Corporate Law & Governance in Romania

Romania's corporate legal framework is governed primarily by Law No. 31/1990 on Companies (Legea societăților comerciale), supplemented by the Civil Code and capital markets legislation. International investors structuring a Romanian entity or managing an existing one face a layered system of mandatory governance rules, shareholder protections and liability exposure that differs materially from Western European norms. This article maps the key legal tools available under Romanian corporate law, identifies the most common structural and procedural mistakes made by foreign clients, and explains how to manage governance risk across the full lifecycle of a Romanian company.

Romanian company law draws on a continental European tradition heavily influenced by French and German models, yet it retains procedural specificities that regularly surprise foreign counsel. The primary statute, Law No. 31/1990, has been amended more than thirty times since its adoption, creating a layered text where transitional provisions and later amendments interact in non-obvious ways.

The Civil Code (Codul Civil), in force since 2011, introduced unified rules on legal persons, obligations and contracts that now run in parallel with Law No. 31/1990. Where the two instruments conflict, the special company law generally prevails, but gaps in the company law are filled by Civil Code provisions. Practitioners who rely exclusively on one source routinely miss obligations arising from the other.

The Trade Register (Registrul Comerțului), operated by the National Trade Register Office (Oficiul Național al Registrului Comerțului, ONRC), is the central public registry for all Romanian companies. Registration at ONRC is constitutive - a company does not acquire legal personality until the registration certificate is issued. This matters for timing: a shareholders' agreement signed before registration has no binding effect on the company itself, only on the individual signatories.

The National Securities Commission (Autoritatea de Supraveghere Financiară, ASF) regulates listed companies and capital market participants. Its governance requirements under ASF Regulation No. 5/2018 go significantly beyond the baseline of Law No. 31/1990, imposing audit committee obligations, related-party transaction disclosure and independent director thresholds that apply automatically once a company's shares are admitted to trading on the Bucharest Stock Exchange (Bursa de Valori București, BVB).

A non-obvious risk for foreign investors is the interaction between Romanian corporate law and EU Directive 2017/828 (the Shareholder Rights Directive II), transposed into Romanian law through Law No. 74/2019. This directive applies to listed companies but its transparency and engagement principles increasingly influence judicial interpretation of fiduciary duties even in private companies.

Romanian law recognises several company forms, but international business practice concentrates on two: the private limited liability company (societatea cu răspundere limitată, SRL) and the joint-stock company (societatea pe acțiuni, SA).

The SRL is the dominant vehicle for foreign direct investment in Romania. It requires a minimum share capital of 200 Romanian lei (RON), which is negligible, and can be formed by a single shareholder. Shares in an SRL are not freely transferable - Article 202 of Law No. 31/1990 grants existing shareholders a right of first refusal, and transfer to third parties requires the approval of shareholders representing at least three-quarters of the share capital unless the articles of association provide otherwise. This restriction is frequently overlooked by foreign investors who assume they can exit freely.

The SA is mandatory for companies exceeding certain thresholds or operating in regulated sectors such as banking, insurance and capital markets. It requires a minimum share capital of 90,000 RON (approximately 18,000 EUR at current rates), with at least 30% paid up at incorporation and the balance within twelve months. An SA may issue multiple classes of shares, including preference shares without voting rights, which makes it the preferred vehicle for private equity and venture capital structures.

Formation of either entity requires:

• Drafting and notarising the constitutive act (articles of association and, for multi-shareholder companies, the memorandum of association)
• Reserving the company name at ONRC
• Opening a bank account and depositing share capital
• Filing the registration application at ONRC, either in person or through the online portal

ONRC processes standard applications within five business days. Expedited processing (within one business day) is available for an additional fee. Legal fees for a straightforward SRL formation typically start from the low hundreds of EUR, rising to the low thousands for an SA with complex share structures.

A common mistake made by international clients is treating the constitutive act as a boilerplate document. Romanian courts have consistently held that provisions not expressly included in the constitutive act cannot be implied from general commercial practice. Governance rights - reserved matters, veto rights, tag-along and drag-along mechanisms - must be embedded in the constitutive act or in a shareholders' agreement that is expressly incorporated by reference. A standalone shareholders' agreement that conflicts with the constitutive act will be unenforceable against the company.

To receive a checklist for company formation in Romania, send a request to info@vlolawfirm.com.

A shareholders' agreement (acord de acționari or convenție între asociați) is a private contract between shareholders. Under Romanian law, it binds only the parties who sign it. It does not bind the company, future shareholders who have not acceded to it, or third parties. This structural limitation has significant practical consequences.

Romanian courts apply general contract law principles from the Civil Code to shareholders' agreements. Specific performance (executarea silită în natură) is available in principle, but Romanian courts are reluctant to order it where the obligation involves a personal act such as voting in a particular way. Damages are the more reliable remedy, which means a shareholder who breaches a voting undertaking may simply pay compensation rather than being compelled to vote correctly.

To achieve governance certainty, experienced practitioners use a two-document structure: a shareholders' agreement for commercial terms and confidential provisions, combined with a constitutive act that incorporates the key governance mechanisms as mandatory statutory provisions. Reserved matters requiring unanimous or supermajority approval, board composition rights, and transfer restrictions should appear in the constitutive act. Drag-along and tag-along rights, information rights and non-compete obligations are typically placed in the shareholders' agreement.

Board governance in an SRL is simpler than in an SA. An SRL is managed by one or more administrators (administratori) appointed by the shareholders. There is no mandatory supervisory board. An SA may adopt either a unitary board structure (consiliu de administrație) or a two-tier structure (directorat and consiliu de supraveghere). The two-tier structure, modelled on the German Aufsichtsrat, is mandatory for credit institutions and certain regulated entities.

Under Article 153 of Law No. 31/1990, SA directors owe fiduciary duties of loyalty and care to the company. The business judgment rule (regula judecății de afaceri) has been recognised by Romanian courts as a defence against liability for good-faith business decisions, but its scope is narrower than in common law jurisdictions. Directors who approve transactions with related parties without following the procedure in Article 150 of Law No. 31/1990 face personal liability for resulting losses.

Minority shareholder protection is a recurring issue in Romanian corporate practice. Shareholders holding at least 5% of share capital in an SA (or any percentage in an SRL) may request the convening of a general meeting. Shareholders holding at least 10% may request a special audit of company management under Article 136 of Law No. 31/1990. These thresholds are mandatory and cannot be increased by the constitutive act, though they can be lowered.

In practice, it is important to consider that Romanian minority shareholders frequently use the special audit mechanism as a precursor to derivative litigation or to negotiate an exit. Foreign majority shareholders who dismiss such requests as tactical manoeuvres often find themselves facing parallel proceedings - a special audit, a general meeting challenge and a damages claim - simultaneously.

Romanian corporate disputes are heard by specialised commercial sections (secții comerciale) of the district courts (tribunale). The Bucharest Tribunal handles the largest volume of corporate litigation in Romania, given the concentration of registered companies in the capital. Appeals go to the Courts of Appeal (Curți de Apel), and final cassation appeals to the High Court of Cassation and Justice (Înalta Curte de Casație și Justiție, ICCJ).

The most common corporate disputes in Romania involve:

• Challenging general meeting resolutions (acțiunea în anularea hotărârii AGA)
• Director liability claims (acțiunea în răspundere contra administratorilor)
• Shareholder exclusion proceedings (excluderea asociatului)
• Dissolution and liquidation disputes

Challenging a general meeting resolution is subject to a strict limitation period. Under Article 132 of Law No. 31/1990, an action to annul a resolution must be filed within fifteen days of publication of the resolution in the Official Gazette (Monitorul Oficial). Missing this deadline is fatal - Romanian courts apply it as a period of forfeiture (termen de decădere), not a limitation period, meaning it cannot be suspended or interrupted. A common mistake is for foreign shareholders to wait for legal advice before acting, only to find the deadline has passed.

Director liability claims under Article 155 of Law No. 31/1990 may be brought by the company (through a general meeting resolution), by individual shareholders acting derivatively, or by creditors in insolvency. The general limitation period is three years from the date the claimant knew or should have known of the damage. Proving causation between a director's act and the company's loss is the central evidentiary challenge in Romanian courts.

Shareholder exclusion is a remedy unique to the SRL. Under Article 222 of Law No. 31/1990, a shareholder may be excluded by court order if they obstruct company activity, misuse company assets or fail to make their capital contribution. The excluded shareholder receives the value of their shares as determined by a court-appointed expert. This mechanism is frequently used in deadlocked two-shareholder SRLs where one party seeks to exit or remove the other.

Romanian courts have developed a body of practice on the valuation of excluded shareholders' interests. Courts generally instruct forensic accountants to apply a going-concern valuation, but the methodology is not standardised. Disputes about valuation methodology add significant time and cost to exclusion proceedings, which typically take between eighteen months and three years from filing to final judgment.

International arbitration is available for corporate disputes where the parties have agreed to it. Romania is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Romanian Code of Civil Procedure (Codul de Procedură Civilă) contains a dedicated arbitration title (Title IV) that broadly follows the UNCITRAL Model Law. The Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania (CCIR) is the primary domestic arbitral institution.

A non-obvious risk is that certain corporate law matters are considered non-arbitrable under Romanian law. Challenges to general meeting resolutions, shareholder exclusion proceedings and company dissolution actions must be brought before state courts. Parties who include broad arbitration clauses in their shareholders' agreements sometimes discover that the specific dispute they face falls outside the scope of what Romanian law permits to be arbitrated.

To receive a checklist for managing corporate disputes in Romania, send a request to info@vlolawfirm.com.

Romanian M&A transactions are governed by a combination of Law No. 31/1990, the Civil Code, competition law (Law No. 21/1996 on Competition), and, for listed companies, capital markets legislation. The Competition Council (Consiliul Concurenței) reviews concentrations that meet Romanian or EU thresholds. Transactions below EU thresholds but above Romanian thresholds must be notified to the Competition Council before closing.

The two principal acquisition structures in Romanian practice are share deals and asset deals. A share deal transfers ownership of the company as a going concern, including all liabilities. An asset deal transfers specific assets and, where applicable, specific contracts and employees. Romanian law does not provide for a statutory business transfer mechanism equivalent to the English law TUPE regime, but Article 173 of the Labour Code (Codul Muncii) requires that employees be informed and consulted before a transfer of undertaking.

Due diligence in Romania requires particular attention to:

• ONRC filings and the accuracy of registered information
• Encumbrances registered in the Electronic Archive of Security Interests (Arhiva Electronică de Garanții Reale Mobiliare, AEGRM)
• Tax liabilities and pending fiscal inspections with the National Agency for Fiscal Administration (Agenția Națională de Administrare Fiscală, ANAF)
• Environmental permits and urban planning certificates for real property

A recurring issue in Romanian M&A is the gap between registered and actual corporate governance. Romanian companies frequently operate under informal arrangements that are not reflected in the constitutive act or ONRC filings. Undisclosed shareholders, de facto directors and unregistered pledges over shares are discovered during due diligence more often than in comparable Western European transactions. Buyers who rely on ONRC extracts without independent verification of the underlying corporate records take on material undisclosed risk.

Mergers and divisions of Romanian companies follow the procedure in Articles 238-251 of Law No. 31/1990. A merger requires approval by the general meetings of all participating companies, publication of the merger plan in the Official Gazette, a thirty-day creditor objection period, and registration of the merged entity at ONRC. The entire process typically takes between three and six months for a straightforward domestic merger. Cross-border mergers involving EU companies are governed by Directive 2017/1132 as transposed into Romanian law, adding a legality certificate requirement issued by the Romanian court.

Private equity and venture capital transactions in Romania increasingly use convertible instruments and preference share structures. Romanian law permits the issuance of preference shares (acțiuni preferențiale) in an SA under Article 95 of Law No. 31/1990, but the statutory framework for convertible notes is less developed than in common law jurisdictions. Practitioners typically structure convertible instruments as loan agreements with contractual conversion rights, combined with a shareholders' agreement governing the mechanics of conversion. The enforceability of anti-dilution provisions and ratchet mechanisms has not been extensively tested in Romanian courts, which creates residual uncertainty for investors relying on these protections.

We can help build a strategy for structuring your Romanian acquisition or investment vehicle. Contact info@vlolawfirm.com to discuss the specifics of your transaction.

Romanian corporate governance compliance operates on two levels: mandatory statutory requirements applicable to all companies, and enhanced requirements for listed companies and regulated entities. Failure to comply with mandatory requirements exposes directors, administrators and controlling shareholders to civil, administrative and criminal liability.

The key mandatory governance obligations under Law No. 31/1990 include:

• Maintaining accurate and up-to-date ONRC registrations, including changes to administrators, registered office and share capital
• Holding annual general meetings within five months of the financial year end
• Preparing and filing annual financial statements with the Ministry of Finance within 150 days of the financial year end
• Maintaining the shareholders' register (registrul asociaților or registrul acționarilor) and recording all share transfers

Failure to hold the annual general meeting or file financial statements on time triggers administrative fines. More significantly, directors who allow a company to continue trading while insolvent face personal liability under the Insolvency Law (Legea nr. 85/2014). Article 169 of Law No. 85/2014 allows the insolvency administrator or creditors to bring a claim against directors for the portion of the company's debts attributable to their wrongful conduct. Romanian insolvency courts have applied this provision broadly, including to de facto directors and controlling shareholders who directed company affairs without formal appointment.

The criminal exposure for corporate governance failures in Romania is broader than many foreign executives expect. The Criminal Code (Codul Penal) contains provisions on abuse of office (abuz în serviciu), fraudulent management (gestiune frauduloasă) and false statements in official documents. Administrators who sign financial statements they know to be inaccurate, or who cause the company to enter into transactions designed to extract value at the expense of creditors, face criminal prosecution in addition to civil liability.

Many underappreciate the risk of joint and several liability between co-administrators. Under Article 144 of Law No. 31/1990, administrators who act collectively are jointly and severally liable for decisions taken by the board. An administrator who disagrees with a board decision must record their dissent in the board minutes to avoid being swept into collective liability. Foreign executives serving as nominal directors on Romanian boards without active involvement in management are particularly exposed to this risk.

The loss caused by incorrect governance strategy can be substantial. A foreign investor who structures a Romanian subsidiary without proper governance documentation, relies on informal arrangements and fails to maintain statutory records may find, on exit or in a dispute, that the company's value is impaired by undisclosed liabilities, contested ownership and unenforceable governance rights. The cost of remediation - restructuring the corporate documents, regularising ONRC filings and resolving accumulated compliance failures - typically runs to the low tens of thousands of EUR in professional fees, before accounting for any litigation.

For listed companies, ASF Regulation No. 5/2018 requires adoption of a corporate governance code, disclosure of related-party transactions above defined thresholds, and establishment of an audit committee with at least one independent member. The BVB Corporate Governance Code (Codul de Guvernanță Corporativă al BVB) operates on a comply-or-explain basis, but ASF enforcement of the underlying regulatory requirements is mandatory. Non-compliant listed companies face ASF sanctions, trading suspensions and reputational damage that affects share liquidity.

To receive a checklist for corporate governance compliance in Romania, send a request to info@vlolawfirm.com.

What is the main practical risk when drafting a shareholders' agreement for a Romanian company?

The central risk is that a shareholders' agreement that is not reflected in the constitutive act will be unenforceable against the company and against shareholders who did not sign it. Romanian courts treat the constitutive act as the primary governance document and will not give effect to contractual provisions that contradict it. Governance rights such as veto powers, reserved matters and transfer restrictions must be embedded in the constitutive act to be binding on the company. A shareholders' agreement is a useful supplement for confidential commercial terms, but it cannot substitute for proper statutory documentation.

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

First-instance proceedings in Romanian corporate disputes typically take between one and three years, depending on the complexity of the case and the workload of the relevant tribunal. Appeals extend the timeline by a further one to two years. Costs depend heavily on the amount in dispute and the procedural complexity. Legal fees for first-instance proceedings in a mid-size corporate dispute typically start from the low tens of thousands of EUR. Court fees (taxe judiciare de timbru) are calculated as a percentage of the value of the claim for monetary disputes, and as fixed amounts for non-monetary corporate actions such as resolution challenges. Parties should budget for expert witness fees, translation costs and potential enforcement costs in addition to legal fees.

When should a foreign investor choose an SA over an SRL for a Romanian subsidiary?

The SRL is the right choice for most operational subsidiaries, joint ventures with a small number of partners, and holding structures where share transferability is not a priority. The SA becomes necessary when the investor anticipates bringing in multiple investors through a share issuance, listing the company on BVB, operating in a regulated sector that mandates the SA form, or issuing preference shares to private equity investors. The SA's higher administrative burden - mandatory auditor appointment, more complex general meeting procedures, and stricter capital maintenance rules - is justified only when the flexibility of its share capital structure is genuinely needed. A common mistake is to form an SA by default because it sounds more substantial, without considering that the governance and compliance costs are materially higher than for an SRL.

Romanian corporate law offers a functional and EU-compliant framework for international business, but its practical application requires careful navigation of statutory formalities, mandatory governance rules and procedural deadlines that differ from both common law and other civil law systems. The gap between formal legal requirements and actual market practice is wider in Romania than in more mature EU jurisdictions, making thorough due diligence and precise documentation essential. Investors who invest in proper governance structuring at the outset avoid the significantly higher costs of remediation and litigation later.

Our law firm VLO Law Firm has experience supporting clients in Romania on corporate law and governance matters. We can assist with company formation, shareholders' agreement drafting, board governance structuring, M&A due diligence, corporate dispute resolution and compliance with Romanian statutory requirements. To receive a consultation, contact: info@vlolawfirm.com.