S.C. FONDUL PROPRIETATEA S.A. a joint stock company registered in Romania under no. J40/21901/2005 managed by Franklin Templeton Investment Management Limited, United Kingdom Bucharest Branch PROSPECTUS FOR LISTING ON THE SPOT REGULATED MARKET MANAGED BY THE BUCHAREST STOCK EXCHANGE Lead Manager RAIFFEISEN CAPITAL & INVESTMENT Manager Manager ING BANK N.V. AMSTERDAM, BRD BUCHAREST BRANCH GROUPE SOCIETE GENERALE Legal advisor to the Consortium SCHOENHERR ŞI ASOCIA łII Prospectus Date: 2 December 2010 THE AUTHORIZATION ENDORSEMENT ON THE LISTING PROSPECTUS SHALL NOT BE CONSTRUCTED AS A GUARANTEE NOR REPRESENTS OTHER FORM OF APPRECIATION BY THE NSC WITH RESPECT TO THE OPPORTUNITY, ADVANTAGES OR DISADVANTAGES, PROFIT OR RISKS THAT MAY BE IMPLIED BY THE TRANSACTIONS TO BE ON THE BUCHAREST STOCK EXCHANGE SUBJECT TO THE AUTHORIZATION DECISION; THE AUTHORIZATION DECISION CERTIFIES ONLY THE COMPLIANCE OF THE PROSPECTUS WITH THE LEGAL REQUIREMENTS AND THE NORMS ADOPTED FOR THE APPLICATION THEREOF. (This page was deliberately left blank) TABLE OF CONTENTS 1 DEFINITIONS AND CONSTRUCTION ................................................................................... 1 1.1 Definitions ............................................................................................................................... 1 1.2 Construction............................................................................................................................. 5 2 SUMMARY OF THE PROSPECTUS ........................................................................................ 7 2.1 The Fund.................................................................................................................................. 7 2.2 The Fund Manager and the Sole Director................................................................................ 8 2.3 Major shareholders and related party transactions................................................................... 8 2.4 Details of the admission of the Shares to trading .................................................................... 9 2.5 Fund’s investment objectives and policies .............................................................................. 9 2.6 The Portfolio.......................................................................................................................... 10 2.7 Summary of Risk Factors ...................................................................................................... 12 2.8 Selected Financial Information.............................................................................................. 14 2.9 Documents on display............................................................................................................ 20 3 RISK FACTORS......................................................................................................................... 21 3.1 Risk factors related to Romanian business environment ....................................................... 21 3.2 Risk factors regarding the Fund............................................................................................. 26 3.3 Risks associated with the Fund Manager and the Depositary................................................ 30 3.4 Risks relating to the investment policy and the Portfolio...................................................... 31 4 DESCRIPTION OF THE FUND............................................................................................... 34 4.1 General Presentation.............................................................................................................. 34 4.2 Fund’s organisation and management ................................................................................... 39 Fund Manager ............................................................................................................................... 39 4.3 Presentation of Articles of Association ................................................................................. 50 4.4 Presentation of the Share Capital........................................................................................... 64 4.5 The Depositary....................................................................................................................... 72 4.6 Material Contracts and Significant Service Providers........................................................... 76 4.7 Related Party Transactions .................................................................................................... 79 4.8 Investment Policy .................................................................................................................. 80 4.9 Special Reporting Requirements ........................................................................................... 86 4.10 Dividend Policy ..................................................................................................................... 88 4.11 Restrictions on the use of the Fund’s capital resources ......................................................... 90 4.12 Subsidiaries............................................................................................................................ 90 4.13 Litigations.............................................................................................................................. 91 5 PRESENTATION OF SEPARATE FINANCIAL STATEMENTS..................................... 115 5.1 Annual Separate IFRS Financial Statements and Results.................................................... 115 5.2 Interim financial statements and results for the six months ended 30 June 2010................ 148 5.3 Significant Change in the financial or trading position of the Fund.................................... 151 6 FUND MANAGER’S PRESENTATION................................................................................ 152 6.1 Franklin Templeton Investments group............................................................................... 152 6.2 Fund Manager’s Appointment............................................................................................. 155 6.3 Fund Manager Incorporation information ........................................................................... 155 6.4 Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch 157 6.5 Important events in the evolution of the Fund Manager...................................................... 157 6.6 Roles and Responsibilities of Fund Manager ...................................................................... 160 7 THE FUND PORTFOLIO ....................................................................................................... 163 7.1 The Fund Holdings .............................................................................................................. 163 7.2 Valuation Method ................................................................................................................ 165 7.3 Net Assets Value Analysis................................................................................................... 170 7.4 Portfolio Performance.......................................................................................................... 176 7.5 Independent Valuation......................................................................................................... 178 7.6 Planned Privatisations through the Capital Market ............................................................. 180 7.7 Overview of Electricity Sector ............................................................................................ 181 7.8 Overview of Gas Sector....................................................................................................... 196 7.9 Overview of Oil Sector........................................................................................................ 213 7.10 Overview of Transportation Sector...................................................................................... 222 7.11 Overview of other stakes of the Fund.................................................................................. 235 8 LISTING ON THE BSE ........................................................................................................... 238 9 TAXATION ............................................................................................................................... 240 9.1 Taxation of dividends .......................................................................................................... 240 9.2 Taxation of capital gains...................................................................................................... 242 9.3 Other taxes and fees............................................................................................................. 243 9.4 Important note on the Fund’s tax treatment......................................................................... 244 10 SOURCES OF INFORMATION............................................................................................. 245 11 DOCUMENTS ON DISPLAY ................................................................................................. 247 12 ANNEXES 248 This document constitutes the English version of the Prospectus approved by the NSC by deci- sion no. 1647 of 16 December 2010. This translation of the Prospectus from Romanian into English language is not an official translation and is made available for informational purposes only, prepared solely