FAQs

Dividends and Distributions

  • The Annual Cash Distribution Policy is published on the Fund’s website, here.

  • The gross cash distribtions are calculated according to the Fund’s Annual Cash Distribution Policy that you can find here.

    According to the Policy currently in place, the Fund Manager intends to recommend to shareholders for their approval a cash distribution of at least RON 0.05 per share in cash, on an annual basis, subject to applicable law and necessary approvals, to any restrictions under Romanian legal or tax regulations and subject to available financing sources.

    In case of dividend distributions the distributable amount proposed for shareholders’ approval is generally calculated as (1) the Fund’s annual dividend income from portfolio companies, except special cash distributions, (2) plus interest on cash balances, (3) less expenses and taxation and (4) less compulsory allocations to reserves.

    In case of a return of capital, the distributable amount is generally based on the Sole Director’s best estimate according to the latest available financial statements at the time of proposing the respective distribution for the shareholders’ approval, subject to the restrictions under Romanian legal or tax regulations and to available funding.

  • The gross dividend is calculated as the number of the shares held by you at the registration date multiplied by the gross dividend rate per share approved at the General Shareholders Meeting.

    Dividends are paid net of applicable Romanian withholding.

  • No, according to the resolutions approved until now, by the Fund’s shareholders for each dividend or cash distribution, these amounts can be paid only in cash.

  • Yes, the dividend withholding tax will be withheld by Fondul Proprietatea from your gross dividend according with the Romanian Fiscal Code provisions. 

     

  • Yes, this is possible. You will need to complete the applicable ‘Payment Request for Individuals’ form or ‘Payment Request for Juridical Persons’ form accompanied by the relevant supporting documents indicated in the applicable Payment Request form. In particular, you will need to provide a bank statement certified by the bank where the dividends are requested to be transferred, or other documents that prove you are the holder of the specified bank account.

  • The dividend will be paid in RON. However, if non-resident shareholders hold a bank account denominated in a different currency than RON, the foreign exchange will be performed by the paying agent (i.e. BRD Groupe Societe Generale) at the exchange rate of BRD Groupe Societe Generale valid on the payment date. Being a foreign payment, the transfer may take longer than 24 hours.

  • The dividends and cash distributions are set in accordance with the Romanian legislation in RON (i.e. the functional currency of Fondul Proprietatea). However, upon non-resident shareholders’ request, Fondul’s paying agent may disburse such amounts in other currency than RON as well, case when the transfer will be impacted by the paying agent’s exchange rate valid on the payment date. Exception to this rule are payments made to Participants (Custodian Banks or Brokers), which are made only in RON.

    In case of GDR’s holders, Fondul Proprietatea disburses the amounts in RON to the local custodian of Fondul’s GDRs depositary bank and further, the currency exchange operations are managed by GDRs depositary bank (i.e. Bank of New York Mellon).   

  • BRD will not charge the shareholders any fees out of the amounts due when the payments are made in cash or by banking transfer. In the case of bank transfers in bank accounts which are opened with other bank than BRD, the bank fees (if any) will be levied according to your banks terms of business.

  •  If your holding is kept by a custodian, then you should contact your custodian in case you bank account is not credited after the payment date, otherwise, if you do not have a custodian account and submitted the payment request form, you should contact either Central Depositary or BRD and they will start an investigation free of charge.

  • If you received a different amount than you expected, then you may need to contact the Central Depositary to request a statement of your account as of Registration date. This statement will confirm the number of shares you have and therefore the correct dividend amount due.

  • No unless, that individual is legally appointed and documentation to that effect is provided.

  • No, there is no interest payable for the period between Pay Date and when you actually claim your dividend / submit a request for payment.

  • The dividends and cash distributions are subject to the general statute of limitation.  As such, the shareholders may request these payments only within a three year term with effect from the Payment Date of each distribution.

  • In case your registration details have changed you need to contact Central Depository and submit a request to update your personal data (e.g. name, address). Once the change is performed, the Central Depository will issue a new statement of account confirming the new registration details. With the confirmation statement you can either contact the Paying agent (currently, BRD- Groupe Societe Generale) for collecting the entitled dividend or you can address the dividend payment request to the Central Depository and they will contact the Paying agent for you and request the dividend payment you are entitled to, into your account.

  • Starting with the Payment date approved by shareholders during the General Shareholders Meeting, for each distribution.

  • The Payment Date is the date on which the shareholders can start to claim the dividend through the Paying Agent.

  • The Reference Date is the date by which a shareholder needs to have their shares registered by the Central Depository, in order to be entitled to vote at the General Shareholders Meeting

  • The registration date is the date by which a shareholder needs to have their shares registered by the Central Depository in order to qualify for the dividend or cash distribution.

  • For each case where a shareholder has issued a power of attorney that has subsequently been revoked, please inform Franklin Templeton International Services S.À R.L. Bucharest Branch: 76-80 Buzesti street, Premium Point building, 8th Floor, 1st district, Bucharest, phone number +4021 200 96 28, email office@fondulproprietatea.ro. We will then inform the Paying Agent on your behalf.

  •  

     

    Distribution type Reference Date / Registration Date of shareholders in the shareholders' registry kept by the Central Depositary Gross dividend per share (RON) Starting Payment Date Statue of limitation of the distribution*
    Dividend 10 June 2019 0.0903 1 July 2019 1 July 2022
    Dividend 10 June 2020 0.0642 1 July 2020 1 July 2023
    Special dividend 28 May 2021 0.0720 22 June 2021 22 June 2024
    Special dividend 6 August 2021 0.0700 27 August 2021 27 August 2024
    Special dividend 28 January 2022 0.0600 18 February 2022 18 February 2025
    Dividend 3 June 2022 0.1250 27 June 2022 27 June 2025

     

    * As an important note to shareholders, the dividend payment is subject to the general statute of limitation. As such, shareholders may request the payment only within a three-year term from the Starting Payment Date.

Taxation

  • In case of the disposal of shares of Fondul Proprietatea, the tax obligation rests with the shareholders.

    Individual shareholders

    Generally the net capital gain derived by individual shareholders from the sale of shares is subject to income tax at the flat rate of 10%. The capital gain/loss is calculated per transaction based on the difference between the sale price and the acquisition price of the shares. Based on the Romanian Fiscal Code there is an exemption on the capital gains resulting from the first sale of  shares that are initially acquired (or inherited) as a compensation in accordance to Law 247/2005. The Brokers are responsible for calculating the capital gain or loss per transaction, as well as the annual capital gain or loss and applying the exemptions based on the clients onboarding documentation. The Brokers are required to inform the individual shareholder about the capital gains/losses incurred during the year, no later than the last day of February of each year, for income derived during the previous year.

    The annual capital gain/loss (determined by adding all gains and losses during the year, per source country) can be decreased by losses from the same type of transactions and country carried forward from previous maximum 7 years. Generally, broker and transaction fees charged in connection with the acquisition or sale of shares should be tax deductible.

    Romanian tax residents are required to report the annual capital gains/losses through the Single Tax Return (Declaratie Unica) and to pay the income tax due according with the deadlines set by the Romanian Fiscal Authorities (usually by 25 May of the next financial year).

    If non-resident individual shareholders are tax residents of countries that have concluded double taxation treaties with Romania (and tax residence certificates are available in this respect), they can potentially apply for treaty reliefs to obtain a tax exemption in Romania. Generally, non-resident individual shareholders are required to present to the Romanian Broker the tax residence certificate issued within the meaning of the double taxation treaty, valid for the year when the capital gain is obtained.

    Please note that individual shareholders resident outside of Romania may be required to declare the capital gains derived from the sale of shares on their tax return in their country of residence. Thus, we advise to seek professional tax advice in relation to any tax obligations arising in their country of residence.

    Corporate shareholders

    Capital gains derived by corporate shareholders from the sale of shares are, generally, included in the ordinary income subject to general income tax at the rate of 16%. However, income from the sale of shares of Fondul Proprietatea might be tax exempt if at the moment of the sale of shares, a Romanian corporate shareholder holds at least 10% of the share capital of Fondul Proprietatea for an uninterrupted period of 1 year.

    If non-resident corporate shareholders are tax residents of countries that have concluded double taxation treaties with Romania (and tax residence certificates are available in this respect), they can potentially apply for treaty reliefs to obtain a tax exemption in Romania.

    Irrespective of the applicable tax rate, non-resident corporate shareholders deriving income from the sale of shares of a Romanian resident on the Romanian market, are required to register with the Romanian tax authorities and to file corporate income tax returns with the Romanian tax authorities. Thus, we advise to seek professional tax advice regarding the Romanian tax registration and reporting obligations.

    Please note that corporate shareholders resident outside of Romania may be required to declare the capital gains derived from the sale of shares on their tax return in their country of residence. Thus, we advise to seek professional tax advice in relation to any tax obligations arising in their country of residences.

  • Dividend distribution

    Dividend distributions conducted by Fondul Proprietatea to individual Romanian shareholders as well as Romanian corporate shareholders are generally subject to 5% withholding tax in Romania. However, a dividend distribution conducted to a Romanian corporate shareholder may be exempt from withholding tax if the recipient entity holds at least 10% of the share capital of Fondul Proprietatea for an uninterrupted period of 1 year prior to the dividend payment date. Moreover, Romanian government agencies, Romanian pension funds and Romanian investment fund without legal personality may benefit from withholding tax exemptions provided that certain legal conditions are fulfilled.

    Dividend distributions conducted by Fondul Proprietatea to non-resident individual shareholders as well as non-resident corporate shareholders are generally subject to 5% withholding tax in Romania, unless a reduced tax rate/tax exemption might be applied based on the provisions of double taxation treaties, the EU Parent-Subsidiary Directive or the EU-Switzerland automatic exchange of financial account information agreement. Moreover, pension funds with seat in the European Union or in the Economic European Area may benefit from withholding tax exemptions provided that certain legal conditions are fulfilled.

    Please note that shareholders resident outside of Romania may be required to declare the dividend income distributed by Fondul Proprietatea on their tax return in their country of residence. Thus, we advise to seek professional tax advice in relation to any tax obligations arising in their country of residence.

    Cash distributions resulting from a share capital decrease

    The tax treatment of cash distributions resulting from a share capital decrease is uncertain under Romanian tax law. Based on our current understanding of Romanian tax law, we believe there are arguments to assume that such a cash distribution is not subject to Romanian withholding tax. There is however a risk that the Romanian tax authorities take a different view on the tax treatment of such a cash distribution.

  • Based on the Romanian provisions on social contributions, individual Romanian shareholders of Fondul Proprietatea might be liable to health insurance contributions on investment income (including capital gains and dividend distributions) starting 2018, provided that the total non-salary income for a given year (e.g. income from independent activities, real estate, other capital investments and farming) exceeds 12 minimum gross salaries (i.e. for 2021, the minimum gross salary is 2.300 RON, thus, the threshold for 2021 is 27.600 RON). If the threshold is exceeded, the individual shareholders are liable to a fixed health contribution of 10% applied to the threshold (i.e. 2.760 RON for 2021).

    In such case, the individual investors will need to submit the Single Tax Return (Declaratie Unica), which will include all distributions if it is the case and pay the health insurance contribution according with the deadlines set by the Romanian Fiscal Authorities (usually by 25 May of the next financial year).

  • Investors resident outside of Romania may be required to declare the dividend on their tax return in their country of residence. We strongly recommend investors to seek professional advice in relation to any tax obligations in their country of residence.

General Shareholders Meetings

  • We cannot anticipate as at today how the meeting will take place due to the pandemic’s potential evolution. Please follow the stock exchange announcement regarding the conduct of the GSM, announcement that will be published by the Fund beginning of December 2021.

  • The mandate renewal process involves 2 steps (similar to the 2017 renewal process when there was a change in the management fee for the Fund Manager). If key commercial terms are approved as proposed, a new shareholders’ meeting will need to be called in the following weeks after the 29 September 2021 GSM. During this subsequent GSM, that we expect to take place in November / December 2021, the Fund’s shareholders will be asked to vote on:

    • Potential changes of the Constitutive Act
    • Updated IPS
    • New AIFM Management agreement
    • Updated remuneration policy of the Fund (updating the existing policy as approved during the 28 April 2021 GSM).
  • During the next GSM (subsequent to the 29 September 2021 one) that we expect to take place in November / December 2021, the shareholders will be asked to vote on:

    • Potential changes of the Constitutive Act
    • Potential buyback programme for 2022
    • 2022 Budget
    • Updated Investment Policy Statement
    • New AIFM Management agreement
    • Updated remuneration policy of the Fund (updating the existing policy as approved during the 28 April 2021 GSM).

     

    The documentation is expected to be published on the date when the calling notice for the meeting is published (after the shareholders meeting that takes place on 29 September 2021).

  • Given the strong stock price performance, we want to make sure that we will be able to continue the daily share repurchases throughout the 12th buyback program and therefore we are proposing an increase in the maximum price from RON 2 to RON 2.5 per share.

  • The maximum theoretical value of the additional distribution fee would be approximatively RON 3.26 million. This value assumes all the remaining shares under the current Buy Back program will be repurchased at the maximum price (2 or 2.5 RON per share).

    However, please note that the actual results may be significantly lower as the two variables depend on the market conditions (price and liquidity). We would like to underline that the increase of the maximum price was proposed as a safety measure to allow FTIS to continue buy backs should the market price exceed RON 2.00 / share and should not be considered in any way an estimate of future prices evolution.

     

    Reference date - 31 August 2021

    Maximum number of shares approved 800,000,000
    No of shares repurchased under current BB12            (up to Reference date) 147,793,314
    Applicable distribution fee 1.00%

     

    1. Theoretical maximum distribution fees under the current approval
    Theoretical maximum no of shares 652,206,686
    Theoretical maximum price RON 2.00 / share
    Theoretical maximum acquisition cost RON 1,304 mn
    Theoretical maximum distribution fee* RON 13.04 mn

     

        2. Theoretical maximum distribution fees under proposed approval

    Theoretical maximum no of shares 652,206,686
    Theoretical maximum price RON 2.50 / share
    Theoretical maximum acquisition cost RON 1,631 mn
    Theoretical maximum distribution fee* RON 16.31 mn

     

         3. Theoretical maximum value of the supplementary fee

             RON 3.26 mn

     

    * Main assumptions used:

    • all remaining shares in the programme will be repurchased
    • the share price will go to the maximum approved price immediately (i.e. 1 September)

     

  • The increase in the distribution fee should be seen in conjunction with the reduction in the base fee from a maximum of 0.70% to 0.45%. These proposed changes are based on the feedback received from investors regarding the upcoming new mandate to start in April 2022.

    The result is greater emphasis on returns being generated for shareholders and the subsequent distribution via established mechanisms such as dividends and share buy backs.

    Please note the distribution fees are only earned when the actual distributions are made, which is based on returns generated with the portfolio companies and subsequent distribution thereof to shareholders. In the absence of generating these returns and distributions, FT risks earning a substantially reduced fee.

  •  The table below shows the value of the distribution fee by applying the 2.5%/ 1.75% to the actual level of distributions performed during 2018-2020 (share buybacks, dividends and/ or return of capital).

    all amounts in RON mn

    Year Total distributions* Proposed Distribution fee 2.5% Proposed Distribution fee 1.75%
    2018 1,870.60 46.77 32.74
    2019 1,081.30 27.03 18.92
    2020 1,483.00 37.08 25.95

    * based on the latest H1 results presentation

    Year Base fee Performance fee Max. fee (incl. Performance fee) Max. fee + 1% Distribution fee 0.45% Base fee + 2.5% Distribution fee

    0.45% Base fee + 1.75% Distribution fee

    2018 41.80 - 48.77 67.47 78.12 64.09
    2019 43.90 - 51.22 62.03 59.96 51.85
    2020 49.00 2.00 57.17 57.17 73.83 62.70

     

  • The proposed changes are based on the feedback received from shareholders, considering the upcoming mandate renewal for the new mandate due to commence in April 2022.

Fondul Proprietatea Portfolio

  • We continue to actively manage Fondul Proprietatea’s portfolio holdings to further improve the operational and financial performance of the companies. Although we have seen significant progress overall, we still believe there is a lot of value potential. Corporate governance remains a key focus for us and there are still several State-Owned Companies that should appoint independent board members and professional managers. At the same time, our objective to increase the listed part of the portfolio to 100% remains unchanged. Therefore, we are collaborating with the Government to expand the list of companies to be listed to include Hidrolectrica, Bucharest Airport, Constanta Port, and Salrom. One thing is certain: there is still a lot to be done, both in respect of improving management and achieving necessary corporate actions to create value for Fondul Proprietatea’s shareholders.

Fondul Proprietatea Performance

About Fondul Proprietatea

  • Fondul Proprietatea is a joint stock company operating as an Alternative Investment Fund with a set lifetime until 31 December 2031 (which may be extended by the extraordinary general meeting of shareholders, with additional periods of 5 years/each), incorporated in Romania, trading on the Bucharest Stock Exchange since January 2011. Fondul Proprietatea is registered with ASF as an Alternative Investment Fund closed-end type, addressed to retail investors under register number PJR09FIAIR/400018.

  • Fondul Proprietatea was established in order to assure the financial resources necessary to grant compensations to the persons abusively deprived of their properties by the former communist regime and no longer possible to be compensated in kind.

    Following the fulfillment of some stages strictly determined by law, the titleholders of the compensation rights, established in accordance with the provisions of the special laws, became shareholders of Fondul Proprietatea.

    The current subscribed and paid in share capital of Fondul Proprietatea can be consulted here. Initially, the sole shareholder of Fondul Proprietatea was the State represented by the Ministry of Public Finance. Following the compensation process, the State stake in Fondul Proprietatea has diminished in time. 

    The share capital of Fondul Proprietatea can be modified according to the provisions of the Constitutive Act of Fondul Proprietatea and the Romanian laws in force.

  • Fondul Proprietatea is not governed or administrated by any institution or public authority. Fondul Proprietatea is under the control of the general meeting of the shareholders, like any other company.  In principal, a public institution is defined by law as “any state organization or local autonomous administration that is not an autonomous administration, neither a company”.

    Unlike the budgets of the public institutions, the incomes and expenses budget and the financial statements of Fondul Proprietatea are approved by the general meeting of the shareholders (art. 7, paragraph 3, letter c - the Constritutive Act of Fondul Proprietatea).

  • The Romanian State, represented by the Ministry of Public Finance, is still now a minority shareholder at Fondul Proprietatea. While at start, in 2005, the state started by owning 100% of Fondul Proprietatea, its stake greatly diminished over time. It is important to note that the government does not have control or influence in the decision-making processes of the fund manager.

  • If your broker cannot directly provide this information, you can access the website of the Bucharest Stock Exchange and type FP in the symbol lookup box on the top right hand of the page and hit enter. You will get transferred to a page with information about Fondul Proprietatea, including price evolution. On the same page you can find all shareholder reports and announcements issued by Fondul Proprietatea.

    Also, information regarding the share price and discount evolution can be found on the Fund’s webpage, here.

  • Trades (buy or sell) are conducted as for any other listed company at the Stock Exchange, through a buy or sell order issued to a broker. For this, any buyer or seller must have a signed contract with one of the brokers registered to trade on the Bucharest Stock Exchange.

  • The number of shares you own in Fondul Proprietatea is confirmed by the Central Depository, situated at 34-36 Carol I Avenue, Floors 3, 8 and 9, Bucharest 2. In order to obtain this information you will need to provide the documents listed on the Central Depository's website, here.

  • Fondul Proprietatea was listed on 25 January 2011 on the Bucharest Stock Exchange.

  • Fondul Proprietatea was listed on the Specialist Fund Market of the London Stock Exchange on 29 April 2015.

  • The BVB listing ensured the opportunity for the primary shareholders shareholders to benefit from the positive effects of a listing: greater transparency, liquidity and a more efficient price formation. Therefore, they have the opportunity to sell their shares for a better price than the one on the grey market.

  • The Bucharest Stock Exchange, proved not big enough for Fondul Proprietatea. In order to ensure a fair market price, an adequate liquidity is necessary. Listing Fondul Proprietatea on an international stock exchange is one way to ensure liquidity, as well as a better exposure of Fondul Proprietatea shares to foreign investors.

  • Starting 21 December 2010, the date when CNVM issued the Securities Registration Certificate, Fondul Proprietatea can no longer be traded through the Central Depository. Trading resumed once Fondul Proprietatea was listed on the Bucharest Stock Exchange and will only be done through the Bucharest and London Stock Exchanges. However, there are some extraordinary limited situations when the transfer can be operated directly by Central Depositary (as successions), but these transactions are not considered to be trades. For additional information please contact Central Depositary.

  • As Fondul Proprietatea is a listed company, it sends regular reports about its activity and latest developments to the Bucharest Stock Exchange and the Romanian Financial Supervisory Authority (FSA). All shareholders and investors have equal opportunities for gaining access to this publicly disclosed information, in Romanian and in English, which can be also accessed on this website here.

    At the same time all shareholders and investors can obtain information about Fondul Proprietatea by contacting the Franklin Templeton Investment Management Limited UK Bucharest Branch:

    Tel: +40 21 200 96 00

    Fax: +40 21 200 96 31/32

    E-mail: office@fondulproprietatea.ro  

    Website: www.fondulproprietatea.ro

  • Since August 2010 when Fondul Proprietatea was registered with CNVM, Fondul Proprietatea has calculated and published monthly Net Asset Value ("NAV") reports in accordance with Romanian legislation and regulations in force. NAV is computed monthly, for the last business day of the month, as well as for the dates when the Fund’s share capital changes are recorded with the Trade Registry.

    The value of Net Asset is certified by the Depositary Bank of Fondul Proprietatea, currently BRD Groupe Societe Generale. The deadline for NAV reports' submission to Financial Supervisory Authority and publication is 15 calendar days after the relevant reporting date.

    The first NAV published by Fondul Proprietatea was as at 31 May 2010. The NAVs from May to July 2010 were published on a voluntary disclosure basis. The August 2010 NAV was the first official report submitted to CNVM following Fondul Proprietatea's registration with CNVM as a closed-end fund.

    The monthly NAV reports published by Fondul Proprietatea, together with the NAV calculation methodology can be found on the Fund’s webpage, here.

  • It is important for shareholders to understand the difference between Net Asset Value (NAV) per share and the market price (as listed on the BVB). The NAV is calculated at each relevant date, according to the regulations applicable to Fondul Proprietatea in Romania and issued by the Financial Supervisory Authority (please see question on How is Fondul Proprietatea’s NAV currently calculated, here) .

    Similar to any other company listed on the Bucharest Stock Exchange, the market price for Fondul Proprietatea shares is the result of supply and demand, representing the price at which shareholders and investors are willing to sell and buy respectively. Franklin Templeton Investment Management Ltd. UK, Bucharest Branch and FTIS have no control over the market price movements from day to day, or the buyers and sellers of Fondul Proprietatea shares. Therefore, at times, Fondul Proprietatea will trade at a discount (below the NAV) and sometimes it may trade at a premium (above the NAV). There is no way to control or predict what the market price will be on any given day.

  • For listed entities, the share nominal value serves for accounting purposes, and does not influence the price at which the company’s shares are traded on the stock exchange. The price at which the company’s shares are traded is driven by the supply and demand for the shares, representing the price at which shareholders and investors are willing to sell and buy respectively, and there is no relation between a company’s nominal value per share and the market share price.

    To have a better picture, you can see in the chart below a comparison between the nominal value and the market share prices of the Fund and various other companies on the Bucharest Stock Exchange (OMV Petrom, BRD, Banca Transilvania, Electrica, etc).

    Nominal value vs Share-1.jpg

Fondul Proprietatea share capital

  • Historical situation

    The Fund was created by the Romanian Government in 2005 as a vehicle to compensate those individuals whose assets had been abusively confiscated by the Communist regime and could not be given back in-kind.

    To establish the Fund, the Romanian State passed a special law – Law no. 247/2005, which expressly stated that the share capital was to be considered fully paid for registration purposes at a value described as the “Initial Value”. The Romanian State contributed to the share capital of the Fund mainly with shares in various companies, private as well as State Owned Enterprises (SOEs).

    After the registration of the Fund, a valuation was required for the shares received by the Fund. As the valuation report determined that the actual value of the received shares was lower than the Initial Value, then the difference was considered unpaid share capital and the State had the obligation to pay the respective difference. 

    A specific mechanism was set under Law no. 247/2005, whereby any in-kind share capital increase performed by any SOE where the Fund was a shareholder, the Fund was to receive shares considered as State’s contribution to the Fund’s unpaid share capital (“Payment Mechanism”). Thus, a set-off mechanism was in place for the payment of the State’s outstanding participation in the Fund (the Romanian State represented by the Ministry of Finance).

    Until 2014, several such settlements occurred, based on which the Romanian State gradually paid part of its obligation to contribute to the share capital of the Fund.

    The outstanding balance of the unpaid share capital of the Fund varied during the period 2007 – 2014 as follows:

    • it was decreased by the contributions made by the Romanian State using the Payment Mechanism or other cash contributions; but also
    • increased when certain shares from the portfolio companies initially transferred by the Romanian State to the Fund were lost in various litigations regarding the property right over the respective shares.

     

    In January 2015, the Parliament enacted Law no. 10/2015 whereby the Payment Mechanism was repealed.

    By Law no. 10/2015, the article related to the proper scaling of the FP’s share capital depending on the process of awarding damages was also repealed; thus, the set-off structure described above is no longer possible, and the Romanian State does not longer have this possibility to pay its outstanding contributions in-kind using the set-off structure to FP’s share capital, which at the date of 31 December 2021, had a value of RON 189,182,422 (363,812,350 shares each with a par value of RON 0.52).

    The changes brought by Law no. 10/2015 also clarified that any payment made by the Romanian State to the Fund, in cash or in kind, will be deemed as effected for extinguishing the payment obligation for the shares subscribed and unpaid, without any distinction or apportionment between the sources or the amounts.

    Also, Law no. 10/2015 does not include any specific time frame in which the Romanian State must pay its obligation, and it has no references to the Companies’ Law no. 31/1990.

    There were two procedures that could be performed to equalize the value of the subscribed and paid share capital:

    The Romanian State represented by the Ministry of Finance performs a contribution in cash for the payment of the unpaid share capital

    On the date the Fund receives the amount representing the unpaid share capital, the FP’s Sole Director issues a decision ascertaining that the value of the subscribed share capital is equal with the value of the paid one. This Sole Director’s decision is then registered with the Trade Registry and based on this registration, a new securities registration certificate is requested from ASF whereby the newly paid shares are included within the total securities tradable on BVB – currently, these shares are blocked from trading. To this scope, the certificate issued by the ASF is registered with the shares’ registry kept by Depozitarul Central SA. After this date, the Romanian State can take any investment decision, according to legislation in force.

    The Romanian State decides not to pay the value of the unpaid shares

    The Romanian State decides not to pay the value of the unpaid shares and it communicates in written its decision, and the Fund Manager may request shareholders’ approval for the share capital decrease, based on Article 207 para. (2) letter a) of Companies’ Law no. 31/1990, by waiving the Romanian State of its obligation to pay the outstanding contributions.

    The situation of the unpaid shares was presented in each periodical report published by the Fund and in the audited financial statements.

     

    The table below presents information with respect to the main events during 1 January 2011 – 1 February 2022 that led to changes to the amount of the issued share capital of the Fund:

     

    Date Event Structure of the share capital after event
    Issued share capital (RON) Paid share capital (RON) Issued shares (Shares) Paid shares (Shares)
    1-Jan- 11 Opening balance 13,778,392,208.00 13,778,392,208.00 13,778,392,208 13,778,392,208
    23-Aug-11 Payment by Romanian state for unpaid shares in amount of RON 9,730,381.00 (at nominal value of RON 1 / share and market value of RON 0.4606 / share)  13,778,392,208.00 13,766,686,344.00 13,778,392,208 13,766,686,344
    23-Dec-11 Payment by Romanian state for unpaid shares in amount of RON 1,704,560.00 (at nominal value of RON 1 / share and market value of RON 0.4253 / share)  13,778,392,208.00 13,407,569,096.00 13,778,392,208 13,407,569,096
    2-Feb-12 Payment by Romanian state for unpaid shares in amount of RON 4,985,760.00 (at nominal value of RON 1 / share and market value of RON 0.5175 / share)  13,778,392,208.00 13,412,554,856.00 13,778,392,208 13,412,554,856
    23-Apr-12 Payment by Romanian state for unpaid shares in amount of RON 225,310.00 (at nominal value of RON 1 / share and market value of RON 0.5435 / share)  13,778,392,208.00 13,412,780,166.00 13,778,392,208 13,412,780,166
    1-Feb-13 Payment by Romanian state for unpaid shares in amount of RON 23,500.00 (at nominal value of RON 1 / share and market value of RON 0.5990 / share)  13,778,392,208.00 13,412,803,666.00 13,778,392,208 13,412,803,666
    8-May-13 Payment by Romanian state for unpaid shares in amount of RON 133,840.00 (at nominal value of RON 1 / share and market value of RON 0.6625 / share)  13,778,392,208.00 13,412,937,506.00 13,778,392,208 13,412,937,506
    18-Jun-13 Payment by Romanian state for unpaid shares in amount of RON 200,080.00 (at nominal value of RON 1 / share and market value of RON 0.6495 / share)  13,778,392,208.00 13,413,137,586.00 13,778,392,208 13,413,137,586
    24-Feb-14 The cancelation of shares acquired during the first buy-back programme  13,538,087,407.00 13,172,832,785.00 13,538,087,407 13,172,832,785
    4-Apr-14 Payment by Romanian state for unpaid shares in amount of RON 999,990.00 (at nominal value of RON 1 / share and market value of RON 0.8185 / share)  13,778,392,208.00 13,173,101,825.00 13,778,392,208 13,173,101,825
    7-Apr-14 Payment by Romanian state for unpaid shares in amount of RON 269,040.00 (at nominal value of RON 1 / share and market value of RON 0.8200 / share)  13,778,392,208.00 13,174,101,815.00 13,778,392,208 13,174,101,815
    25-Jun-14 The decrease for annual cash distributions to shareholders  12,861,183,036.65 12,515,396,724.25 13,538,087,407 13,174,101,815
    16-Sep-14 Payment by Romanian state for unpaid shares in amount of RON 163,239.45 (at nominal value of RON 0.95 / share and market value of RON 0.9100 / share)  12,861,183,036.65 12,515,559,963.70 13,538,087,407 13,174,273,646
    26-Sep-14 The cancelation of the shares acquired during the second buy-back programme   11,815,279,886.85 11,469,656,813.90 12,437,136,723 12,073,322,962
    27-Oct-14 Payment by Romanian state for unpaid shares in amount of RON 1,340.00 (at nominal value of RON 0.95 / share and market value of RON 0.9365 / share)  11,815,279,886.85 11,469,658,154.35 12,437,136,723 12,073,324,373
    27-Jan-15 The cancelation of the shares acquired during the third buy-back programme  11,575,064,733.65 11,229,443,001.15 12,184,278,667 11,820,466,317
    31-May-15 The decrease for annual cash distributions to shareholders  10,965,850,800.30 10,638,419,685.30 12,184,278,667 11,820,466,317
    12-Aug-15 The cancelation of the shares acquired during the fourth buy-back programme  10,074,080,745.90 9,746,649,630.90 11,193,423,051 10,829,610,701
    14-Mar-16 The cancelation of the shares acquired during the fifth buy-back programme  9,869,265,720.90 9,541,834,605.90 10,965,850,801 10,602,038,451
    9-Jun-16 The decrease for annual cash distributions to shareholders 9,320,973,180.85 9,011,732,683.35 10,965,850,801 10,602,038,451
    26-Oct-16 The partial cancelation of the shares acquired during the sixth buy-back programme  9,168,314,116.70 8,859,073,619.20 10,786,251,902 10,422,439,552
    18-Jan-17 The partial cancelation of the shares acquired during the sixth buy-back programme  8,562,968,634.10 8,253,728,136.60 10,074,080,746 9,710,268,396
    24-Mar-17 The decrease for covering accounting loss and for an extraordinary cash distribution to shareholders  5,742,226,025.22 5,534,852,985.72 10,074,080,746 9,710,268,396
    16-Jun-17 The decrease for annual cash distributions to shareholders  5,238,521,987.92 5,049,339,565.92 10,074,080,746 9,710,268,396
    29-Nov-17 The partial cancelation of the shares acquired during the seventh buy-back programme  4,854,034,784.56 4,664,852,362.56 9,334,682,278 8,970,869,928
    29-Jun-18 The partial cancelation of the shares acquired during the seventh and eighth buy-back programmes  4,771,610,196.08 4,582,427,774.08 9,176,173,454 8,812,361,104
    28-Dec-18 The partial cancelation of the shares acquired during the eighth buy-back programme  4,733,020,898.32 4,543,838,476.32 9,101,963,266 8,738,150,916
    15-Oct-19 The cancelation of the shares acquired during the ninth buy-back programme  3,959,264,762.44 3,770,082,340.44 7,613,970,697 7,250,158,347
    30-Sep-20 The cancelation of the shares acquired during the tenth buy-back programme  3,749,282,292.08 3,560,099,870.08 7,210,158,254 6,846,345,904
    25-Oct-21 The cancelation of the shares acquired during the eleventh buy-back programme  3,334,342,422.84 3,145,160,000.84 6,412,196,967 6,048,384,617
    1-Feb-22 Romanian state pays RON 189,182,422 (at nominal value of RON 0.52 and market value of RON 2.0650 / share)  3,334,342,422.84 3,334,342,422.84 6,412,196,967 6,412,196,967

    Impact

    Shareholder Type* % of total voting rights before Romanian State payment % of total voting rights after Romanian State payment
    Romanian institutional shareholders 40.58 38.2
    Romanian private individuals 21.84 20.56

    The Bank of New York Mellon (depository bank for GDRs)out of which Fondul Proprietatea held 11,783 GDRs (589,150 shares equivalent) 

    18.2 17.14
    Foreign institutional shareholders 15.76 14.84
    Foreign private individuals 3.51 3.3
    Ministry of Public Finance 0.11 5.96
    Treasury Shares 0 0
    Total number of voting rights 5,854,708,694 6,218,521,044

     

    Based on the 31 December 2021 shareholder structure, the Romanian State would own 5.96% of the voting rights.

     

    Based on the 31 December 2021 NAV and taking into account the cash payment for the unpaid shares of RON 189,182,442, the impact on total NAV would be positive, an increase of RON 189,182,442 or 1.4%, and negative on the NAV per share, of approximately 4.5% .

     

About Franklin Templeton

General Information

  • Introduction

    The history of stock exchanges can be traced to 12th century France, when the first brokers are believed to have developed, trading in debt and government securities. Unofficial stock markets existed across Europe through the 1600s, where brokers would meet outside or in coffee houses to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock exchange when it began trading shares of the Dutch East India Company. These were the first company shares ever issued.

    By the early 1700s there were fully operational stock exchanges in France and England, and America followed in the later part of the century. Stock exchanges became an important way for companies to raise capital for investment, while also offering investors the opportunity to share in company profits. The early days of the stock exchange experienced many scandals and stock crashes, as there was little to no regulation and almost anyone was allowed to participate in the exchange. Today, stock exchanges operate around the world, and they have become highly regulated institutions. Investors wanting to buy and sell stocks must do so through a stock broker, who pays to own a seat on the exchange. Companies with stocks traded on an exchange are said to be 'listed' and they must meet specific criteria, which varies across exchanges. Most stock exchanges began as floor exchanges, where traders made deals face-to-face. The largest stock exchange in the world, the New York Stock Exchange, continues to operate this way, but most of the world's exchanges have now become fully electronic.

    A company listed on a stock exchange has unlimited access to investors. This means unlimited financing opportunities, which can help owners raise capital for their corporation and expand into a more successful business. Depending on the product popularity or market conditions, the price of stocks fluctuates. Investors earn a profit through buying when stock prices are low and selling when shares have reached their highest prices. Even investors do not directly deal with the stock exchange, but hire a broker, a specialist who knows the ins and outs of the exchange, to buy and sell for them. Brokers make a commission off of every profitable sale.

    What Is a Stock Market?

    The stock market is a platform for trading shares in publicly listed companies (PLCs). It is a place to invest money with the chance that it will appreciate faster than it would by sitting in a bank account. Of course, there is also a risk that the companies invested in do not perform well, and the investment shrinks.

    What Is a Public Company?

    Public companies list or float on a stock exchange for two main reasons. Firstly, they open up their share capital to mainstream investors. That means, instead of the company being owned and funded by a handful of wealthy private individuals, it is split into much smaller shares, or holdings. Shareholders own part of the company and even have a say in how it is run.

    Another reason is to raise money. A publicly traded company may decide to issue, say, another million shares to the market. New investors bring new money to the table, and that funding can be put toward anything from expansion to paying off bank debt. It puts the business in a better position to grow.

    There are other benefits to having a public listing including raising the company’s reputation for a start.

  • Introduction

    Closed-end funds are often confused with, and mistakenly called Mutual Funds. A major difference is that closed-end funds behave more like a stock -- the market value is driven by supply and demand for the shares. On the other hand, an open-end mutual fund continually issues new shares to investors and does not trade on an exchange. Perhaps the best way to understand a closed-end fund is to compare it with an open-end mutual fund.

    Open-End Mutual Funds vs. Closed-End Funds

    You can think of a mutual fund as “open-ended” because the cash flow door -- both into (investments) and out of the fund (redemptions) -- is always open. In other words, the portfolio manager continues to invest new cash from investors, and the fund company continues to offer new shares of the fund to new investors.

    You can think of a closed-end fund, then, as “closed-ended” because the cash flow door -- into and out of the fund -- is always (with a few exceptions) closed. The manager only invests a fixed amount of cash that was raised (in an initial public offering) of the fund’s shares. If you want to buy shares of the fund, you buy the shares from another investor via a stock exchange. The number of fund shares do not fluctuate based on investor demand.

    Prices

    As mentioned above, a closed-end fund does not continually issue or redeem shares like a mutual fund. The value of one share of this pool is called the Fund’s net asset value (NAV), just like open-end funds. Closed-end funds trade on exchanges or the over-the-counter market. As a result, closed-end funds can have another price, known as the market price, besides their NAV. The market price is the price at which investors buy and sell shares of the closed-end fund.

    Trading

    Closed-end funds can trade at a premium, discount or, rarely, exactly equal to their NAV. The shares of these funds often trade at a discount to their NAV. The ability to buy at a discount is key benefit of the closed-end structure for investors. If held for a long period of time, the price may eventually return close to the fund’s NAV. The price increase, combined with any dividends or interest, can provide a higher-than-average rate of return.

    Similarities in Closed-End Funds and Mutual Funds

    Like mutual funds, closed-end funds are:

    • A diversified portfolio of stocks, bonds, or a combination of the two
    • Professionally managed by an investment manager
    • Either actively or passively managed
    • Required to distribute capital gains and dividends to shareholders
    • Regulated by the country’s local regulator

    Differences in Closed-End Funds and Mutual Funds

    Unlike mutual funds, closed-end funds:

    • Are traded on a stock exchange or over-the-counter
    • Are bought and sold at market price versus the underlying securities’ value
    • Are valued based on supply and demand for the fund
    • Can be purchased and sold throughout the trading day
  • Various research and studies show that over the medium and long-term, the equity market has provided superior risk adjusted returns. Equities can provide higher returns than a bank account.

  • Primary shareholders (beneficiary of the restitution process) and those acquiring the shares on the stock market are both eligible to hold shares in Fondul Proprietatea.

  • There are two situations:

    • if you received the shares from the Romanian State as a compensation, you need an account statement because this document also includes the confidential code, which is a necessary element for your broker to be able to trade. The list of confidential codes is released only together with the account statement. If you obtained an account statement when you received the shares, you will need a new one, which should also show your confidential code.
    • if you bought the shares directly from the stock exchange, you don’t need any document from the Central Depository as you have your brokerage agreement with your broker.
  • Not necessarily. Your broker can obtain, for a fee, the account statement, including the confidential codes, on your behalf. The broker will need however to have a contract signed for this purpose with the Central Depository.

  • The settlement process for a trade on the Bucharest Stock Exchange is T+2, meaning funds will be transferred to your brokerage account 2 working days after the day of the trade. For example, if you sold shares on a Monday, funds will arrive in your brokerage account by Thursday. It is also important to keep in mind that funds will first get transferred in your brokerage account, not your bank account. In order for the funds to get transferred to your bank account, you need to ask your broker to transfer the funds from your brokerage account.

  • Yes, you can empower a different person to contact a broker for your trades on the Bucharest Stock Exchange. This is done through a special power of attorney legalized by a notary. The rights and the obligations of the empowered person must be clearly stated within the special power of attorney.

  • Yes, it is possible to sell only some of the shares you own in Fondul Proprietatea.

  • Daily market buy-backs are suspended during the duration of the tender buyback offer and will be restarted after the completion of the offer.

    In case of takeover offer by a third party, any tender buy-back would require an approval from the local supervisory authority (FSA). Daily market buy-backs should still be possible unless Fondul Proprietatea is in possession of material non-public information.