The ping-pong game being played by Romanian MPs over the capital market law, especially the norms regulating the activity of Financial Investment Companies (SIFs) is still going strong. After the Senators modified the original draft law and introduced a stipulation allowing the shareholders of SIFs to hold one percent in the capital of these companies, up from the current 0.1 percent, the Deputies, in their turn, modified the law yesterday. They eliminated any stipulations regarding the shareholding cap, returning to the original version of the law.
This fact is again generating confusion on the capital market. Apparently, the initiative taken by the Deputies (which must be promulgated by the Presidency) radically changes the situation of SIFs, since the law does not clearly stipulate up to what percentage the cap can be raised. Thus, SIF shareholders and administrators are left to decide whether to raise the cap or not. On the other hand, the variant endorsed by the Senators, although stipulating a maximum cap of one percent, also left the exact cap level to be set by the administrators and shareholders of every Financial Investment Company.
“To be honest, I don’t understand what is going to happen with this cap, either” one of the Deputies that proposed the modification of the law said yesterday.
The SIF chairmen also had conflicting opinions.
“As far as we are concerned, the modification being proposed in the Chamber of Deputies does not change the issue. Raising the gap was already a matter left to the decision of the Shareholders’ Meetings. In my opinion, the caps will be raised anyhow. In the case of SIF Transilvania, during every General Meeting of Shareholders, we had in attendance stockholders accounting for more than 50% of the total capital, which means that we can make such changes,” Mihai Fercala, chairman of SIF Transilvania, told Ziarul Financiar.
“I think that eliminating the stipulation on the possibility of raising the cap to 1% was plain stupid. I believe it’s time that those that want to buy more into financial investment companies were given a transparent opportunity to do so, without being forced to go to great lengths and buy through intermediaries,” explained Teodor Mihaescu, chairman of SIF Muntenia.
The successive modification to the draft law has triggered big speculations on the stocks of the five financial investment companies on the Bucharest Stock Exchange. Facts and rumours regarding the Senate’s plans to raise the shareholding cap have pushed SIF stocks up more than 70 percent in the past two months, with investors gaining millions of dollars.
Raising the cap will allow for a higher concentration of the shareholding structure (as the stockholders will gain control over the management), and investors are calculating that this would also lead to a surge in the stock prices.
Even if, under the drafts endorsed by both the Senate and the Chamber of Deputies, raising the cap is practically left to the shareholders (or rather their ability to organise a meeting with at least 50% of stockholders in attendance to modify the company’s status), these successive modifications have made it more difficult for the Financial Investment Companies to clear up their situation.
laurentiu.ispir@zf.ro