Clauses in the regulations governing the operation of financial investment companies (SIFs) that bar shareholders from owning more than 0.1% in their stock are likely to be modified by law. This comes after the chairmen of the five existing SIFs were heard by the Senate's budget-finances committee on Wednesday.
According to the committee chairman Varujan Vosganian, the five SIF chairmen had agreed to the raising of the holding ceiling from 0.1% to 1%, which would be done by modifying capital market legislation
"The simplest procedure would have been an emergency ordinance, but as you well know, the government tends to avoid such methods. By modifying the law, the measure could be adopted by the SIF management boards with there being no need for a decision by their General Meetings of Shareholders," Vosganian said. All the members of the budget-finances committee, with the exception of Silvia Ciornei (PUR), accepted that the holding limit imposed on SIF shareholders be raised from 0.1% to 1%. Ciornei voted for the current cap to be maintained.
SIF representatives say that the raising of the limit should be accompanied by restrictions whereby majority stakes cannot be taken over by shareholder groups that already own significant stakes in the company.
"The limit is wrong target: it is not the problem. The important thing is for rules to be established that stop hostile takeovers of the SIFs. Already there are some shareholder groups with more than 10-15% in share capital of SIFs. I hope that the raising of the limit will be combined with measures to prevent possible takeovers of SIFs," said Theodor Mihaescu, chairman of Muntenia Invest, which manages the assets of SIF Muntenia.
In fact, Vosganian also said on Wednesday that the raising of the limit would be carried out in parallel with the endorsement of strict penalties for any attempted hostile takeovers and the implementation of some rules for corporate governance.
One year ago, the draft law for the capital market included a provision whereby the holding limit was to be raised to 1% and voting rights limited for shareholders with more than 0.1% in stock. However, this did not make it to the final form of the law, with representatives of the National Securities Commission at the time saying that establishing a holding limit by law was not legal.
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