The bill for the privatization of the CSE is being brought to the plenary session, following the article-by-article discussion in the Parliamentary Finance Committee on Monday, of a revised text that places further emphasis on the inclusion of qualitative criteria in the evaluation of candidate investors, in addition to financial ones.
In the discussion in the Committee, the representative of the Ministry of Finance, Avgi Lapathiotis, clarified that the state remains able, if it chooses, to remain a shareholder, through the proposed legal framework.
Furthermore, the Ministry of Finance stated that it took into account the strong positions of the CSE and the Commission regarding the inclusion of qualitative criteria and after consultations between the Ministry of Finance, the Office of the State Aid Commissioner and the CSE, the procedure was revised. It is now envisaged that qualitative criteria, in addition to financial ones, will also be taken into account. Specifically, as mentioned, the assessment of the business plan submitted by the eligible investors will have a weight of 30% in the overall score, while the financial offer will have a weight of 70%.
It is noted that the eligibility criteria remain in the first phase, regarding the determination of the strategic investor, while the tender documents will include other eligibility criteria, such as the investor's share capital, its total revenue, average cash flows and profitability of the last three years.
Regarding the business plan that prospective investors will submit, this will describe their intentions for the development of the stock market over the next five years and will be binding, since it will constitute an annex to the sales agreement.
It is also noted that the bill added the possibility of excluding any strategic investor from the process, provided that there are reasons of public interest, which, as pointed out by the Chair of the Finance Committee, DIKO MP, Christiana Erotokritou, is provided for in any case by the law on the control of foreign direct investments.
A representative of the Taxation Department proposed extending the provision for tax exemption for the state from the sale of its share in the CSE to a future date, if the state ultimately chooses to retain a percentage of shares at this stage. The representative of the Legal Service noted that such a possibility is covered by the existing wording in the bill.
The Chairman of the Board of Directors of the CSE, Marinos Christodoulides, said that they are fully in agreement with the changes made and expressed the hope that they will be voted on as soon as possible.
For her part, the State Aid Control Commissioner, Stella Michaelidou, said that her Office also agrees with the modification of the criteria to 70%-30%, since the financial offer plays a dominant role and there are important prerequisites. She also stressed the importance of transparency regarding the final evaluation of interested parties.
Representatives of the CSE unions said that labor issues were the first to be resolved, and staff are being secured following the relevant agreement made with the Minister of Finance.
The President of the Commission, Christiana Erotokritou, said that she is particularly satisfied with the changes and the consultation that led to bridging the differences, while the amendments reflect, she noted, the concerns expressed by the Commission in September.
He noted that "we are not more interested in the amount, but in how and what will be invested later in the CSE, not what the state will receive instantly," stating that the change in the bill ensures the possibility of approaching an investor who will have the guarantees for a substantial and attractive investment plan for the CSE.
Speaking during the session, DISY MP Onoufrios Koullas spoke about improvements "in the direction we wanted and requested," noting that the bill is quite satisfactory.
For her part, DISY MP Savia Orphanidou said that by including the percentage for quality criteria, the most advantageous offer will be selected and not the lowest. “We are positive that our concerns have been taken into account,” she said.
AKEL MP Andros Kafkalias asked the Ministry of Finance to further clarify the framework of the minimum requirements. The representative of the Legal Service stated that these are criteria that are included in the terms of the competition and not in the law.
In his statements after the Committee, Mr. Kafkalias said that AKEL has not taken the same position it has always taken on the privatizations or decentralizations of semi-state services for the CSE. “The CSE is a separate, special institution, which is why we do not maintain the same approach.” Beyond that, he said that they will make their final decisions in the coming weeks.
In his statements after the session, DIKO MP Chrysis Pantelidis said that the legislation will be brought to the Plenary in the immediate future. “We believe that this development is particularly important, both for the CSE, as well as for the Cypriot economy and for the market that operates around and within the CSE,” he said.
He added that “we must note that our primary concern is not to simply have a privatization that will be financially advantageous for the CSE and the public treasury at the time it takes place.” “It is much more important that the CSE passes into the plans of an investor, an organization, that is larger than our stock exchange and wants to invest in it and support it, highlight it to the greatest extent possible for the good of the Cypriot economy and the Cypriot market,” noted Mr. Pantelidis.
The MP of the Hellenic Public Investment Corporation, Alekos Tryfonidis, in his statements after the Committee, noted the vesting of CSE employees. He added that “we would prefer more weight on qualitative criteria”, noting that “we want interested investors to have qualitative criteria and not only financial ones. We are interested in the quality of the investor and his business plan”.
The President of the Environmental Movement, Stavros Papadouris, stated, within the Committee, that he agrees with the suggestions made and described the revised text as "improved". In response to a question regarding what happens in the event that the investor decides to proceed with a sale to a third party, regarding the criteria set out in the legislation, as well as the tax exemption provided for the sale by the state.
In response, the CSE President stated that the CSE is supervised by the Capital Market Commission and after privatization it will be a private company, governed by the same rules. The Capital Market Commission spokesperson noted that in case the existing strategic investor decides to sell, the new investor will be evaluated based on European directives and criteria.
Source: KYPE
