The Proprietatea fund received Wednesday a note from Elliott calling for a shareholder meeting where there would be talks on revising the administration fee collected by Franklin Templeton. Right now, the manager collects each year 0.479% of the fund’s market value.
Elliott Associates holds 12.57% in the Proprietatea fund.
“The revised fee arrangement proposed for the approval of the shareholders seeks to incentivize the fund manager to sell portfolio holdings and distribute cash to shareholders as ‘Excess Distributions’ whilst at the same time compensating the fund manager for the resultant reduction in future fee potential due to the decline in the overall size of the fund,” reads the proposal.
Elliott believes that the current formula for the calculation of the management fee collected by Franklin Templeton does not encourage Franklin Templeton to sell holdings, but to invest in order to maximize value.
In 2011, Franklin Templeton collected fees worth 32.1 million lei (EUR7.5 million) from Proprietatea.
Proprietatea shares were trading mid-Thursday at RON0.5305, up 1.24% on the day. (EUR1=RON4.3467)