Madalina Neagu is a partner at Schoenherr Romania, specializing in corporate/M&A. She has extensive transactional experience, having assisted on a significant number of high-profile local and cross-border M&A deals, with many of them involving leading market players. Madalina has provided expert advice on the buy as well as sell side in all phases of complex share deals, asset deals, transfers of business, corporate restructurings, joint ventures and privatizations, also covering acquisition finance. Her clients portfolio includes major Romanian and multinational companies active in various industries, including banking and finance, private equity, manufacturing, retail, real estate, constructions, telecommunications and media, food, energy, hotels and leisure etc.
The stock market's flexibility is its greatest selling point for publicly traded companies, as it allows a fast flow of capital while still enabling majority shareholders to implement fundamental corporate changes should they wish to exit the market. However, even with all of this flexibility, shares may not always be free of other encumbrances, and the sale of such shares may be opposed by interested parties or even refused to be recognised as a genuine sale by the Trade Registry.
Although the Companies Law created flexible mechanisms and procedures allowing specific shareholder powers to be delegated to a company's management, it also provides that only some decisions made in this regard can be subject to an annulment action. Specifically, the law excludes decisions which concern an increase in a company's share capital from being challenged. However, the Constitutional Court recently recognised shareholders' right to request the annulment of such decisions in court.
The squeeze-out of minority shareholders in closely held companies is a controversial issue made more complex by the large number of Romanian companies with minority shareholders. Historically, state-owned companies were privatised through the management-employee buy-out method, which allowed employees to receive shares in former state-owned companies. As such stakes were often granular, many minority shareholders are dormant or even unaware of their participation in these companies.
In Romania, joint stock and limited liability companies continue to be the most common type of corporation. Limited liability companies are an important backbone of the local economy, with many becoming large enough to qualify as targets in M&A transactions. However, debate exists as to whether classical exit-related provisions (eg, put or call options or drag-along or tag-along clauses) may be implemented in M&A transactions involving shares in limited liability companies.
The government recently approved a draft legislation transposing the Fourth Anti-money Laundering Directive and introducing, among other things, important changes for private companies with regard to their reporting duties and transparency of ownership. Some of the new requirements for non-listed companies are of particular importance, as they will be key for combating money laundering and terrorism financing. The bill will also introduce stricter reporting duties and penalties for non-compliance.