On 5 November 2020, Law 223/2020 on simplification and debureaucratisation of formalities in the case of transfer of shares and of the payment of the share capital by amending Company Law 31/1190 (”Law 223/2020”) has entered into force. 

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Legislative changes regarding transfer of shares to third parties

On 5 November 2020, Law 223/2020 on simplification and debureaucratisation of formalities in the case of transfer of shares and of the payment of the share capital by amending Company Law 31/1190 (”Law 223/2020”) has entered into force.

The main amendment brought by Law 223/2020, as it can be seen from its title, is the simplification of the procedure regarding transfer of shares to third parties at the level of limited liability companies by eliminating the possibility of introducing oppositions to such transfer.

Until the entrance into force of Law 223/2020, the formalities in front of the Trade Registry regarding the transfer of shares to third parties involved a two-stage procedure, During the first stage, a resolution of the governing body of the limited liability company regarding the approval in principle of the transfer was submitted to the Trade Registry, resolution which was published in the Official Gazette of Romanian, part IV. Following such publication, any interested third party had a 30-days term at its disposal to introduce oppositions to the transfer, opposition which was solved by the courts. Normally, if no oppositions were made, a second stage followed in front of the Trade Registry, during which, a resolution of the governing body of the limited liability company regarding the approval of the share transfer and the share transfer agreement were submitted, the transfer being thus approved and effective between the parties as of their date and, subsequently, opposable to third parties after the publication of the latter resolution in the Official Gazette of Romania. Nevertheless, if a third party would have made an opposition, the procedure could have been prolonged for month until definitive solved by the courts. Also, most of the time, ANAF intervened and made oppositions even if the company in question had debts in reduced amounts and ANAF having other legal means of capitalising on such debts. Moreover, most of the times, ANAF did not bring proofs in front of the courts to sustain its claims and the opposition made had just the effect of postponing the share transfer for an unjustified period of time.

Following Law 223/2020, the share transfer procedure at the level of limited liability companies became a single stage procedure in front of the Trade Registry and implies the submission of, among others, the resolution of the governing body of the limited liability company regarding the approval of the share transfer and the share transfer agreement. Also, Law 223/2020 provides that the shareholders of limited liability companies may establish in the constitutive deed of the company a lower majority for the approval of the transfer of shares to third parties or may eliminate the requirement of a majority altogether, which was not possible until now, the transfer being approved only with a majority of  ¾ of the share capital of the company.

The purpose of this amendment was to favour and encourage the national and cross-border transactions and to create a more predictable business environment for foreign investors accustomed to more direct and short-term procedures regarding share transfers.

Another important amendment brought by Law 223/2020 is the elimination of the requirement of a minimum share capital of RON 200 at the establishment of a limited liability company. This amendment was made in view of aligning the Romanian legislation with the legislation of other European countries that did not have this requirement and has as purpose the stimulation of the establishment of new companies.

The amendments made by Law 223/2020 represent another step in aligning the Romanian legislation on companies to the European standard, at the same time having as scope the fluidisation of commercial transactions and the attraction of national and foreign investments.