Long awaited Companies Law amendments now enacted pursuant to Law No. 102/2020
On 2 July 2020, Law No. 102/2020 (“Law No. 102/2020”) on the amendment and supplementation of Companies Law No. 31/1990 (“Companies Law”) was published in the Romanian Official Gazette, Part I, No. 583.
The draft bill underlying Law No. 102/2020 (the “Draft Bill”) was promulgated by the President of Romania (the “President”) after the Romanian Chamber of Deputies passed and submitted the Draft Bill to the President for promulgation for the second time. As we have mentioned in previous articles, the Draft Bill was initially referred back to Parliament for re-examination due to the President criticising the amendments envisaged by the Draft Bill.
Following this re-examination, a new provision was added to the Draft Bill amending Article 17 Para. (1) of the Companies Law regarding the obligation to submit, when notarising articles of association or when assigning them with a certain date, an affidavit stating that one person holds the capacity of a sole shareholder only with respect to one limited liability company. So, as of entry into force of Law No. 102/2020, submitting the previously mentioned affidavit loses its mandatory requirement becoming, at the same time, redundant, considering the abrogation of Article 14 of the Companies Law.
Law No. 102/2020 amends Companies Law in respect of provisions dealing with the incorporation of companies and the mandatory conditions to be fulfilled by the shareholders, making the process whereby entrepreneurs set up companies and develop businesses easier, less bureaucratic and more efficient.
We expect such amendments to have an impact not only on the business environment but also on other fields such as tax, accounting and money laundering.
Law No. 102/2020 also innovates by repealing Article 14 of the Companies Law which stated that individuals’ or legal entities’ could only act as the sole shareholder in one limited liability company and also by repealing the condition that a limited liability company cannot be wholly-owned by another limited liability company which is, in turn, held by only one shareholder.
Additionally, the process of registering the company’s headquarters has become easier by repealing certain compulsory prerequisites, namely the applicants’ obligation to submit either a certificate regarding the envisaged premises or an affidavit in regard to fulfilment of the conditions pertaining to premises. Law 102/2020, once in force, will eliminate these requirements by amending Article 17 Para. (3) of Companies Law, making it sufficient to submit a document showing the right to use of the premises when registering and/or relocating a company’s headquarters.
Law No. 102/2020 also repeals Article 17 Para. (4) of the Companies Law which restricted companies from operating in shared premises, unless the structure of the envisaged premises’ allowed the companies to operate in different rooms.
Law No. 102/2020 also introduces an additional provision in cases where the company’s registered office is located in an apartment. The neighbours’ permission will no longer be required for registering the headquarters, provided that the company does not perform any commercial activities at the said registered headquarters.
The bottom line of these amendments is to encourage the business environment to rapidly evolve and grow. By simplifying registration and incorporation procedures, Law No. 102/2020 aligns Romanian legislation with European wide regulation.