PROMOTER OF AND PLAYER ON STOCK MARKET

In agreement with the principles of Corporate Governance implemented in the current activity, SIF Moldova consults its shareholders on the proposed strategic approaches in the process of substatiation of the SIF Moldova projections for the period 2014 – 2018, in the context of the interest in and initiatives related to the development of Romanian stock market.

Shareholders’ opinions and proposals are and will constantly represent a reference point in the process of improving investment strategy and vision.

Increase of the importance of capital

market in the Romanian economy

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There is a gap between including the Romanian economy in the category of emerging economies and the Romanian capital market which is included in the frontier market category. The joined efforts of BSE new management and the state institutions involved in the privatization of Romanian companies by listing them on the stock exchange, will contribute to reducing the gap and promoting the Romanian capital market in the category of emerging markets.

The attractiveness of new issuers and improving the legislative framework are prerequisites which will increase liquidity and trading volume, context in which the Romanian capital market will have a real development and a contribution to the national economy by attracting foreign and Romanian investors.

Making the operating/trading procedures including the computer applications compatible with those used in other markets. Attracting investors who are already familiar with these practices from other markets, process in which BSE, Central Depository , etc. can have an important role.

Possibility- BSE merging with the energy exchange OPCOM, with Sibex, as well as a partnership with the Romanian commodities exchange, through which the state will become a shareholder as well, will have multiple advantages and ensures the prerequisites for creating a very important mechanism of the capital markets. 1

SIF 2 contribution to developing the capital market

2.1.

High liquidity Corporate governance at high standards – SIF Moldova’s code for

Corporate Governance presented in AGM, on 5.04.2013 to the shareholders – which provides answers to the information and voting of non-residents requirements

Dividend policy Proposal for the redemption of shares

SIF 2 blue chip share

For the implementation of investment strategies in the perspective of 2014 – 2018 it is possible / necessary to increase the investment effort as an essential source for reaching future performance / yeld. It is brought to the shareholders’ / investors’ attention a balance report between the dividend policy and that of allocating resources for investment programmes.

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SIF 2 contribution to the development of capital market – consulting shareholders

2.2.

Elaborating and publishing of the multiannual strategies starting with 2007, documents that set and quantify the main targets related to SIF Moldova, in correlation with shareholders’ interests.

Through the programme / themes brought to the attention/ approval of the shareholders in the AGM 2013 the re-calibration of the previous strategies is announced, by looking at new fields of analysis, in line with developments in the capital market, economy sectors etc.

The current Board of Directors takes old topics and speeds the process of restructuring portfolio, redefining the categories of assets and their management from the perspective of diversification and capitalization of the investment opportunities. Here are included:

Starting 2013, in order to optimize the process of managing assets in distress, there were retrieved/surrendered to social capital of companies controlled by SIF Moldova, shares owned at closed companies, found in bankruptcy or administrative liquidation ( to Asset Invest SA), as well as fixed assets (to Casa SA), having as effect the application of uniform management policies as well as reducing the operational costs Public information on current reports to the market.

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2.3.

Perspectives 2014 – topics to the attention of investors / shareholders

Developing new business lines especially in domains such as: real estate, agro business, high tech

Investments in new companies as well as in companies from SIF Moldova’s portfolio, that could represent the object of some major investment programmes ensuring improved performance of these issuers.

We do not exclude sectors/ segments in which Romania has a competitive advantage, expertise, financing from international finance institutions and as well the private equity segment which perspectives in the European scene register a constant and certain improvement.

Securities investments (mil lei)

282% related to

2013 programme Total investment

2009 – 2013: 615 mil lei

For implementing investment strategies on the ennumerated business lines, maintaining an ascendent trend of the investment effort is necessary.

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2.3.1.

Perspectives 2014 – topics to the attention of investors / shareholders

We maintain an important portfolio share in energy and financial banking sectors and we aim at capitalizing investment opportunities from real estate and agribusiness, domains in distress or with a high come back potential. We maintain interest to participate in the privatization of state companies through BSE with the conditions stipulated by the Government.

We would like to set up new centralized administrative structures for the companies where we have majority holdings. Uniform management techniques will be implemented, on rationalizing measures for using resources and optimizing costs, for growing the managed value, profitability and performance of capital invested . We intend to list these companies to BSE.

In the same time we will

consider a concentration

process leading to a decrease of

the number of participants and

the increase of exposure/issuer,

such as to directly determine

positive influences on portfolio.

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SIF Moldova - main legal concerns on Romanian

capital market development

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1. Proposals for additions to GEO 32/2012 for the possibility of amending the

articles of incorporation to SIFs 2. Cancellation of NSC Arrangement of Measures 11/2005 related to the

interdiction of one SIF buying shares from other SIFs 3. Project for modification of NSC Regulation no. 15/2004 – speed up completion ;

enrolment and harmonizing rules and incident projects 4. AIFMD - applicability and implications for SIFs; correlation with changes from

Regulation 15/2004 5. Draft of statement on risk management - approval and completion 6. Necessity of regulation of the legal status of RASDAQ - adoption of

amendments to the draft of law no . PL - x no . 385/2013 registered at the Chamber of Deputies for debate

7. Changing BSE regulations on deal transactions 8. Necessity of making efficient mechanisms related to loans of stock and trading

on margin 9. Steps taken on BSE and SIBEX on setting an central counterparty; finding a

common regional solution on clearing operations for derivatives and spots 10. Proposal for amendment of tax legislation – correlating the base of CASS

payment obligation with minimum threshold of income in dividends to shareholders with very small holdings

11. Request to ASF and NBR for uniformity of content and form of institutional reports

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Inside preoccupations for developing Romanian

capital market, SIF Moldova analyzes,

proposes and participates to the market debates on

following topics:

3.1.1.

1. Alignment to the MiFID legislation and its exceptions on simplifying documents and shortening the period for investor access to the Romanian capital market.

2. In continuing steps taken on certain aspects of national tax law ( CASS ) for resident shareholders, we support the simplification of tax regulations applicable to non-resident shareholders.

3. Analyzing the opportunity to amend NSC Regulation no.6/2009, so as to grant discretionary voting to AGM representatives;

4. Assimilation of practice in mature markets on the payment of dividends, immediately after the AGM decision;

5. Reducing excessive costs of capital market institutions ( BSE, DC, ASF) determined by the fact that Romania is one of the most expensive stock exchanges in the Central and Eastern Europe;

6. Clarifications needed from the point of view of the tax system for operations of share loans type, sales in the absence, etc.

7. Eliminating the barriers for the primary market and the bonds market, characterized by inflexibility, excessive formalism and long duration in comparison with the most of EU countries.

8. Reducing bureaucracy imposed on non-residents who wish to invest in the Romanian capital market

9. Aligning the national provisions to the European ones in the field of finding a concerted action, by changing judgment from simple affiliation to the group to the necessity of an explicit provision form a company to the affiliated entity.

10. Cooperation of the parties involved for the establishment of specialized panels for litigations involving the application of capital market. Subsidiary, the elaboration of occupational standard for specialist for capital market.

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SIF Moldova’s concerns on improving legislation related to capital market are in line with

advancing recommendations from European regulation authorities and international and national

associations

3.1.2.

European Securities and Markets Authority (ESMA) International Organization of Securities Commissions (IOSC) Organization for Economic Co-operation and Development

(OECD) European Fund and Asset Management Association (EFAMA) Asset Managers Association (AAF) Professional Organization Market Capital (OPPC) Association for the Reform of Taxes and fees (ARSIT)

SIF Moldova is an active member in : AAF - Asset Managers Association OPPC – Capital Market Professionals Organization ARSIT - Association for the Reform of Taxes and fees

SIF Moldova maintains an active professional collaboration with the associations from the capital market circumscribed to the areas of interest of the activity: AAT - Association of Technical Analysts ANEVAR - National Association of Romanian Valuers

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Topic: Changes of articles of incorporation of the financial investment companies

3.2.

Amendment to GEO 32/2012 (PL-x 458/2012) Art. 286^2 (1)The conditions of quorum and majority vote necessary to conduct general meetings of S.I.F. shareholders and those of adopting decisions are those referred to in art. 115 paragraphs (1 ) and ( 2 ) of Law no . 31/1990. (2) Notwithstanding the Law no. 31/1990, amendments to be made to the S.I.F.'s articles of incorporation, exclusively for their classification under the provisions of paragraph ( 1 ) will be registered to Trade Registry, by the decision of the S.I.F.’s Board of Directors/ Supervisory Board or S.A.I’s who manages a S.I.F., as appropriate, subsequently to the obtaining of the authorization from F.S.A. .

SIF Moldova-constantly during time-brought this topic to the attention of different interested parties (shareholders, investors, state authorities, legislative decision makers). There are premises for obtaining a favourable decision, by entering in parliamentary debate, in the February 2014 session, of the amendments to the draft of law for approving GEO no. 32/2012 and supplementing Law 297/2004.

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Topic: Draft amendment to GEO 32/2012 (PL-x 458/2012)

3.2.1.

Objection to the introduction of certain incompatibilities for managers and directors of market/system operators and central depository (art.130 (1); art.139 (1), art.149 (1) ) It is groundless for the main players on the market (issuers) not to involve in managing capital market institutions they act on; we do not believe it is advisable to include in the law certain stipulations from a secondary FSA regulation (agreements of measures) disputed by the market and extending applicability for directors.

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Topic: Cancellation of NSC Arangement of Measures 11/2005 on forbidding one SIF to buy shares from other SIFs

3.3.

SIF Moldova has continued efforts to FSA in order to cancel Arrangement of Measures no . 11/2005, goal having the following objectives: ensure equal and undiscriminating treatment of SIFs compared with

the other UCITS from Romania; ensure necessary framework to improve SIFs performances in case

they could trade important share volumes of other SIFs ; ensure possibility to diversify share portfolio; increase liquidity of SIF shares as a result of increased trades; ensure additional possibilities to cover the risks in case of investment

decisions; cancel of the measure will have a positive impact on increasing the

interest of Romanian/foreign investors for SIF shares, which will lead to the development of national capital market.

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Topic: Draft for changing NSC regulation no. 15/ 2004 – speeding completion

3.4.

Important aspects: Correlation, for SIFs, with the disposals for running AGM and

expressing electronic vote in GEO no. 32/2012 (proposal already submitted)

Correlation with GEO project on alternative investment fund managers – AIFM; in case project is advanced as law draft it is possible that the document is not in line with the Regulation, if adopted before completing the parliamentary legislative procedure.

Consolidation with the secondary legislation issued to the present ( including the introduction of FSA rule on promissory notes from 11/23/2013, by clarifying the issues raised by the entities

Currently we subscribe to FSA approach on splitting Regulation 15 in 2 distinct regulations: UCITS and non-UCITS (FIA), to speed the adoption of regulation for UCITS; most probable the adoption of regulation for FIA will have to be synchronized with GEO adoption on AIFM.

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Topic: AIFM - applicability and implications for SIFs correlation with the reviewed version of Regulation 15/2004

3.5.

Clarifications needed: Are SIFs and Fondul Proprietatea included in FIA category? On SIF Moldova being registered as FIA: it is determined by the analysis of

including or not including company’s activity in article 3 “Waivers” from the DIRECTIVE

What are the requirements specifically applied to SIFs and Fondul Proprietatea, on AIFM?

AIFM - Alternative Investment Fund Manager AIFM Extern (appointedF by a FIA, being responsible for managing FIA) AIFM Intern (in acse of self managed FIA, AIFM = FIA

Connection – “UE regulation draft on structural reform of the banking sector and financial markets transparency ”, from the perspectives of provisions on: 1. interdiction for credit institutions and their UE mother companies to

sponsor or to have exposure on certain FIA types FIA types are analyzed, exposure limits or interdictions 1. Reporting obligations and transparency for OPCVM and FIA considered as a

possible source of systemic risk. Possible term for adoption December 2015 and coming into force on January 2017.

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Topic: Necessity of regulating the RASDAQ legal status

3.6.

SIF Moldova, both individually and as a member of Capital Market Professionals Organization proposes/supports the efforts taken in showing the necessity of regulation the RASDAQ legal status by adopting with the amendments the draft of law no. PL-x no. 385/2013 registered at the Chamber of Deputies for debate. We appreciate as being extremely important the elaboration of a legislative act ensuring to defend the public interest and the increase of investors’ trust in financial markets from Romania and that will have : Positive effects at legislative level Positive effects from the economical perspective Positive effects on the development of Romanian capital market

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Topic: Changes of BSE regulations on deal transactions

3.7.

In order to execute deal transactions (with a powerful negotiable characteristic of the sales and purchase agreements of financial instruments) with large share stocks, it is needed to have no daily variation, otherwies, there is a permanent risk of making allegations on manipulating the capital market against the pre-contract parties who decided to fulfill their contractual obligations. For that, we support amending the Bucharest Stock Exchange Code in terms of: a) Amending paragraph 113 from Title III of the BSE Code – market operator, in

terms of creating the opportunity for the potential seller and potential buyer to negotiate, outside BSE mechanisms and without the mandatory intercession of an authorized intermediary, transaction condition

b) Amending paragraph 129 from Title III of the BSE Code, in terms of eliminating letters a, b şi a and amending the text of paragraph 129 letter d), as the restrictions aimed by these texts from BSE Code lead to the impossibility of performing cross transactions.

In the same time we request the analysis of removing all maximum variations limits on the Romanian markets , at least on the “deal” market segments

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Topic: Necessity to make the mechanisms for transactions in margin more efficient (alignment to SSIF Broker position taken by BSE)

3.8.

Objectives 1. To analyze impact of Regulation UE 236/2012 on regulations, procedures and

BSE activity, Central Depository, intermediates on short selling and loan stock. 2. To establish the method of involvement and the BSE, DC responsibilities in

buying in margin transactions, short selling and loan stock operations. 3. To identify the best way to apply the NSC AM no. 13/2012 on loan stock

performed by UCITS and UCITS. 4. To analyze the method of modifying the risk management mechanism to DC

settlements. 5. To analyze the settlement methods to OTC transactions and FOP transfer. 6. Efforts to FSA on implementing regulations amended for making more efficient

the mechanisms for loan stocks and transactions in margin. 7. Efforts to FSA and MFP for modifying the tax treatment applicable to loan

stock, buying in margin and short selling transactions. 8. To amend regulations and IT solutions applicable to loan stocks and

transactions in margin.

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Topic: Securities loan

3.9.

From the analysis of legislative provisions SIFs can perform securities loans and can form collateral securities only in the following conditions:

For a period of maximum 30 days To not exceed 10% of assets Collateral financial securities can be formed in cash, shares in BET and BET-FI index, securities of state with a maturity of over 12 months negotiable on the capital market Financial securities have to represent at any point a minimum of 120% out of the value of loan securities

Proposal – To reanalyze the legislative framework in terms of simplifying the loan mechanism and extending the framework for loan issuing, with a tax treatment fit to income obtained, in this case interest, commission

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Topic: SIF Moldova, as shareholder in BSE and Sibex, supports the necessity of setting up a national CCP for developing the Romanian capital market.

3.10.

SIF Moldova sent a release (Nov 2012) in which is highlighted that “it will be imposed for all financial instruments to be compensated/settled through Central Counterparties and that OTC derivatives will be traded on regulated markets.”

Subsequently (with the occasion of SIBEX AGM taking part) it requested to add on the agenda aspects on setting up CCP; to approve the strategy of SC SIBEX SA BD, as a majority shareholder of SC CRC SA, on CCP set up, empower CA SIBEX to hold general meetings and to issue mandate to the representative for SC Depozitarul Sibex SA – dissolute the activity of depository and SC CRC SA – company participation with cash infusion in order to set up CCP (together with BSE)

In July 2013 SIF Moldova sent a letter to BSE BD/shareholders: SIF Moldova’s reaction to not meeting quorum and lack of action, vision and initiative, which led to the impossibility to adopt decisions on setting up CCP in due time. In the same period an address was sent to BSE – BD BSE Central Depository, on “granting an imperative mandate to BSE executive management, to continue negotiations with BSE on setting up a concrete strategy on its collaboration/ involvement in setting up CCP.”

In EGM Central Depository (July 2013) to SIF Moldova’s BD proposal of DC, it approved convening EGM with an unique point of the agenda “social capital infusion to CCP” given that the majority shareholder of BSE (over 70%) would have approved in AGM BSE the participation to CS of CCP.

In August 2013 the BSE Board of Directors organized an informal meeting on the measures of developing the local capital market, following which a questionnaire was launched, addressed to BSE shareholders, that includes the issue brought to the attention by SIF Moldova (including the necessity of approving a clear project on setting up CCP).

Current situation: SIBEX - SIBIU STOCK EXCHANGE (SBX) chose as option to conclude a Clearing contract and a master agreement on extending collaboration on CCP direction. Following concluding negotiations with Helex Group, signing the agreements and implementing the technical solutions, SIF Moldova supports, as shareholder to the other entities of SIBEX group : (1) proposal to dissolute and voluntary liquidation of CRC Sibiu; (2) proposal to dissolute and voluntary liquidation of Sibex Depository.

FSA disclaimer: “We notified the European authority ESMA that we will set up the Central counterpart. NBR and Ministry of Finance agreed on participating with a third of the capital. “ 13.01.2014

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Topic: Proposal to amend the tax law – in terms of correlating the CASS payment obligation with the minimum threshold from income from dividends for shareholders with very small holdings

3.11.

SIF Moldova initiated in 2013 efforts to MFP and FSA to initiate legislative amendments to regulate the situation of the over 5.5 million shareholders with holdings lower than 30 shares to whom, for their dividends due in quantum lower than 5 lei CASS is calculated and penalties issued in accordance with amounts of 750 - 800 le, to which favorable answers were received from MFP and FSA, who requested to initiate efforts to amend the tax law.

SIF Moldova informed professional associations AAF, OPPS si ARSIT and SIFs

about the request to FSA to amend the tax law. Favorable answers were

received from the associations, by supporting SIF Moldova’s efforts to the

empowered institutions.

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Topic: The opportunity to modify the holding threshold to regulated entities, especially to SIFs and stock operators (BSE)- currently 5%

3.12.

SIFs: eliminating threshhold progressively Change history holding limit: • 0,1% - available in the period since BSE listing until the emergence of Law 297/2004 ( 1999-

2004) • 1% - changed by Law 297/2004; available in the period 2004-2012 • 5% - changed by Law no. 11/2012; available in the period 2012- present Disclaimer: in the initial version of the law draft ( Law 11/2012) for changing the Law 297/2004 (PL no. 600/2009) the elimination of holding threshold was provisioned, presenting the positive consequences, respectively:

o Improvement of stock capitalization of SIFs and implicitly of BSE o Possibility to attract capital by issuing new bonds, investors not being conditioned by

limiting subscription to a certain threshold o Creating easier conditions to meet the quorum and adopt decisions by AGM

Current situation – communicated by FSA officials: „From the discussions I had with SIFs representatives, we agreed that raising the holding threshold is not appropriate in 2014. I am a supporter of raising the threshold, discussion can be restarted in 2015 and in 2016, or when the market needs it“.

BSE (stock operator): raising threshhold progressively • raising threshhold progressively, in stages in a period of up to 3 years • Stages for implementation: 10%, 20% , to 33% Currently we subscribe to the amendment from GEO 32 –20% threshold

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TRANSPARENCY

QUALITY

PERFORMANCE

Implementing the Corporate Governance code presented to shareholders in AGM 05.04.2013) – ensures:

Procedure of activity and implementation of management systems for security information (SMSI 27001) and quality management (ISO 9001/2005 – in progress)

Ensured by implementing strategies presented to shareholders for being approved in conditions of quality and transparency of decision-making processes.

The analysis and evaluation of SIF 2 share performance as well as of management and personnel.

Introduction in the current practice of periodical and current reporting to the market, as well as of the monthly Newsletter in English (starting 2012)

Permanent consulting of shareholders on important topics, including by using the questionnaires (ex 2 questionnaires in 2013 on Corporate governance topics and SIF Moldova’s strategies)

In grounding the investment decisions an important role is given to identifying and evaluating potential risks with a constant concern on rebalancing portfolio on performance criteria / risk. In this respect, an IT application developed in-house is used, which makes internal scoring models and of portfolio optimization based on financial indicators and risk/performance statistical indicators.

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