This content is from: Local Insights

Reformation of the Trade Register

Similar to commercial registers in other countries of the EU, the Romanian Trade Register is an entity handling the incorporation and authorisation of new companies, the changes in a company's statutory structure and the formalities meant to ensure legal publicity towards third parties. The Trade Register is under the authority of the Ministry of Justice.

On August 15 2009, as the financial crisis and the distress caused by it reached their peak, Romanian judges initiated a strike, hampering the activity of the courts and the related public institutions. As the entire registration procedure relating to companies was dependent upon a final approval by a specially appointed judge at the Trade Register, the business community was suddenly unable to perform its commercial activities in a sound legal environment.

After five months of deadlock, during which companies had their registration requests scheduled as long as until March 2011 and unsettled files reached staggering numbers, on December 29 2009 the Romanian Government passed Emergency Government Ordinance 116/2009 providing for a new registration procedure at the Trade Register.

As a result, starting January 14 2010, the majority of the registrations with the Trade Register, such as share capital increases, share transfers, management changes or voluntary dissolutions, are to be handled by the director of each local Trade Register or by the persons appointed to this end by such directors. The director will pass resolutions approving or denying the registration requests of companies in the respective region. The resolutions of the Trade Register director may be challenged at the Trade Register where the registration request was filed within 15 days of their issuance, and will be tried by the commercial section of the corresponding local court (Romanian Tribunal).

As opposed to the previous situation, when as a general rule company-related filings were subject to a judicial procedure under the Romanian civil procedure, during which companies through their representatives appeared in front of the judge and endorsed their registration publicly, with legal arguments, the new system is not public except if it is expressly requested by the applicant. However, as under the previous system, the director of the Trade Register or the persons appointed by him may also summon the applicant to provide clarifications or additional documents with respect to the registration request.

The Ordinance provides that if the documents in support of a registration request are not in compliance with the legal requirements, the applicant's request is postponed for a maximum of 15 days, which may be extended once for the same period. If at the end of such term, the company does not fulfill its obligations, the registration application will be denied.

Although, as mentioned above, the director of the Trade Register has the authority to approve most of the companies' filings, the courts will still rule over several matters considered more important with respect to the rights of the parties. Consequently, the court located at the company's registered office will have jurisdiction over: (i) cases of dissolution by virtue of law, (ii) the appointment of liquidation practitioners in cases of dissolutions by virtue of law and (iii) the approval of mergers (including cross-border mergers) and spin-offs.

Moreover, whenever a third party submits a request to intervene with respect to a certain filing, in order to defend a personal interest contrary to that of the applicant, the Trade Register will defer the matter to the court located at the registered office of the company which filed the registration request.

These changes, aimed at transforming a mainly judicial procedure into a simplified administrative one, are merely the first steps of an extensive overhaul of the whole public registration procedure concerning companies. Within six months of the entry into force of the Ordinance, the Romanian Government undertook to present Parliament with a law establishing the framework for the appointment of specialised clerks in charge with registrations at the Trade Register.

The changes have been felt quickly by the business community, given that files with terms well into 2010 have already been solved. The new system is expected to be more expedient and suitable to commercial needs, allowing companies to develop their activities in a sound legal and business environment, without additional bureaucratic hindrance.

Alexandru Campean

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