The conflict between the majority and the minority shareholders has again landed on the table of the National Securities Commission (CNVM), which must tilt the balance one side or the other. In an unprecedented move, the significant shareholders are hinting that the minority stockholders have inflated the stock quotations by speculations, prompted by the desire to get a big price from the majority shareholders when the latter have to buy their shares.
The Council of Foreign Investors (CIS), which comprises some of the largest foreign investors, brings up three examples of stocks and price evolution: Dacia Renault, Koyo - Rulmenti Alexandria and Lafarge Romcim Bucharest. The majority shareholders say that law 525/2002 on securities, which also includes the protection of minority shareholders, has led to these speculations.
The price evolution in the first months of the year did not point to any major changes, which shows that financial investors had not learnt of any change in the shareholding structure or in the companies' business plans. After the publication of the law, which compelled those significant shareholders holding more than 90% in a company to buy the rest of shares from the small stockholders, "each and every involved company has logged price increases, for no any other reason, almost at the same time," CIS mentions. During a two-month interval, the average share quotations went up 4.5 - 5 times, as compared to the prices recorded early in the year.
"Another sign of distortion is the fact that all prices plunged around October 18, upon release of the official announcement on postponed launch of compulsory public offers. All these distortions considered, it can be said that law 525 generated speculations on the financial markets," the CIS specifies. Speculations could be done with relatively small amounts. The majority shareholders admit that financial speculations cannot be avoided, but accuse the CMVM of overregulation. "The attempt at overregulation and administrative intervention in developments whose evolution should be regulated by market mechanisms is not a solution to these problems. The only solution would be to use the market economy mechanisms and consider the international practice on capital market legislation."
On the other hand, the minority shareholders, represented by the Association of Romanian Shareholders (AAR), claim that: "It is unbelievable that the example of the share price increases is used to dispute the capital market legislation."
"As to the negative connotation cast by the CIS over the market 'speculations', we can only note that it is only normal for the stocks' value to oscillate when market conditions change. This is a perfectly natural phenomenon that occurs on all the capital markets and is the market's response to an important event," the AAR mentions.
Representatives of the minority and the majority shareholders were invited to attend today's extraordinary meeting of the National Securities Commission, aimed to solve the conflict.
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