Less protection for minority shareholders, new confusing rules for tender offers, the lack of clear provisions on the statute of the Financial Investment Companies (SIF), but also regulations that introduce new instruments and concepts on the Romanian capital market. These are the main co-ordinates of the final draft of the consolidated capital market law, revealed by the National Securities Commission (CNVM) on Tuesday.
CNVM has recently completed this draft, following a year of talks around several intermediary drafts and sent it to the Finance Ministry that will forward it to the Parliament for endorsement.
The most surprising changes in the new draft compared to the version released in December 2003 can be found in the minority shareholders’ rights chapter. The final draft allows contributions in kind to capital increases (an option widely used by majority shareholders to reduce the interests of the minority shareholders in the last few years) and allows shareholders than own more than 75% to cancel the pre-emption right for the shares they do not hold. “The possibility to make contributions in kind and suspend preference right is a major step back for the Romanian legislation in this field. The European Union legislation stipulates that such measures may be taken only in exceptional situations,” says Gratiela Iordache, executive director of the Association of Shareholders in Romania, which protects the rights of the minority shareholders.
Paul Miclaus, CNVM Commissioner, replied by saying the new draft was entirely compliant with the European Union’s provisions in this regard.
“The European Union directives are clear when it comes to increases by contribution in kind and on suspending pre-emption right. We set the maximum quorum allowed by the European norms for passing such a decision, 75%,” Miclaus says.
A regulation challenged by the participants to the market in the last few months yet unchanged in the final draft is the mandatory requirement for the investors holding more than 33% in a specific company to put out a tender offer and buy the rest in that company. At present, the tender offers for acquiring 100% are only mandatory for those investors that hold more than 50%. The CNVM representatives say that a shareholder owning more than 33% has enough power over the company even though it does not directly control its management.
The final draft includes another surprising provision, or rather the lack thereof, as it no longer clearly stipulates whether those that own more than 90% in a specific company are bound to have it delisted or not.
laurentiu.ispir@zf.ro ; vlad.nicolaescu@zf.ro