Government approves additional safeguards for minority stockholders

Joint stock companies (JSCs) will be required to adopt distribution orders of up to 25% of the profits when paying dividends, under an amendment to the Law on Joint Stock Companies approved by the Government. Deputy Minister of Economy Octavian Calmic mentioned that this is the legislative initiative of MP Veaceslav Ionita, who explains the necessity of this addendum on the fact that majority stockholders who own the control stock package adopt decisions on the capitalization of the profit ignoring the interests of minority stockholders to obtain revenues from membership within the company, through dividends. According to data from the last 3 years, of the 1,000 JSCs that presented their reports, less than 10% had paid dividends, and the reported dividends were negligible relative to the profits in several cases. The National Participatory Council (NPC), an advisory body for the Government composed of civil society members, believes that the amendment cannot be adopted without analyzing the regulation impact, and without consulting the business community. A communique from the NPC says that the interests of minority stockholders are already protected through several mechanisms. They have the right to sell their stock on the market, or to request their purchase by majority shareholders at the highest bid. It is important to take into account the JSCs commercial development interests, and to reinvest the profits in growth, since they have to become competitive in a market economy. Additionally, the NPC highlights that the version presented to the Government has an obscure regulation subject, since it is not clear whether it refers to the profits accumulated by the JSC in the previous years, or the ones to be accumulated in the following year.