After a first set of amendments to the Companies Law no. 31/1990 adopted in July 2020, a second set of amendments were adopted in November 2020, streamlining the process for transfer of shares and making the process of incorporation of limited liability companies less formalistic.
A first set of amendments was adopted in July 2020, when two main restrictions in case of limited liability companies (LLCs) were repealed[1]. First, the restriction that an individual or a legal entity can only be sole shareholder in one LLC was eliminated, so that currently such individual or entity can hold this position in more than one LLC. Also, the restriction that an LLC cannot be incorporated by another LLC held by a sole shareholder was eliminated, so that now an LLC can be incorporated by another sole shareholder held LLC. Second, several companies can establish their headquarters at the same premises, whereas before the amendment this was possible only with the observance of various formalities. Also, various approvals for registering the headquarters in a residential building are no longer required, provided the director(s) declare that no activity is carried at the premises. The relevant formalities were simplified.
In a second amendment of November 2020[2], few other significant changes were implemented. The most important is meant to streamline the transfer of shares in LLCs.
First, in case of transfer of shares to third parties, the transaction will become effective without the need to wait for a 30-day term for an opposition to be filed, or for such opposition to be finally solved by courts. Before the amendment, transfer of shares in LLCs were facing significant delays as creditors (mainly fiscal bodies, but other creditors as well) could file oppositions and ask for the suspension of the transfer until the final solving of the opposition. Also, the shareholders may derogate in the articles of association from the rule in the Companies law that transfer of shares held in LLCs to third parties has to be approved by the shareholders holding ¾ of the share capital.
Second, certain formalities for incorporation of LLCs were simplified: (i) in case of a transfer of shares, the requirement to file with the Trade Registry the share transfer document and the updated articles of incorporation was eliminated, (ii) the requirement for LLCs to have a minimum share capital of Lei 200 was eliminated, (iii) the requirement for LLCs to submit at the incorporation proof of payment of the share capital was eliminated, (iv) the documents attesting the right to use the premises designated as headquarters no longer need to be submitted to the fiscal authorities prior to submitting the incorporation file with the Trade Registry (in turn, the Trade Registry will send these documents to the fiscal authorities).
All the above changes are meant to simplify the incorporation process for an LLC but most importantly to ensure predictability and efficiency of M&A deals with LLCs as targets.
[1] Law no. 102/2020 on the amendment and supplementation of the Companies Law no. 31/1990, published in the Official Gazette no. 583 of 2 July 2020, that entered into force on 5 July 2020.
[2] Law no. 223/2020 for the simplification and de-bureaucratisation of transfer of shares and of the payment of the share capital by amending the Companies Law no. 31/1990, published in the Official Gazette no. 1018 of 2 November 2020, that entered into force on 5 November 2020.
