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Zamfirescu Racoti Predoiu Won in the Withdrawal of Two Minority Shareholders from Arta Culinara S.A. Cluj, a Company whose Shares Were Traded on RASDAQ

The court’s decision is a precedent, as it confirms that RASDAQ is not a regulated market

Bucharest, July 5, 2011 - Zamfirescu Racoti Predoiu (ZRP) won the case in which it represented two minority shareholders, holding together approximately 10% of Arta Culinara S.A. Cluj, a company traded on RASDAQ, helping them to have the withdrawal right recognized, under art. 134, paragraph 4 of the Companies Law (Law no. 31/1990). Initially, the company had denied them such right, under the special provisions of art. 242 of the Capital Market Law (Law no. 297/2004), on the grounds that they could have withdrawn from the company at any time by the sale of the equity interest freely held on the market.

The High Court of Cassation and Justice confirmed, on June 22, 2011, the award delivered by Cluj Court of Appeals by which the appeal court recognized the right of withdrawal of the shareholders dissatisfied with the company’s merger. Thus, Arta Culinara S.A. had to follow the procedure instituted by the provisions of art. 134, paragraph 4 of Law no. 31/1990 and appoint an independent certified expert in order to establish the price that was to be paid for the shares of the ones exercising their withdrawal right.

ZRP represented the two shareholders, the team of attorneys involved in the settlement of this case being coordinated by Stan Tîrnoveanu, Senior Partner and Alina Tugearu, Senior Associate. ZRP team managed to convince the courts of law that, irrespective of the inexistence of clear legal provisions on this matter, the shareholder’s fundamental right to withdraw from a company whose activity does not correspond to the reason for which it has become shareholder, withdrawal right that has to be possible to be actually exercised, should prevail.

“The decisions of the High Court of Cassation and Justice and of Cluj Court of Appeals institute a precedent and mark the beginning of a practice in this matter. Both courts confirmed that the current legal statute of RASDAQ market does not allow its including in the notion of regulated market in the sense of art. 125 of Law no. 297/2004, which aspect had been, as a matter of fact, settled previously also by CNVM, the competent regulating authority, by several stands communicated in other disputes pending before the courts.

The court’s decision instituted a precedent that could allow now on any shareholder of a company traded on RASDAQ, which disagreed with the general meeting’s decision on the company’s merger or split-up and which wants to withdraw, make the company redeem its shares at a higher price than their real value.

If ZRP had not obtained a favorable solution, our client should have waited 23 years until it could have withdrawn from the company by sale of the entire equity interest on RASDAQ at a price 10 times lower than the one from the merger report.” (Stan Tîrnoveanu, Senior Partner)

Company’s shareholders requested the company to redeem their shares in exchange for a price that was to be established by an independent certified expert, but the company refused, on the grounds that its open company statute did not change after the merger and that the special provisions of art. 242 of Capital Market Law (recognizing the right to withdraw from a company traded on a regulated market only if, after merger or split-up, shareholders are allotted shares that are not admitted for trading on a regulated market) did not apply to them.

The decision delivered by the supreme court ended a dispute lasting from almost 2 years, in which period the team of attorneys of Zamfirescu Racoti Predoiu had to deal with complex legal issues relating to the mechanism of functioning of the regulated markets by relation to the uncertain status of RASDAQ market and the current legislative void.