First pageNewsNew transparency requirements for legal entities and amendments to companies law no. 31/1990

New transparency requirements for legal entities and amendments to Companies Law no. 31/1990

Law no. 129/2019 on prevention and combating of money laundering and terrorism financing, as well as on the amendment and supplementation of certain legislative acts (the “Law”) was published in the Romanian Official Gazette no. 589/ July 18, 2019 and entered into force on July 21, 2019.

The Law includes, among other matters, new transparency requirements for legal entities, and brings important amendments to certain pieces of legislation, including to Companies Law no. 31/1990 (the “Companies Law”). Some of the most important novelties are the establishment of a beneficial owner register with the Trade Registry and the total elimination of bearer shares.

Private legal entities subject to registration with the Trade Registry must now submit an affidavit with identification details of their beneficial owners and information on the control mechanism over the legal entity. The document must be submitted upon incorporation (for new companies) and thereafter on a yearly basis, within 15 days as of the approval date of the annual financial statements or whenever any changes in this respect occur. The beneficial owner is defined as any individual who ultimately owns or controls a private legal entity and/or the individual on behalf of whom a transaction, operation or activity is performed.

From the Companies Law standpoint, the beneficial owner includes (i) the individual(s) who ultimately own(s) or control(s) a privately owned company by exercising directly or indirectly the right of ownership over a number of shares or voting rights ensuring their control or by participating in the equity of the company (i.e., 25% + 1 of the shares or over 25% of the equity), or control(s) it by other means, or (ii) the individual(s) who ensure(s) the management of the company, in case there are doubts with regard to the beneficial owner.

Failure by the legal representative of the legal entities to submit such affidavit is sanctioned by fine ranging from RON 5,000 (approximately EUR 1,050) to RON 10,000 (approximately EUR 2,100). Also, failure to submit the affidavit within 30 days as of the date the fine is applied can entail the dissolution of the company.

The National Trade Registry Office is responsible for implementing a so-called “Companies’ beneficial owners registry” within 120 days as of the entry into force of the Law.

The same obligations to declare their beneficial owner will apply to associations and foundations and in this case, the special register will be held by the Ministry of Justice. The sanction for breach of this obligation consists in a fine ranging from RON 200 (approximately EUR 40) to RON 5,000 (approximately EUR 1,050), depending if it is the first or second breach. Third breach may result in the dissolution of the association or foundation, as per the applicable law.

In an attempt to align the Companies Law with the economic realities and to ensure transparency, the Law has eliminated bearer shares. Such shares were no longer used on a large scale and were hard to trace since their transfer was made by simple hand-over. Thus, as of the date of entry into force of the Law, no new bearer shares can be issued and no operations with existing bearer shares may be performed. Existing bearer shares must be converted into registered shares within 18 months as of the entry into force of the Law. Failure to comply with such obligation leads to annulment by law of the respective shares simultaneously with a reduction of the share capital. Furthermore, any person proving a legal interest can request the dissolution of the company.

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