Law 299/2024 on amending several provisions of Companies Law no. 31/1990 (the “Companies Law”), coming into force on 6 December 2024, has been adopted in response to the sweeping impact of digital transformation, which has revolutionized how companies operate and manage their business processes. To meet the evolving needs of shareholders of all types of Romanian companies, the current framework must adjust to the digital age. In this context, a long-awaited proposal aimed at adapting the modus operandi of Romanian companies to the current reality of the business world has just been promulgated by the Romanian President and will enter into force in the near future.
The amendments focus on two main areas: removing the requirement to include theidentification data pertaining to the ultimate beneficial owners (“UBOs”) in constitutive actsof all types of Romanian companies and enabling the digitalization of general meetings for all types of shareholders.
Key Legislative Changes
As regards the provisions on the UBOs of Romanian companies, the law currently requiresthat the constitutive acts of all types of companies (general partnership; limited partnership; joint-stock company; partnership limited by shares; limited liability company) contain identification data of UBOs and specify the means of ownership/control exercised over the company. Such requirement was highly disputed in practice from its implementation, not only due to overlapping with the requirements imposed under Law no. 129/2019 on preventing and combating money laundering and terrorism financing (each company being under an obligation to identify and report its UBOs by way of submitting an UBO statement), thus unnecessarily increasing red tape and generating technical issues at the Trade Registry, but also potentially leading to sensitive information, protected by the afore-mentioned law, being made public by way of publishing the relevant corporate body’s decision amending the constitutive act in the Romanian Official Gazette.
On the topic of digitalizing general meetings of shareholders, the amendments introduce a series of changes, the most significant one being perhaps the express provision that general meetings of shareholders may now be held online, allowing votes to be cast electronically across all types of companies (general partnership; limited partnership; joint-stock company; partnership limited by shares; limited liability company). Such possibility can either be expressly granted in the company’s constitutive act or decided by the shareholders for each individual meeting (in case of joint-stock companies and partnerships limited by shares, with the majority required by law for decisions taken by the shareholders during extraordinary meetings or with the higher majority provided in the respective constitutive acts, and in case of general partnerships, limited partnerships and limited liability companies, with the majority provided by law or in the respective constitutive acts).
The ability to participate online in a shareholders meeting is expected to enhance efficiency, save time, and provide greater flexibility while reducing operational costs. Additionally, allowing online participation in general meetings is expected to increase shareholder engagement, as virtual access makes attendance more convenient.
Also, the decisions/resolutions adopted by the shareholder(s) of all Romanian companies are to be signed either by hand, in wet ink, or with an electronic signature (in this latter case, although significant changes to the Romanian legislation on the use of electronic signatures have been recently implemented, our recommendation remains for a qualified electronic signature as per the eIDAS Regulation to be used, especially since this is the only type of electronic signature currently accepted by the Romanian Trade Registry upon submissions therewith).
Where remote participation is allowed, the convening notice must provide detailed instructions on the online participation and voting process.
Additional Provisions for Modernized Governance
In addition to digitalization matters, Article 114 of the Companies Law is amended in order to extend the duties of the shareholders of a Romanian joint-stock company which can be delegated by the extraordinary general meeting of the shareholders to the Board of Directors or to the Directorate, as the case may be, by way of also including the setting-up or closing of secondary places of business (such as branches, agencies, representations, or other similar units without legal personality).
Currently, the setting-up or closing of secondary places of business falls under the purview of the extraordinary shareholders meeting, unless the bylaws of the company provided otherwise which, basically, as a matter of practice, allowed such decisions to be given to the Board of Directors or to the Directorate’s authority. However, in such case, the law lacked an express provision allowing the Board of Directors or the Directorate to also modify the bylaws to reflect such decisions, where the case.
Conclusion
In conclusion, these legislative amendments represent a first significant step towards aligning existing laws with modern technological capabilities and the realities of today’s digital world. It marks an important shift, promoting greater efficiency, transparency, and accessibility.
