Updates to the Romanian corporate law: attempt for a more investment-friendly environment?

√     Corporate law changes enter in force on 26 November 2022
√     Changes to the mandatory content of the articles of association
√     More flexible rules for share capital contributions in SRLs
√     Unanimity for amending SRLs articles of association removed
√     Extended attributions of commercial registry clerks – reorganisations no longer with courts of law

Law No. 265/2022 regarding the commercial registry and the amendment of other pieces of legislation with impact on the registration in the commercial registry (the Law) is aiming at unifying the commercial registry legislation as well as simplifying the corporate processes. The Law amends the legislation on commercial registry (including processes for registration) and other pieces of legislation, including Law No. 31/1990 on companies (the Companies Law).

In addition, new rules regulating the procedure for registration of operations with the commercial registry were due to be adopted prior to the Law’s entry into force, however, such have not yet been issued.

1. Main amendments to the Companies Law

a. New mandatory provisions to be included in the articles of association

The articles of association must include:

  • In case of SRLs, a provision stating that decisions will be passed with unanimity when due to the existing shareholding quotas an absolute majority cannot be reached;
  • Identity of the UBOs.

b. Flexibility on rules regarding payment of share capital contribution in SRLs

  • In the context of SRLs incorporation, the founding shareholders can pay only 30% of their respective share capital contribution before the SRL commences operations (without however exceeding 3 months from incorporation) with the balance to be contributed in: (i) 12 months in case of cash contribution and (ii) two (2) years in case of in-kind contributions, in both cases as of incorporation – this aligns the incorporation contribution regime with that of joint-stock companies.
  • Several questions remain unanswered in relation to the new contribution regime:

i. Is it also applicable to the increase of the share capital of SRLs or only upon incorporation?

ii. What happens if shareholders fail to contribute in due course? Are their voting rights suspended, and if so, on what grounds? Or are they only liable for potential damages caused to the company?

iii. How does the new regime corroborate with provisions incriminating directors for initiating operations of SRLs before share capital is paid in full? Presumably the criminal offence will no longer apply although not expressly abrogated?

c. New mandatory clause to be included in management/audit agreements

  • The mandate agreements of directors, managers and/or members of the supervisory boards as well as the agreements for the appointment of censors or financial auditors must now include a statement that the appointee meets the capacity requirements under the Companies Law for such position (e.g., not having committed criminal offences of economical nature, corruption, etc.).

d. Unanimity no longer required to amend SRLs articles of association

  • Unanimity requirement will be repealed in the new form of the law. Currently, the unanimity requirement does not apply only if the shareholders expressly waive it.
  • However, the double majority rule in SRLs (i.e., majority of shares and of shareholders) remains unchanged, with the shareholders having the flexibility to amend this rule under the articles of association.

e. Obligation to keep and present the shareholders’ register of joint stock companies

  • After the Law’s entry into force, failure by the joint stock company directors to keep the shareholders’ register or to present to any interested person information on shareholding structure and related certificates will be qualified as an administrative offence sanctioned with a fine of up to RON 15,000.
  • If following the sanction, the breach is not remedied in 30 days potential dissolution of the company can be triggered.

2. Main amendments to the commercial registry registration

As a matter of principle, the Law sets-forth a new regime in regards of the attributions of the commercial registry by repealing Companies Law provisions whereby the legality control is performed by delegated judges and granting such attributions to a new commercial registry clerk – the registrar (in Romanian, registrator).

This is a fundamental change in the way the commercial registry operates since judicial control is, in the vast majority of cases, replaced with an administrative legality control performed by the registrar. This determines several significant changes, such as:

a. More straightforward procedure/less formalities for submissions

  • The Law is generally attempting to simplify the commercial registry registration procedure and facilitate digitalised interaction with the commercial registry. Among the measures aimed at simplifying the process:

i. The Government’s prior approval to use the Romanian words for national, Romanian or institute (or variations thereof) is repealed;

ii. Statements under own responsibility required for various operations can be issued in simple form signature as a permanent measure (notarisation no longer required) – this also translates into the requirement of having apostilles applied for statements issued outside Romania becoming less frequent;

iii. Specimen signatures will no longer be required in the process of directors/managers appointment;

iv. An online company set-up process will be implemented within the new digitalised platform of the commercial registry.

b. Approval of company reorganisations no longer to go through the court procedure

  • The new commercial registry regime apparently aims at having the company mergers and spin-offs (both national and cross-border) approved directly in front of the commercial registry and thus avoid doubling the commercial registry procedure with the court procedure;
  • In practice, this should lead to a significantly shortened process, especially for heavily regulated businesses (e.g., insurance, pension fund management, etc.).

 

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