The financial investment companies (SIF) will be allowed to repurchase part of their shares issued, even if this means exceeding the 10% of share capital cap set by the legislation in force, according to the consolidated capital market law draft published by the National Securities Commission (CNVM).
It is about the residual stakes, i.e. those that every Romanian citizen participating in 1992's Mass Privatisation Programme got as dividends for the profits made by the five Private Ownership Funds (POF) throughout 1992-1996. Each bonus stake distributed back then is now worth several hundred thousand ROL at most on the market. Some of the shareholders are not even aware they own stake, while others have trouble finding a broker that agrees to handle such an insignificant transaction. All the residual stakes put together account for a significant share of the SIFs' share capital, though, and a possible redemption would allow for a more concentrated shareholder structure of these companies and would make it easier to endorse certain decisions during General Meetings of Shareholders.
The provisions in the law draft are quite vague, however, with CNVM left to provide further regulations. The thing is the repurchasing decision will only be possible to make by the management of a specific SIF and will have to be endorsed by CNVM. The draft says nothing about a way to set the repurchase price though, about how to identify residual stakes, considering that some of those that used to hold such stakes back in 1996 have already sold them, or about whether the holders of such stakes will be bound to sell them.
Some of the SIF representatives say the provisions were introduced in the law draft as proposed by them, but would not comment on the possibility of making such a decision.
"The provision to allow for redemption of residual stakes was one of the propositions we submitted to the National Securities Commission (CNVM) for the consolidated capital market law draft," Florin Buzatu, SIF Oltenia vice-chairman said. He did not say whether SIF Oltenia was planning to take such a step in case the provisions allowing for repurchase enforced as they were at the moment. Buzatu says the repurchase of the residual stakes will mean purging the database including those that hold stake in the company first of all. Each of the five SIFs has 9 to 10 million shareholders. vlad.nicolaescu@zf.ro
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