Where does the EPS brake when it comes to the Law on the Right to Free Shares?

Published on 26. April 2023., News

The Law on the Right to Free Shares foresees the distribution of 15 percent of the total number of shares of Electric Power Company of Serbia (EPS), Oil Industry of Serbia (NIS), Nikola Tesla Airport and Telekom Serbia to all citizens who are entitled to it. Given that EPS also referred to that law in the process of transformation, the question arises whether the citizens should also have received 15 percent of EPS shares, as stated in this regulation.

Based on the Law on the Right to Free Shares, citizens became shareholders of NIS, Aerodrom and Telekom, but with EPS, which recently became a joint stock company, that “step” was missing, at least for now, reports N1. One hundred percent of EPS shares are otherwise registered to the sole owner, the Republic of Serbia.

EPS, however, is not listed on the stock exchange (the founder states that it is a “closed AD” even though the division into closed and open joint-stock companies was abandoned in the Companies Act in February 2012), but neither is Telekom, whose shares are distributed to citizens in May 2012.
The Ministry of Mining and Energy did not answer to N1’s question which is “why the allocation of 15 percent of EPS shares to the citizens was missing”.

Several economists we talked to pointed out that this is a legal issue. Zoran Grubišić, professor of the Belgrade Banking Academy, says that the question of distributing free shares to citizens is “premature”.

“We still have to wait a little and see how the situation will develop.” It is not too late for the distribution of free shares, if the owner so decides. EPS is not an open joint-stock company, it is not listed on the stock exchange. It is still too early to talk about this,” Grubišić believes.

Stock market expert Nenad Gujaničić, however, points out that this is not the first time that the valid regulatory framework has been ignored.

“That in itself speaks of the instability of the economic environment here, so in the end economic policymakers have to resort to non-market shortcuts such as subsidies in order to attract investors.” Unfortunately, this kind of economic policy is quite disastrous in the long run, considering that it is not sustainable and leads to a violation of the equality of market participants”.

EPS, as he adds, should theoretically represent the most valuable company in this package where, according to the law, 15 percent of the capital should belong to citizens, and to former and current employees close to that amount in accordance with their years of service.

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