by Vlad Cuc
The joint stock company in Romania represents a legal structure that has the highest level of complexity. This is given by the fact that it was designed for large businesses – such as international companies; this business form is generally used when developing an investment project of high importance in Romania or elsewhere; our Romanian lawyers can represent foreign investors in setting up the joint stock company in Romania.
The owners of a Romanian joint stock company are known as stockholders. They can be natural persons or legal entities. The number of stockholders cannot be less than two. If the company has less than two stockholders during a period longer than nine months, any interested person may request to the court the dissolution of the company. In this case, the company will not be dissolved if the number of stockholders provided by the law is met before the final decision of the judge regarding the dissolution of the company.
In the case of a joint stock company in Romania, the minimum registered capital has to be of at least RON 90.000. The Government will modify at least once in two years the minimal value of the registered capital to correctly adjust to the RON equivalent of EUR 25.000.
The stockholder’s contributions may be done in cash or in receivables. Working performances cannot be contributed to the increase of the registered capital. The in-kind contributions must be evaluated economically. In this respect, the appointed-judge will appoint, in five days from the request registration, one or more experts from the list of the authorized experts who will draw a report containing the description and the evaluation modality of each in-kind good and will evince that its value correlates with the granted shares value in exchange, if possible, and our team of lawyers in Romania can provide more information on the rights and obligations of those owning shares in a Romanian joint stock company.
The stocks are fractions of the registered capital which have a certain nominal value. The law stipulates that the nominal value of a social share cannot be less than RON 0,1. Depending on the manner of transmission, the stocks can be nominative or to the barer. The nature of the stocks is determined by the articles of incorporation. Barer stocks can be transformed in nominative stocks and vice versa by decision of the General Assembly.
The stocks have an equal nominal value granting equal rights to their holders. Even so, in accordance with the articles of incorporation and the provisions of the law, preference stocks can be issued, but these types of stocks don’t give the right to vote in the General Assembly to their owners; our law firm in Romania can offer more details concerning this subject.
These types of stocks give their owners right to a priority dividend distribution taken over the financial year, before any deductions, and they will not exceed one quarter of the share capital and they will have the same value as ordinary stocks. Administrators, directors, and auditors of the company cannot be holders of preferred dividend stocks.
The stocks are indivisibles. When a nominative social share becomes the property of more than one person, the latter will have to appoint a sole representative for exercising the rights deriving from the social share. The stocks are negotiable titles, they incorporate a certain patrimonial value and this is the reason why they are considered securities or bonds. Stocks can be traded on the regulated market.
The shareholders in a joint-stock company in Romania have the following rights: to participate to the general meeting of the shareholders, to vote (the exercise of the voting right is suspended for the shareholders who are not informed about due levies), to be informed on the activity of the company, to benefit from dividends and the right over the proper part from the company’s dissolution.
As far as the obligations of the Romanian joint stock shareholders are concerned, the most important is the due levies operation. If the stockholders have not paid the levies due in the terms disposed by the law, they will be invited to fulfill this obligation by a collective demand of payment, published twice in an interval of 15 days in the Romanian Official Gazette - the fourth part and in a large circulation newspaper; our Romanian lawyers may assist investors with additional advice on how to publish corporate information in the Romanian Official Gazette.
The General Assembly of Stockholders is the most important decision and deliberation body of the joint-stock company, deciding over all the matters regarding the company in accordance with de provisions of the law. The general meetings of a Romanian joint stock company can be organized as the following: ordinary, extraordinary or they may take the form of special meetings.
The Ordinary Feneral Assembly rallies at least once a year, in no more than five months from the conclusion of the financial exercise and is obliged to discuss and approve or amend the annual financial statements on the basis of reports from the Board Administrators, to elect and dismiss the members of the Board of Administrators and the auditors of the company.
In order to validate the proceedings of the Ordinary General Assembly of stockholders, the present stockholders need to hold at least a quarter of the total voting rights. The decisions that can be taken by the Ordinary General Assembly may be enforced only if there is a majority vote on the respective matters.
The articles of incorporation may provide higher requirements for quorum and majority. If the Ordinary General Assembly cannot work because the conditions of quorum aren’t met, then a second meeting may be convened and, in that second meeting, the items on the agenda can be deliberated on regardless of the quorum; in this case, the decisions will be taken with the majority vote.
The General Extraordinary Assembly takes place every time a decision needs to be taken in regards to the legal change of the company's status or the change of the company's social headquarters; the extraordinary assembly also decides on the aspects such as modifying the company’s business activities, the establishment of a secondary registered address or on its dissolution, the prolongation of the society duration, the increase of the registered capital, its decrease or its replenishment by issuance of new social shares as well as for any modification of the articles of association etc.
In order to validate the Extraordinary General Assembly’s deliberations on first convocation presence of shareholders holding at least one-fourth of the total number of voting rights and the following covenanting the stockholders representing at least one fifth of the total voting rights need to be present.
The Special Assembly rallies at the request of the stockholders holding of certain class of stocks such as the preferred shares with no voting rights. According to the law, the decision of the General Assembly to modify the rights and obligations regarding a certain class stocks will not take effect until this decision is approved by the Special Assembly.
The decisions of the general meetings are taken by open vote. The decisions of the general meeting are obligatory for all the shareholders, even for the shareholders who have not taken part to the meeting or voted against. Still, the decisions will be opposable to the third parties only after their publication in the conditions mentioned by the Romanian Law.
Starting with the year 2006, a new concept regarding the management and administration of the Romanian joint stock company was implemented by the changes brought to the Romanian commercial law. The principles of corporate governance were materialized in the new form of the law in order to ensure the harmonization of the Romanian regulations with the EU regulations.
The principles of corporate governance refer mainly to the rights of the stockholders, the equitable treatment of the stockholders, the role of each interested party in the activity of the company information and transparency in the company and also the liability of the administrators of the company.
According to the Romanian law, the administration and management of the company is realized by the board of administrators and the directors of the company this is called the unitary system of administration or by a Directorship and a Supervision Board, this being the dual system of administration and management. The system of administration and management of the company is established by the articles of incorporation.
In this case, the administration of the company is realized at a single level trough the Board of Administrators. The Board of Administrators can delegate the leadership attributions to the directors of the company. The joint stock company can be administrated by one or more administrators, but their number needs to always be an odd number. If there are more administrators, they will form a Board of Administrators.
The number of administrators of the company is determined by the articles of incorporation. If the company is subject to an annual audit on its financial situation, the company needs to have at least three administrators. The administrators cannot be employees of the company. The Board of Administrators is headed by a president who is elected by the board from its members. The main attributions of the Board of Administration are the following:
In this system, the separation of the control powers and executive powers is complete. The Directorship ensures the administration and leadership of the company’s activity and the Supervision Board controls and supervises the directorship’s activity. The members of the directorship cannot be members of the Board of Supervisors and they cannot be employees of the company.
The members of the Directorship are named by the Board of Supervisors. Once every three months, the Directorship has to present a written report to the Board of Supervisors regarding its activity. The attributions of the Board of Supervisors are presented below: