Companies Worth EUR2.5B Await Parliament Decision On Stock Exchange Rules

01.06.2014 By Roxana Pricop

Legislative moves with a sweeping impact on the Romanian capital market are likely to materialize in 2014, changing the fortunes for companies worth about 2.5 billion euros.

The Parliament currently holds two legislative drafts regarding the RASDAQ market restructuring and, toward the end of 2013, the Finance Ministry drew up another draft, which includes proposals of the Financial Supervisory Authority (FSA).

Also, Emergency Ordinance no. 32/2012 regulating investment funds’ activity is awaiting Parliament approval. Mircea Ursache, the authority’s vice-president, last year stated he would submit a series of modifications to the act, which would cancel restrictions regarding quorum of general shareholder meetings and lift the holding ceiling for SIFs.

Changing the holding cap for SIFs, currently set at 5% of capital, would be, by far, the most important legislative change for the local capital market.

SIFs are among the most valuable companies listed on the bourse. By lifting the ceiling, investors will be able to buy more shares in the companies and more easily have a say in the companies’ management.

Ursache also plans a raise of the holding ceiling in the Bucharest market operator (Bucharest Stock Exchange) from 5% to 33%, a change rendered possible by changing capital market law 297/2004.

The Parliament has not publicly set a timeline for the approval of legislative drafts on the capital market, but the stake of their approval is high. Currently, almost 1,000 companies worth EUR1.7 billion are listed on RASDAQ, while higher holding caps for SIFs may bring additional capital inflows on the Romanian market. In addition, the battle for taking over the huge assets controlled by the SIFs, companies with an overall market value of nearly EUR1 billion, is likely to restart.

RASDAQ, likely to be shut down in 2014

The stake of clearing up RASDAQ status lies in the takeover bids majority stakeholders may submit to minority stakeholders that do not agree with transferring firms’ shift from a regulated market to an alternative trading system.

More specifically, the stake is the price minority stakeholders may get for the shares they hold in the firms now trading on RASDAQ. Two draft laws meant to clarify RASDAQ market status were initiated last year.

However, the two drafts stand quite low chances of being approved by Deputies after the Finance Ministry drew up another draft proposing the dissolution of RASDAQ. The latter states that minority shareholders who do not agree with the transfer of the shares on a regulated market or an alternative trading system won’t be entitled to ask for a buyback of their stakes.

(English version by Catalina Apostoiu)