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Countless investment funds, by way of derogation from five laws – ordinance from which two other prime ministers run away is on Viorica Dancila’s table

de Victor Bratu , 8.10.2018

Minister Teodorovici “fixes” a delay in Liviu Dragnea’s government program

The Ministry of Finance launched a draft emergency ordinance on Saturday establishing the “general framework related to the conditions that a company should meet to be considered a sovereign development and investment fund.”

Two months after the Court decided that a similar draft promoted by the Parliament is unconstitutional the government coalition brings an “improved” version which, if adopted in the form presented by the Ministry of Finance, would allow the establishment of sovereign funds, probably of a “niche” type, depending on the political interests of the moment.

The problem is that this framework contains derogations from various provisions contained by no fewer than five other laws, including the corporate law and the law on corporate governance.

It should be noted that the draft also amends the laws on the establishment of the Romanian Lottery and the National Printing House, companies most likely targeted to be involved in the structure of the future development funds.

Viorica Dancila assumes what two other prime ministers have denied

PSD has included the establishment of a sovereign fund in the government program with which it won the elections but the first two prime ministers of the current coalition – Sorin Grindeanu and Mihai Tudose – have blocked the draft no matter how much Liviu Dragnea insisted to be promoted. Neither Grindeanu nor Tudose offered public explanations on why they did so.

Minister Tudorel Toader has also been accused recently of “sabotage” by Eugen Teodorovici. The Justice Minister did not publicly explain why the ministry’s signature is delayed on the draft.

Whatever the reasons for the two PSD prime ministers’ disobedience, Viorica Dancila does not show signs of hesitation “to implement the government program.”


Ministry of Finance starts from the premise that there are no public instruments in Romania to support the long-term development of major investments in the economy and considers that as “an extraordinary situation where the need of being regulated cannot be postponed and the adoption of immediate measures by emergency ordinance is needed”.

Consequently, the following principle is proposed to the Government for adoption:

The development and investment sovereign fund, hereinafter referred to as “the Fund”, aims at developing and financing, from own and attracted funds, cost-effective and sustainable investment projects in various economic sectors through direct contribution or other investment companies or funds, by itself or together with other institutional or private investors, including through the participation in public-private partnerships, as well as the management of its own financial assets, in order to obtain profit.

The principle is to be transposed by another, or other, Government decisions.

How state is willing to get into business

The text states that the state “may contribute movable and immovable assets to the Fund’s share capital”. Here are two important points of the draft:

  • By way of derogation from the provisions of art. 9 par (2) of the Law no. 31/1990, republished, with the subsequent amendments and completions, at the establishment of the Fund, by the Government decision stipulated in art. 4 par. (1), a deadline of up to 5 years may be set for the payment of the cash contribution to the initial share capital.
  • The classification of companies whose shares are to be part of the Fund’s share capital in the category of strategic companies shall be carried out by the government decision stipulated at paragraph (1) based on proposals submitted by public tutelage authorities.

The funds necessary to cover cash payments are provided from the budget of the central public authority that exercises on behalf of the Romanian state the rights and obligations resulted from its status of sole shareholder, under the conditions established by the government decision stipulated in art.4 par (1), within the limits of the budgetary provisions approved for this purpose and/or from privatization revenues.

The in-kind contribution shall be established by the government decision provided for in art. 4 par. (1) and may also consist of movable and immovable assets privately owned by the state.

What kind of business the state wants to do

The Fund would operate based on of its own strategy, approved by the General Shareholders Meeting based on a mandate previously approved by government decision. The strategy is issued for a period of over three years and reviewed “each time is needed”.

The strategy should be linked to a set of medium to long-term performance indicators set by the general shareholders meeting and will address the following areas and activities:

  • infrastructure development in Romania
  • job creation
  • stimulation of innovation and new technologies
  • increasing human capital in the long run
  • increasing the competitiveness of the Romanian economy
  • other development areas and activities that are of interest to the national economy

How the state will run the business

An Investment Fund will be managed in a dual system by a supervisory board and a directorate, in accordance with the provisions of Law 31/1990, republished, with subsequent amendments and completions.

The selection procedure for the management is carried out by the central public authority that exercises, on behalf of the Romanian state, the rights and obligations stemming from the sole shareholder status.

When defining the selection criteria and/or the selection process, this sole shareholder may decide but is not required, to be assisted by an independent expert, a natural or legal person specializing in the recruitment of human resources whose services are contracted under the terms of the public procurement law.

How state can juggle with assets and shares

The decision on the disposal of assets and shares that constitutes the Fund’s share capital is taken in accordance with the Fund’s strategy and based on a cost/benefit analysis of the way of using this financing source from the disposal of assets/shares in order to implement the strategy, after all other financing instruments provided by law have been exhausted, by maintaining the value of the Fund’s net assets at levels set by the Fund’s strategy.

The disposal or acquisition by the Fund of shares or other assets under their ownership is not subject to the provisions of Government Emergency Ordinance 88/1997 on the privatization of commercial companies, approved by Law 44/1998, with the subsequent amendments and completions, nor the provisions of Law 137/2002 on some measures for accelerating the privatization, with subsequent amendments and completions, but will be carried out in accordance with the provisions of this article.

To be noted:

  • Provisions of the Government Ordinance 64/2001 on the distribution of profits to national companies and publicly owned or controlled companies, as well as autonomous national and municipal companies, approved with amendments by Law 769/2001, as subsequently amended and supplemented, do not apply to the Fund.
  • The provisions of Government Emergency Ordinance 109/2011 (on corporate governance – editor’s note), approved with amendments and completions by Law 111/2016, as subsequently amended, shall not apply to the fund established in accordance to this Emergency Ordinance, nor to companies for which state-owned majority stakes are in-kind contributions to the Fund’s share capital.
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