What is the main source of law authorising this entity form?

Companies Law No. 31/1990.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

An SA has legal personality.

(Maximum) period of existence

There is no maximum period of existence for an SA.

Governing document(s)

A SA is governed by its Articles of Association.

Liability of incorporators / shareholders

A shareholder's liability is limited to the subscribed capital contribution. However, shareholders abusing the limitation of their liability and the distinct personality of the company, thus deceiving the company's creditors, will be in theory held liable without limitation for the company's outstanding debts. The law deems abusive the use by a shareholder of the company's assets as if they were his own or diminishing the company's assets for his own or third parties' benefit, while aware that in doing so the company is hindered in performing its obligations.

(Governing) bodies

The main management body of an SA is the GMS.

Other particularities

The Companies Law provides for two (2) types of management systems available for SA's: (i) the one-tier management system, where the management is entrusted to a Board of Directors (BoD) (consiliu de administraţie) which can, or in certain cases is obliged to, delegate management powers to several managers (directori), and (ii) the two-tier management system, where the effective administration of the company is ensured by an executive committee (directorat) under the control of a supervisory council (consiliu de supraveghere). In practice, the majority of the Romanian SA's adopt the one-tier management system.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

International restructurings and assets/equity acquisitions are possible, subject to the conditions imposed by EU and national regulations.

Cross-border mergers are addressed in an extensive manner in the Companies Law.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes, a SA may be listed or publicly held.

Can this type of entity be used for a non-profit or charitable organization?

No, pursuant to Article 1(1) of Companies Law, the individuals and legal entities may associate and set up companies with legal personality only for the purpose of carrying out profit-generating businesses.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Romanian companies are incorporated by registration with the Trade Registry.

Involvement of notary, company register, governmental authorities

First, one must obtain/draft the documents required for the registration procedures (e.g. certificate issued by the Trade Registry Office proving the availability and reservation of the company name, Articles of Association, documents attesting to the payment of the subscribed share capital, etc).

Timing (estimate)

The incorporation certificate will be issued within three (3) days after the documentation for registration is submitted with the Trade Registry Office.

Main costs, including registration and similar fees (excluding legal fees)

The registration costs are about EUR 400.

After the registration formalities with the Trade Registry are completed, the company must also be registered for VAT purposes with the competent fiscal authority, if applicable, and with the labour authorities before starting to employ personnel.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The company can operate almost any kind of business activities, it being noted that certain businesses can be carried out only by SAs (e.g. banking and insurance). The Articles of Association of an SA must include the company's scope of business, mentioning the area and main line of business.

Minimum number of incorporators / shareholders and residency requirements

An SA must have at least two (2) shareholders.

The owners of Romanian companies may be Romanian or foreign legal or natural persons, in any proportion, no residency restrictions/prohibitions being applicable thereto.

Minimum number of directors (or other applicable officers) and residency requirements

One-tier administration system:

The management is undertaken by one (1) director or by several directors (always in odd number), organised as a BoD and, if the case, by one (1) or several managers (the Managers), led by a General Manager. In case of companies having the legal obligation to have their financial statements audited, the BoD must be composed of at least three (3) directors and must delegate the management to the Managers, save for certain reserved powers.

Two-tier administration system:

• The managing board (the Directorate) consists of one (1) or several members, always an odd number. When there is only one (1) member, his title is "sole general manager".
• In the case of joint-stock companies whose annual financial statements are subject to legal auditing, the managing board must consist of at least three (3) members.
• The managing board works under the supervision of a supervisory council.

There are no residency restrictions or prohibitions applicable.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The SA must have a share capital of at least RON 90,000 (i.e. approximately EUR 18,000).

The company's share capital may be formed by contributions in kind, in cash and/or in receivables. Cash contributions must always be paid upon establishment.

In the event that the joint-stock company is incorporated by way of an entire and simultaneous subscription of the share capital by all the shareholders signatory to the constitutive deed, at least 30% of the subscribed capital must be paid upon incorporation, while the remaining 70% must be paid within 12 months (for cash contributions) or within two (2) years from the registration of the company (for in-kind contributions). When an SA is established by public subscription, the entire share capital must be subscribed for and each shareholder must pay in cash at least half of the subscribed shares at the financial institution named CEC SA or another bank, while the rest of the share capital must be paid within 12 months as of the company’s incorporation. In - kind contributions must be entirely paid upon incorporation.

The cash amount must be deposited in a share capital account.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

The tax identification number is issued by fiscal authorities upon registration of the company.

What is the title of the applicable company registry?

National Trade Registry Office (Oficiul Național al Registrului Comerțului). The National Trade Registry Office is a public institution subordinated to the Ministry of Justice.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

A wide range of information must be filed with the Trade Registry and, as per the legal provisions, including but not limited to:

• the constitutive act,
• the emblem, form of organization of the company and duration of the company;
• the identification data of (1) the founding partners/shareholders and (2), if applicable, the other partners/shareholders and (3) the representatives of the founders/partners/shareholders of legal entities;
• the subscribed and paid-up capital, the amount of the authorized capital indicating the structure of the contribution, the number of shares and their nominal value and the participation of each partner/shareholder in benefits and losses, the beneficial owner;
• the object of activity;
• the management and administration bodies, their members and their identification data, the powers conferred and the manner of their exercise (together and/or separately) and the term of their mandate;
• the administration system opted for, when applicable, as well as a specimen signature;
• the identification data of the Company’s representatives;
• the control bodies, respectively censors/auditors, their members and their identification data, and if the censor/auditor is a legal person, the identification data of its representative;
• the name and headquarters of the authorized independent registry company that keeps the shareholders' register, as well as the changes made in the case of joint-stock companies, as the case may be;
• the state of the legal entity regarding:
• operation, reorganization, dissolution, liquidation, insolvency procedure and the subsequent measures ordered within it or the temporary suspension of the activity, as well as the issuer, number and date of the act by which it was ascertained/ordered; and
• reorganization of the legal entity through merger and division; transformation of the legal person;
• as appropriate, the annual and consolidated financial statements;
• the conviction of the associate, administrator, censor or auditor for criminal acts that make him unworthy or incompatible to exercise this activity;
• if a criminal action is made against the company, documents of the action and any judgement , as well as the acts and measures ordered according to the Code of Criminal Procedure; marital status, legal capacity, matrimonial regime and other elements regarding personal status; other mentions provided by law;
• the donation, sale, lease, movable mortgage on the goodwill, as well as any other act by which changes are made to the records in the trade register regarding the goodwill;
• opening and closing a preventive composition procedure, confirmation of a preventive restructuring agreement, according to the insolvency law;
• the opening of insolvency proceedings, including cross-border, judicial reorganization, bankruptcy, based on court decisions or notifications made according to as well as other mentions regarding the conduct of the insolvency procedure, according to the law;
• the prohibition, established as a complementary punishment, by final court decision, to carry out the activity used to commit the crime, to exercise the profession or trade, in the case of persons who have the capacity of founder, partner/shareholder, director, member of the board of directors, manager, member of the directorate, censor, auditor, in the cases provided by law;
• final conviction of the legal person, other measures ordered according to the Criminal Code and the Criminal Procedure Code;
• the establishment of security seizure, seizure, other security measures;
• renouncing the mandate of administrators, authorized persons, censors, as the case may be;
• any other changes regarding the acts, facts and data previously registered in the trade register.

The Trade Registry provides, upon request, certificates of status that show the following information –

• company name (firm);
• company logo;
• registration number in the trade register;
• unique registration code;
• company's status (e.g. insolvency status);
• legal form;
• registered/professional office;
• term of existence;
• object of activity – area and main line of business;
• share capital (subscribed and paid), number and amount of respective parts of share capital;
• for private limited companies, limited or general partnerships: the partners, identification data, amount or portion of share capital given to each partner for his/her contribution, and participation in share capital and in profit and losses;
• auditors/financial auditors;
• secondary offices (puncte de lucru), branches (sucursale) or subsidiaries (filiale) (if the case);
• authorised activities and offices;
• information from annual financial statements; and
• other information regarding protective measures and criminal convictions.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

As stated above, the administration system of an SA may be either a one-tier system or a two-tier system.

One-tier administration system:

• The management is undertaken by one (1) director or by several directors, organised as a BoD and, if the case, by one (1) or several managers, led by a General Manager.
• The BoD represents the company in relation to third parties and before the courts of law.
• When management powers have been delegated to the Managers, the representation powers are held by the latter. The Managers oversee the day-to-day management of the company.

Two-tier administration system:

• The Directorate manages the company, except for the matters incumbent upon the GMS or the Supervisory Board, having representation powers in relation to third parties and before the courts of law.
• The Supervisory Board has the supervising duties in the company, such as permanent control rendered over the management performed by the Directorate.

The directors' duties and liability are regulated by the Companies Law and established on a case-by-case basis in the appointment documents. As a rule, directors are jointly liable to the company for the following: (i) substantiality of payments made by the shareholders in connection with share capital subscriptions; (ii) substantiality of paid dividends; (iii) existence and correct maintenance of the company ledgers required by law; (iv) appropriate enforcement of the resolutions of the general meetings; and (v) strict fulfilment of the duties imposed by the law and the Articles of Association.

Directors are liable to the company for the damages caused by the actions of the managers or of the hired staff, when the damage would not have taken place if they had exerted the supervision imposed by the duties of their position. Moreover, directors will be jointly liable with their immediate predecessors if, having knowledge of violations committed by their predecessors, they fail to disclose them to the in-house auditors or to the financial auditors, as the case may be. Also, in the case of an SA managed by several directors, the liability for the perpetration of actions or omissions does not extend to directors who have had their opposition to such action/omission recorded in the registry of resolutions of the BoD and who gave notice of such opposition in writing to the in-house auditors or the internal auditors and the financial auditor.

How are the members of the executive body appointed, dismissed and replaced?

The directors are appointed initially by the Articles of Association and, thereafter, during the current operations of the company, through a GMS decision. They may be replaced or removed by the GMS throughout the company's existence.

In an SA, further requirements must be observed, such as:

• An appointed director must expressly accept his/her designation, and must provide professional liability insurance;
• The duration of the term of office of the directors or members of the Directorate or supervisory council is established by the Articles of Association and may not exceed a period of four (4) years. However, they may be re-elected unless otherwise provided in the Articles of Association. The duration of the term of office of the first members of the BoD, and of the first appointed members of the supervisory council, respectively, must not exceed two (2) years;
• An individual may at the same time be a director and/or a member of the supervisory board in no more than five (5) Romanian-based joint-stock companies. This restriction equally applies to an individual that is a director or member of the supervisory board, and to an individual that is the permanent representative of the legal entity appointed as a director or a member of the supervisory board. The prohibition does not apply where the individual elected to the BoD, or the supervisory board owns at least a quarter of the total shares of the company or is a member of the BoD or the supervisory board of a joint-stock company holding the aforementioned shareholding quota.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

There is no general requirement to appoint non-executive directors. However, when the management powers have been delegated to the Managers, the majority of the BoD members must be non-executive directors.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

General Meeting of Shareholders (Adunarea Generala a Actionarilor).

Depending on the matters to be submitted for shareholders' approval, the GMS may be ordinary (AGA) (e.g. for the appointment or dismissal of directors or auditors, for the approval of the yearly financial statements and of the management report etc.) or extraordinary (e.g. for the increase/decrease of the share capital, for changes in the company's legal form, mergers, spin-offs, as well as for any other matter which does not fall under the exclusive competence of the ordinary GMS).

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

The ordinary and the extraordinary GMS have different statutory quorum and voting requirements in case of an SA.

On the first call, the ordinary GMS may duly pass resolutions only (i) in the presence of the shareholders (or their representatives) holding at least a quarter of the total number of voting rights and (ii) with the majority of the voting rights exercised in the meeting. The Articles of Association may provide higher quorum and voting requirements regarding the first call. On the second call (which takes place when the necessary quorum is not met upon first call), there is no minimum quorum, and the decision will be taken with the majority of the voting rights exercised in the meeting. The Articles of Association may not provide a minimum quorum or a higher majority for the second call of the ordinary GMS.

In the case of the extraordinary GMS, the presence of shareholders holding at least a quarter of the total number of voting rights is required at the first call, and one-fifth of the total number of voting rights for the second call. Decisions may be duly passed with the vote of shareholders representing at least half of the voting rights of the shareholders present or represented at the meeting. However, a special majority of two-thirds of the voting rights of the attending shareholders is required for decisions on major issues, such as the increase or decrease in the share capital, merger or wind-up operations. The Articles of Association may provide increased thresholds of quorum and voting majorities.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Yes, special governance regimes apply for listed and publicly held companies/State owned companies and for regulated companies.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

It is compulsory that companies organise and maintain their own accounting records, according to the provisions of the Accounting Law no. 82/1991.

The accounting records are meant to reflect and measure the assets, the liabilities, and the capital, as well as the results obtained from operations.

Companies are required to submit their annual financial statements to the tax authorities and the Trade Registry.

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

The annual financial statements of medium and large entities must be audited. Companies that meet at least two (2) of the following criteria are considered medium or large entities –

• the value of aggregate assets is at least RON 17,500,000 (approximately EUR 3, 500,000);
• net turnover amounts to RON 35,000,000 (approximately EUR 7,000,000); and
• the average number of employees within the financial year is 50.

Moreover, companies that meet at least two (2) of the following criteria are obliged to have their annual financial statements audited:

• the value of aggregate assets is at least RON 16,000,000;
• net turnover amounts to RON 32,000,000; and
• the average number of employees within the financial year is 50.

The obligation indicated above is applicable only when the limits are exceeded for two (2) successive financial years.

The same obligation applies to the annual financial statements of companies of public interest (i.e. credit institutions, insurance companies, national companies, listed companies etc.) and to companies opting for the two-tier management system.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

A joint-stock company must have three (3) censors and one (1) alternate censor unless the Articles of Association stipulates a higher number. In all cases, the number of censors must be odd. Censors are elected by the general meeting of shareholders. Their term of office is three (3) years, and they may be re-elected. They are part of the surveillance body of the company.

Censors may be shareholders, except for the chartered accountant censor who may be a third-party working individually or in association.

The following persons may not be censors, and if elected, their appointment is not deemed valid –

• relatives or in-laws up to the fourth rank inclusively, or spouses of the directors;
• persons receiving under any form for other positions than censor, a wage or remuneration from the directors or from the company, or whose employers have contractual or competitive relations with the company;
• any person who cannot act as a director or member of the supervisory board, or of the managing board pursuant to article 73; and
• persons who, while exercising their powers in the capacity of censor, have control powers within the Ministry of Public Finance or other public institutions, except for the situations expressly provided by the law.

Censors have the obligation to supervise the company's management, check whether the financial statements are legally prepared and in accordance with the books, if the books are regularly kept and whether the assets and liabilities were assessed in accordance with the rules for the preparation, and presentation of the financial statements.

When the company is subject to external financial audit, the role of the censors is taken over by internal auditors.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (Actiuni).

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, for example, pursuant to Article 95(1) of the Companies Law, preferential shares that benefit from priority dividends and do not grant voting rights may be issued. The aggregate number of shares benefiting from priority dividends that do not grant voting rights must not exceed a quarter of the share capital and must have the same face value as the ordinary shares.

Preferential shares and ordinary shares may be converted from one (1) category into the other by resolution of an extraordinary GMS.

What documentation is required for the transfer of ownership interests?

SA shares may be transferred freely, unless the shareholders agree otherwise in the Articles of Association.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer must be registered in the shareholders' registry and the transaction parties must sign in such registry in order for the transfer to be effective. The registration in the Trade Registry is required for transparency of the transaction towards third parties.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

Any share issue must be approved by the GMS.

The capital increase must be registered with the Trade Registry. Shares issued in exchange of cash contributions must be paid upon subscription in a percentage of at least 30% of their face value and entirely within the maximum of 3 years as of the date of the GMS decision publication in the Official Gazette. Shares issued for in -kind contribution must be paid within the same 3 year term. The Articles of Association or the GMS may authorise the BoD or the Directorate to increase the registered share capital of the company, within a period of time which cannot exceed five (5) years from the date of its incorporation, up to a determined face value (authorised capital), by issuing new shares in exchange for contributions. The face value of the authorised capital must not exceed half of the registered share capital existing at the authorisation above.

Existing shareholders benefit from a preference right upon issues of new shares, which can be lifted only under certain restrictive conditions.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

The registered share capital may be increased by issuing new shares or by increasing the nominal value of the existing shares in exchange for new contributions in cash and/or in kind.

The share capital increase with a share premium refers to the issuance of a new share at its face value, equal to one (1) of the existing shares of the company, while the contribution of the shareholders per each new share is made at a higher value than the face value (premium).

Also, new shares may be fully paid-up by incorporating the reserves, except for the legal reserves, as well as the profit or share premiums, or by setting off liquid and payable claims against the company with shares thereof.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The registered share capital may be reduced by: Reducing the number of shares; reducing the nominal value of shares or participations; or purchasing the company's own shares, followed by their cancellation. The authorization to acquire own shares is granted by the extraordinary GMS, which must establish the conditions of the acquisition, in particular the maximum number of shares to be acquired, the duration for which the authorization is granted (which cannot exceed 18 months from the date of registration in the trade register) and, in the case of an acquisition for consideration, the minimum and maximum consideration.

The Company Law sets forth certain restrictions as regards the acquisition of own shares. Thus, the nominal value of own shares acquired by the Company, including those already in its portfolio, cannot exceed 10% of the subscribed share capital; the object of the transaction can only be fully released shares; the payment of the shares acquired will be made only from the distributable profit or from the available reserves of the company recorded in the last approved annual financial statement, with the exception of legal reserves. If own shares are acquired to be distributed to the company's employees, the shares acquired must be distributed within 12 months from the date of acquisition. These restrictions do not apply however in certain cases, for example:

• in the case of acquisition(s) in accordance with a decision of the general meeting to reduce the share capital;
• in the case of shares acquired as a result of a universal transfer;
• in the case of fully released shares, acquired through the effect of a court decision or in a forced execution procedure against a shareholder or debtor of the company; or
• in the case of fully released shares, acquired free of charge.

Also, should the decrease not be motivated by losses, the registered share capital may also be reduced by total or partial exemption of the shareholders from their obligation to make their due and payable deposits; refund to the shareholders of a share of their contributions, proportionally to the reduction of the registered share capital equally calculated for each share or participation; and other methods provided by law.

The registered share capital cannot be reduced before two (2) months after the day on which the resolution was published in the Official Gazette of Romania. The company's creditors whose receivables existed before the publication of the GMS resolution deciding on the decrease of the registered share capital will be entitled to obtain security for their receivables which are not due at the date of publication.

Any requirements with respect to distributions to shareholders?

Dividends are distributed to shareholders in proportion to their share of participation in the share capital, unless the Articles of Association provide otherwise.

Dividends must be paid within the period of time which is prescribed by the GMS.

Dividends can only be distributed from profits determined according to law.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Shareholders' agreements are not explicitly regulated under Romanian law. Unlike the Articles of Association, shareholders' agreements are deemed confidential among the shareholders, rather than being a public deed subject to publicity requirements. Consequently, a shareholders' agreement may not be enforced with respect to third parties unless they were aware of the agreement.

Lacking a legal framework to condition the contents of a shareholders' agreement, shareholders are at liberty to stipulate in their agreement any provisions they consider necessary for the good functioning of the company, to the extent they do not contradict or violate the Companies Law or the company's Articles of Association.

A shareholder failing to observe a shareholders' agreement may be held liable for damages towards the other shareholders.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Approx. EUR 2,000. This figure does not include audit costs.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The standard corporate income tax rate is 16%.

Various exemptions and special rules may apply.

Summary of any specific matters, e.g. recent or prospective major legal developments

No major legal developments are expected in 2024.