Bucharest Court rules that Franklin Templeton's naming at helm of Fondul Proprietatea was unlawful

The Bucharest Court of Appeal recently decided to cancel a decision which had allowed Franklin Templeton to become manager of the Proprietatea Fund in Romania, as well as the decision to name the company fund manager. The court decision is irreversible, but it should not have an actual impact on the fund, says the fund manager. Franklin Templeton says it will continue to be fund manager, as a new version of the constitutive act is in place, following a recent general shareholders meeting decision. However, market sources quoted by Mediafax say the recent court decision in fact switches the fund back to its older status, and the fund manager will be Ionut Popescu. The court canceled a general shareholder decision at Fondul Proprietatea from 2010, which changed the fund's statute, allowing Franklin Templeton to be named sole fund manager later on. The recent decision was part of a litigation brought by lawyer Ioana Sfîrăială, a shareholder in Fondul Proprietatea. The court decision refers to an older version of the constitutive act, and the technicality found was that the changes in the constitutive act were not published within the legal time frame of 30 days before the shareholders meeting in 2010. In that meeting, shareholders decided to change the management status of the fund from surveillance council and management, to investment management company, thus allowing Franklin Templeton to become fund manager. However, another technicality appeared as the constitutive act has been changed three times since, so the fund no longer works based on the same decision that was voided by the court. Fondul Proprietatea was created in 2005 as a joint stock company with a special purpose to provide compensation to people whose real estate assets had been confiscated by the Romanian state during the communist regime and who can no longer receive restitution in kind. The Romanian investment fund posted a profit of around EUR 128 million in 2011, and is listed on the Bucharest Stock Exchange, symbol FP. The fund’s portfolio is focused on the electrical energy sector, oil and natural gas – around 88 percent of its net assets. The biggest unlisted company in its portfolio of shares is Hidroelectrica, while the biggest listed company where Fondul Proprietatea owns shares is OMV Petrom. editor@romania-insider.com