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Bucharest Stock Exchange's (BVB) Articles of Association has been aligned to the GEO 90/2014 regarding the increase of the threshold and the flexibility requirements of quorum and decision-making in EGSM of the market operator.
BVB Board of Governors decided, Friday, January 9, 2015, to amend the Articles of Association of the company in order to align its provisions to the new provisions included in the Law 297/2004 by the Government Emergency Ordinance no. 90/2014, which entered into force on January 9, 2015. As per Art II (1), in 30 days since the date when the Emergency Ordinance becomes effective, Bucharest Stock Exchange, as market operator, has to take all the necessary measures to transpose the above mentioned stipulations into its bylaws and implement it as such.
Thus, there were amended the BVB Articles of Association as per articles 129 and, respectively, 286³ of the Capital Market Law. These refer to the increase of the company's ownership threshold from 5% to 20% stake and, respectively, the flexibility of requirements of quorum and majority required for extraordinary general shareholders meetings and the adoption of decisions by reference to the provisions of the Companies Law 31/1990, republished.
The amended Articles of Association will be submitted to the Financial Supervisory Authority in order to receive the authorization stipulated by the provisions of GEO 90/2014 and, subsequently, submitted to the Bucharest Trade Register.
The GEO 90/2014 was adopted by the Government on December 23, 2014 and published in the Official Gazette on December 30, 2014. With the date of its effectiveness, January 9, 2015, the ordinance brings several updates which are meant to simplify and clarify the voting procedure in the general shareholders meetings, to consolidate the creation of a centralized dividend payment system, to improve the public offers mechanisms and listing regime.
For other changes brought up by the GEO 90/2014, please see below:
1. Simplification of the procedure for voting by proxy
The notion of “general power of attorney” was inserted in addition to the special power of attorney so as to comply with the provisions of the Directive 2007/36/EC and streamline and ease the voting by proxy mechanism.
2. Clarifying the power of attorneys regime
A new type of power of attorneys that can be used when voting by proxy, “general power of attorney” was introduced and the current one - “special power of attorney” was maintained.
The general power of attorney will be awarded with for maximum 3 years, for one or more issuers, for all the points on the agenda. On the other hand, the special power of attorney can be awarded for representation in a single GSM and must contain the shareholder’s vote casted in accordance with the meeting’s agenda (i.e. the proxy is not allowed to cast votes other than in accordance with the power of attorney). The general power of attorney can be awarded to intermediaries or lawyers.
3. Elimination of the mandatory vote instructions in the power of attorney
In order to simplify, clarify and corroborate the legislative framework, when voting by proxy, the provisions in the Romanian regulatory framework regarding the requirement to indicate clear voting instructions in the power of attorney were eliminated for general power of attorneys.
4. Simplification of the requirements regarding the documents for the general shareholders meeting
The Romanian regulations provided that before the GSM shareholders must submit the power of attorney in original. In order to simplify this preliminary process, new provisions were introduced allowing the power of attorney to be submitted in certified copies.
Moreover, shareholders that choose to vote by general power of attorney awarded for several shareholders meetings have to submit the certified copy only before the first shareholders meeting.
Under previous legislation, legal entities were required to submit several documents in original or certified form attesting the identity of their legal representative.
The changes aim to simplify the whole procedure by using the Central Depository database. Thus, the proof of ownership and legal representatives should be done with an excerpt from the Central Depository database and all other requirements are removed.
5. Asserting the Central Depository’s database role
In order for the Central Depository to become the national body qualified to supply information on shareholders, a new article regarding the shareholders obligation to submit to the Central Depository the identification documents regarding the legal entity and its legal representative pursuant to applicable national legislation was introduced.
Furthermore, the shareholders will have to notify and communicate to the Central Depository the documents regarding the changes in the legal person structure and legal representatives.
6. Simplifying correspondence voting procedure
A new provision in the Law no.297/2004 regarding the shareholders’ right to vote in the general shareholders meetings was introduced. The new provision stipulates that the shareholder that voted by correspondence can vote in person or by proxy if it decides to join the general shareholders meeting. The initial correspondence vote will be annulled.
This proposal is meant to preserve the essence of the benefits sought by the Shareholders’ Rights Directive when stipulating the vote by correspondence without hindering in any way the shareholders rights to vote in person or by proxy.
7. Creating a centralized system of paying dividends
In order to create a centralized, uniform and general dividends payments system, the Law no. 297/2004 was amended by inserting a new competence to the Central Depository concerning the distribution of dividends to investors.
8. Elimination of the requirement of a public offer announcement
The public offer regime required the publication of a notice stating how the prospectus has been made available and where it can be obtained by the public.
Taking into account the publication requirements of such notice and the delays in the public offers process triggered by it, and arguing that the publication requirements relating to the prospectus itself are sufficient to protect the investors’ rights, the requirement was eliminated.
9. Clarifying the advertisements regime
Romanian regulatory framework was extremely rigid and lacking clarity when it comes to advertisements relating either to an offer to the public of securities or to an admission to trading on a regulated market. In the circumstances where a more conservative approach was taken, the previous advertisement regime could amount to a serious impediment to any investor roadshows.
The changes in relation to the advertisements consist mainly of aligning the relevant provisions with
Directive 2003/71/EC (the “Prospectus Directive”) as well as reducing the role of the FSA role from a priori approval to supervisory role.
10. Omission of information regarding the final offer price and amount of securities
Pursuant to the Romanian laws and regulations, where the final offer price and amount of securities which will be offered to the public cannot be included in the prospectus, the criteria, and/or the conditions in accordance with which the above mentioned elements will be determined and the maximum price have to be disclosed in the prospectus. On the other hand, the provisions of the Prospectus Directive are less rigid, stating that the criteria, and/or the conditions in accordance with which the above mentioned elements will be determined or, in the case of the price, the maximum price have to be disclosed in the prospectus. This effectively dispenses with the implicit need to have (rigid) pricing mechanisms included in the prospectus, provided a maximum price is included.
The changes consisted of aligning the provisions with the Prospectus Directive.
11. Simultaneous approval of the admission to trading by the FSA and by the regulated market operator
The new article inserted in the Law no. 297/2004 on capital markets is meant to create a procedure of provisional approval by the regulated market operator of the prospectus and of the admission to trading application. Consequently, the person requesting the admission to trading on a regulated market will file a provisional application in this respect with the relevant market operator simultaneously with the filing of the application for approval of the prospectus with the FSA. The market operator’s approval in this scenario is conditioned by the FSA’s approval.
This proposal will trigger further changes in the rules issued by the market operators (e.g. the rulebook of the Bucharest Stock Exchange).
12. New quorum threshold for dis-application of preference rights
The previous version of Law no. 297/2004 on capital markets provided a special quorum and majority for voting on share capital increases and dis-application of the preference right of shareholders to subscribe new shares, namely that ¾ of the number of shareholders had to be present at the GSM and the vote of at least 75% of the voting rights had to be cast in order for the decision to be taken.
Amendment of this provision consists of changing the quorum to ¾ of the share capital (and not the number of shareholders) and the majority to 2/3 of the voting rights.
13. Raising the ownership limit for a market operator
The previous form of the Law no. 297/2004 on capital markets imposed a 5% ownership limit for market operators. The new provisions will allow a threshold of 20% from the voting rights of a market operator. The acquisition of shares which could result in holding 20% ownership from the voting rights will be notified to the market operator, subject to FSA prior approval.
The changes are in line with the Directive 2014/65/UE (MiFID II), which has a deadline for implementation 03.07.2016, which at Art.46 imposes no limitation relating to ownership limitations or voting limitations for market operators, and following the market practice across EU.
14. Lowering the quorum requirements for market operators
The new provisions of the Law 297/2004 will allow for market operators a quorum requirement for the extraordinary general shareholders meetings similar to the Company Law 31/1990 requirements (1/4 for the from the voting rights first meeting and 1/5 for the second meeting)
The new provisions were driven by extremely high quorum requirements for extraordinary GSM and the difficulties encountered in practice to meet those requirements (75% from the voting rights for the first meeting and 50% for the second meeting).
