Investors' Compensation Fund

Bank deposits are insured when banks become bankrupt, thus depositors are remunerated depending on the availabilities (which differ from year to year) of the 'Bank deposits guarantee fund'. The same principle applies to investors on the capital market, i.e. they are compensated when an investment company becomes insolvent.

The Investors' Compensation Fund is a company founded by investment companies and its activity consists of collecting contributions from its members and compensating those investors who can not acquire their cash/financial instruments from the investment company they signed an agreement with in this sense. The Fund is administrated by a Board of Governors formed of three members, all of which are legal persons, authorized and monitored by the RNSC, and shareholders of the Fund. When an investment company can no longer honor its payment obligations toward its clients, the Fund will set a minimum time period of 5 months from when the bankruptcy occurred, during which investors can request remuneration. Investors will then be paid accordingly, no longer then 3 months from the time their requests were validated.

The Investors' Compensation Fund will compensate all investors in an equal and non-discriminatory manner, but will not be able to grant more than 20 000 Euros per individual investor. The upper limit of the compensation sum will gradually increase by December 31, 2011 to reach the 20 000 Euros as follows:

1. 7 000 euro/individual investor as of January 1, 2008
2. 9 000 euro/individual investor as of January 1, 2009
3. 11 000 euro/individual investor as of January 1, 2010
4. 15 000 euro/individual investor as of January 1, 2011
5. 20 000 euro/individual investor as of January 1, 2012

The Investors' Compensation Fund will publish on its website and make a note at each of the insolvent investment company's branch, as well as in a minimum of two national newspapers, the following information: the member's incapacity to honor its payment obligations towards its investors, the place, the method and the period of time in which investors can request remuneration, and the date as of which investors will be compensated.

Each investment company has an obligation to inform its clients with respect to the existence of the Fund, the possibility of receiving compensation should the investment company become insolvent and the Fund's procedures and upper compensation limit awarded.

The Investors' Compensation Fund will insure the compensation of investors within the limit previously specified, in the shortest time possible, but not longer than 3 months from the validation of the investors' compensation request. Under extraordinary circumstances, the Investors' Compensation Fund may request the RNSC for an extension to the 3 months deadline, but not for more than an extra 3 months.

Contact Details

S.C. Fondul de compensare a investitorilor S.A.
Address: B-dul CAROL I nr. 34-36, etaj 12, cam. 10, cod postal 020922, sector 2, Bucuresti,
Telephone: +40 21 315 73 48
Fax: + 40 21 315 73 40
E-mail: office@fond-fci.ro
Web-site: www.fond-fci.ro

The Bucharest Stock Exchange Chamber of Arbitration

Another institution in a position to protect investors' interests is the Bucharest Stock Exchange Chamber of Arbitration. This institution functions on the basis of the RNSC Regulation no. 3/1999 regarding procedures of the Bucharest Stock Exchange Chamber of Arbitration. The Bucharest Stock Exchange Chamber of Arbitration is authorized to resolve litigations between intermediaries, agents, intermediaries and agents, or between intermediaries and clients, occurring as a result of trading on the Bucharest Stock Exchange or other securities markets. In order for investors to benefit from decisions issued by the Bucharest Stock Exchange Chamber of Arbitration, it is compulsory for them to have stipulated an arbitration clause in the written agreement signed with the investment company beforehand. This clause should specify that any potential litigation that may arise between parties should be resolved by means of arbitration, naming the institution they wish to be involved. The arbitrary convention excludes the involvement of the law.

Other information

The provisions of Law no. 297/2004 regarding the capital market insure the protection of investors. In this sense, the RNSC has issued regulations regarding prudential requirements and adequate investment companies' capital, so as to accurately assess risks, thus preventing and limiting the impact thereof. Investment companies authorized by the RNSC also have an obligation to present financial statements as well as periodical reports, and observe throughout the duration of their activity all of the prudential rules set by the RNSC.

Furthermore, in order to protect investors, companies listed on the Bucharest Stock Exchange also have an obligation to report events that occur within the company (GSM, mergers, spin-offs, acquisitions, selling, renting or mortgaging assets, changes in the company management, receiving or granting loans, significant changes in the shareholders structure, bankruptcy, etc.). Companies listed on the Bucharest Stock Exchange must issue quarterly financial statements and administrator activity reports. In addition, annual statements must be audited by an independent company. The Bucharest Stock Exchange can suspend shares from trading if it believes the alternative may interfere with the maintenance of the market's well-functioning.