Law 223/2020 recently introduced a series of important changes to the Companies Law. It appears that the goal of these provisions is to further simplify the legal requirements for setting up and operating limited liability companies so that they become more attractive to investors seeking to carry out business in Romania.
At the beginning of 2020, legislative initiatives were launched to debureaucratise the functioning of companies established in Romania. In furtherance of these initiatives, in July 2020 20 members of Parliament submitted to the Senate a draft law proposing new amendments to the Companies Law. The draft law proposes numerous amendments – some which are welcome and some which raise questions as to their benefits. This article highlights the main proposed legislative changes and their anticipated effects.
A series of minor yet impactful amendments will shortly be introduced to the Companies Law, making it easier for investors and entrepreneurs to set up a new company. Parliament adopted the amendments in order to reduce the red tape surrounding company incorporation and encourage investment in the Romanian economy.
Until recently, Romanian companies could distribute dividends to shareholders only on an annual basis and on approval of their annual financial statements at the end of each financial year. This paradigm has changed and companies can now opt to distribute their dividends annually or quarterly. Although these newly acquired corporate rights have been widely welcomed within the Romanian business markets, they may initially be treated with suspicion by entrepreneurs.
The corporate functioning rules for joint stock companies have been repeatedly altered by Romanian legislation, especially in relation to the governing structures of companies, such as shareholders' assemblies and management bodies. However, some situations create problems in practice or generate inconsistencies within jurisprudence. One such example is the use of secret voting in general shareholders' meetings.