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FIND OUT IF THEY HAVE VALUE; IF THEY ARE WORTHLESS, TRANSFER THEM TO THE FNM

Still have coupon privatisation shares?

AFTER the fall of the communist regime in 1989, Slovak citizens had an opportunity to acquire a portion of the wealth they had helped to create during the totalitarian regime through a coupon privatisation scheme that enabled them to obtain shares in some of the flagship companies in the previously state-owned economy. Now, people who still own some of these securities face the possibility of paying hefty administrative fees if they continue to hold shares that are now essentially worthless.

AFTER the fall of the communist regime in 1989, Slovak citizens had an opportunity to acquire a portion of the wealth they had helped to create during the totalitarian regime through a coupon privatisation scheme that enabled them to obtain shares in some of the flagship companies in the previously state-owned economy. Now, people who still own some of these securities face the possibility of paying hefty administrative fees if they continue to hold shares that are now essentially worthless.

Citizens who want to rid themselves of worthless or low-value securities to avoid further administrative fees, can transfer the shares to the National Property Fund (FNM), the state agency that has been responsible for privatisation of state assets. The possibility to do so was started on October 1, 2009 and currently there is no deadline for citizens to make such a decision to transfer any shares that they own in their name. But those who continue to retain securities may pay hefty administrative fees of up to nearly €200. The lowest annual administrative fee for securities held in a person’s name by the Central Securities Depository of the Slovak Republic (CDCP) is currently €9.60.

“The fee is calculated as 0.055 percent of the nominal value of the securities held on the account of its owner,” stated Rastislav Pavlík, the CDCP director general, as cited by the Pravda daily. He added that the administrative fee is calculated on the basis of the price when the securities were issued even if some of the companies are now bankrupt and the shares are currently worthless. “Only owners of accounts with securities with a nominal value of up to €35 or empty accounts will be exempt from payment of the fees,” Pavlík said.

When a person holding these securities decides to transfer them to the FNM, that agency will pay the transfer fees as well as the fees for administering the securities for the year during which the securities were transferred and for the two previous years.

“When somebody finds out that he holds securities without any value, he can use the possibility of the free-of-charge transfer of these securities to the FNM,” said Elena Osuská, the director general of RM-S Market, a company which offers handling of this service.

However, because there is no unified registry of previously-issued securities that have no market value, there is a danger that people could transfer shares that they own to the FNM that do have actual market value. For example, shares of stock in Slovnaft are currently trading on the Bratislava stock exchange at around €51 per share but have a nominal value of €33.20 based on when they were issued. A person holding Slovnaft shares who transferred these securities to the FNM to avoid administrative fees would not be making a sound financial decision.

Experts say that holders of securities that were acquired through the coupon privatisation scheme should contact a stockbroker or the issuer of the securities to obtain current information about the market value of any securities they hold.

“The easiest way to get the value of securities is to turn directly to a stockbroker,” said Osuská. So far about 200,000 people have contacted RM-S Market and about 130,000 of them have signed contracts with the company for the free transfer of their securities, the SITA newswire wrote. Osuská confirmed that some people had also mistakenly transferred valuable securities, believing they were worthless. By the end of 2010 the FNM had received shares of marketable Slovnaft shares as well as shares in profitable banks such as VÚB, UniCredit Bank Slovakia, OTP Banka Slovensko, Tatra Banka, shares of insurer Allianz-Slovenská Poisťovňa, and companies such as Zentiva and Biotika.

Individuals who still hold securities from the coupon privatisation scheme must carefully research whether their shares have value before making any transfers to the FNM because reversing such a transfer is not possible.

“Accusations that people have not been informed about the value of these securities are out of the question,” Osuská stated, as quoted by SITA. “A citizen has the right to transfer whatever; it’s his decision.”

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