the request of the Privatisation Authority, which asked majority and minority investors to finalise the legislation to regulate relations between majority and minority shareholders.

The modification of the legislation has been insistently requested by portfolio investors, minority shareholders that have repeatedly accused majority shareholders and foreign investors, mainly, of abuses.

The version proposed by the Foreign Investors Council is intended for all the companies listed on the Stock Exchange and on RASDAQ, no matter if they are traded or not.

The most important stipulations in the version worked out by the Foreign Investors Council are about the protection of the minority shareholders in case of changes in the majority shareholding structure, about dividend payment, conflicts of interests, transactions between the company and administrators or shareholders, inclusive.

In the event of a change in the control over a company, the new shareholder or group of shareholders acquiring the controlling interests has to launch a public purchasing offer to buy the other shares of the company at the highest price they paid for the stake they already hold.

This stipulation should be valid for the companies privatised and listed on the Romanian stock markets, as well. The new shareholder to have bought the controlling interests from the Privatisation Authority should run a public purchasing offer at the price paid upon the privatisation.

Such a stipulation would only complicate the assessment of companies by the investors interested to take part in the privatisation, and consolidate the position of those already in Romania.