Corporate Disputes in Romania: Key Issues for Management and Shareholders

Corporate disputes in Romania arise at the intersection of company law, civil procedure and commercial practice, and they carry real consequences for business continuity, asset control and personal liability. Romanian company law - anchored in Law No. 31/1990 on companies (Legea societăților) and supplemented by the Civil Code (Codul civil) and the Civil Procedure Code (Codul de procedură civilă) - provides a structured but demanding framework for resolving conflicts between shareholders, between shareholders and management, and between the company and third parties. Understanding this framework is not optional for any international investor or executive operating in Romania: procedural missteps, missed deadlines and misread governance documents can convert a manageable dispute into a multi-year litigation with uncertain outcomes. This article examines the legal context, available tools, procedural mechanics, key risks and practical strategies for management and shareholders navigating corporate conflict in Romania.

Romanian corporate law draws on a civil law tradition heavily influenced by French and Italian models, later adapted to EU standards following accession in 2007. The primary statute governing companies is Law No. 31/1990, which regulates the formation, governance, operation and dissolution of all commercial entities, including the most common forms used by international investors: the societate cu răspundere limitată (SRL, equivalent to a private limited company) and the societate pe acțiuni (SA, equivalent to a joint-stock company).

The Civil Procedure Code, as amended by Law No. 134/2010, governs the procedural aspects of corporate litigation. Disputes involving companies are heard by specialised commercial sections (secții comerciale) within the tribunals (tribunale), which sit at county level and serve as courts of first instance for commercial matters above a threshold value. Appeals go to the Courts of Appeal (Curți de Apel), and final recourse lies with the High Court of Cassation and Justice (Înalta Curte de Casație și Justiție, ICCJ).

A critical structural feature is that Romanian law distinguishes sharply between the internal governance of a company - regulated by the articles of association (actul constitutiv) and the Companies Law - and the external legal relationships of the company with third parties, governed by general civil and commercial law. Many disputes begin as internal governance conflicts but quickly acquire external legal dimensions when assets are transferred, contracts are signed by unauthorised persons, or management decisions are challenged in court.

The Companies Law grants shareholders specific procedural rights that function as entry points into litigation. Under Article 132 of Law No. 31/1990, shareholders may challenge resolutions of the general meeting (adunarea generală) within 15 days of publication in the Official Gazette (Monitorul Oficial) or, for absent shareholders, within 15 days of notification. This is a hard deadline: courts consistently refuse to admit challenges filed even one day late. International clients frequently miss this window because they rely on informal communication channels rather than monitoring the Official Gazette directly.

The supervisory board (consiliul de supraveghere) and the board of directors (consiliul de administrație) operate under fiduciary duties codified in Articles 72 and 144 of the Companies Law, which require directors to act with the diligence of a prudent administrator and in the best interests of the company. Breach of these duties grounds a liability claim, but Romanian courts apply a business judgment standard that gives directors meaningful latitude when decisions are made in good faith and on adequate information.

Shareholder disputes in Romania cluster around three recurring situations: challenges to general meeting resolutions, deadlock between co-shareholders, and minority shareholder oppression. Each situation calls for a different legal tool, and selecting the wrong one wastes time and money.

Challenging general meeting resolutions is the most frequently litigated corporate action. Under Article 132 of Law No. 31/1990, any shareholder who voted against a resolution or was absent from the meeting may seek annulment before the tribunal. The grounds include procedural irregularities in convening the meeting, lack of quorum, violation of the articles of association, and substantive illegality. Courts distinguish between absolute nullity (nullitate absolută) - which applies to resolutions that violate mandatory legal provisions and can be raised at any time - and relative nullity (nullitate relativă) - which applies to resolutions that violate the articles of association and is subject to the 15-day limitation. The practical consequence is that a shareholder who misses the 15-day window for a relative nullity claim is not entirely without remedy if the resolution also violates a mandatory statutory provision, but the argument is harder to sustain and courts scrutinise it carefully.

Deadlock between co-shareholders, particularly in SRLs with two equal shareholders, is a structural risk that Romanian law addresses imperfectly. The Companies Law does not contain a dedicated deadlock resolution mechanism equivalent to the English unfair prejudice petition. In practice, a deadlocked company either dissolves by court order under Article 227 of Law No. 31/1990 - which requires proof that the company can no longer function - or the parties negotiate a buyout. Courts are reluctant to order dissolution unless the deadlock is complete and documented over a sustained period. A common mistake by international investors is to assume that a 50/50 deadlock automatically triggers dissolution: Romanian courts require evidence of repeated failed attempts to convene meetings, absence of quorum over multiple cycles, and genuine inability to adopt any resolution.

Minority shareholder protection operates through several mechanisms. Under Article 136 of Law No. 31/1990, shareholders holding at least 10% of the share capital of an SA (or 20% for an SRL) may request the court to appoint an expert to investigate management acts suspected of causing harm to the company. This is a powerful investigative tool that does not require the shareholder to prove the harm at the outset - only to demonstrate a reasonable basis for suspicion. The expert's report then forms the evidentiary foundation for a subsequent liability claim. Many minority shareholders underappreciate this tool and instead attempt to bring direct liability claims without adequate evidence, which courts dismiss at an early stage.

To receive a checklist of shareholder remedies available under Romanian company law, send a request to info@vlolawfirm.com.

The procedural mechanics of shareholder litigation in Romania involve several steps that international clients find unfamiliar. Claims must be filed in Romanian, accompanied by certified translations of all foreign-language documents. The court fee (taxa judiciară de timbru) is calculated as a percentage of the claimed value for patrimonial claims and at a fixed rate for non-patrimonial claims such as resolution annulments. Proceedings at first instance typically take between 12 and 24 months, depending on the complexity of the case and the workload of the relevant tribunal. Appeals add a further 12 to 18 months. Total litigation timelines of three to five years are not unusual for complex corporate disputes.

Management liability in Romanian corporate law is a field where the gap between formal legal rules and practical enforcement is significant. The Companies Law and the Civil Code together create a layered liability regime that can expose directors, administrators and managers to personal financial claims well beyond their remuneration.

Under Article 155 of Law No. 31/1990, directors of an SA are jointly and severally liable to the company for damages caused by acts that violate the law or the articles of association, or by negligent management. The liability action (acțiunea în răspundere) is brought by the company itself, following a resolution of the general meeting authorising the claim. If the general meeting refuses to authorise the claim - which happens frequently when the majority shareholders are aligned with the directors - minority shareholders holding at least 5% of the share capital may bring the action on behalf of the company under Article 155 paragraph 2. This derivative action mechanism is underused in Romania because many minority shareholders are unaware of it or find the procedural requirements burdensome.

A non-obvious risk for foreign executives serving as directors of Romanian subsidiaries is that Romanian criminal law also applies to management conduct. The Criminal Code (Codul penal) and Law No. 31/1990 both contain provisions criminalising fraudulent management (gestiunea frauduloasă), abuse of company assets, and false declarations in corporate documents. Criminal investigations can run in parallel with civil liability proceedings, and a criminal conviction creates a presumption of civil liability that significantly simplifies the plaintiff's burden of proof in subsequent civil proceedings.

The business judgment rule in Romania is not codified as explicitly as in common law jurisdictions, but courts have developed a consistent practice of evaluating management decisions against the standard of a prudent and diligent administrator (administratorul prudent și diligent), as referenced in Article 144 of the Companies Law. Directors who can demonstrate that a decision was made on the basis of adequate information, without a conflict of interest, and in the reasonable belief that it served the company's interests, generally avoid liability even if the decision ultimately caused a loss. The key evidentiary requirement is documentation: board minutes, financial analyses, legal opinions and correspondence that reconstruct the decision-making process.

A common mistake by international management teams is to treat Romanian board meetings as administrative formalities and to keep minimal minutes. When a dispute arises, the absence of documented deliberation leaves directors unable to invoke the business judgment defence. Retroactive documentation is not a viable strategy: Romanian courts and prosecutors are experienced at identifying inconsistencies in corporate records.

Directors also face liability under insolvency law. Law No. 85/2014 on insolvency procedures (Legea privind procedurile de prevenire a insolvenței și de insolvență) allows the insolvency administrator or creditors to bring liability claims against directors who contributed to the company's insolvency through fraudulent acts, continued trading while insolvent, or failure to file for insolvency within the mandatory 30-day period from the date the company became insolvent. Personal liability under insolvency law can extend to the full amount of the company's unpaid debts, making it one of the most financially significant risks for Romanian directors.

The most cost-effective approach to corporate disputes in Romania is prevention through well-drafted governance documents. Romanian law gives shareholders considerable freedom to customise the internal rules of their company, but this freedom is exercised within mandatory limits that differ significantly from common law jurisdictions.

The articles of association (actul constitutiv) are the primary governance document for both SRLs and SAs. Under Law No. 31/1990, the articles must be registered with the Trade Register (Registrul Comerțului) and are publicly available. Any provision in the articles that conflicts with mandatory statutory rules is void, but the articles can validly restrict share transfers, establish supermajority requirements for specific decisions, create multiple classes of shares in an SA, and define the scope of management authority. A well-drafted actul constitutiv reduces the scope for disputes by eliminating ambiguity about decision-making authority and shareholder rights.

Shareholder agreements (acorduri între acționari or pacte de acționari) are valid under Romanian law as contracts between the parties, but they do not bind the company or third parties and cannot override the articles of association. This is a critical limitation that many international investors fail to appreciate. A shareholder agreement that grants a veto right to a minority shareholder is enforceable between the parties as a contractual obligation, but it does not prevent the majority from passing a resolution in breach of that agreement at the general meeting level. The remedy for breach of a shareholder agreement is a damages claim or, in some cases, specific performance - not automatic annulment of the offending resolution.

Tag-along and drag-along rights, pre-emption rights and put/call options are all recognised and enforceable under Romanian contract law, but their enforcement requires court proceedings if a party refuses to comply. Courts have generally upheld these mechanisms when they are clearly drafted and do not violate mandatory provisions of the Companies Law. The enforcement timeline - typically 12 to 24 months for a first-instance judgment - is a practical limitation that parties should factor into their exit planning.

To receive a checklist of governance provisions recommended for Romanian SRL and SA structures, send a request to info@vlolawfirm.com.

Arbitration clauses in articles of association and shareholder agreements are valid under Romanian law. The Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania (Curtea de Arbitraj Comercial Internațional de pe lângă Camera de Comerț și Industrie a României, CCIR) administers domestic and international arbitrations. International parties frequently opt for ICC or LCIA arbitration with a seat outside Romania, which is permissible for disputes with an international element. The advantage of arbitration over court litigation is confidentiality and, in some cases, speed - though complex arbitrations can take as long as court proceedings. The disadvantage is cost: arbitration fees and legal costs in a significant corporate dispute can reach the mid-to-high tens of thousands of euros per party.

A non-obvious risk in Romanian arbitration practice is that arbitral awards must be enforced through the Romanian courts if the losing party does not comply voluntarily. The enforcement process (procedura de executare silită) adds time and cost, and courts have occasionally refused enforcement on public policy grounds in cases involving allegations of fraud or procedural irregularity in the arbitration.

Three scenarios illustrate how the legal framework operates in practice and where the critical decision points arise.

Scenario one: minority shareholder in an SRL challenging a dividend policy. A foreign investor holds 30% of an SRL. The majority shareholder, holding 70%, consistently votes against dividend distributions and instead approves management fees paid to a company controlled by the majority. The minority shareholder's options include: challenging the general meeting resolutions approving the management fees under Article 132 of Law No. 31/1990 on grounds of conflict of interest; requesting court appointment of an expert under Article 136 to investigate whether the management fees reflect genuine services; and bringing a liability claim against the administrator for breach of fiduciary duty. The most effective sequence is to begin with the expert appointment request, use the expert's report to build the evidentiary foundation, and then file the liability claim. Attempting to litigate the liability claim without the expert report typically results in dismissal for insufficient evidence. The total cost of this sequence, including legal fees, typically starts from the low tens of thousands of euros and can rise significantly depending on the complexity of the financial analysis required.

Scenario two: deadlocked SA with two equal shareholders. Two corporate shareholders each hold 50% of an SA operating a Romanian manufacturing facility. A disagreement over capital expenditure strategy has made it impossible to achieve the statutory quorum for extraordinary general meetings, which under Article 115 of Law No. 31/1990 requires at least 25% of share capital at second convening. The company cannot approve its annual budget, renew key contracts or make necessary investments. Options include: negotiated buyout, with one party acquiring the other's stake at a price determined by an independent valuer; court-ordered dissolution under Article 227, which requires demonstrating that the company can no longer function; and mediation under Law No. 192/2006 on mediation (Legea medierii), which is available but rarely used in Romanian corporate practice. The dissolution route is slow - typically 18 to 36 months - and destroys value. A negotiated buyout, even at a discount, is usually preferable. The risk of inaction is significant: a company that cannot adopt resolutions for more than six months faces increasing operational and regulatory risk, including potential loss of licences and contracts.

Scenario three: director liability claim following subsidiary insolvency. A Romanian subsidiary of a foreign group enters insolvency. The insolvency administrator, appointed by the court under Law No. 85/2014, investigates the subsidiary's financial history and identifies a series of intercompany transactions that transferred value to the parent group in the 24 months before insolvency. The administrator brings a liability claim against the Romanian directors - who were also employees of the parent group - arguing that the transactions were fraudulent and contributed to the insolvency. The directors face both civil liability for the full amount of the subsidiary's unpaid debts and potential criminal exposure under the Criminal Code. The parent group faces a separate claim for recovery of the transferred assets under the insolvency avoidance provisions of Article 117 of Law No. 85/2014, which allows the administrator to challenge transactions made within two years before the insolvency opening date if they were made at below-market value or with fraudulent intent. Early engagement of Romanian insolvency counsel - ideally before the insolvency filing - is essential to assess exposure and structure a defence. Waiting until the administrator files the liability claim significantly narrows the available options.

The most consequential risks in Romanian corporate disputes are not always the most obvious ones. Several patterns recur across different types of disputes and different types of clients.

Underestimating procedural formalism. Romanian civil procedure is highly formalistic. Claims must be structured correctly from the outset: the legal basis, the relief sought and the factual allegations must all be stated in the initial pleading (cererea de chemare în judecată). Courts are reluctant to allow substantial amendments after the first hearing. International clients accustomed to common law pleading standards, where claims can be refined through discovery and amended pleadings, often file inadequate initial pleadings that limit their options throughout the proceedings.

Ignoring the Trade Register. The Trade Register is the primary public record of corporate acts in Romania. Resolutions, changes in management, share transfers and amendments to the articles of association all take effect against third parties only upon registration. A shareholder agreement that grants pre-emption rights but is not reflected in the registered articles of association provides only contractual protection. A director who has been removed by a general meeting resolution but whose removal has not yet been registered in the Trade Register can still bind the company in dealings with good-faith third parties. Monitoring the Trade Register is a basic but frequently neglected governance practice.

Misreading the limitation periods. Romanian law applies different limitation periods to different types of corporate claims. The general limitation period under Article 2517 of the Civil Code is three years. The 15-day period for challenging general meeting resolutions under Article 132 of Law No. 31/1990 is far shorter. Liability claims against directors under the Companies Law are subject to a three-year period running from the date the damage was discovered or should have been discovered. Insolvency avoidance claims have their own limitation periods under Law No. 85/2014. Missing any of these deadlines is fatal to the claim and cannot be remedied.

Assuming that foreign judgments are automatically enforceable. A foreign court judgment against a Romanian company or director requires recognition and enforcement proceedings in Romania under the Civil Procedure Code and, where applicable, EU Regulation 1215/2012 (Brussels I Recast). For judgments from EU member states, the process is relatively straightforward, but it still requires filing a formal application with the competent Romanian court. For judgments from non-EU jurisdictions, the process is more demanding and requires proof of reciprocity. The enforcement timeline adds months to the recovery process, and Romanian courts have occasionally refused enforcement on procedural grounds.

Overlooking criminal exposure. Romanian prosecutors are active in investigating corporate disputes that involve allegations of fraud, embezzlement or abuse of company assets. A civil dispute can acquire a criminal dimension quickly, particularly if one party files a criminal complaint (plângere penală) as a tactical move. Criminal investigations impose significant costs and reputational risks on management, even if they ultimately result in no charges. Directors of Romanian companies should be aware of this risk and should ensure that their governance practices and documentation standards are robust enough to withstand prosecutorial scrutiny.

The loss caused by an incorrect litigation strategy in Romanian corporate disputes is not limited to legal fees. A failed challenge to a general meeting resolution leaves the challenged resolution in force and may exhaust the shareholder's procedural options for that particular decision. A premature dissolution application that courts reject signals weakness to the counterparty and may foreclose a negotiated solution. A liability claim filed without adequate evidence is dismissed and may be used by the defendant to obtain a costs award against the claimant.

What is the most significant practical risk for a minority shareholder in a Romanian company?

The most significant practical risk is the erosion of value through related-party transactions that benefit the majority shareholder at the company's expense. Romanian law requires disclosure of conflicts of interest under Article 144 of Law No. 31/1990, but enforcement depends on the minority shareholder actively monitoring the company's transactions and challenging them within the applicable deadlines. A minority shareholder who does not regularly review the company's financial statements, Trade Register filings and general meeting minutes may discover the damage only after the limitation period has run. The practical defence is to negotiate information rights and audit rights into the articles of association or a shareholder agreement before the dispute arises, and to exercise those rights systematically.

How long does a corporate dispute in Romania typically take, and what does it cost?

A first-instance judgment in a corporate dispute before a Romanian tribunal typically takes between 12 and 24 months from the date of filing. An appeal to the Court of Appeal adds 12 to 18 months, and a further appeal to the ICCJ can add another 12 to 24 months. Total litigation from filing to final judgment can therefore take three to six years in complex cases. Legal fees vary considerably depending on the complexity of the dispute and the seniority of counsel, but parties should budget from the low tens of thousands of euros for straightforward proceedings and significantly more for complex multi-party disputes. Court fees are calculated as a percentage of the claimed value for patrimonial claims and are payable at the outset, which can represent a meaningful upfront cost in high-value disputes.

When is arbitration a better choice than court litigation for Romanian corporate disputes?

Arbitration is preferable when confidentiality is a priority, when the parties are from different jurisdictions and neither trusts the other's home courts, or when the dispute involves technical commercial issues that benefit from a specialist arbitral tribunal. Arbitration is less suitable when interim measures are needed urgently - Romanian courts can grant interim injunctions (ordonanță președințială) within days, while arbitral tribunals take longer to constitute - or when one party lacks assets in Romania and enforcement will be needed in multiple jurisdictions. For disputes between Romanian parties with assets in Romania, court litigation is often more cost-effective than arbitration. The choice should be made at the time of drafting the governance documents, not after the dispute has arisen, because changing the dispute resolution mechanism once a conflict has started requires the agreement of both parties.

Corporate disputes in Romania demand early legal engagement, precise procedural execution and a clear understanding of the gap between formal rights and practical enforcement. The legal framework is comprehensive but unforgiving of procedural errors, missed deadlines and inadequate documentation. Management and shareholders who invest in sound governance structures before disputes arise - and who engage experienced Romanian counsel at the first sign of conflict - consistently achieve better outcomes than those who react after the situation has deteriorated.

To receive a checklist of priority actions for managing a corporate dispute in Romania, send a request to info@vlolawfirm.com.

Our law firm VLO Law Firm has experience supporting clients in Romania on corporate dispute matters. We can assist with shareholder litigation strategy, management liability defence, governance document review, arbitration proceedings and enforcement of foreign judgments. To receive a consultation, contact: info@vlolawfirm.com.