Following the official interpretation received from the Financial Supervisory Authority on computation methodology for the ‘net asset value’ to be used by the Fund in the application of Article 69 of Companies Law no. 31/1990, related to the distributions of profits to shareholders, published on the Fund’s webpage on 24 June 2014 here, which in essence limits the Fund’s current ability to distribute dividends, the Fund Manager remains committed to returning cash to shareholders on an annual basis (subject to applicable law and necessary approvals) and has amended the Fund’s Annual Cash Distribution Policy as follows:
“In the absence of exceptional market conditions or circumstances, and subject to any restrictions under Romanian legal or tax regulations, the Fund Manager intends to recommend to shareholders a cash distribution related to each financial year equivalent to 100% of the sum of (i) the Fund’s dividend income from portfolio companies, (ii) plus interest on cash balances, (iii) less expenses and taxation and (iv) less compulsory allocations to reserves according to the regulations in force, in each case for that year. The cash distributions would be paid to shareholders either in the form of a return of capital (by decreasing the nominal value per share) or in the form of dividends, in each case subject to any restrictions under Romanian legal or tax regulations. In the case of dividend distributions (where permitted by applicable law), the distributable amount will be assessed based on audited financial information. In the case of a return of capital, the distributable amount will be based on a best estimate according to the latest management accounts at the time of proposing the resolution.”
Greg Konieczny, Fund Manager of Fondul Proprietatea, commented: “After the recent success of the Fund’s first operation to return capital to shareholders, we have clarified the Fund's distribution policy to acknowledge that return of capital can also be a useful method of cash distribution to shareholders, in addition to dividends. This decision is in line with our commitment to use all means to create value for our shareholders and it continues our transparent and robust policy of ensuring that shareholders receive an annual cash distribution."
The Annual Cash Distribution Policy does not limit additional cash returns and share buy-backs that can be recommended by the Fund Manager separately, subject to available cash and depending on the discount level, in accordance with the principles of the Investment Policy Statement.
