Amendments To The Law No. 297/2004 Regarding The Capital Market, Proposed By The Romanian Ministry Of Public Finance (MFP)

UniCredit Bank S.A.
Summary: 
The Romanian Ministry of Public Finance initiated and published on its web-site proposed changes to the Law no. 297/2004 on capital markets. The proposed amendments are under public consultation until October 18th, 2014.
Wed, 15/10/2014

The Ministry of Public Finance issued a draft with the proposed amendments to the Law no. 297/2004 on the capital market. According to MFP’s statement of reasons, the projected amendments are aiming to align the current national legislation to the existing European standards in order for Romania to be ranked as an emergent capital market, thus increasing external visibility and attracting new investors.

The main proposed amendments to the law 297/2004 on capital markets consist of:

-     increasing the permitted ownership upper limit from 5% to 20% related to the shares that may be held at a market operator;

-     removing the threshold ownership with respect to the shares that may be held in Financial Investment Companies (SIFs), with the decision to be made in the Extraordinary General Shareholders Meeting;

-     the payment of dividends and of any other amounts by listed companies to be made through the Central Depository and the participants to the clearing and settlement system;

-     reducing the deadline for payment of the dividends from 60 to 30 days from the date on which the relevant general shareholders meeting (GSM) decision is published, to the extent the GSM did not establish the date for such a payment;

-     simplifying the voting procedure in the shareholders' meetings (GSM). Under certain conditions, the representation of the shareholders in GSM is allowed based on a general proxy (valid up to three years);

-     in case of in cash capital increase operation, the suspension of the sharehorlders‘ preemtive rights shall be approved by the Extraordinary General Shareholders Meeting in which are represented ¾ of the total share capital of the company and with the votes representing at least 75% of the total votes presented or represented in the GSM;

-     in kind capital increase operation shall be approved by the extraordinary general shareholders meeting in which are represented ¾ of the total share capital of the company and with the votes representing at least 75% of the total votes presented or represented in the GSM;

-     eliminating the restrictive provisions included in the articles of association of the Financial Investment Companies (SIF) and the market operators, regarding the conditions  required to meet the quorum and conditions imposed for the passing of decisions in the general meetings of shareholders. The Financial Investment Companies (SIF) and market operators will have a period of 60 days as of the entry into force of the Draft Law to align their articles of association to such new requirements.

 The proposed amendments are currently under public consultation and it will be submitted to the Government for review and approval. Subsequently it will be sent to the Parliament for debate and eventual approval.

Impact on investors: Romanian Ministry of Public Finance intends to improve the capital market law by amending it, in order to ensure consistent and fair treatment for investors, both local and foreign.