Assessing title over shares in Romanian companies is a complex process, involving an analysis of the title of previous shareholders, as well as the validity of each operation that resulted in changes to the ownership, value or structure of the share capital.

In making this assessment, one of the most common issues is the effect that the annulment of a shareholders' resolution may have on subsequent acts concluded on its basis. While the view of the Romanian courts has been inconsistent over the years, recent practice of the High Court of Cassation and Justice provides additional guidance for interpreting and applying the penalty of nullity in matters relating to companies.

This update highlights some of the arguments made by the court in Decision 1386/2014, which related to cascade annulments that were claimed based on the annulment of a shareholders' resolution. Although the facts may seem somewhat incongruous, the principles arising from the decision may become a reference point for courts in similar future cases.


In June 2006 the shareholders of a Romanian joint stock company passed a resolution approving the conversion of shares from nominative to bearer shares. This resolution was challenged and in November 2006 its effects were suspended by court decision. In 2011 the claim was finally settled by annulment of the conversion resolution (and therefore annulment of the decision to convert the shares from nominative to bearer shares).

In April 2007 A transferred its shares in the company (representing 5% of the share capital) to B, who further transferred them to C. These share transfers purported to transfer bearer shares, so the formalities for the transfer of nominative shares were not observed.

At some point either during the proceedings or after the conversion resolution was annulled (the timing of the various steps in the process is unclear from the decision), the majority shareholder of the company challenged the share transfers, requesting that – due to the retroactive effect of the nullity of the conversion resolution – the share transfers also be declared null. The claimant argued that A could not have sold bearer shares becaus,e following the annulment of the conversion resolution, such shares had never validly existed.


The High Court of Cassation and Justice rejected the annulment claim regarding the share transfers. In doing so, it made several interesting arguments, some of which are briefly described below.

Annulment of conversion resolution does not affect existence of shares
The court considered that changing the nature of shares or annulling such a change does not result in the annulment of ownership title. Therefore, even if the rules governing the transfer of shares change as a result of the conversion of the shares into a different category (eg, from nominative to bearer), this will not trigger the loss of ownership rights and will not preclude the shareholder from disposing of the shares that it holds, as the claimant tried to argue.

Breach of formalities for transfer of nominative dematerialised shares does not affect validity of transfer between parties
As a rule, nominative dematerialised shares in Romanian joint stock companies are transferred by registration in the shareholders' register, signed by the transferor and transferee. However, the transfer of bearer shares involves merely the physical handover of the shares.

The share transfers in question purported to be transfers of bearer shares and seem to have been undertaken in accordance with the rules governing the transfer of such shares. Consequently, the claimant argued that the share transfers were invalid, because (among other things) they had not been registered in the company's shareholders' register (at any rate, the register seems to have been closed following approval of the conversion from nominative to bearer shares).

The court rejected the claimant's argument that at the time of the share transfers, the shares were bearer shares and therefore were not subject to the formalities invoked by the claimant.

The court extended its reasoning, taking a position with respect to the effects of failure to comply with the transfer formalities of the shareholders' register. It seemed to favour an interpretation which is not necessarily in line with previous practice, stating that the share transfer is registered in the shareholders' register for evidentiary and opposability purposes. Consequently, failure to comply with this formality does not invalidate the transfer between the parties. The court further stated that even if registration in the shareholders' register is deemed a condition for validity, breach thereof cannot lead to the absolute nullity of the transfers – rather, it can lead only to relative nullity, given the private interests that the rules protect. This view significantly limits the parties that may challenge the transfer and the period for which the transfer is vulnerable, granting greater certainty to the parties to the transfer.

Nullity of shareholders' resolutions – future effect only
Nullity has retroactive effect under Romanian law. By way of exception, the nullity of the creation of a company has only prospective effect. In an interesting move, the court ruled that this exception also applies to the nullity of constitutive acts and any acts approving their amendments. The conversion resolution aimed to amend the company's constitutive documents. Therefore, the court took the view that its annulment could not be deemed to have retroactive effect and could not trigger the annulment of the share transfers.

Although this principle seems to allow for some nuances, the decision could become a milestone in future interpretations by the Romanian courts of the practical implications of the nullity of shareholders' resolutions.

Validity of acts following resolution
One of the most important effects of the nullification of an act under Romanian law is the annulment of subsequent acts concluded on its basis. According to the High Court of Cassation and Justice's recent decision and in line with previous case law, this principle should not be applied without discrimination to all subsequent acts and must be read as applying only to subsequent acts that are closely connected to the annulled act.

The court further differentiated between subsequent acts issued with the intention of implementing the annulled resolution and those that do not pursue this aim. In many cases, subsequent acts do not necessarily implement an annulled act and therefore should not be affected by its invalidation. The court determined that the share transfers in question were not acts seeking to implement the conversion resolution and therefore could not be annulled merely because they took place subsequent to the annulled resolution.

This point is particularly relevant in relation to vexatious claims filed by shareholders (almost 'professional litigators') that challenge all acts adopted by the shareholders' meetings – mostly for breach of formalities – and then try to obtain cascade annulments. These parties typically argue that the formalities that were disregarded and, for example, triggered the annulment of the appointment of a director constitute sufficient grounds for the annulment of any act concluded by that director.

Hopefully, the decision will be an additional defence against such vexatious claims, helping to provide greater certainty.

For further information on this topic please contact Alina Stancu Birsan or Eliza Baias at PeliFilip by telephone (+40 21 527 2000) or email ( or The PeliFilip website can be accessed at

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