Four months since the enactment of the new Law on the Trade Registry

Law no. 265/2022 on the trade registry and for the amendment and supplementation of other normative acts incident on the registration with the trade registry (“Law no. 265/2022”) entered into force on November 26, 2022. Such law was enacted justified by the necessity to simply the regulations applicable with respect to the commencement and carrying out a business in Romania, to regulate appropriate procedures considering the current economic-social environment, to modernize and digitalize the services offered by the Trade Registry, as well as for transposing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law.

Article by Adina Popescu (Senior Associate), Sandra Frunzulica (Managing Associate), Dragos Iamandoiu (Senior Managing Associate) at KPMG Legal

Considering the purpose of Law no. 265/2022 was to completely replace the former Law no. 26/1990 on the trade registry, as well as the incidence thereof on the Law no. 31/1990 on companies (the “Companies Law”), upon almost four months as of the enactment and application thereof, we further present the main practical aspects that professionals should take into consideration when intending to incorporate a company.

1. Articles of association

The Companies Law regulates new mandatory provisions to be provided within the articles of association:

(i) a clause stating that, by signing the articles of association, the founders assume the liability for observing the capacity and compatibility conditions to incorporate a company – in this respect, the provision according to which a sworn statement of the founders declaring that they fulfil the conditions provided by the Companies Law had to be attached to the incorporation file of the company was repealed.

However, the practicably of this provision may be questionable especially when the articles of association are not signed by the shareholder or by the legal representative thereof, but by the proxy. In such cases, in order to avoid further observations of the Trade Registry clerks, we argue in favour of signing and submitting by the shareholder of a sworn statement regarding the fulfilment of the capacity and compatibility conditions to incorporate a company.

Furthermore, the Government Ordinance no. 39/2015 regarding the fiscal record provides under art. 8 para. (4) that, as regards the natural and legal persons who are not fiscally registered in Romania and who intend to incorporate a company or to acquire the capacity of shareholder within a company further to an assignment of shares or to a share capital increase, the obligation to present the fiscal record is fulfilled by submitting an authenticated sworn statement, stating that such persons did not commit any deeds and that they do not find themselves in any situations that are subject to registration/ listing in the fiscal record, as well as that they are not fiscally registered in Romania.

Thus, signing and submitting a sworn statement is especially mandatory in the case of natural or legal persons who are not fiscally registered in Romania; in such cases, within the above-mentioned statement a provision regarding the fulfilment of the capacity and compatibility conditions for incorporating a company may be also provided.

In addition to this, as regards this specific situation, some local Trade Registry offices require the above-mentioned statement to be submitted in authenticated form, based on the above-mentioned provision of the Government Ordinance no. 39/2015.

However, the practice as regards the required form of this statement is still not unified. Thus, other local Trade Registry offices, although still require the submission of such statements, they accept them executed under private signature.

(ii) identification data of the ultimate beneficial owners and the way they exercise the control over the company;

This amendment comes in conjunction with Law no. 129/2019 on prevention and combating money laundering and financing of terrorism, as well as for the amendment and supplementation of other normative acts (“Law no. 129/2019”) which already provided that the obligation of legal entities subject to registration within the Trade Registry to submit upon incorporation a statement regarding the ultimate beneficial owner thereof is also observed by way of including within the provisions of the articles of association the identification data of the ultimate beneficial owners and the ways they exercise the control over the respective legal entity.

From a practical perspective, we note that in the course of the proceedings for opening the share capital account, in most cases, the banking institutions require a separate (in a different form) ultimate beneficial owner statement from the legal representatives of the company.

(iii) as regards the limited liability companies, the fact that general meeting of the shareholders resolutions are to be passed with unanimous vote of all shareholders in case an absolute majority cannot be established due to parity of the participation quotas to the share capital;

(iv) duration of the mandate of the directors within limited liability companies (Note: A specific duration must be provided considering that the directors of limited liability companies can no longer be appointed for an unlimited or undetermined period of time, as per the previous practice);

(v) as regards limited liability companies, the methods of ensuring the settlement of the debt or its regularization in agreement with the creditors, in the case of dissolution without liquidation of the company, when the shareholders agree on the dissolution and liquidation of the company’s assets.

In this respect, we mention as examples some such methods: payment of debts; the fulfilment of obligations and the reimbursement of the company’s loans; the payment of the company’s goods; offsetting mutual claims; as well as any other means permitted by applicable laws.

2. Share capital of a limited liability company

Further to the amendment brought in 2020 to the Companies Law regarding the elimination of the requirement of minimum amount of the share capital and of a share, the updated Companies Law now provides that the shareholders of limited liability companies must pay 30% of the subscribed amount of the share capital no later than within 3 (three) months as of its incorporation, but in any case before commencement of operations in the name of the company; the rest of the subscribed share capital must be paid as follows:

a) in case of cash contribution, within 12 (twelve) months as of the incorporation date;
b) in case of contribution in kind, within maximum 2 (two) years as of the incorporation date.

According to the instruction as of November 5, 2020 published on the National Trade Registry Office’s website, we highlight that the amount of the share capital of limited liability companies cannot be less than 1 RON however, considering the provisions of art. 11 para. (1) of the Companies Law according to which the share capital shall be divided in equal shares.

3. Documents which are no longer necessary to be submitted with the incorporation in the Trade Registry application

The Companies Law no longer provides the requirement for the following documents to be executed and attached to the incorporation file of a limited liability company:

• proof of corporate name reservation;
• documents regarding the ownership, in case of assets which are contributed in kind to the company’s share capital upon its incorporation; in case real estate would be contributed in kind, the ascertaining certificate regarding the encumbrances over such real estate is no longer necessary;
• ascertaining documents of the operations concluded on the company’s account and approved by the shareholders;
• ultimate beneficial owner statement;
• sworn statement of the founders and of the first directors stating that they fulfil the conditions provided by the Companies Law to hold such capacity;
• specimen signatures of the company’s representatives.

However, as regards the sworn statement of the first directors stating that they fulfil the conditions provided by the Companies Law to hold such capacity, the Companies Law now expressly provides that, in case of limited liability companies as well, in order for the appointment of a director to be valid from a legal point of view, the person appointed in this capacity must expressly accept it and also that by accepting the mandate, the directors also assume the responsibility for fulfilling the conditions provided by the Companies Law to hold such capacity.

Thus, considering that the articles of association are not usually signed by the director(s) as well, in order to avoid further observations of the Trade Registry clerks, we argue in favour of signing and submitting a sworn statement of the director both in respect of expressly accepting the mandate and confirming the fulfilment of the conditions provided by the law to hold such capacity.

4. Formalities before the Trade Registry related to the registration of the incorporation file

Law no. 265/2022 now expressly provides that the sworn statements (such as the directors’ statements for accepting the mandate, the sworn statement regarding the fulfilment of the operating conditions/ performance of activity) which are attached, as per the law, to the incorporation file, may be signed under private signature.

Thus, the former provisions, stating the obligation to submit the sworn statements regarding the fulfilment of the conditions to hold the shareholder and director capacities (as well as the specimen signature of the director) in authenticated form (given before a notary public) was replaced. The temporary regulation – introduced within the provisions on the Trade Registry registrations in 2020 when the urgency state was declared – providing that sworn statements may be submitted with the Trade Registry under private signature was therefore made permanent.

However, an amendment was brought to the sworn statement regarding the fulfilment of the operating conditions/ performance of activity; now such statement must contain all activities (as per the classification within the national economy – NACE) that the company carries out according to the articles of association. Thus, the articles of association should only contain the activities that the company actually carries out which must also be declared within the sworn statement regarding the fulfilment of the operating conditions/ performance of activity.

5. Incorporation procedure within the online platform

Incorporation of companies exclusively through the online platform of the Trade Registry based on standard forms is a novelty. The Trade Registry makes available templates of articles of association which provide standard clauses, with predefined options, as well as templates of other necessary documents for the incorporation of a company, which the applicants may fill in instantly within the platform.

Of course, as regards the articles of associations, the template is a simple document, useful especially in less complex companies. However, there is still the standard option to upload within the platform the articles of association signed in wet ink by the shareholders.

In order to be able to benefit from this mechanism, the applicant must hold an account within the online platform of the Trade Registry (www.portal.onrc.ro) and a qualified electronic signature, as provided by the applicable laws, for being able to sign all the filled in documents and to upload them within this platform.

6. Issuance of the registration certificate in electronic format

As per the new amendments brought by the Law no. 265/2022, upon the incorporation/ registration, the registration certificate, containing the Trade Registry registration number, the sole registration code and the European Unique Identifier (EUID), together with the decision issued by the trade registry clerk, the ascertaining certificates issued following the registration of the information contained within the standard statement regarding the fulfilment of the operating conditions/ performance of activity, as well as, as the case may be, other documents provided by the Law no. 265/2022, may be issued in electronic format and signed with qualified electronic signature, upon the applicant’s request.

Upon request, the applicant may also obtain a copy or a certified copy of the document issued on paper-based format and kept within the company’s file.

7. Conclusions

Considering the current dynamics of the business environment in Romania, the legislator’s intention to reduce the formalities and bureaucracies before the Trade Registry upon incorporation of companies is welcomed.

On the other hand, we remain optimistic that the legislator will also regulate similar less formalistic procedures as regards banking institutions as well, considering the necessity to significantly reduce the formalities and bureaucracies related to incorporation of companies; this is especially necessary so as the procedures for opening share capital or bank accounts to be simplified as well, most importantly in case of companies having foreign shareholders, especially from non-European Union countries.

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