On September 6, 2012 the Government Emergency Ordinance no. 47/2012 (the ”Ordinance”) was published in the Romanian Offcial Gazette no. 635 and entered into force. Among several amendments to the Romanian Fiscal Code and to the Fiscal Proceedings Code, the Ordinance amended the Companies Law no. 31/1990 (the ”Companies Law”) in the sense that it increased the amount of the delay penalties to be paid by a company for failure to pay dividends to its shareholders on time.

Main amendments

According to art. 67 (2) of the Companies Law prior to its amendment by the Ordinance, if the relevant company did not pay the dividends to its shareholders within the period approved by the general meeting of shareholders (which could not, in any case, exceed six months from the date the financial statements for the previous financial year were approved), the company had to pay penalties to the shareholders amounting to the legal interest rate established by the National Bank of Romania. Alternatively if the general meeting of shareholders approving the relevant financial statements or the company’s articles of association provided a higher interest rate than that of the National Bank of Romania, then the higher rate would apply. Please note that currently, the legal interest in Romania amounts to 5.25% per year.

Pursuant to the amendment of the Companies Law by the Ordinance, the delay penalties to be paid by the company to its shareholders for failure to pay dividends on time amount to the legal interest rate applicable as at such date plus four percentage points (in which case the delay penalties would amount to 9.25% per year.) As before, if the general meeting of shareholders approving the relevant financial statements or the company’s articles of association provide a higher interest rate, then the higher rate will apply.

Following the abovementioned amendment of the Companies Law, companies’ management should take extra care with respect to paying the shareholders the dividends they are entitled to, as the new increased interest rate for delay penalties could entail serious losses for said companies.