During Thursday's meeting, the Romanian Government approved a draft Government Ordinance regulating certain fiscal-budgetary measures (Draft GO). The Draft GO tackles upon various matters such as (i) restructuring measures of budgetary duties outstanding as at 31 December 2017, (ii) amending certain provisions of the Romanian Fiscal Code and of the Romanian Fiscal Procedure Code, or (iii) repealing certain legislative provisions. Additionally, the Draft GO aims to amend particular provisions of Law no. 31/1990 on companies (Company Law), the most significant envisaged changes being presented below.
- Distribution of dividends in case of losses carried forward followed by profit A new provision regulating the distribution of dividends is to be included in the Company Law according to which the companies registering profit at the end of the year, but with losses carried forward for the last five (5) years in the aggregate, may distribute dividends from the profit of the current financial year only after (i) establishment of the legal reserves, (ii) coverage of the loss carried forward, and (iii) establishment of reserves in accordance with statutory requirements.
- Dissolution of the company in case of decreased value of the net assets The Ministry of Public Finance – National Agency of Fiscal Administration (in addition to any interested person, as the provisions currently states), will be entitled to address the court to seek dissolution of the company, in case the value of the net assets of the company decreases below half of the subscribed share capital, and the extraordinary general meeting of shareholders is not convened in accordance with the applicable legal provisions or could not validly deliberate on the second convening. The court may grant the company a deadline which cannot exceed six (6) months for redressing the situation. The company shall not be dissolved if restoring the net assets up to a value of at least half of the share capital takes place by the deadline established by the court (as opposed to the date the decision of the court has become final, as currently stated). Based on the annual financial statements, the Ministry of Public Finance shall prepare, by the end of the year following that for which the annual financial statements were prepared, a list of companies whose net assets decreased to less than half of the value of the subscribed share capital. The list shall be published on the Ministry's webpage. The information contained on the list shall be sent, in electronic format, to the National Office of Trade Registry, for registration. The Ministry of Public Finance – National Agency of Fiscal Administration shall initiate dissolution proceedings for all the companies meeting the condition of being included on the list indicated above for two consecutive years. The dissolution proceedings indicated above shall also be initiated in case of companies that fail to submit the annual financial statements for two (2) years in a row, within six (6) months as of the deadline for submission of the annual financial statements for the second financial year.
- Mandatory conversion of loans into shares Additional provisions are to be included in the Company Law for the companies that recorded net assets below the limit provided by the law. In this case, it will be mandatory to increase the share capital by converting into shares the debts towards the shareholders resulted from loans or other financing granted by the latters, subject to observance of the applicable legal provisions (eg, preemption right). The general meeting of shareholders needs to adopt a resolution to this end, within 90 (ninety) days as of the approval of the annual financial statements. In case of companies where the Romanian State is a shareholder, the debts towards the shareholders indicated above do not include debts towards the general consolidated budget, respectively the loans that the companies receive, according to the law, from the privatization proceeds. This provisions shall apply to companies where the administrative-territorial units act as shareholders, as well. In case of companies where the Romanian State is a shareholder, the conversion, the procedure and the conditions of conversion are to be established by Government decision or by decision of the general/local council, as applicable.
- Dissolution by the National Office of Trade Registry The National Office of Trade Registry, ex officio or upon request of any interested person, including the company, as applicable, shall be able to decide the dissolution of the company in certain cases. Currently only the court is allowed to pronounce the dissolution upon the request of the National Office Trade Registry or of any interested person. The cases of dissolution remain the same: a) The company no longer has statutory bodies or such bodies can no longer gather, b) The shareholders are missing or their domicile or residence are not known, c) The conditions regarding the headquarters are no longer met, including as a result of expiration of the duration of the act attesting the right of use over the premises used as registered office or the transfer of the right of use or ownership right over the premises used as registered office, d) Company's activity ceased or was not resumed after a period of temporary inactivity, notified to the fiscal bodies and registered in the trade register, which period cannot exceed three (3) years as of the date of registration in the trade register, e) The company did not reconstitute the share capital according to the law. The list of companies with respect to which the National Office of Trade Registry shall decide on the dissolution thereof, under the conditions indicated above, shall be published on the online web portal of the National Office of Trade Registry at least 15 (fifteen) calendar days in advance and shall be sent to the Ministry of Public Finance – National Agency of Fiscal Administration. In addition, new provisions dealing with the cases in which the Ministry of Public Finance - National Agency of Fiscal Administration or any interested person could request the dissolution of the company are included. Upon such request, the National Office of Trade Registry shall be able to decide the dissolution of the company, if: a) The company failed to submit its annual financial statements or the accounting reports, as applicable, to the territorial units of the Ministry of Public Finance, within the deadline established by the law, if the delay period exceeds 60 (sixty) business days, b) The company failed to submit to the territorial units of the Ministry of Public Finance, within the deadline established by the law, the statement according to which no activity was performed as of establishment, if the delay period exceeds 60 (sixty) business days. The list of companies with respect to which the National Office of Trade Registry shall decide on the dissolution thereof, under the conditions indicated above, shall be published on the webpage of the Ministry of Public Finance – National Agency of Fiscal Administration, at least 15 (fifteen) calendar days prior to the submission of the request for dissolution. By resolution deciding the dissolution of the company, the National Office of Trade Registry shall also appoint a liquidator among those included in the List of Insolvency Practitioners. Any interested person, including the company, may file complaints against the dissolution resolution of the National Office of Trade Registry.