Important changes regarding Companies Law and the simplifying of incorporation procedures
On 18 December 2019, a Draft Bill (the “Draft Bill”) amending and supplementing Companies Law no. 31/1990 (“Companies Law”) was passed within the Romanian Chamber of Deputies, which is currently being submitted to the President of Romania for promulgation purposes.
In a world where business advances are taking place at a staggering pace, entrepreneurs are increasingly expecting to easily set-up and do business. The Draft Bill represents a stepping stone towards reducing bureaucracy and the streamlining of the establishment of companies.
Aiming to promote the private initiative, the Draft Bill amends the Companies Law in respect of provisions dealing with incorporation of companies and the mandatory conditions to be fulfilled by shareholders.
This Draft Bill innovates by repealing previously essential conditions with respect to shareholders in limited liability companies. As such, Article 14 of Companies Law providing individuals’ or legal entities’ limitation to act as sole shareholders only in one limited liability company shall be repealed, thus increasing entrepreneurial initiative. Also, the condition providing that a limited liability company may not be wholly owned by another limited liability company which, in turn, is held by one shareholder is repealed.
We expect these amendments to impact not only on the business environment, but also in other fields such as tax, accounting and anti-money laundering.
Under the Companies Law, in order to register a company’s headquarters, some prerequisites are compulsory. In this respect, upon incorporation, applicants have to submit either a certificate regarding the envisaged premises or an affidavit in regard to fulfilment of the conditions pertaining to premises. The Draft Bill shall eliminate such requirements by amending Article 17 para. (3) of Companies Law, thus facilitating the companies’ incorporation process. Therefore, as per the Draft Bill, in order to register or relocate a company’s headquarters, it will be sufficient to submit a document showing the right to use of the premises.
Moreover, pursuant to the Draft Bill, Article 17 para. (4) of Companies Law setting forth the restriction on companies to operate at shared premises, unless the envisaged premises’ structure allows companies to operate in different rooms, shall be repealed.
The Draft Bill also introduces an additional provision in such cases when the company’s headquarters are located in an apartment. The neighbours’ permission shall no longer be required provided that the company shall not perform any commercial activities at the said location.
The bottom line is that the business environment is encouraged to rapidly evolve and grow. By simplifying registration and incorporation procedures, such Draft Bill falls in line with European wide regulations.
The Draft Bill was passed within the Romanian Chamber of Deputies on 18 December 2019 and is required to be promulgated by the Romanian President in order to be published in the Official Gazette and come into force.