Stock market listing of state companies, blocked by the Senate. Until the sale of shares is suspended

The Senate plenary adopted, in Monday's meeting, the project on the prohibition of the sale of state assets to strategic companies of national interest until December 31, 2027, initiated by the PSD. 71 votes for, 29 votes against and 11 abstentions were registered, informs Agerpres.

According to the draft, it is forbidden, until December 31, 2027, to alienate the shares owned by the state in national companies and societies, in credit institutions, as well as in any other company in which the state has the capacity of shareholder, regardless of the share of the social capital held.

What the project provides

These provisions do not apply to the shares held by the state in companies, societies and credit institutions that register losses for five consecutive years or for which the insolvency procedure has been initiated, by a final court decision, as well as to shares whose total value, on December 31 of the previous fiscal year, does not exceed 5 million lei for each company, society or credit institution.

Also, the draft also provides that, until December 31, 2027, any operations regarding the disposal of the shares held by the state in national companies and societies, as well as in other companies in which the state has the capacity of shareholder, are being carried out.

The Senate amended the legislative proposal with the amendment that stipulates that “the increase of the social capital through the issue of shares (…) is not prevented if they do not have as their object the alienation of the shares owned by the state and are carried out in compliance with the corporate legislation, the capital market legislation, the pre-emptive right of the existing shareholders, as well as the rules regarding state aid, as the case may be”.

The amendment proposed by the AUR in the specialized commissions and appropriated by the plenary is justified by the fact that, in the absence of this clarification, some articles could be “extensively interpreted, with the effect of blocking some legal financing mechanisms provided for by corporate legislation and the capital market, although these do not represent, by their legal nature, acts of privatization or sale of state shares”.

Heated debates in plenary

The leader of the PSD senators, Daniel Zamfir, one of the initiators of the project, showed that the social democrats are not against the listing of companies on the stock exchange, but dispute the method and the time chosen.

“The initiative does not in any way aim to block forever the alienation of state shares to strategic companies. In the text of the law, we only refer to the opportunity and the moment. (…) If we have something to object to, it is with regard to the method established for the alienation of state assets, state shares to profitable companies and the moment, the opportunity,” Zamfir said in the Senate plenary.

He said that through this law “the country is protected from the rats that are being secretly made in the Government”.

The leader of the USR senators, Sorin Şipoş, spoke out against the project because it “does not protect the national interest, but blocks the reform and (…) is a pretext for a censure motion”.

“It will probably be the most expensive no-confidence motion in history. We are told that the listing means selling. It is false. The listing means transparency, discipline, performance. The state remains the majority shareholder, but the companies are obliged to deliver results. (…) This initiative does not protect the national interest, it actually protects the lack of reform, and its timing with the no-confidence motion actually tells the truth. It is not a serious economic debate, but a political justification built in a hurry”, said Şipoş.

The President of the Budget-Finance Committee in the Senate, Gabriela Horga (PNL), believes that this legislative initiative shows that “a new anti-European pole has appeared in Romania led by Mr. Sorin Grindeanu (PSD president – no)”.

“A profoundly anti-Romanian law, which can generate losses of billions of euros for Romanians, Romanian companies and private pension funds. (…) First of all, no one sells or privatizes any state company. Listing a minority share package on the stock exchange means ridding state companies of the companies that have been tickling them for years,” explained Horga in plenary.

PACE – Romania First Senator Clement Sava announced that he supports the law and said that “the best way to preserve the national wealth is to vote for the no-confidence motion”. The leader of the AUR senators, Petrisor Peiu, declared after the adoption of the project: “We are selling the country to Romanians, not to foreigners.”

The decisive vote will be given in the Chamber

The project will enter the debate of the Chamber of Deputies, decision-making body in this case.

The draft law was submitted on April 20 by the PSD, in response to Deputy Prime Minister Oana Gheorghiu's announcement regarding the Government's intention to list minority stakes in several state-owned companies on the stock exchange.

On April 16, Oana Gheorghiu presented a list of state companies that could be listed on the stock exchange. Some of the companies are proposed for IPO (Initial Public Offering). This includes those that are not already on the stock market. And there is the category of those who are already on the capital market and from which new minority stakes can be listed. According to the government document, the state would remain the majority shareholder.

“Exploratory list” of companies proposed for listing

Companies that are recommended for listing:

• Hidroelectrica, with a 5-7% stake in the shares
• Romgaz, with a 5-7% stake
• CEC – initial listing

Companies that are conditional

• Transgaz – maximum 5%. The condition is correlation with the Neptun Deep project
• Constanța Port – IPO. The condition is the clarification of Fondul Proprietatea's participation
• Romanian Post – IPO. The condition is the clarification of the cost of the universal service
• Salrom – IPO. The condition is a reserve audit
• Romarm – IPO. The condition is the legislative change regarding pension fund investments