Fondul Proprietatea

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Fondul Proprietatea S.A.
TypeSocietate pe Acțiuni
BVB: FP
IndustryInvestment management
Founded2005
RevenueIncrease RON 871.8 million (2012)
Increase RON 567.0 million (2012)
Websitewww.fondulproprietatea.ro

Fondul Proprietatea is a joint-stock company operating as a closed-end investment company (Alternative Investment Fund) without a set lifetime, incorporated in Romania, trading on the Bucharest Stock Exchange since January 2011, and on the London Stock Exchange since April 2015. The fund operates under the control of the general assembly of shareholders.

The objective of the Fund Fund’s is to maximize the returns for the shareholders and the increase of the net asset value per share via investments mainly in Romanian equities and equity-linked securities.

History[]

Romania is a country of the former Eastern Soviet bloc where a very large number of properties (factories, enterprises, houses, apartments, buildings, churches and lands) have been nationalised by the communist government.

Fondul Proprietatea was set up by the Romanian state in December 28th 2005 to indemnify persons whose assets were abusively expropriated by the communist regime (especially in cases when restitution in kind would not be possible) by granting shares in Fondul Proprietatea to the respective persons proportionate to their loss. Romania is the only country in Eastern Europe where it was attempted to find a solution for restitution – at its actual value – of the property confiscated by the previous communist governments.

Following the fulfillment of specific phases strictly determined by law, holders of compensation titles have become shareholders of the Fund. The compensation has been made in shares, representing the actual value of the real estates which are not given back in kind.

The restitution process is wholly independent of Fondul Proprietatea and is managed by the National Agency for Property Restitution, a specialized legal entity of the central administration. The Romanian Government became minority shareholder in Fondul Proprietatea (0.10%) by reallocating shares from its initial holding to eligible claimants.

Company, capital and corporate purpose[1][]

The Fund operates today as a closed-end investment company (Alternative Investment Fund) for an indefinite period. When it was set-up, it was one of the largest closed-end funds in the world with an estimated asset value of € 4 billion 2. Ten years after its set-up, the Fund was the fifth largest closed-end fund in the world with an estimated value of its assets of 3.1 billion euros.3

· Fondul Proprietatea is a joint-stock company, established in accordance with the provisions of Title VII of law 247/2005, GOVERNMENTAL DECISION 1481/2005 4 and of Law no. 31/1990. Fondul Proprietatea is a corporate body from the registration date at the Trade Register Office besides the Court of Bucharest.

· The main objective is to create profit for its shareholders.

· Last available information on the portfolio on April 2021 5:

  1. 32 companies in portfolio.
  2. Subscribed social capital: RON 3.749.282.292,08 6.
  3. Number of shareholders: 7,869.

On January 25, 2011 Fondul Proprietatea was listed on the Bucharest Stock Exchange, with the FP stock index. The fund is included in the BET index. BET is the first index developed by BVB and represents the reference index for the local capital market. BET reflects the performance of the most traded companies on BVB’s regulated market 7.

FP was listed on the Specialist Fund Market segment of the London Stock Exchange through global certificates of deposit (GDRs) on April 29, 2015, being the 5th largest fund in terms of net assets and the first in a border market present in the ring of the London Stock Exchange.[8]

Fondul Proprietatea is also one of the most important Romanian companies, its market value being of USD 2.86 billion on April 21, 2021.

In March 2021, the Fund's shares were traded at a record market value of RON 1.7450 / share 9.

Management[]

Until the appointment of a selected administration, the fund has been managed provisionally by the Ministry of Public Finance through the Board of Supervisors. After selecting through an international public tender, a management company took over the powers of the administrator of the Fund property. Following a tender selection process, a Selection Commission has recently designed "on June 9, 2009 Franklin Templeton Investment Management Ltd 10 as the manager of the fund." Franklin Templeton is the current manager of Fondul Proprietatea.

Structure of the shareholders[]

  • On 31 March 2021
Shareholder type % of subscribed share capital % of paid-up share capital % of total voting rights
The Bank of New York Mellon 17.01 17.91 20.19
Romanian institutional shareholders 31.97 33.67 38.58
Romanian private individuals 17.39 18.31 20.99
Foreign institutional shareholders 13.71 14.44 16.55
Foreign private individuals 2.97 3.13 3.58
Ministry of Public Finance 5.14 0.10 0.11
Own Shares 11.81 12.44 0.00
Total 100.00 100.00 100.00

Portfolio structure[]

By the end of March 2021, the portfolio total value was evaluated around RON 10.9 billion In September 2020, Fondul Proprietatea had in its portfolio 33 companies: 7 listed companies, representing 18% of the NPV and 26 unlisted companies, representing 72% of the NPV.

  • Fondul Proprietatea’s top 10 holdings:
Name % of the share capital held on 31/03/2021 VAN (EUR million) % of the portfolio
OMV PETROM S.A. 7.0 346.0 15.7
Hidroelectrica 19.9 1.126.3 51.1
CN Aeroporturi Bucuresti SA 20,0 126,7 5,8
Engie Romania SA 12,0 109,4 5,0
E-Distributie Banat SA 24,1 55,4 2,5
CN Administratia Porturilor Maritime SA 20,0 47,9 2,2
E-Distributie Muntenia SA 12,0 46,3 2,2
Alro SA 10,2 41,6 1,9
SN a Sarii SALROM SA 49,0 40,9 1,9
E-Distributie Dobrogea SA 24,1 36,0 1,6

Compensation scheme[1][]

  • The shares issued by Fondul Proprietatea will be transferred, free of charge, to the titleholders of compensation issued on the date of the Fund establishment, to their subsequent holders, or to the persons compensated by the decisions issued after the establishment of the fund. The number of the shares transferred will be set by reference to the value of the compensation securities held.
  • The shares of Fondul Proprietatea will be freely sold by their titleholders, on regulated markets. For this purpose, Fondul Proprietatea will initiate the legal procedure to admit the shares for transaction on the market operated by Bucharest Stock Exchange. By the capitalization of the shares - either by their sale, or by receiving annual dividends resulted from the activity developed by Fondul Proprietatea -, the effective compensation will be accomplished for the former owners of the nationalized real estates, which could not be given back in kind.

Effectiveness of the fund and challenges[]

  • The fund has been experiencing serious management difficulties, delays[2] and scandals[3] since its creation. This fund is also widely disputed by the beneficiaries and all owners associations,[4] considering it is not a real compensation scheme since the shares cannot be properly sold on the market and that it is insufficient in size.[5] It has been also criticized by the press, the civil society or political parties in Romania.[6] It appears[7] that the fund is still not in a position to compensate anyone,[8] mainly because it cannot be floated in the financial market and for the weak amount of money that the Romanian State makes available for the fund.[9] In 2009, according to many newspapers and commentators, the image of the fund and of the State of Romania has been seriously tarnished by the long series of issues and failures.[10]
  • In fact, the fund has been liquid for the victims only once, for a very limited amount: 500,000 Lei (around 166,500 USD or 118,778.80 Euros) for each owner, whatever the extent of injury, and for a very limited time (within 6 months from 1 October 2007[11]). It allows only rarely the compensation of the deprivation of property. Many of the former owners die[12] before receiving any compensation.
  • The European Court of Human Rights (or ECHR) has repeatedly condemned[13] Romania[14] for its failure to return the real estates, but also to pay for compensation. In November 2009, it is still not considered by the European Court of Human Rights as an acceptable means of compensating the confiscations.[15] According to the Romanian newspaper Ziua, the refusal of Romania to change its legislation in order to make effective the restitution of confiscated properties, or to offer a swift and decent compensation, led the ECHR to threaten Romania of an outright exclusion of the organization (21 May 2009).[16] On 21 October 2009, the newspaper Evenimentul Zilei[17] dedicates a long article of the never ending condemnations of Romania, considered by the ECHR unable to compensate dispossessed owners. Romania has lost more than 100 trials since 2007, and had to pay nearly 18 million euros in damages awarded by the Court to the plaintiffs.
  • It can also be noted that the Council of Europe[18] states that a systemic problem in Romania due to the mechanism of the fund. The Committee of Ministers[19] has regularly highlighted a deficiency regarding the respect of private property right. The Committee emphasizes particularly the lack of compensation following the deprivation of property, which amounts to confirm the ineffectiveness of Fondul Proprietatea.
    Thus at its last meeting on June 6, 2009,[20] the ministers states on the basis of the 88 cases involving the absence of restitution or compensation for nationalized property, subsequently resold by the State to others:[21]
    1. recall that the issues raised in these cases relate to a major systemic problem, particularly related to the absence of restitution or compensation for nationalized property, subsequently resold by the state to others, a problem that must be addressed as quickly as possible to avoid a significant number of new, similar violations;
    2. note that the European Court in a number of cases that have recently become final, said, inter alia, that the Romanian authorities should take the necessary legislative measures to prevent the occurrence of situations where two titles related to the same property coexist, and also amend the administrative mechanism established by the laws of repair[22] so that it becomes really coherent, accessible, timely and predictable;
    3. invite the Romanian authorities to submit an action plan on measures taken or envisaged to improve the current mechanism of restitution;; in this context they noted with interest that bilateral consultations are envisaged between the authorities involved in the process restitution and the Secretariat;
    5. consequently decide to resume consideration of these matters at the latest af their 1st HR meeting in 2010 in the light of the action plan and to provide information on individual measures.

Romania is the only country in the former Eastern bloc to join the European union where such a problem concerning the situation of property in connection with the collapse of communist regimes remains unresolved. None of the other ex-Soviet bloc countries have raised a real estate issue with such a magnitude at European level.

Given the seriousness of the situation and the inertia of the Romanian state, despite hundreds of convictions of the European Court of Human Rights, the latter launched on 25 February 2010 a pilot-judgment procedure.[23] The hearing was held 6 September 2010.[24] The ruling is expected in September 2010. It could be accompanied by sanctions against Romania such as the obligation to amend its legislation, or the exclusion of the Court.

References[]

  1. ^ Jump up to: a b "Home". Fondul Proprietatea. Retrieved 2021-04-26.
  2. ^ (in Romanian) - Cotidianul writes on 06/03/2009 that the Commission Fund manager selection is postponed again, indefinitely. link to the article
  3. ^
    (in Romanian) - In Ziarul financiar.ro on 30/03/2009 - Summary: the profit is divided by two and the salaries increase. link to the article
    (in Romanian) - In FrontNews.ro on 12/11/2008 - Summary: the excessive and undeclared executives salaries raises a scandal at Fondul Proprietatea. link to the article
    (in Romanian) - In Evenimentul Zilei on 17/09/2008 - Summary: the performance tumbles down but wages continually inflate. link to the article
    (in Romanian) - In Capital.ro on 17/09/2008 - Summary: the salaries budget of the fund has tripled in 3 years. link to the article Archived 2008-09-20 at the Wayback Machine
    (in Romanian) - In Hotnews.ro on 7 February 2008 - Summary: the managing director has a 17.000 euros salary and a 120.000 euros prime for dismissal in secret clauses that should have been made public through the ANI (National Integrity Agency) obligations. link to the article
    (in Romanian) - In Cotidianul.ro on 18/06/2008 - Summary: nepotism and huge salaries for the head of the fund. The director, godmother of the Interior minister, gets 17.000 euros per month. link to the article
  4. ^
    (in Romanian) - In Curierul Na��ional on 10/06/2005 - Summary: Fundul Proprietatea, the formula proposed by the Government to pay compensation to former owners of nationalized properties that can not be returned in kind, is strongly contested by potential beneficiaries, the solution was met with skepticism even by the Ministry of Finance. link to the article Archived 2011-07-16 at the Wayback Machine
    (in Romanian) - In Ziarul Financiar on 10 March 2006 - Summary: Owners do not trust either the government or Fondul Proprietatea. link to the article
    (in Romanian) - In Gândul on 10 September 2006 - Summary: Dissatisfaction and mistrust are the feelings of the former abusively dispossessed owners that should receive shares of the Fondul Proprietatea instead of confiscated homes. Discontent, because they do not know if the assessment will be correct and have no certainty that he will recover quickly and easily the money. Distrust, because they are not familiar with the mechanism of capital market. link to the article
    (in Romanian) - In Financiarul.ro on 12/12/2008 - Summary: there is no law to compensate former owners, the only form of compensation is provided by the Property Fund, but, at present, it is not functional, said Friday (December 12, 2008) Maria Teodoru, President of the Improperly Deprived by the State Owners Association (APDAS - Asociatiei Proprietarilor Deposedati Abuziv de Stat) link to the article
  5. ^ (in Romanian) - In Gândul on 23/10/2007 Summary: the fund is 5 time smaller than the total amount of the compensation link to the article
  6. ^ (in Romanian) - In Gardianul on 23/09/2008 - Summary: political parties critic and challenge the fund that would be a piggy bank for some political parties. link to the article[permanent dead link]
  7. ^ In November 2009
  8. ^
    (in Romanian) - In Ziarul Financiar on 03/09/2009 - Summary: still remaining undistributed dividends of the fund test the patience of thousands of people waiting for years to collect cash value part of property confiscated by the communist regime. link to the article
    (in Romanian) - In Ziarul Financiar on 30/07/2009 - Summary : state is trying to find solution in order to compensation former owners but many obstacles remain. The article list the blocking issues regarding the fund :
    1/ after four years of its establishment FP does not have a manager
    2/ the listing will not meet the deadline of November 30, 2009
    3/ FP cannot yet provide dividends of record profits in 2008
    4/ social capital and par value of a share should be reduced by 23%
    5/ although it is the largest fund in Europe, it is not functional link to the article
  9. ^
    (in Romanian) - In BloomBiz.ro on 04/09/2009 - Summary: Romanian state does not pay its own participation in the fund which is obliged to enforce it to pay. link to the article
    (in Romanian) - In Ziare.com on 03/09/2009 - Summary: the fund is suing the Romanian State for not fulfilling its legal duty : paying its share of the fund social capital. link to the article
    (in Romanian) - In Curierul Naţional on 25/03/2009 - Summary: The company (Fondul Proprietatea) wants to get back 160 millions euros following the privatisation of the BCR (Banca Comercială Română). Until now, negotiation with the Minister of Economy have failed. The company prosecuted the Minister of Economy and Finance in 2008. link to the article Archived 2009-03-28 at the Wayback Machine
    (in Romanian) - In Evenimentul Zilei on 03/03/3009 - Title: "The Romanian Government will give compensation when the holy cows come home" - Summary: the money allocated (from Fundul Proprietatea) during 2009-2012 period will not cover the needs for half this year in order to pay the former owners. It is very hard to communicate and to get information from the Authority for Property Restitution (ANRP) in charge of the compensation scheme. link to the article
  10. ^
    (in Romanian) - In Romania Libera on 24/09/2009 - Summary: Fundul Proprietatea is in a stalemate since its creation. The problem is so serious, that it has become internationalized. The negative effects of this process have contaminated the European Court of Human Rights in Strasbourg, where property processes against Romania multiply from year to year. Bucharest keep the same pace and does not change the legislation, despite the fact that the court asks constantly to review bad legislation and to implement judicial decisions. link to the article
    (in Romanian) - In The Romanian Digest in June 2009; Hotnews.ro on 10/06/2009 and Romania News Watch on 03/06/2009 - Summary: four years after the creation of the Property Fund (“Fondul Proprietatea” in Romanian) as a means of awarding restitution to former owners of properties confiscated by the Romanian state where in-kind restitution is no longer possible, Fondul Proprietatea still does not represent an effective mechanism in awarding compensation to the victims. This is a stain on the honor of the Romanian state. The Romanian Digest (in English).- Hotnews.ro Romania News Watch (in English)
  11. ^ (in Romanian) - In Ziarul Financiar on 09/07/2007 - Summary: the fund will start to pay in September for dividends regarding last year profit, and in October it will start the first pay in cash but up to the limit of 500,000 lei, said today, Minister of Economy and Finance Varujan Vosganian. link to the article
  12. ^ (in Romanian) - In Ziarul Financiar on 30/10/2009 - Summary: the former owners die before getting any money from Romania, the share from Fundul Proprietatea cannot be sold on the market, 80 years after communism nationalized abusively industries and factories, there is still no effective compensation measures.link to the article
  13. ^ (in French) Jurisprudence about Proprietatea: (On February 9th of 2009, there are 52 rulings published since December 2008) :
    - In the cases All judgments are in extenso in French, the official language of the ECHR. Except for very few ones, no available English version exist for the selected decisions. - - Evolceanu vs. Romania (application n°37522/05), ruling of 09/02/2010 link to the judgment
    - Mărăcineanu c. Romania (application n°35591/03), ruling of 9/02/2010 link to the judgment
    - Veniamin vs. Romania (requête n°19438/05), ruling of 26/01/2010 link to the judgment (English version)
    - Bădoi vs. Romania (application n°22815/07), ruling of 26/01/2010 link to the judgment
    - Nita vs. Romania (application n°24202/07), ruling of 26/01/2010 link to the judgment
    - Loewenton vs. Romania (requête n°111/07), ruling of 26/01/2010 link to the judgment
    - Caragheorghe and others vs. Romania (application n°38742/04), ruling of 19/01/2010 link to the judgment
    - Bistriţeanu and Popovici vs. Romania (application n°5855/05), ruling of 19/01/2010 link to the judgment
    - Varodi vs. Roumanie (requête n°8704/06), ruling of 19/01/2010 link to the judgment
    - Stanca Ciobanu vs. Romania (application n°38800/02), ruling of 19/01/2010 link to the judgment
    - Andreesca Murăreţ et Autres vs. Romania (application n°4867/04), ruling of 19/01/2010 link to the judgment
    - Corbu vs. Romania (application n°12393/05), ruling of 19/01/2010 link to the judgment
    - Rogojină vs. Romania (application n°6235/04), ruling of 19/01/2010 link to the judgment
    - Alexandra Maria Popescu vs. Romania (application n°9684/04), ruling of 12/01/2010 link to the judgment
    - Emilian Ştefănescu vs. Romania (application n°35018/03), ruling of 12/01/2010 link to the judgment
    - Karl Gottfried Schwarz and Helmut Martin Schwarz vs. Romania (application n°39740/03), ruling of 12/01/2010 link to the judgment
    - Seceleanu et autres c. Romania (application n°2915/02), ruling of 10/01/2010 link to the judgment (English version)
    - Gherghiceanu and others (Costache and Rusu) vs. Romania (applications n°21227/03, 18377/05 and 18730/05), ruling of 08/12/2009 link to the judgment
    - Cristian and Mihai Dumitrescu vs. Romania (application n°29231/06), ruling of 01/12/2009 link to the judgment
    - Demetrescu vs. Romania (application n°5046/02), ruling of 10/11/2009 link to the judgment
    - Vidrascu vs. Romania (application n°11138/06), ruling of 27/10/2009 link to the judgment
    - Dermendyin vs. Romania (application n°17754/06), ruling of 27/10/2009 link to the judgment
    - Bohenschuh vs. Romania (application n°14427/05), ruling of 27/10/2009 link to the judgment
    - Mihai and Radu Rǎdulescu vs. Romania (application n°14884/03), ruling of 20/10/2009 link to the judgment
    - Diver vs. Romania (application n° 35510/06), ruling of 13/10/2009 link to the judgment
    - Anea & Nitescu vs. Romania (application n° 45924/06), ruling of 13/10/2009 link to the judgment
    - Schuster vs. Romania (applications n° 36977/03 and 37375/03), ruling of 13/10/2009 link to the judgment
    - Stürner vs. Romania (application n° 17859/04), ruling of 13/10/2009 link to the judgment
    - Gătitu vs. Romania(application n° 16535/04), ruling of 06/10/2009 link to the judgment
    - Simionescu-Râmniceanu (n°2) vs. Romania (application n° 43953/02), ruling of 22/09/2009 link to the judgment
    - Tamir and Others vs. Romania, (application nr. 42194/05), ruling of 15/09/2009 link to the judgment
    - Dumitraş vs. Romania (application n° 17979/05), ruling of 28/07/2009 link to the judgment
    - Ştefănescu & others vs. Romania (application n° 34741/07), ruling of 21/07/2009 link to the judgment
    - Simionescu-Râmniceanu vs. Roumanie (application no 16272/03), ruling of 21/07/2009 link to the judgment
    - Cernitu vs. Romania (application n° 11474/04), ruling of 21/07/2009 link to the judgment
    - Naghi vs. Romania (application n° 31139/03), ruling of 21/07/2009 link to the judgment
    - David vs. Romania (application n° 34247/06), ruling of 16/07/2009 link to the judgment
    - Aurel Popa vs. Romania (applications n° 21318/02), ruling of 16/07/2009 link to the judgment
    - Chamber of Commerce, Industry and Agriculture of Timişoara (n°2) vs. Romania (applications n° 23520/05, 23524/05, 23544/05, 23550/05, 26288/05, 27175/05, 27176/05, 27177/05, 27178/05, 27179/05, 27180/05, 27181/05,27182/05), ruling of 16/07/2009 link to the judgment
    - Chamber of Commerce, Industry and Agriculture of Timişoara vs. Romania (applications n° 13248/05, 13321/05, 23462/05, 23471/05, 23475/05, 23482/05, 23490/05, 23493/05, 23496/05, 23501/05, 23504/05, 23517/05), ruling of 16/07/2009 link to the judgment
    - Becskei vs. Romania (application n° 8266/05), ruling of 07/07/2009 link to the judgment
    - Roman vs. Romania (application n° 30453/04), ruling of 07/07/2009 link to the judgment
    - Turus vs. Romania (application n° 31566/03), ruling of 07/07/2009 link to the judgment
    - Athanasiu Marshall vs. Romania (application n° 21305/05), ruling of 23/06/2009 link to the judgment
    - Czaran and Grofcsik vs. Romania (application n° 11388/06), ruling of 02/06/2009, link to the judgment
    - Glatz and others vs. Romania (application n° 15269/03), ruling of 02/06/2009, link to the judgment
    - Elias vs. Romania (application n° 32800/02), ruling of 12/05/2009, link to the judgment
    - Stanciu vs. Romania (application n° 3530/03), ruling of 10/03/2009, link to the judgment
    - Denes and others vs. Romania (application n° 25862/03), ruling of 03/03/2009, link to the judgment
    - Katz vs. Romania (application n° 29739/03), ruling of 20/01/2009, link to the judgment
    - Faimblat vs. Romania (application n° 23066/02), ruling of 13/01/2009, link to the judgment
    - Viaşu vs. Romania (application n° 75951/01), ruling of 09/12/2008, link to the judgment
  14. ^ Romania joined the Convention for the Protection of Human Rights and Fundamental Freedoms on June 20, 1994
  15. ^
    (in Romanian) - In Ziarul Financiar on 31/01/2007 - Summary: European Court of Human Rights in Strasbourg demonstrates that the non-operating Property Fund makes compensation impossible for the Romanians, owners of nationalized houses, so that Romanian Government is sentenced to pay damages for infringement of property rights. link to the article
    (in Romanian) - In Gândul on 14/07/2006 - Title : "Fondul Proprietatea Juggling is denounced by the ECHR" link to the article
  16. ^ (in Romanian) - In Ziua, edition of 21 May 2009: correspondence (article written in Romanian) between the ECHR and the Prime Minister of Romania Emil Boc, in which the Court explicitly threatens to exclude Romania, article link
  17. ^ (in Romanian) Article link
  18. ^ "Council of Europe". www.coe.int. Retrieved 2018-12-19.
  19. ^ "Home". Committee of Ministers. Retrieved 2018-12-19.
  20. ^ Decisions of the meeting of 2 to 5 June 2009: HR 1059th meeting - June 5, 2009; Section 4.2
  21. ^ List of the 88 cases on the website of the Committee of Ministers
  22. ^ , Title VII of 247/2005 law - Statutory on the determination and payment of damages for property abusively taken - describes the modus operandi of the fund, Law available on the website of the Romanian Parliament.
  23. ^ ECHR website:
    - Definition and explanations on the pilot-judgment procedure
    - Press release of 25/02/2010.
  24. ^ Press release of 08/06/2010

External links[]

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