The only initial public offerings conducted ever since have involved stakes in state-run companies. Romanian high quality privately held businesses continue to avoid the stock market because they can get cheap loans from banks, do not want to open to the public and the entrepreneurs are still not interested in an exit by stock sale.
“I think this is a positive step that will encourage SMEs to go public. The management of many small and medium-sized enterprises had its doubts about doing it because of the many requirements previously in place,” said Cristian Micu, general manager of NBG Securities.
When the new reorganization steps of the Bucharest Stock Exchange take effect, the relaxation might help attract the companies from RASDAQ at first. About 40 companies on the latter meet the new admission to trading criteria of the former.
The new steps will also allow issuers to notify the stock exchange management about important events as soon as possible without having to wait for the close of the trading session and the shares of a particular company will no longer be suspended from trading for the duration of its General Meeting of Shareholders. The modifications of the Bucharest Stock Exchange Code will come into force at a time decided by the stock exchange’s chief executive officer.
The stock exchange on Wednesday got the approval from the Financial Supervisory Authority (ASF) for its planned replacement of the three listed issuer tiers with two, “Premium” and “Standard”, which come with different share dispersion and capitalization requirements.
To be included in the “Premium” category, a company has to meet only one requirement, that is have a free float of at least EUR40 million.
The current Bucharest Stock Exchange Code stipulates that to make it into the first tier, a company must have a 25% free float, equity capitals of EUR30 million, net profit in the last two years in business and its shares dispersed among two thousand shareholders.
The category currently consists of 29 companies, but not all of them meet the “Premium” tier criterion. Those that do are Fondul Proprietatea (FP.RO), OMV Petrom (SNP.RO), BRD (BRD.RO), Banca Transilvania (TLV.RO), Electrica (EL.RO), Romgaz (SNG.RO) and Nuclearelectrica (SNN.RO), which have a free float above EUR40 million, according to ZF’s calculations, which took into account only the shares held by individuals, where such data was available.
Transgaz (TGN.RO) was not included in the list because it does not report individual and corporate shareholders separately.
The companies that do not meet this criterion will be included in the “Standard” tier, which replaces the current Tier II and Tier III. The admission to trading criteria for the newcomers to the “Standard” tier are the requirements for Tier III, i.e. equity capitals of EUR1 million and a free float of 25% of the total shares.
ASF leaves the enforcement of the latter to the discretion of the Bucharest Stock Exchange management, which may make an exemption if it believes that “the normal operation of the market is ensured with a lower free float percentage or if the shares are distributed to the public via transactions on the Bucharest Stock Exchange.”
(English version by Loredana Fratila-Cristescu)