Current Trends In The Development Of Company Law In Romania

Current Trends In The Development Of Company Law In Romania Presented by: Mrs. Ilyés Date: 9 May 2024 Regulation - Following the overthrow of the Soviet-style dictatorship in December 1989, Romania embarked on the establishment of a market economy, necessitating the adoption of the Law on Commercial Companies (Law No. 31 of 1990) in the autumn of 1990. - Law No. 31 of 1990 has undergone over forty-five modifications, some of which are considered significant corporate law reforms, leading to a fragmented legal framework. - The extensive amendments have eroded the conceptual unity of the original law, posing challenges for corporate governance and legal clarity in Romania's business environment. - Need for Reform. Typology - According to the Company Act, the following five types of companies exist: • General partnership; • Simple limited partnership; • Limited liability company; • Joint-stock company; • Limited partnership by shares. Statistical Data Statistical Situation Of Professionals In The Trade Register As Of 31.01.2020 Joint-stock Limited Limited General Limited liability company partnership by partnership partnership company shares 11.111 4 193 2.476 1.141.824 Source: Romanian National Trade Registry Office Participations - - Company Participation Forms: • Limited liability company • Company shares joint-stock company+ limited partnership by shares – stocks • General partnership + simple limited partnership - interest shares. Limited Liability Company Transfers Associates can freely transfer shares among themselves, but outsider transfers require approval from three-quarters of the company's capital. - Legislative Changes: Law No. 223 of 2020 introduced flexibility in governing documents, removing the three- quarters majority rule as mandatory. - Stocks Transformation: Romania eliminated bearer shares in 2019, aligning with European directives (Directive 2015/849/EU) to prevent money laundering and terrorist financing, transitioning existing bearer shares into registered shares for increased transparency and security Capital Requirements - Minimum Capital Requirements: joint stock companies + partnerships limited by shares: minimum RON 90,000 (EUR 18,000). - Evolution of Limited Liability Company Capital: Previously, limited liability companies had a minimum capital of 200 lei (approximately 50 euros) with shares having a minimum nominal value of RON 10 Law No. 223 of 2020 abolished these requirements. - The amendment allows for setting any nominal value for company shares, enabling the creation of limited liability companies with capital up to RON 1. - Low capital requirements → easy company formation, potentially giving Romania a competitive edge, but raise concerns about insolvency risk and market integrity. - Setting minimum capital levels is a delicate balance, aiming to prevent abuse while not stifling entrepreneurship. Number Of Associates/Shareholders - Joint Stock Company: minimum of two shareholders. - Companies with sole or majority state capital can bypass the minimum shareholder requirement, resulting in single-member joint-stock companies owned by governmental bodies. - Limited Liability Company: A single person can establish a limited liability company, known as a single-member limited liability company; the number of members may not exceed 50. - Act No. 102 of 2020 repealed restrictions on single-member limited liability companies, allowing greater flexibility in company formation.