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Legal Commentaries

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Parliament activity, April 24 - 30, 2004
3 May 2004

As it was the case in the previous weeks, this week Parliament convened on one session only. For three weeks now Christian-Democrats block the main tribune thereby demanding data on how public funds were spend to be disclosed, as well Speaker resignation. Albeit at times aggressive and altercations, sessions' agenda was followed precisely with reporting deputies speaking from other microphones, whereas opposition staying at the central tribune.

Some of the drafts examined by Parliament are of major importance since they refer to areas in the media and public attention alike.

I. Law on establishing diplomatic duty free shops

ADEPT Comment: The law provides for opening a duty free shop in Chisinau to serve diplomatic corps. Goods shall be sold based on identity cards issued by the Ministry of Foreign Affairs in amounts enough for personal or family use and shall not be subject of resale. Foreign missions would be allowed to purchase goods in larger amounts with the previous authorisation of the Ministry of Foreign Affairs. The Government is to decide on the establishment, operation and sale of goods in the diplomatic duty free shops.

Previously, the initiative has attracted a storm of criticism on the grounds it was solely intended to serve the murky bargains of the ruling party. The law of December 21, 2001 amended the Customs Code in particular in that goods should be sold in foreign currency only to those who passed customs control. Also, duty free shops are to be located at the customs checkpoints, or on airplanes flying on international routes.

Lawmakers cited in favour of the law the numerous requests from diplomatic corps to open such shops allowing them to buy better quality products at lower prices.

The law does not stipulate whether duty free shops would be state-owned, joint venture or private; or whether a tender is to be held to select the successful bidder. The Government would have to decide on those issues in the Regulation it is to develop. And only then, would we see whose interests are at stake.

II. Law on converting the debts of the "Tracom" tractor plant into shares

ADEPT Comment: Parliament decided to convert the 12.5 million Lei debt into shares to be owned by the state. Thereby state would hold 93% of the registered capital, fact that reportedly would boost production of agricultural machinery and tractors in the country.

III. Law on settling historic debts to the state budget of "Mezon" joint venture under insolvency procedures

ADEPT Comment: The law authorized Ministry of Finance and Creditors Council to settle Mezon's debts worth 1.7 m Lei by transferring its patrimony into the property of Basarabeasca rayon. The patrimony shall be transferred via alienation. Noteworthy, the plant was part of the industrial military complex. Upon the collapse of the Soviet Union its production shrank and in 2000 it undergone insolvency procedures under a resolution of the Economic Court at the request of the Ministry of Finance.

IV. Draft law on the modification and completion of the Law on Joint Stock Companies

ADEPT Comment: The law obliges joint stock companies to pay dividends amounting at least 30% of its net annualized profit. Under the current law the net profit is used to:

  1. pay interests or other relevant payments to the company obligations;
  2. cover the losses incurred in the previous years;
  3. form reserve fund;
  4. award compensation to members of the company council and censor commission;
  5. invest in developing production;
  6. pay dividends, etc.

The decision to distribute net profit throughout the financial year is taken by the Company Council based on the norms set by the General Assembly of the shareholders, whereas the decision to distribute net annualised profit by the annual General Assembly of the shareholders at the recommendation of the Company Council.

As for dividends the law says the company is entitled to pay intermediary, quarterly and semester dividends and annual ones on the shares in circulation. The Company may not decide on paying dividends:

  1. prior to redeeming shares placed that should be redeemed;
  2. if, at the date decision to pay dividend is taken, the company is insolvent or if payment of dividends would lead to its insolvency;
  3. if the value of net assets, according to the last balance sheet, is less than its registered capital, or shall become so, as a result of dividend payment;
  4. on ordinary shares if there is no similar decision on preferential shares;
  5. on any shares if there is no decision on paying interests on obligations.

The modifications drafted and approved by the Parliament in the first reading is to protect the interests of minority shareholders, who sought to get dividends for placing shares, but are deprived of those dividends by the decision of the majority shareholders seeking to capitalise the business. At the same time, this requirement would be yet another infringement on the autonomy of the companies and would force its leadership to pass decision regardless of the short sight interests or long-term development perspectives.

V. Draft law on the modification and completion of the legal acts on obligatory medical insurance

ADEPT Comment: Under the draft law passed in the first reading, pregnant and breast-feeding women shall enjoy a free medical insurance to be covered from the Government allotted funds. Also a notification was proposed to the effect that only unemployed receiving unemployment aid or allotment for professional integration shall benefit of free medical insurance. This provision alone would reduce the burden on the state budget, as many more people register as unemployed so as to get free medical insurance and refrain from job hunting that would enable them to cover its costs.

VI. Resolution on approving the membership of the Administration Council of the Fund of guaranteeing the deposits made by natural entities in banking system

ADEPT Comment: Under the law on guaranteeing deposits made by natural entities in banking sector, the Fund is to be administered by a Council including 6 members:

  • 3 members designated by Banking Association;
  • 1 member by each of the following: Ministry of Justice, Ministry of Finance and National Bank of Moldova (non-voting members).

The following persons were approved as members of Administering Council:
Calpagiu Vasile, Foca Silviu and Veverita Petru (designated by the Banking Association), Esanu Nicolae (designated by the Ministry of Justice); Jurminschi Veronica (Ministry of Finance) and Mustata Radu (National Bank of Moldova).






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