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LIQUIDATION OF INVESTMENT FUNDS DOES NOT MEAN CRASH OF SHAREHOLDERS’ HOPES
“I”: What is going on with investment funds, what is the sense of the amendments, approved by the Government?
Е. P.: Six investment funds, which were set up in the mass privatization process for national patrimony bonds, took decisions at general meetings of their shareholders to reorganize them into joint stock companies. The compulsory condition for this reorganization was the purchase of shares from shareholders. The Mandatar, Asito-Invest-Prim, Agrofond, Dividend, Real-Invest and DAAC-Hermes funds fulfilled this condition and were reorganized. Shareholder, who did not want or were late to submit their applications within the fixed period, remained the shareholders of the joint stock companies. The amendments, approved recently by the Government, concern the funds, which are in the process of voluntary or forced liquidation.
“I”: How many investment funds are in the liquidation process and how is this process going on?
Е. P.: Seventeen investment funds are undergoing the process of voluntary liquidation. General meetings of their shareholders took decisions on the liquidation of their funds, the alienation of the assets and the distribution of financial resources, earned as a result of the sale. The liquidation had to be completed by July 1, but only Viitorul tău could complete the process within this period. Despite the fact that shares of this fund were offered for sale at nine auctions of the Moldova stock exchange, only 24 out of 53 blocks of shares, owned by Viitorul tău initially, were sold. The financial resources, which fell per share, constituted on the average 0.31 bani and 90.8 lei per a shareholder. These financial resources, as well as the shares of the unsold blocks of shares were divided between more than 125 thousand shareholders. The remaining investment funds, which are in the process of voluntary liquidation, failed to complete it within the fixed period. Beside these funds, there are 17 more funds, which are in the process of forced privatization on the initiative of the former National Commission for Securities, which have not completed the process, as well.
“I”: What is the reason that some funds are already several years in the liquidation process?
Е. P.: They faced difficulties in dividing non-alienated shares, which were not in demand at auctions. They failed to determine their cost, particularly, the cost of shares of insolvent enterprises or enterprises, which had no assets. It should be noted that only 214 out of 582 blocks of shares or shares, owned by investment funds, were sold at the stock exchange. Investment funds, which are in the process of forced liquidation sold only 269 block of shares and shares, which they owned, and about 100 blocks of shares and shares were not sold. Another problem lies in the fact that the investment funds, which are in the liquidation process, number about a million of shareholders. If the unsold blocks of shares had been divided, the number of their shareholder had been increased considerably, the expenses of the joint stock companies for convening general meetings of shareholders had been also increased. They cannot obviously agree upon this situation. But the main problem is that the financial resources, collected from the sale of shares at the stock exchange arɥ rather insignificant. Thus, the investment funds, which are in the process of voluntary liquidation, accumulated 88.4 million lei and those, which are in the process of forced liquidation – 24.5 million lei. The price per share wavers from 0.09 bani to 0.64 bani and from 32.22 lei to 242 lei falls per shareholder. This fact explains the amendments, approved by the Government to the Law on Investment Funds and to the Law on Applying Sections I and II of the Tax Code and to the Law on Notary’s Offices.
“I”: Interpret them …
Е. P.: One of the amendments envisages prolonging the investment funds’ liquidation term from July 1, 2007 to July 1, 2008. It will allow selling more blocks of shares and shares and to provide more solid financial resources to be divided among shareholders. Moreover, the Law on the Liberalization of the National Economy pardoned the debts, accumulated by the funds, to the state budget, to State Social Insurance Fund, the State Medical Compulsory Fund, as of January 1, 2007. These debts exceed 800 thousand lei. In any case, it is an alleviation, as the sum of these debts will not be deducted from the financial resources, earned at auctions from the sale of investment funds’ assets. Another amendment proposes to exempt the shareholders of the investment funds from the preliminary payment of a 5% income tax on the payments, made by the investment funds in favor of the shareholders during the division of assets, left, as a result of their liquidation. And the last amendment says that a power of attorney for representatives of shareholders, if they come personally to bank institutions, where the money due to them will be transferred owing to the liquidation of their investment funds,, can be certified by local authorities (Primars). It means that shareholders will not have to go to notary’s offices and to pay the fixed due. The objective of these amendments is to solve problems, faced by some shareholders, particularly, old ones or those, who are abroad. The Parliament supported the idea of prolonging the liquidation terms of investment funds. According to the Bill, passed by Parliamentarians in the first reading, the term will be prolonged from July 1, 2007 to December 31, 2008. The document envisages also that the shareholders of investment funds will be exempt from the preliminary payment of a 5% income tax on the profits due to them after the placement of the assets. It was made in virtue of the Government’s supposition that the majority of shareholders will not submit declarations of incomes and, therefore, the respective money will not be returned to them. The document gives the right to the local authorities to certify documents, which must be usually certified by notaries in the process of the liquidation of investment funds. The Parliament and the Government consider that in this way they will release villagers from the need to go to towns to use notaries’ services.
