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July 28, 2021
POLITICS

President Iohannis notifies CCR on the Law establishing the Sovereign Development and Investment Fund

President Klaus Iohannis notified on Wednesday the Constitutional Court (CCR)  on the Law establishing Fondul Suveran de Dezvoltare si Investitii – S.A. (e.n. – the Sovereign Development and Investment Fund), claiming that such a decision must be taken through an act of the central administration, not through a law adopted by the Parliament.

“The fact that the state is the sole shareholder for the entire duration of FSDI, and the purpose of establishing FSDI is to develop and finance by its own funds and by attracted funds, cost-effective and sustainable investment projects, leads to the conclusion that FSDI is a company that will perform commercial activities, a legal person governed by public law within the meaning of Art.191 para.(2) of the Civil Code. Therefore, establishing a joint stock company must have been made through an act of the authorities of the central public administration, not through a law” reads the text f the notification submitted to CCR by President Klaus Iohannis.

“The challenged law is also unclear in terms of the lack of any mention regarding the monitorization of FSDI by any other authority, including by EUROSTAT, during its existence. Also, the legal regime of FSDI does not refer to the corresponding European regulations which are mandatory for conducting the activity of such a fund” the head of state also argues.

 

Iohannis also criticized the lack of clarity of the regulations establishing the composition of the FSDI Supervisory Board

 

“Regarding the establishment of the composition of the FSDI Supervisory Board, we appreciate that the text is unclear. On the one hand, by the fact that the law establishes only some of the selection criteria (“at least of the following selection criteria”), the rule is deprived of precision and unpredictable, and it may lead also to the interpretation according to which it could be complemented by infra-legal acts. On the other hand, no objective assessment criteria are provided in terms of fulfilling the requirements related to “the experience in the financing-banking system” and the “experience corresponding to the complexity of the activity that is specific to FSDI, both individually and collectively” the President claims in the document.

In the notification on the challenged law, Iohannis says that the term “election of the composition of the Supervisory Board” is generic, and the regulations referring to these issues are unpredictable.

Referring to the phrase “in the administration of the companies in which FSDI is the majority shareholder, FSDI will also consider the governmental sectorial strategies”, the Romanian President claims that the way in which this phrase is formulated breaches the Constitution and risks to affect the national interest in the companies’ economic activity.

Iohannis also criticizes the provisions regarding the FSDI share capital, consisting of packages of shares and cash in value of RON 9 billion.

The head of state believes that the transfer of some assets which are in the state’s private property to a joint stock company, performed through a law as a primary regulatory act, violates the separation of powers and the jurisprudence of the Constitutional Court in this matter.

“The Constitutional Court established that transferring, without consideration, shares of a company from the state’s private property to the private property of an administrative-territorial unit, is an act of disposition related to the share capital of the company, and these acts are not included in the Parliament’s capacity as a lawmaker, but they are related to the capacity of administrating the public/private property of the state, which belongs exclusively to the Government (the Decision no.574/2014). Transferring without consideration the packages of shares breaches the capacity of administration of the private property of the state, which belongs to the Government. Therefore, the modality of transferring these shares chosen by the legislator (namely the law), violates both the separation of powers provided by Art. 1 para. (4) of the Constitution, and the jurisprudence of the Constitutional Court, which is contrary to At.147 para (4) of the Fundamental Law. This transfer should be done according to the decision of the General Meetings of the Shareholders, not by the law. The state cannot directly intervene in the activity of the trade companies, since Romania has a market economy, with specific obligations arising from the provisions of Art. 135 para. (I) and para. (2) let. a), b) and g) of the Constitution”, Iohannis says.

Article 10 of the Law establishing FSDI provides that after the registration of the Sovereign Investment Fund, the articles of association can be amended, which “would lead to the situation in which a legislative act could be amended by a decision of the General Meeting of the Shareholders of a joint stock company, according to the Law no.31/1990”.

Iohannis also refers to the provision related to the companies’ dividends, which no longer belong to the state, but they become non-fiscal revenues of FSDI.

In the notification submitted to CCR, Iohannis also criticizes the exemption of remunerating the members of the Supervisory Board and of the Directors, which is provided by Art.12, saying that such exemptions may create a differentiated legal treatment.

“Given that establishing such an exemption has no objective and rational justification, it is likely to create a differentiated legal treatment within the same category (the legal regime applicable to the members in the management of the companies in which the state is the sole or the majority shareholder); establishing the remuneration level for the Supervisory Board from the public enterprises is contrary to Art.1 para. (5) and Art.16 para. (1) of the Constitution”, President Iohannis concludes.

The constitutional challenge submitted by the head of state to CCR on the Law establishing FSDI has seven items.

 

Viorel Stefan: All the draft laws adopted by the Parliament are challenged by the President

 

Vice PM Viorel Stefan stated on Wednesday, following the President’s decision to notify the Constitutional Court on the Sovereign Fund, that all the draft laws are challenged by the President, regardless if they are good or not.

“All the draft laws adopted by the Parliament are challenged by the President, regardless if they are good or not”, Stefan said.

Asked if this is a strategy, Viorel Stefan answered: “seems like so”.

On June 7, the Parliament adopted the draft law establishing the Sovereign Development and Investment Fund (FSDI), which will include 33 state companies. Its shareholder will be the Romanian state, and the share capital will amount to RON 9 billion.

The draft law initiated by 181 PSD and ALDE deputies and senators aims at developing and financing by own funds and by attracted funds, cost-effective and sustainable investment projects, in various fields of economy, by direct participation or through other investment funds or investment companies, solely or as part of public-private partnerships. Another purpose of establishing FSDI is the management of its own financial assets, in order to gain profit.

On June 16, the Parliament sent the law to the President, in order to promulgate it.

 

 

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