LEGAL INFO@Law-Counsel.com

1.What are the conditions for carrying on commercial activities in Romania?
The general legal framework for commercial activities has been established by the Constitution adopted in 1991.
The Constitution specifically describes the Romanian economy as a market economy. According to the Constitution, the state is bound to ensure the necessary conditions for free trade and fair economic competition. Therefore, the law of supply and demand functions in the Romanian economy. The grounds of this system are ensured by the existence of private property, which is protected and GUARANTEED . Article 41 of the Constitution, entitled The Protection of Private Property specifies (at paragraph 1): " the right to property and debts of the state are guaranteed". Private property is subject to the same conditions and is equally protected by the law, regardless of the holder of the right.
Within this general framework there are specific laws regulating various aspects such as the legal ways to create, obtain authorization and carry out the activities of a commercial company, taxes, consumer protection, etc. All these specific laws comply to the general principles prescribed by the Constitution.
Dan Livescu

2. What types of commercial companies can be created in Romania?
The types of commercial companies that can be created in Romania are specified in the Law 31/1990, modified and published in the Official Monitor of Romania, no.33/ January 29, 1998.
The following types of commercial companies can be created, according to Romanian laws: general partenership (societate in nume colectiv) limited partnership (societate in comandita simpla) joint-stock company (societate pe actiuni) limited partenership by share(societate in comandita pe actiuni) limited liability company (societate cu raspundere limitata) Each of these types of companies has specific traits. The choice among these types is determined by various factors, such as: the way the entrepreneur conceives the structuring and the further development of the business, the number of partners, the starting capital, etc.
Dan Livescu

3. What should the constitutive documents of a limited liability company or of a joint-stock company contain?
The Law 31/1990 concerning commercial companies prescribes the contents of the constitutive documents of a commercial company needed in order to obtain the authorization. If there are two or more associates, however, and you want to develop a functional business and do not want to waste time and money in lawsuits among the associates, these data are not sufficient. In reality there is a great number of lawsuits among associates because of the insufficient attention paid to the regulating of relations among associates and to the way the company functions. Thus, if there are two or more partners, it is necessary that you, together with an attorney, brainstorm about potential situations that may occur in the organizing and the functioning of the company.
In what concerns the mandatory clauses needed for the authorization, they are: surname, first name, the date and the place of birth, the address and the citizenship of the associates (in case they are natural persons); the name, the headquarters address and the nationality of the associates (in case they are legal persons); the type, name, headquarters address and, if the case, the emblem of the company; the object of activity, also mentioning the field and the main activity; the registered capital, subscribed and deposited, also mentioning the contribution of each associate in cash or in kind, the value of the contribution in kind and the way of evaluation, the date when the total subscribed capital is deposited, the number and the face value of the shares, as well as the number of shares given to each associate according to its contribution; the managers of the company, their prerogatives and the way they are to exercise these prerogatives; the share given to each associate in case of profit and loss; secondary headquarters (branches, agencies, offices or other units without legal personality) the time-span of the company the method of dissolution and liquidation of the company.
The constitutive documents of a joint stock company contains all the data required for a limited liability company with the following differences:
- the registered capital deposited by each partner cannot be less than 30% out of the subscribed one. The rest of the registered capital can be deposited within 12 month from the registering of the company.
- the constitutive documents of a joint stock company will also have to contain: a specification if the shares are nominal or not; if different categories of shares exist, the number, the face value and the rights given by each category will be specified; the mandatory guarantee the manager must deposit; the surname, the first name, the date and place of birth, the address and the citizenship of the auditors (if they are natural persons); the name, the address of the headquarters and the nationality of the auditors (if they are legal persons).
Dan Livescu

4. Which is the minimal registered capital of a limited liability company? How about a joint stock company ?
The minimal registered capital of a limited liability company (societate cu raspundere limitata) is of 2 million lei.
The minimal registered capital of a joint stock company (societate pe actiuni) is of 25 million lei.
Dan Livescu

5. How can an associate be excluded from the company?
Some specifications must be made. Thus, the issue of excluding an associate appears only in the case of a general partenership, of a limited partnership or of a limited liability company; in the case of a limited partnership by shares, the issue regards only the active and responsible partners and not the silent partners. The shareholders in the joint stock companies who paid for their shares cannot be excluded, as the basis for the functioning of these companies is the capital and not the person.
Therefore, the associates in general partenership, in limited partenership, in limited liability company, as well as the active and responsible associates in joint stock sleeping partnership companies can be excluded. The reasons for their exclusion are provided by the Law 31/1990, republished with further modifications.
The exclusion can be decided by a Court, at the request of the company or of any of the associates.
The final decision of exclusion will be filed within 15 days at the Office of the Register of Commerce in order to be registered. The decision will be published in the Official Monitor.
Dan Livescu

6. How can I withdraw from a limited liability company of which I am an associate?
The associate can withdraw from a limited company in the following cases: the cases prescribed in the constitutive documents; upon the agreement of the other associates; if the constitutive documents do not prescribe the cases regarding the withdrawal or if the unanimous agreement of the other associates is not achieved, the withdrawal can be made for well-grounded reasons upon the decision of the Court; In what concerns the worth of the share you are entitled to receive, this is to be established: upon settlement among the associates or by an expert appointed by them; when a settlement cannot be achieved, by a competent Court.
Dan Livescu

7.I intend to expand the activity of the company by creating sub-companies (filiale) or branches (sucursale). What is the difference between the two and which type should I choose to set up: sub-company or branch?
The main difference between them consists in the fact that the sub-companies posses independent legal personality while the branches are dependent parts of the "mother" company, having no legal personality.
Therefore: the sub-companies are companies distinct from the "mother" companies; they engage in legal relations on their own behalf, they take on rights and obligations on their own liability. Sub-companies can be created as a commercial company according to the provisions of the Law 31/1990 regarding the types of commercial companies, under the conditions and having the legal status prescribed for that specific type of commercial company. Although an independent company, the sub-company is however under the control of the "mother" company which has the majority of the registered capital. the branches do not have independent legal personality, do not engage in legal relations on their own behalf and the liability extends to the "mother" company. The creation of branches is done in the conditions prescribed by the constitutive documents and they are registered in the Register of Commerce from the county where they will function. If the constitutive documents does not stipulate anything concerning the branches, a general meeting of the associates is needed in order to dispose of the modification of the constitutive documents. Concerning what would be better to create, a sub-company or a branch, it cannot be said what would be best. The choice is done according the features and the type of business to be developed. The corporate development and extension of the company imposes the creation of various company structures, not only sub-companies and branches, but also agencies, bureaus, other secondary headquarters and work units. Only after a thorough analysis, together with a specialized jurist who understands the business mechanism, the way that fits best to the pursued ends can be chosen.
Dan Livescu

8. What is the difference between a limited liability company and a general partenership?
The general legal framework is established by the Law 31/1990 concerning commercial companies. This stipulates various specific provisions for each type of company, from the point it is constituted to its liquidation. The main differences between a limited liability company and a general partenership is given, however, by the responsibility of the partners and by the registered capital. Thus: In a general partenership (societate in nume colectiv) the associates shall have an unlimited and joint liability for the company's obligations; the creditors of the company may sue the company in order to recover the credit given; if the company does not pay within 15 days, the creditors may then sue the associates. In the case of limited liability companies (societate cu raspundere limitata), the associates may be kept liable only up to the value of their subscribed registered capital. In the case of limited liability companies (societati cu raspundere limitata) the law prescribes a mandatory minimal amount of registered capital. In the case of general partenership (societati in nume colectiv) there is no minimal limit of registered capital.
Dan Livescu

9. If an associate decides to withdraw from a limited liability company, what is the legal procedure to be followed?
It depends if the other associates agree or do not agree with the withdrawal.
If there is an agreement of the other associates, the constitutive document will be modified, respecting the substantial and the formal conditions for its being signed. This means that the associates will conclude an additional act that will register the withdrawal, as well as the other modifications of the constitutive documents that the withdrawal presupposes: registered capital, the way it will be distributed, the sharing of the benefits and losses among the remaining associates, etc. The additional act that modifies the constitutive document is authenticated with a public notary and filed at the Register of Commerce in order for it to be registered. After that it will automatically be sent to the Official Monitor in order to be published at the expenses of the company.
If there isn't a unanimous agreement the associate may withdraw for well-grounded reasons upon the decision of a Court.
Dan Livescu

10. One of the shareholders is deceased. The shares are nominal. What can be done in order to transfer the shares to the successors of the late associate?
First of all, the quality of successor must be proven.
Thus, following the decease, succession will be open. The successors will receive an abstract share of the inheritance. After the distribution among the successors, proportionally to the percentage each one has, each successor becomes exclusive owner of some goods. In this sense a successor's certificate is issued.
According to the Law 31/1990, joint stock companies must keep, with the help of the Council of Administration, a register of the shareholders that specifies the surname, the first name and the address of the shareholders.
If, on the basis of the successor's certificate you become a shareholder, solicit the company your registering in the register of the shareholders.
Dan Livescu NEXT >>