by Vlad Cuc
There can be many reasons why a shareholder would want or need to sell his/her shares in a Romanian company and even more reasons why someone would prefer the acquisition of shares rather than incorporating a new company in Romania. Our team of Romanian lawyers can offer legal assistance on the procedure that must be followed in both cases.
One must consider that this procedure is now more complicated in Romania and it involves interaction with the local tax authorities, which will verify that all accounts are updated and the person who sells the shares does not have debts towards the Romanian state. Our lawyers can also present additional information on the requirements imposed by the local tax institutions, such as registering for corporate tax, social security or VAT in Romania.
A sale of shares can in some instances take up to three months (the reasons for this lengthy timeframe is owed to the reporting requirements towards the local tax authorities). It's very important to note that, if the assignor or assignee of shares is another Romanian or foreign legal entity then, besides the Share Transfer Agreement, a special Resolution or Resolutions will be needed in a special format (drafted exactly per the wording of the Share Transfer Agreement). If any differences between these two documents will appear, one might encounter problems with the Romanian Trade Register.
The transfer of shares is a legal operation consisting in the transmission of a contract for the transfer of shares to one or more third parties (shareholders or persons who are not part of the company), who acquire such shares. It is very important to note that if the assignee is already a shareholder within the company, then the entire procedure is much simpler and shorter than in the case in which the buyer is not a shareholder.
The transmitter is called the assignor and the party receiving the shares is called the assignee. In order to purchase shares in a Romanian company, the parties have to sign a shares assignment contract; the contract is signed by the current owner of the shares and the future shareholder, who will have ownership rights on the respective shares, once the transaction is completed.
The shares assignment can be performed at the shares' nominal value, mentioned in the company’s articles of incorporation, or at a higher value than the nominal one. In this case, the new shareholder has the obligation to discharge to the state the tax in amount of 16%, percentage which applies to the difference between the nominal value and the purchase value.
For the shares assignment to be demurral to third parties unknown to the contract, it has to be registered with the Trade Register Office, and consequently published in the Official Gazette. The shares assignment agreement shall contain a clause inserted by which the value of the assignment will be established (they will mention respectively if the assignment remains to the shares nominal value or to another value convened by the parties).
The dividends which are incumbent after the share transmission data belongs to the transferee, excepting the case where the parties have otherwise agreed. Although the law refers to Romanian joint stock companies, this also applies Romanian limited liability companies. As a result, the shares assignment agreement can contain a clause for the right of the transferee to obtain the dividends for the period prior to the assignment.
If the parties have not regulated the legal situation of the dividends, the practice inclines to assign them to the assignor for the period of time prior to conclusion of assignment. This way, the right to dividends, being a fundamental social right of each shareholder, cannot be alienated only through the party’s convention.
In addition, the dispositions of Article 1 of the Civil Code, stating that the civil law is not retroactive, is taken into consideration. The company is forced to pay to its shareholders the convened dividends. If this payment obligation is not respected, the company indebts interests to the associates, on the grounds of the Article 43 of the Commercial Code.
Our team of Romanian lawyers can provide information on the procedure through which the share assignment procedure is concluded here. Foreign investors can receive more information on the legislation regulating the transfer of shares in Romania. When referring to the share assignment procedure, investors should know that the following steps will apply:
WORDING OF A TRANSFER OF SHARES AGREEMENT IN ROMANIA (this is solely for information purposes only; please contact our law firm in Romania if you require assistance):
I , Person A. ........... , assigning a number of ........... shares at their nominal value of .........................., to person B. .......... will withdraw myself as shareholder (asociat) in ................. SRL , renouncing through by this document any rights and obligations in the company mentioned above.
I , person B , received from the X. ...... a total of ........................shares of ......... lei each , the total value of ...................... ie 60 % of the share capital.
Completed and signed by the parties in .......copies, five copies were released today to each party, the date of authentication in Notary Public.
Please contact our Romanian law firm for more information on the sale of shares; our team of Romanian lawyers can provide an in-depth presentation on the rights and obligations that will apply for the new owner of the shares of a company in Romania.