Introduction In Commercial Law

The notion of commercial law

Etymologically, the term “commerce” is juxtaposition between the Latin words “cum” meaning activity or way to
do, and “mex” meaning goods or merchandise. Thus the word commercium means any human activity related to
goods or carried on by merchants.

The term “commerce” has different meanings:

*from the economical point of view, “commerce” is that economic activity located at mid way between
“production” and “consumption”, which facilitates the distribution and the circulation of goods. So we can
conclude that commerce, as a phase of the economic activity, has to provide the consumers with all necessary
goods they need.

On the other hand, trade is more than a simple connection between the different stages of economic activity.
Indeed, depending on the way it is carried on, all the other elements are influenced. For instance, the production
of goods can be achieved only if it was supplied with raw materials or the consumption depends on how fast the
trade foresees the consumer’s needs and how fast it secures them. In this respect, the economical circuit is
reversed and complex. It starts with the consumption foresight and then follows the production.

The relationship “claim-offer” within the framework of a market is not a figure of speech, but it has a real
economical content, because each partner, no matter if he is a producer, distributor or merchant, pursues his
own lawful economic gain.

*from the juridical point of view, the term “trade” has a broad meaning, because it includes the production as
well as the distribution and circulation of merchandise. Moreover, some human activities such as agriculture and
handicrafts are not recognized by law as being commercial activities.

The legal regulation of trade is a very old and constant preoccupation of people. The Romans regulated, for the
first time, the juridical relationships between people themselves and related to goods “in commercio”, meaning
goods which are in the trade framework. Even if the modern juridical doctrine does not consider the Roman law
as a source of commercial law, the provisions of “jus civile” and especially of “jus gentium” were a necessary
step ahead for the present commercial regulations.

Commercial Law is that ensemble of juridical norms applicable to juridical relations based on commercial acts,
facts and operations as juridical relations between merchants.

The history of the Romanian Commercial Law

In its beginnings the Romanian commercial law was based on the community’s rules or on some foreign laws.

The first written rules that had elements of commercial law were Andronache Donici’s Code (1814), Caragea
Code (1817) from Muntenia and Calimach Code (1828) from Moldavia.

The Organic Regulations of Muntenia and Moldavia (1831) represent rules with constitutional features which had
certain commercial aspects.

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After the unification of Muntenia and Moldavia took place, the commercial rules started borrowing elements of
French legislation. This process was finalized by adopting the present Romanian Commercial Code.

Our Commercial Code was adopted in 1887, having as main model the Italian Commercial Code, one of French
inspiration. It was abrogated by the new Civil Code which entered into force in 2011

The objective of Commercial Law

The commercial law has as objective mainly the social patrimonial relations, with commercial character and the
personal (no-patrimonial) relations.

The features of commercial law

1. Commerciality

The commerciality can be determined in two ways:

a) Subjective system – commercial law has as objective the juridical rules applicable to merchants, so the
commercial law is a professional law because we apply it to all persons that are merchants.

According to this system, the commercial fact has the following features:

 is performed by a merchant
 is performed as a profession
 the main objective is to obtain profit

b) Objective system – commercial law has as objective the juridical rules applicable to trade, so it means those
commercial facts, acts or operations qualified as facts of commerce, no matter who does them.

The Romanian Commercial Code is based, as principle, on the objective system, proof of that is article 3 that
presents juridical acts, facts and operations considered commercial facts.

        2.   Juridical equality

In contractual relations, the will of one party is not subordinated to the other, but each one is free to negotiate the
provisions.

This free will of the parties is a result of the supletive or dispositive juridical rules, as the free will principle
provided by Civil Code

        3.   Rapidity, simplicity, security and credit

The commercial rules provide instruments which help the fast circulation of goods (for example circulation of
shares, bonds etc)

The fast process of business activity is assured by the acceptance, in commercial law, of any type of evidence
and of the simplified contracting forms (the acceptance of written offer or the execution of a written/oral offer).

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The commercial law is founded on the idea of credit, which has two meanings:

a)    The postponing of payment

b)    The trust between partners

The Sources of Commercial Law

1. The Constitution – regulates general principles of economical and legal activity.

Art. 135: (1) Romania’s economy is a free market economy, based on free enterprise and competition.

            (2) The State must secure:

a) a free trade, protection of fair competition, provision of a favourable framework in order to stimulate and
capitalize every factor of production;

b) protection of national interests in economic, financial and currency activity;

c) stimulation of national scientific and technological research, arts, and protection of copyright;

d) exploitation of natural resources, in conformity with national interests;

e) environmental protection and recovery, as well as preservation of the ecological balance;

f) creation of all necessary conditions so as to increase the quality of life.

g) implementation of regional development policies in compliance with the objectives of the European Union.

            Knowing that the commercial relations are based, just like the civil ones, on the property, our
Constitution guaranties the public and private property:

Art.136: (1) Property is public or private.

            (2) Public property is guaranteed and protected by the law, and belongs to the State or to territorial-
administrative units.

            (3) The mineral resources of public interest, the air, the waters with energy potential that can be used
for national interests, the beaches, the territorial sea, the natural resources of the economic zone and the
continental shelf, as well as other possessions established by the organic law, shall be public property
exclusively.

            (4) Public property is inalienable. Under the terms of the organic law, the public property can be
managed by autonomous régies or public institutions, or can be granted or leased; also, it can be transferred for
free usage to public utility institutions.           (5) Private property is inviolable, in accordance with the organic
law

            Art. 44: (1) The right of property, as well as the debts incurring on the State are guaranteed. The
content and limitations of these rights shall be established by law.

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            (2) Private property shall be equally guaranteed and protected by the law, irrespective of its owner.
Foreign citizens and stateless persons shall only acquire the right to private property of land under the terms
resulting from Romania’s accession to the European Union and other international treaties Romania is a party
to, on a mutual basis, under the terms stipulated by an organic law, as well as a result of lawful inheritance.

            (3) No one shall be expropriated, except on grounds of public utility, established according to the law,
against just compensation paid in advance.

            (4) The nationalization or any other measures of forcible transfer of assets to public property based on
the owners’ social, ethnic, religious, political, or other discriminatory features.

            (5) For projects of general interest, the public authorities are entitled to use the subsoil of any real
estate with the obligation to pay compensation to its owner for the damages caused to the soil, plantations or
buildings, as well as for other damages imputable to these authorities.

            (6) Compensation provided under paragraphs (3) and (5) shall be agreed upon with the owner, or by
the decision of the court when a settlement cannot be reached.

            (7) The right of property compels to the observance of duties relating to environmental protection and
ensurance of neighbourliness, as well as of other duties incumbent upon the owner, in accordance with the law
or custom.

            (8) Legally acquired assets shall not be confiscated. Legality of acquirement shall be presumed.

            (9) Any goods intended for, used or resulting from a criminal or minor offence may be confiscated only
in accordance with the provisions of the law.

2. Civil Code

3. Special Laws

a) Laws (stricto sensu) – like 31/1990 (regarding commercial companies); 26/1990 (Register of Trade); 64/1995
(Reorganization and Bankruptcy) etc

b) law-Decrees

c) Government Decisions

d) Rules, Regulations and Orders

4. Custom (Usage) – interpretative source of the commercial law, their purpose being of helping the
interpretation of the parties will.

The Subjects Of Commercial Law

The Professionals

Legal basis: art. 3 Civil code :

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1) The provisions of the Code apply to both relations between professional and those between professionals
and other subjects of civil law

2) Are considered professionals all those managing an enterprise.

The new civil code has erased the term ’’merchant’’ and it has introduced a new one: professional which
includes all persons licensed to perform economic activities.

Art. 8 from law no. 71/2011 (the law issued for the entering into force of the Civil code) stipulates the
professional includes all types of merchants, enterprises, commercial agents and any other persons authorized
to exercise economic or professional activities.

The new Civil code presents the professional as the one managing an enterprise, the activity of this enterprise
being an systematic exercise for producing, administrating or selling goods, services.

Classification of professionals

For the moment, the doctrine hasn’t presented a clear classification of professionals, but, the provisions of the
Civil Code and the law no 71/2011 help us issue one:

a)      Merchants: commercial companies, individual merchants, co-operative organizations, economic interests
groups, state institutions, etc

b)      Liberal professions: attorneys, doctors,

c)      Foundations, Associations, Unions

d)     Public institutions

The Merchants

Conditions:

a) The legal capacity

Can be defined as being the natural person’s abstract and general ability to have rights and obligations and to
exercise their rights and to assume their obligations by concluding juridical acts on their own name.

The legal capacity deals with two issues:

1) The abstract capacity – the persons’ ability to have rights and obligations (granted to each human being from
the moment of irth or, by exception, from the moment of his conception)

2) The concrete capacity – the person’s capacity to exercise their rights or to assume their obligations by
concluding on their own name juridical acts (granted at the age of 18 years old and a restrained capacity from 14
or 16 years old)

Incapacities

Do not have legal capacity:

– underage persons

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Full capacity from 18 years old and special cases:

1) married person after 16 years old (art. 39 Civil code)

2) by court decision (art. 40 Civil code)

3) member of family enterprise (art. 8 oug 44/2008)

Incompatibilities

The commercial activity is incompatible, because its speculative character, with certain positions and
professions like: deputies, senators, public persecutors, judges, officers, public servants / attorneys, doctors;

Declines

The commercial system has to respect the legal provisions regarding the public order.

According to Law nr.12/1990, Criminal Code, Law nr.26/1990 and Law nr. 31/1990, a person who was convicted
of a criminal act incompatible with the commercial activity (like: theft; taking/offering bribe), cannot be a
merchant.

Interdictions

In order to protect general interests, economical, social or moral ones, some activities cannot be done by private
persons, but only by the state (for example: fabrication and commercialization of guns, drugs, narcotics with
other purpose than medicine)

Interdictions (legal or conventional)

Are due to legal interdictions or the parties’ will

– Legal incapacities – related to public monopoly domains (e.g. mine exploitation) or to public order requests
(existence of a labor permit –e.g. foreigners)

–  Conventional incapacities (general/special):

– continuation of trade in case of selling the stock trade (good will)

– exclusive distributor

– franchisee position

 b) Name and risk

Name = “firm” (according to Law no.26/1990)

Exception = permanent commercial agent is merchant according to art.1 par.5 Law no.509/2002.

Permanent commercial agent is a natural or legal person who acts as independent intermediary and is entitled
constantly

– to negotiate business for other natural or legal person

–  to conclude business operations on the name and on behalf of the principal

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Note: It carries on its intermediation acts as principal or accessory acts in exchange of a remuneration => he
carries on trade activity as a profession

Auxiliary of trade are not merchants (perform commercial acts/facts on the name of their employer):

– pre-posed agent (prepus)

– shop vendor (vănzător)

– delegate

– commercial traveler (comis-voiajor)

Risk = unlimited liability => debtor of all its commercial obligations ─> commercial creditors (as simple creditors)
have as warranty the merchant’s entire present or future “fortune” (patrimony)

The merchant has to reduce the risk which is objective => clauses for modification /adaptation of parties’
obligations

c) Profitability of merchant’s activity

Finis mercatorum est lucrum = the activity has to be completed with a certain gain necessary to cover the
needs of his own existence and of his family, the activity has a speculative character => non-profit activities are
excluded

Important is the intention to obtain profit and not the obtainment itself.

It has no relevance if the activity is his only source of revenue or not.

d) merchant’s authorization and registration

The authorization and registration in Register of Trade is imposed by art.1 of law 26/1990 for:

1. individual merchants, individual enterprises, family enterprises,

2. commercial companies;
3. cooperative organizations;
4. cooperative companies
5. state companies and national companies
6. economic interest groups
7. european companies
8. european cooperative companies
9. european interest groups

Authorization is an administrative act issued by the Register of Trade.

Professional knowledge or practice can be proved with the following documents: college or university diploma or
certificate of graduation, certificate of professional competences, labor book that proves at least 2 years of work
within the activity for which the authorization is requested.

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Art.1 para.1 of Law no.26/1990 modified and republished and art.16 of Law no 300/2004: “the merchants have
the obligation to request the registration within the Register of Trade, before the beginning of their activity or
during it, or at the end of it, and to request the registration within the same register of all mentions regarding acts
or facts that are submitted to registration by law”.

The professional obligations of merchants

These professional obligations of merchants are provided by the law in order to protect the public interests, as
well as the interests of third parties and merchants themselves. Thus, the merchants are obliged to accomplish
certain formalities of publicity within the Register of Trade, to keep specific books and to organize and manage
their own accounting activity.

1. The obligation to keep specific books

It is provided by the Commercial Code, articles 22-24 and the Law no. 82/1991 on the accounting system,
republished, amended and completed. Thus, the merchant is bound to keep the following books:

– Journal ledger, where all economical and juridical operations of the merchant are recorded daily;

– Inventory ledger, where all movable and immovable goods of the merchant are recorded, on the basis of a
yearly inventory.

– General ledger, which serves as a summary of the journal ledger.

2. The obligation to organize and manage his own accounting activity which refers mainly to the yearly financial
statements, accounting books, inventories and so on.

3. The obligation of registration within the Register of Trade

The publicity within the Register of Trade is regulated by Law no. 26/1990 republished.

Thus, before starting their business, the merchants are bound to ask for the incorporation in the Register of
Trade. During the performance of their commercial activities, the merchants are also obliged to ask for the
registration in the same register of certain mentions concerning acts and facts that are subject to publicity, as
follows:

– juridical acts such as sale, donation concerning the goodwill;

– any act certifying changes to the records in the Register of Trade;

– information concerning the legal representative of the merchant;

– patents, trade marks, firm, emblem and other distinctive signs upon which the merchant has any right;

– the insolvency procedure and so on.

The Register of Trade is kept by the Office of the Register of Trade organized in each county and in Bucharest.
The Central Register of Trade is kept by the National Office of the Register of Trade, which is a public institution
subordinated to the Ministry of Justice.

The Register of Trade is public and thus, any interested person may have access to all its records.

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The Register of Trade consists of a register for recording individuals and family partnerships and another one for
recording legal persons.

The merchants must apply for incorporation to the Office of the Register of Trade organized in the county where
they have their headquarters.

The registration in the Register of Trade is done on the basis of a decision provided by the judge delegate.

The incorporation and the mentions registered within the Register of Trade have a publicity function, in order to
be opposable to third parties. It means the law considers that all records in the Register of Trade are known by
third parties form the date of their registration.

The merchants must apply for the incorporation in the Register of Trade within 15 days:

– form the date of the authorization, in the case of individual merchants;

– form the date of conclusion of the constitutive act, in the case of commercial companies.

According to article 22 form the Law no. 26/1990 republished, the obligation of merchants to ask for the
registration of mentions in the Register of Trade is due within 15 days from the date of the acts or facts that are
subject to publicity.

As far as the merchant natural person is concerned, the incorporation in the Register of Trade does not produce
constitutive effects in order to obtain the quality of merchant. As we mentioned before, the natural person
becomes a merchant by performing commercial facts, under the conditions provided in the Commercial Code.

However, concerning the commercial companies, by the incorporation in the Register of Trade they get the legal
personality, meaning they become legal persons.

The Goodwill (Stock-Trade)

In common law legal systems, the “good will” is an intangible asset that normally represents the excess of the
value of the business over the value of its tangible assets established reputation of a business regarded as a
quantifiable asset

In legal systems of French inspiration (Romanian), the “good will” is more than the merchant’s reputation, it is a
totality of different elements which together are used by the merchant with the view to carry on his business

The performance of commercial activity requests the existence and the use of goods such as buildings,
merchandise, industrial equipment, raw materials, patents and so on. All these goods used for the
accomplishment of commercial activity represent the goodwill of a merchant.

The Civil code does not provide either a definition of the goodwill or legal provisions for its regulation. The
legislator had used the term “goodwill”, without explaining it, within several normative acts, such as the Law no.
26/1990 on the Register of Trade, republished.

However, there is a definition of the term “goodwill” provided by the Law no. 298/2001 concerning the
amendment of the Law no. 11/1991 on the unfair competition. Thus, according to article 1 1 point c form the law,

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the goodwill represents the ensemble of movable and immovable, tangible and intangible (trade marks, firms,
emblems, patents, the place of business and so on) used by a merchant in order to perform its activity.

The Definition

Thus, the goodwill is an ensemble of movable and immovable, tangible and intangible goods used by a
merchant in his commercial activity, in order to get clients and to obtain profits.

The Distinction between Goodwill and other close notions

a) Goodwill and Patrimony. Unlike the goodwill, which is an ensemble of goods, the patrimony contains all
patrimonial rights and obligations of the merchant.

b) Goodwill and Enterprise. As we mentioned before, the enterprise is an independent organized activity which
combines elements like capital, labor or nature for the purpose of producing goods and services and of obtaining
profit. The goodwill is an ensemble of goods used for the accomplishment of commercial activities. Thus, we
may see from these definitions that, beside goods, the enterprise also combines other elements like capital or
labor. As a consequence, the goodwill is only a part of the enterprise.

The legal nature of the goodwill

Legal doctrine considers it as “de facto” universality and not a legal universality as the patrimony is.

In the juridical doctrine, most authors consider that the goodwill constitute an ownership right over an intangible
thing, as the copyright.

As a consequence, the features of the goodwill are the following:

1. it is an unitary thing, different from the goods that compose it. Thus, the goodwill can be the object of juridical
acts such as the sale-purchase or the donation.

2. it is a movable thing because in its composition the movable goods prevail.

3. it is an intangible movable thing because in its composition the intangible goods have the highest value.

4. It can be object of pledged

5. It is a part of the patrimony of the merchant, not the patrimony itself.

6. It lasts as long as it is exploited (used), so its existence is less stable than of other intangible goods

The assignment contract (contract de cesiune), is the agreement concluded between the assignor (“cedent”)
and the assignee (“cesionar”) with the view to transfer to the assignee the rights that belong to the assignor

The elements of the goodwill

Because the goodwill contains those goods that are necessary for the performance of a specific commercial
activity by a specific merchant, its composition is different from one merchant to another, it depends upon the
specificity of the merchant’s activity.

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In the same time, the elements that compose the goodwill may change, in accordance with the needs of the
trade, but the goodwill as a whole continues to exist.

Generally, regardless of the specificity of commercial activity, we consider that the goodwill contains two
categories of goods:

1. tangible goods

2. intangible goods

The tangible elements of the goodwill

They are included within this category:

a. immovable goods, such as buildings, real estate and so on.

b. movable goods, such as raw materials used for the production of other goods and products or merchandise
which are the result of commercial activity.

The intangible elements of the goodwill

They are included within this category: the firm, the emblem, the clients, the place of business, the patents, the
trade marks and so on.

1) The Firm

It is an element of identification, a name, registered in the Register of Trade, used by the merchant to identify his
business. (article 30 Law 26/1990).

Natural persons – the firm is composed by the name (full name or only the family name with the first letter of the
second name) and, sometimes, with a phrase representing the object of activity.

Commercial Companies – the firm has different forms, depends on the type of company we discus about.

Characteristics:

– each new firm has to be different than the others already in use

– the name must be avaible, so we have to check at the “Register office” (Registrul Unic), but an erased name
can be taken after 2 years it has been erased.

– the firm must not include a denomination, name, used by public institutions;

– it can be transmitted through acts intervivos/ mortis causa only together with the goodwill.

– protection by:

– incorporation and no matter if it is used or not

– action in counterfeit (contrafacere) and action for usurpation

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– action based on unfair competition facts

– action for damages (moral or pecuniary) + criminal proceedings

2) The Emblem (Corporate Image)

It is a sign or denomination used to make the difference between merchants.

Characteristics:

–  it is not compulsory to have an emblem

–   it’s disponibility can be checked at the Registration Office

–   we can use emblems on invoices, letters, catalogues, advertising etc

–  can be transmitted separately of the good will

–  protection by:

– incorporation – if it is used

– action for recovery of property (in revendicare)

– action based on unfair competition facts

– action for damages (moral and pecuniary)

3) The clients (The Practice)

It represents the ensemble of natural and legal persons that have juridical relations with a merchant.

In accounting is a figure, meaning it can be evaluated.

Influenced by:

– internal factors: objective (the place where the shop/headquarters is located, the quality of merchandises) or
subjective (advertising, clients’ fidelity, shop assistants’ behavior.

– external  factors (competition, market share owned, possibility to obtain credits)

The trademark

It is a distinctive sign, drawing or denomination that individualizes the products of a merchant from the ones of
other merchants. The exclusive usage right of a merchant over a trademark is protected only if the trademark is
registered within the State Office for Inventions and Marks, the competent Romanian authority for ensuring
industrial property. The juridical protection is granted for 10 years.

The patent

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It grants and protects the rights over an invention. The patent is issued by the State Office for Inventions and
Marks. The patent grants its owner an exclusive usage right over the invention within the entire protection period
of 20 years.

However, according to the Law no. 26/1990, in order to ensure the juridical protection, the merchants must ask
for the registration, in the Register of Trade, of mentions concerning the trademarks, patents and other
distinctive signs.

Juridical acts concerning the goodwill

The goodwill, as an unitary movable thing, as well as its elements, may be the object of juridical acts such as
sale-purchase, donation, rental or pledge.

The goodwill may be also the object of contribution in kind to the capital of a commercial company. Thus, the
owner of the goodwill who wants to become an associate of a commercial company contributes to the capital of
that company with the goodwill.

We should mention that, because of their object, the juridical acts concerning the goodwill are objective
accessory commercial facts.

According to the Law no. 26/1990 the merchant is bound to ask for the registration, in the Register of Trade, of
mentions related to juridical acts concerning the goodwill.

Commercial Companies. Introduction

The commercial companies are regulated by Law no. 31/1990 on commercial companies, republished, amended
and completed, which is the general law that regulates the matter. Beside this general law, there are special
laws which regulate specific companies, such as banking companies, insurance companies and so on. These
provisions are to be completed by the Civil code.

The Law no. 31/1990 regulates the following types of companies:

– general partnership;

– limited (sleeping) partnership;

– limited (sleeping) partnership by shares;

– limited liability company;

– company by shares or joint stock company.

It contains general rules that are applicable to any commercial company and special rules related to each
category of commercial companies.

The definition

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The commercial companies are not defined by the Law no. 31/1990 . In this case, we have to look for a definition
in the Civil Code. The Civil Code regulates the company contract.

Thus, according to article 1881 Civil Code, the company is a contract by which two or more persons (the
associates) agree to put together some goods in order to perform together a certain activity for the purpose of
obtaining and sharing the profits.

This definition refers to the contract, but certain elements may also be used for defining the commercial
company.

Features of a commercial company:

– it is set up by a company contract;

– the existence of a common fund, constituted by the contributions of the members;

– the goal of the associates is to obtain and share the benefits;

– affectio societatis, meaning the will of the associates to participate in the performance of the common activity
and the common use of contributions and capital in order to obtain profits.

– the economic activity of the commercial company

– the commercial company has legal personality, it is a legal person.

As a consequence, taking into account all these elements, the definition of the commercial company is the
following:

The commercial company is a group of persons, set up by a company contract and having legal personality, in
which the associates agree to put together some goods in order to perform economic activity for the purpose of
obtaining and sharing the profits.

The juridical forms of commercial companies

According to article 2 form the Law no. 31/1990 republished, the commercial companies can only be set up in
one of the following juridical forms: general partnership; limited (sleeping) partnership; limited (sleeping)
partnership by shares; limited liability company; company by shares (joint stock company). Thus, it is not
possible to constitute a commercial company in other form than those provided by article 2 from the Law no.
31/1990 republished.

The differences between the forms of commercial companies are determined by the extent of liability of
associates for the debts of the company.

Therefore:

a. the obligations of the general partnership are secured by its patrimony and the unlimited and joint liability of all
associates.

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b. the limited partnership has two categories of partners: active partners and sleeping partners. The obligations
of the limited partnership are secured by its patrimony and the unlimited and joint liability of active partners; the
sleeping partners are liable only within the limits of their contribution to the capital of the partnership;

c. the limited partnership by shares has also two categories of partners: active partners and sleeping partners.
Its registered capital is divided into shares and its obligations are secured by the patrimony of the partnership
and the unlimited and joint liability of active partners; the sleeping partners are liable only within the limits of their
contribution to the capital of the partnership;

d. concerning the company by shares, its registered capital is divided into shares and the obligations of the
company are secured by its patrimony; the shareholders are liable only within the limits of their contribution to
the registered capital of the company;

e. the obligations of the limited liability company are secured by its patrimony and the associates are liable only
within the limits of their contribution to the registered capital of the company.

However, the persons who want to set up a commercial company are free to choose between the five juridical
forms provided by the law. The juridical form chosen by the associates must be mentioned in the constitutive
contract of the company. After choosing the juridical form of the company, the associates are bound to observe
the legal provisions which regulate the setting up and the functioning of that type of company.

The classification of commercial companies

The commercial companies are classified according to several criteria.

1. the most important is the criterion of their nature and the prevalence of personal element or the
material element.

According to this criterion, the commercial companies are divided in two categories:

– companies of persons

– companies of capitals.

The companies of persons are those commercial companies set up by a small number of persons taking into
account the mutual trust between partners and their personal qualities (intuituu personae). The general
partnership and the limited partnership are companies of persons.

The features of the companies of persons are the following:

– a small number of partners;

– the liability of the partners for the debts of the company is unlimited and joint. Unlimited liability means that
regardless of his contribution to the registered capital of the company, each partner is liable for the debts of the
company with his own patrimony. Joint liability means that in the case the commercial company does not pay a
debt, any partner can be obliged to pay the whole amount. However, there is an exception, concerning the
sleeping partners of a limited partnership. Thus, the liability of the sleeping partners for the debts of the
partnership is limited to their contribution to the registered capital.
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– the registered capital is divided into parts of interest which are not negotiable. They can be transmitted only
under restrictive conditions.

– the partners are allowed to contribute with their work to the registered capital of the company. It means that the
undertaking of a partner to perform a certain work on behalf of the company is considered as a contribution to its
registered capital.

– the companies of persons are dissolved when they are reduced to a sole partner because of the bankruptcy,
incapacity, exclusion, withdrawal or death of the other partners.

The companies of capital are those commercial companies that are set up by a great number of associates
taking into account only the actual contribution of the associates to the capital of the company. Thus, the
personal qualities of the associates are not important. The limited partnership by shares and the company by
shares are included in this category.

The features of the companies of capital are the following:

– a great number of shareholders;

– the liability of the shareholders for the debts of the company is limited to their contribution to the registered
capital. There is an exception concerning the active partners of a limited partnership by shares. Thus, the liability
of the active partners for the debts of the partnership is joint and unlimited.

– the registered capital is divided into shares which are negotiable and can be transmitted freely;

– the shareholders are not allowed to contribute with their work to the registered capital of the company. Thus,
the contribution to the registered capital of a company of capitals may be in kind or in money.

– the bankruptcy, incapacity, exclusion, withdrawal or death of a shareholder does not produce any
consequence concerning the dissolution of the company.

We should mention that the limited liability company cannot be included in one of these two categories. Thus,
like the companies of persons, the setting up of a limited liability company is based on the trust and the personal
qualities of the associates.

This feature requires the limitation of the number of associates and restrictive conditions for transmitting the
social parts. However, the liability of the associates is limited to their contributions to the registered capital, as for
the companies of capital.

2. the criterion of the structure of registered capital.

According to this criterion, the commercial companies may be divided in two categories:

– commercial companies in which the registered capital is divided into parts of interest such as the general
partnership, the limited partnership and the limited liability company. According to the Law no. 31/1990
republished, the parts of interest of a limited liability company are called “social parts”.

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– commercial companies in which the registered capital is divided into shares such as the company by shares
and the limited partnership by shares.

3. the criterion of the possibility to issue negotiable instruments (shares or bonds).

According to this criterion, the commercial companies may be:

– companies that are allowed to issue negotiable instruments, such as the company by shares and the
limited partnership by shares.

– companies that are not allowed to issue negotiable instruments, such as the general partnership, the
limited partnership and the limited liability company.

4. the criterion of the number of associates. According to this criterion, there are:

– companies with sole associate such as the limited liability company with sole associate;

– companies with two or more associates, such as all the other types of companies.

The Setting Up Of Commercial Companies

In order to set up a commercial company, there are several steps, which must be followed:

1. The conclusion of the constitutive act;

2. The incorporation of the company in the Register of Trade;

3. The publicity of the company’s setting up.

1. The conclusion of the constitutive act

Any commercial company is set up by a company contract. This contract must fulfill the validity conditions
requested for any contract, as follows: the capacity of the parties, the assent, the object and the consideration.

Beside these general conditions, the company contract must fulfill three specific conditions:

a. the contributions of the associates to the capital of the company;

b. affectio societatis, meaning the will of the associates to participate in the performance of the common activity
in order to obtain profits;

c. the purpose obtaining and sharing the profits.

The company contract has the following features:

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1. it is a multilateral contract, meaning that it is concluded by two or more persons and each party undertakes
certain obligations;

2. it is contract made by onerous title, because each associate wants to obtain a patrimonial benefit, namely the
profits obtained through the performance of the common activity;

3. it is a commutative contract because the associates know from the very moment of concluding the contract
which are their mutual obligations;

4. it is a formal contract, because it must be concluded in one of the forms required by the law.

The constitutive act of the company and its form

According to the provisions of the Law no. 31/1990 republished, in order to set up a general partnership or a
limited partnership, the partners must conclude a company contract which is the constitutive act of the
partnership.

In order to set up a company by shares, a limited partnership by shares or a limited liability company, the law
requires the conclusion of the company contract and the articles of association which both represent the
constitutive act of the company. The company contract and the company statute may be concluded either as two
distinct documents or, if the associates agree, as a single document.

In order to set up a limited liability company with sole associate, the Law no. 31/1990 republished requires
only the conclusion of the articles of association As a rule, the constitutive act of any company has to be
concluded in writing and signed by all associates or by the founders, when a company by shares is set up by
public subscription.

As an exception, the constitutive act of the company must be concluded in authentic form (it must be
authenticated by a notary public) in the following cases:

– land is contributed in kind to the registered capital of the company;

– the company by shares is set up by public subscription;

– it refers to the setting up of a general partnership or a limited partnership.

The founders of a commercial company

The term “founders” is a common element for all the juridical forms of commercial companies.

According to article 6 form the Law no. 31/1990 republished, the founders of a commercial company are the
persons who sign the constitutive act, as well as the persons who play an important role in the setting up of the
company.

In order to become a founder, the person must fulfill two conditions, as follows:

– he must have full concrete capacity;

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– he must not have been convicted of any criminal offence related to commercial activity such as forgery, use of
forgery, breach of trust an so on.

The content of the constitutive act

Regardless of the juridical form of a commercial company, its constitutive act must contain the following common
elements:

– the identification elements of the associates;

– the firm of the company, its juridical form, the headquarters and the emblem of the company, if any;

– the company’s object of activity, specifying the main field of activity;

– subscribed and paid-up registered capital;

– the bodies of decision, management and control of the company;

– the manner in which the associates share the profit and the loss of the company;

– the time limit of the company;

– the branches, agencies or other divisions without legal personality;

– the ways for the dissolution and the liquidation of the company.

Beside these general elements, the constitutive act of a limited liability company must provide the number and
the nominal value of the social parts as well as the number of social parts acquired by each associate on the
basis of his contribution.

The constitutive act of a limited partnership or a limited partnership by shares must provide in a distinctive
manner the two categories of partners: active partners and sleeping partners.

The constitutive act of a company by shares or a limited partnership by shares must also mention:

– the number and the nominal value of shares;

– the type of shares, meaning bearer shares or registered shares;

– the specific advantages of the founders.

Specific aspects concerning the setting up of companies by shares

The companies by shares may be set up either by simultaneous subscription or public subscription.

Concerning the simultaneous subscription, the setting up procedure is the same as for any other juridical form of
commercial company.

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The setting up of a company by shares by public subscription means that the founders call for public funds in
order to set up the company. Concerning the public subscription, the Law no. 31/1990 provides additional steps
in the setting up procedure, as follows:

1. drawing up the issuance prospectus by the founders.

Generally, the prospectus must contain all the elements that are compulsory for the constitutive act of the
company. It must also provide the date when the subscription is closed.

The prospectus has to be concluded in authentic form and signed by all founders. It must be registered within
the Office of the Register of Trade from the county where the headquarters of the company will be located. The
prospectus will also be published in order for the public to know it.

A prospectus which does not fulfill the above-mentioned conditions is sanctioned with the absolute nullity.

2. the subscription of shares

By subscription the subscriber accepts the offer of the founders as to become a shareholder of the company and
to contribute in money to its registered capital, in exchange for shares.

3. the Constitutive Meeting

Within 15 days from the date when the subscription is closed, the founders are obliged to convene the
Constitutive Meeting by public notice published in the Official Monitor and in two newspapers. The founders are
also obliged to draw up the list of subscribers who are entitled to participate in the Constitutive Meeting. Within
the Constitutive Meeting, each subscriber has a vote, regardless of the number of shares he subscribed. The
Constitutive Meeting discuses and approves the constitutive act of the company by shares.

In order to set up a company by shares by public subscription, the registered capital provided by the prospectus
must be fully subscribed. Upon subscription, each subscriber must pay up at least 50 % of the value of
subscribed shares, while the rest may be paid within 12 months form the date of company’s incorporation in the
Register of Trade. The contributions in kind, if any, must be fully delivered upon subscription.

The founders of a company by shares set up by public subscription may have a larger quota when sharing the
profits. This quota is decided by the Constitutive Meeting. Nevertheless, according to the Law no. 31/1990
republished, the quota of the founders can not be more than 6 % from the company’s net profits and it can be
granted only for 5 years from the setting up of the company.

Within 5 years from the setting up of the company the founders are liable for all the operations concluded on
behalf of the company before its setting up, even if these operations have been approved by the Constitutive
Meeting. Thus, the founders are liable towards the company and third parties for:

– the full subscription of the registered capital and its payment;

– the existence of goods that are contributed in kind;

– the accuracy of the publicity made in order to set up the company.

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2. The incorporation of the commercial companies in the Register of Trade

Within 15 days from the conclusion of the constitutive act, the founders, the administrators or their
representatives are bound to apply for the incorporation of the commercial company in the Register of Trade.

The incorporation is made on the basis of an application filled by the applicant and registered within the Office of
the Register of Trade from the county where the company has the headquarters.

The incorporation of the company in the Register of Trade is made within 24 hours form the judgment of
authorization of the company’s setting up, provided by the delegated judge to the Office of the Register of Trade.

According to article 41 form the Law no. 31/1990 republished, from the date of incorporation in the Register of
Trade, the commercial company becomes a legal person.

After incorporation, the applicant is bound to obtain the necessary approvals provided by the law for the
functioning of the company (for example fire prevention authorization, sanitary authorization, environment
authorization and so on). The functioning of commercial companies may be authorized on the basis of a
declaration on their own risk made by the persons that are obliged to apply for the incorporation of the company
in the Register of Trade.

3. The publicity of the setting up of commercial companies

After the incorporation, the applicant is obliged to publish the judgment of authorization provided by the
delegated judge in the Official Monitor of Romania. Also, the applicant must publish in the Official Monitor of
Romania the constitutive act of the company approved by the delegated judge, in full or only an extract of it.

This publicity has an opposability function, meaning that the law considers that the existence of the company is
known by third parties form the date of the publication. Thus, any interested party has the possibility to bring an
action against the constitutive act of the company or even against the existence of the company, if they prejudice
his interests in any way.

The irregularities concerning the setting up of commercial companies

After the incorporation in the Register of Trade, certain irregularities related to the company’s setting up may be
found out. In this case, the company is obliged to correct them within 8 days form the date they have been found
out. Otherwise, any interested person, meaning either the associates or third parties, may bring an action in
order to claim that the irregularities should be removed. This action may be brought within 1 year from the date
of conclusion of the constitutive act of the company.

However, the founders or any other person who has acted on behalf of the company in the process of its setting
up are liable for:

– all operations performed on behalf of the company and

– the damages caused to third parties by the irregularities related to the constitutive act of the company.

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This liability is joint and unlimited.

Nevertheless, concerning the operations performed on behalf of the company during its setting up, the founders
or the representatives of the company are not kept liable if the General Meeting decides to consider these
operations as being performed by the company itself. In this case, the company itself will be kept liable towards
third parties.

We should also mention that the companies of capitals as well as the limited liability company are fully liable
towards third parties for the acts concluded in their behalf by their legal representatives, even if these
representatives exceeded their powers conferred by the company.

The Nullity Of Commercial Companies

The nullity of an incorporated company may be claimed only for one of the grounds expressly provided by article
56 from the Law no. 31/1990 republished, as follows:

1. the constitutive act of the company is missing

2. the non-observance of the authentic form of the constitutive act of the company, when this form is expressly
requested by the law

3. all the founders lacked the concrete capacity at the date of the setting up of the company. The date of the
company’s setting up is the date of its incorporation in the Register of Trade.

4. the object of activity of the company is unlawful or prohibited by public morals.

5. the judgment of incorporation provided by the delegated judge to the Office of the Register of Trade is
missing.

6. the administrative authorization for the setting up of the company is missing.

7. the constitutive act of the company does not provide mentions concerning the firm, the headquarters, the
object of activity, the contributions of the associates, the subscribed and paid-up registered capital.

8. the non-observance of legal provisions concerning the minimum amount for the registered capital.

9. the non-observance of the minimum number of associates requested by the law.

The tribunal from the place where the headquarters of the company are located is competent to hear actions
concerning the declaration of the company’s nullity. The nullity of the company is an absolute nullity, meaning
that any interested person may claim it and the nullity may be claimed any time.

Generally the absolute nullity is not subject to ratification. It means that the parties are not allowed to correct the
juridical act which was concluded disregarding the provisions of the law. As an exception, concerning the
absolute nullity of commercial companies, the grounds for the nullity may be corrected before the tribunal
provides the final judgment and thus, the nullity of the company can not be any longer declared.

After the nullity of the company is declared, the company ceases its existence for the future and it is liquidated.

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The judgment for the declaration of nullity is communicated to the Office of the Register of Trade. Then this
Office decides the publication of the judgment in the Official Monitor of Romania.

Concerning the effects of the declaration of company’s nullity, the article 59 from the Law no. 31/1990 provides
that the acts concluded on behalf of the company before the nullity is declared are valid and continue to produce
their effects for the parties.

Contributions. Social Capital

1. The contributions to the registered capital of the commercial companies

The contribution means the obligation assumed by each associate to put together some goods, to transfer a
right from his patrimony to the patrimony of the commercial company or even to perform a certain work in behalf
of the company. Concerning the transfer of a right, this right may be either an ownership right over a thing or
only a usage right. In exchange for his contribution, each associate gets parts of interest, social parts or shares.

The term “contribution” has two meanings, as follows:

a. contribution as the obligation to contribute to the registered capital of the company;

b. contribution as the goods that are the object of this obligation.

The contributions of the associates to the registered capital of the company may be unequal and may have a
different nature. Nevertheless, in all situations they have to be real. The absence or the fictiveness of
contributions is a ground for the absolute nullity of the company contract.

For example, the contribution of a thing without an economic value is a fictive contribution, such as the
contribution of a trademark that is no longer protected.

According to the object of the associates’ contribution to the registered capital of a commercial company, this
contribution may be as follows:

1. contribution in money;

2. contribution in kind;

3. contribution in work (in industry).

1. The contribution in money is compulsory at the setting up of any juridical form of commercial company.
According to article 68 from the Law no. 31/1990 republished, the contribution in money of the associates does
not give them the right to interests.

2. The contribution in kind may consist in the following goods:

– immovable goods, such as buildings, real estate and so on;

– tangible movable goods, such as raw materials, merchandise;

– intangible movable goods, such as receivables, patents, the goodwill and so on.

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The contribution in kind is allowed for any juridical form of commercial company. This contribution is performed
by the transfer to the company either of the ownership right or the usage right over specific goods. If there is no
provision in the constitutive act of the company concerning the right that is transmitted, the law considers that
the goods which are contributed in kind are the property of the company from the date of its incorporation in the
Register of Trade.

The thing that is the object of the contribution in kind must be evaluated in money, in order to determine the
value of the parts of interest, social parts or shares the associate must get in exchange for his contribution. This
evaluation may be made by the associates or by an expert.

The evaluation must be made by an expert in the following cases:

a. in the case of limited liability company with sole associate;

b. in the case of the company by shares set up by public subscription;

c. in the case of companies by shares, when the delegated judge decides the performance of an expertise in
order to evaluate the contributions in kind.

As we mentioned before, the contribution may have as object intangible movable goods, such as the
receivables.

The contribution in receivables is not allowed for the company by shares set up by public subscription, the
limited partnership by shares or the limited liability company, because the payment of the receivable may be
difficult to obtain.

If the contribution in receivables is allowed, the associates contributing receivables to the capital of the company
are not exonerated of liability towards the company until the latter obtains the actual payment of the receivable. If
the payment can not be obtained from the debtor, the associate is liable towards the company for the amount
representing the value of the receivable and interests, calculated from the date when the receivable becomes
due.

3. The contribution in work (in industry) represents the associate’s undertaking that he will perform a certain
work or activity in behalf of the company.

The contribution in work is allowed only in the case of the general partnership and the limited partnership.

The contribution in work is not included in the registered capital of the company. Thus, the associate who
contributes his work is not entitled to get parts of interest in exchange for his contribution. Nevertheless, this
associate has the right to participate in sharing the profits and the assets of the company. Also he has the
obligation to participate in sharing the loss of the company. For this purpose, the contribution in work must be
evaluated in money and provided in the constitutive act of the company.

2. The registered capital of commercial companies

The registered capital of a commercial company represents the monetary value of all the contributions of the
associates who participate in the setting up of the company, except for the contributions in work.

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From the accountancy point of view, the registered capital is recorded in the passive part of the balance sheet
because it represents the contributions of the associates that must be given back to them when the company is
dissolved. Nevertheless, the goods that are contributed by the associates are recorded in the active part of the
balance sheet because they belong to the company.

From a juridical point of view, the registered capital represents the general guaranty of the company’s creditors.
Therefore, the registered capital has a fixed amount for the entire period of time the company exists. It is subject
to modifications, such as the increase or the reduction of the registered capital, but only under the conditions
provided by the law, namely by amending the constitutive act of the company.

In order to protect the interests of company’s creditors, in the case of certain juridical forms of commercial
companies, the law requires a minimum amount for the registered capital, as follows:

– 25 000 euros, for the company by shares or the limited partnership by shares;

– 200 lei, for the limited liability company.

The registered capital can not be used in order to pay dividends to the associates. If the registered capital is
diminished under a certain limit, as a consequence of its use in the performance of the company’s activity, the
law provides the obligation of completing or reducing it, before sharing the profits between associates.

Concerning the registered capital of a commercial company, the law makes a distinction between the subscribed
capital and the paid-up capital.

The subscribed capital represents the total value of the associates’ contributions that they undertake to
contribute at the setting up of the company. The subscribed capital corresponds to the registered capital.

The paid-up capital represents the total value of paid contributions that are actually in the patrimony of the
company.

In certain cases, the law requires some conditions concerning the payment of the registered capital. Thus,
according to article 8 form the Law no. 31/1990 republished, in the case of the limited partnership by shares or
the company by shares set up by simultaneous subscription, upon incorporation each shareholder must pay up
at least 30% of the subscribed capital, while the rest of 70% may be paid within 12 months from the date of
company’s incorporation. In the case of companies by shares set up by public subscription, upon subscription,
each subscriber must pay up at least 50 % of the value of subscribed shares, while the rest may be paid within
12 months form the date of company’s incorporation in the Register of Trade.

The registered capital of commercial companies is divided into fractions, as follows:

a. parts of interest, in the case of the general partnership or the limited partnership;

b. social parts, in the case of the limited liability company;

c. shares, in the case of the limited partnership by shares or the company by shares.

In exchange for their contribution to the registered capital of the company, the associates get a certain number
of parts of interest, social parts or shares, proportionally to the value of their contribution.

 
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3. The social capital of a commercial company

Definition

The social capital is the ensemble of the associates’ contributions.

Modification of social capital

a) Increasing the social capital

a.1.) by new contributions

The registered capital may be increased by issuing new shares or by increasing the nominal value of the
existing shares in exchange for new contributions in money and/or in kind.

The registered capital cannot be increased and new shares shall not be issued until shares of previous
issue are completely paid for.

a.2.) by including the reserves

New shares can be paid by including the reserves, except legal reserves.

Favorable differences, as resulted from the re-evaluation of the registered assets, may be included in the
reserves and used for the increase of the registered capital.

a.3.) by including the benefits and the issue premiums

New shares can be paid by including the benefits and the issue premiums.

a.4.) by compensation of some certain and liquid debts

New shares can be paid by compensation of some certain and liquid debts of third parties with its own shares.

The increase of the registered capital obtained by increasing the nominal value of the shares can only be
decided with the vote of all shareholders, except for the case when it is done by including the reverses, the
benefits and the issue premiums.

The resolution of the extraordinary meeting of the general assembly to increase the registered
capital will be published in the Official Gazette of Romania, Part IV, granting a period of at least one month
for the priority right to be exercised starting from the publication date.

b) Decreasing the social capital

If a registered capital decrease is ascertained this will have to be completed or written down prior to any profit
allotment or distribution being carried out.

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In case the managers find out the loss of half of the registered capital they are compelled to convene the
extraordinary meeting in order to decide upon the reconstitution of the capital, its limitation to the balance
amount of money or the dissolution of the company.

If provided by the constitutive act, the extraordinary meeting can be convened even in case of a smaller loss.

When the writing down of the registered capital is motivated by losses incurred, it may be done by:

b.1.) reducing the number of shares or of the participating shares;

b.2.) reducing the nominal value of the shares or of the participating shares;

b.3.) purchasing its own shares, followed by their cancellation.

When the writing down of the registered capital is not motivated by losses incurred, it may yet be done
by:

b.4.) total or partial exemption of the associates of their obligation to make the deposits they owe;

b.5.) restitution to the shareholders of a share of their contributions, in proportion to the writing down of the
registered capital equally calculated for each share or participating shares;

b.6.) other methods, as prescribed by the law.

The writing down of the registered capital can only be made after a two month’s period passing from the day of
the publication of the decision in the Official Gazette of Romania.

The decision must observe the minimum registered capital, when stated by the law, to point out to the reasons of
the writing down and the procedure used for its accomplishment.

Any creditor of the company, prior to the decision being published, is entitled to enter a caveat within the period
mentioned of two months and under the conditions regarding the opposition.

When the company issued bonds, the writing down of the registered capital by paying back the shareholders
out of the sum paid on account of the stock can only be made proportionally to the value of the reimbursed
bonds.

The Funtioning Of Commercial Companies

General rules concerning the administration of commercial companies

Generally the administrator represents the company within the relations established with third parties. The
administrator is the legal representative of the company. The administrators may perform all operations required
for the fulfillment of the object of activity of the company, except for the restrictions set forth by the constitutive
act or by law.

Any commercial company is administrated by one or several administrators. The administrator of a commercial
company may be a natural person having full concrete capacity. A legal person may also be appointed as
administrator of a commercial company. In this case, the legal person must appoint a permanent representative,
natural person, in order to carry out its duties.
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The administrators of commercial companies are appointed and revoked exclusively by the General Meeting.
The first administrators can be appointed by the constitutive act.

The administrators of any commercial company may be associates of the company or persons unrelated to the
company.

Normally, the powers of the administrators end upon the expiry of their mandate or before that date, in any of the
following situations:

– the revocation of the administrator;

– the death, incapacity or incompatibility of the administrator;

– the resignation of the administrator.

The control of commercial companies’ operations

The control of commercial companies’ operations may be performed as follows:

– by the associates who are not the administrators of the company;

– by internal auditors.

The appointment of internal auditors by the constitutive act is compulsory in the following cases:

– for the companies of capitals;

– for the limited liability company with more than 15 associates.

General Partnership
Associates’ rights and obligations

1.Rights:

a) to vote(name) the administrators

b) to receive all documents concluded by administrators

c) to request any information related to the company’s activity

d) may elect one or more administrators among themselves; establish their powers, duration of their mandate
and their possible remuneration, unless otherwise stipulated by the constitutive act.

e) in case the constitutive act prescribes that the administrators should operate together, the decision must be
made unanimously; in case of disagreement among the administrators, the decision will be made by the
associates.

f) to participate to profit

The associate who, in a certain operation, has, on his own or on another one’s behalf, interests contrary to those
of the company, cannot take part in any proceedings or decision-making regarding this operation.
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The associate breaking the legal provisions is liable for the damages caused to the company if, without his vote,
the required majority would not have been met.

2. Obligations:

a) The associates may not take part, as partners with unlimited liability, neither in other competing companies or
having the same goal, nor may they operate on their own or on others’ behalf, in the same trading branch, or in a
similar one, without the consent of the other associates.

b) to participate to losses

         c) The associates are unlimitedly and jointly liable for the operations carried out in the company’s name, by
the persons representing it.

The judgement in court obtained against the company is opposable to each associate.

d) The associate who, without the written consent of the other associates, uses the capital, the assets or the
credit of the company for his own or another person’s benefit is bound to reimburse the resulting profits to the
company and to pay the damages caused.

e) No associate may take out of the company’s funds more than what was allotted to him, for the expenses
which were incurred or for those he will make in the company’s interest.

f) In case of breaking the provisions regarding the interdiction of competition, the company, beside the right to
exclude the associate, can decide whether he worked on its behalf or can claim for damages.

This right is cancelled after a three months’ period passing from the day the company took knowledge of the
situation without making any decision.

Management

The administrators can carry out all the operations required for the fulfilment of the company’s goal, except for
the restrictions mentioned by the constitutive act.

They are bound to take part in all the company’s meetings, in the meetings of the managing board and of
managing bodies similar to this.

The right to represent the company belongs to each administrator, unless otherwise stipulated by the constitutive
act.

The associates representing the absolute majority of the registered capital may elect one or more administrators
among themselves, establish their powers, duration of their mandate and their possible remuneration, unless
otherwise stipulated by the constitutive act.

The same majority may decide the administrators’ discharge or the limitation of their powers, except for the case
when the administrators were appointed through the constitutive act.

Managers can be also persons unrelated with the company.

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In case a administrator takes the initiative of an operation exceeding the limits of an ordinary operation in the line
of trade carried out by the company, he must advise the other administrators prior to concluding respective
operation under the sanction of bearing the consequences resulting from.

Limited Partnership
Associates’ rights and obligations

 In order to determine Associates’ rights and obligations we need to make the distinction between active and
passive partners.

he active partners have the right to represent the company, can be elected as administrators, having all the
rights and obligations like the partners from Partnership.

The passive partners can conclude operations on behalf of the company, only on the basis of a special power
of attorney for certain operations, granted by the company’s representatives and registered in the trade register.

The passive partner can perform actions of supervision, may take part in the procedures for appointing and
dismissing the administrators in cases provided by law, or can grant the administrators’ authorization in
performing operations exceeding their powers, within the limits of the constitutive act.

The passive partner also has the right to ask for a copy of the balance sheet and of the profit and loss
account and to verify their exactness by means of checking the commercial registers and the other supporting
documents.

           

Joint-stock companies
The General Meeting

The General Meeting is the main decisional body, because has the obligation to decide all the other bodies and
their powers.

The general meetings are ordinary and extraordinary.

The ordinary meeting is convened at least once a year, within 5 months as from the end of the financial year.

Besides the debate of other issues on the agenda the general meeting is obliged:

    a) to discuss upon, approve or amend the balance sheet, after listening to the administrators and auditors’
report and to determine the dividend;

    b) to appoint the administrators and the auditors;

    c) to establish the proper remuneration for the administrators and auditors for the current financial year,
unless it was settled by the constitutive act;

    d) to give their opinion on the administrators’ administration of budget;

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    e) to determine the income and expenditure budget and the activity program for the next financial year as the
case may be;

    f) to decide upon the mortgaging, renting or dissolving of one or several of the companies’ units.

Quarom. With a view to ensuring the validity of the proceedings of the ordinary meeting it is necessary to have
the shareholders’ attending it representing at least 1/4 of the registered capital and that the decisions be made
by the shareholders representing the absolute majority of the registered capital represented in the meeting in
case the constitutive act or the law does not stipulate a larger majority.

If the meeting cannot operate due to not fulfilling of the conditions of paragraph (1) the meeting gathered after a
second convening may proceed upon the issues on the first meeting’s agenda, whatever the registered capital
part represented by the attending shareholders is, with a majority.

The extraordinary general meeting gathers whenever a decision is necessary to be made for:

a) changing the legal form of the company;

b) changing the location of the registered office of the company;

c) changing the object of activity of the company;

d) extending the company’s life;

e) increase of the registered capital;

f) writing down of the registered capital or its completion by means of the issue of new shares;

g) merging with other companies or its division;

h) early dissolution of the company;

i) conversion of shares from one category into another;

j) conversion of one category of bonds into another or into shares;

k) issue of bonds;

l) any other modification of the constitutive act or any other decision for which the approval of an extraordinary
general meeting is requested.

Quarom. With a view to ensuring the validity of the proceedings of the general extraordinary meeting, in case
the constitutive act does not stipulate otherwise, the following are necessary:

– upon the first convening, the attendance of shareholders representing at least 1/4 of the registered capital and
the decisions to be made with the vote of the majority of those present or represented;

– upon the subsequent convening, the attendance of shareholders representing at least 1/5 of the registered
capital, and the decisions to be made with the vote of the majority of those present or represented;

The right to vote.

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The shareholders exercise their right to vote in the general meeting proportional to the number of shares they
hold, with the exception stipulated under The constitutive act can limit the number of votes belonging to the
shareholders who possess more than one share.

The exercising of the right to vote is suspended for the shareholders not updated on the payments which are
falling due.

The shareholder who, with regard to a certain operation, has a personal, an opposite interest to that of the
company, will have to refrain from taking part in the proceedings concerning that operation.

On company’s administration

The administration of the company by shares may be performed according to two systems, as follows:

a. the unitary system, with an administrator or a board of administration;

b. the dual system, with two bodies, namely the Supervision Board and the Directorate.

a. The unitary system

The company by shares is administered by one or several temporary and revocable administrators. In case
there are several administrators, they are organized as a board. If a company is run by a board, one of the
administrators will be appointed as chairman of the board.

The company by shares is represented by the administrators empowered to represent it or by the chairman of
the board.

The administrators who have the right to represent the company are not allowed to delegate this right, unless
provided otherwise by the constitutive act.

b. The dual system

In this system, the General Meeting of shareholders appoints the Supervision Board and this Board elects the
Directorate. The executive of the company is the Directorate composed by one director or a board of directors.
The Supervision Board controls the activity of the Directorate. In the relations with the third parties, the company
by shares is represented by the Directorate.

For the validity of the decisions of the Managing Board, Directorate, Supervision Board the attendance in person
ofat least half of the number of administrators is necessary, unless the constitutive act stipulates a larger
number.

The decisions in Managing Board, Directorate, Supervisory board are made with the majority of the attending
members.

The Managing Board may delegate part of its powers to a Managing Committee, made of members elected
from among the administrators, at the same time determining their remuneration.

Liability.The administrators are jointly liable towards the company for :

a) reality of payments effected by associates;

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b) actual existence of the paid dividends;

c) existence of the registers required by law and their correct updating;

d) exact fulfilment of the decisions of the general assembly;

e) strict fulfilment of the duties imposed by the law and by the constitutive act.

Auditors

The joint-stock company will have three auditors and one deputy member unless the constitutive act stipulates a
larger number. In all cases, the number of the auditors must be an odd one.

The auditors have to carry out their mandate personally. The auditors may be shareholders of the company
except of the authorized or certified accountant.

The auditors are bound to supervise the company’s administration, to check if the balance sheet and the profit
and loss account are legally drawn up and according to the registers, if these are regularly kept, and whether the
assets assessment was made according to the regulations settled for the drawing up of the balance sheet.

Limited Partnership by Shares

The limited partnership by shares is regulated by the provision regarding joint-stock companies except for the
provisions regarding the partners.

The administration of the partnership is entrusted to one or several active partners.

In the limited partnership by shares, the administrators can be dismissed by the shareholders’ general assembly
according to a decision made with the majority required for the extraordinary meetings.

The general assembly elects with the same majority another person instead of the manger who was dismissed,
died or who ceased to exercise his mandate.

The appointment must also be approved by the other administrators if there are several ones. The new
administrator becomes an active partner.

The dismissed administrator remains unlimitedly liable towards third parties for the obligations he was committed
to during his administration, keeping his right to subsequently sue the partnership.

The active partners who are administrators cannot participate in the proceedings of the general assembly for the
election of auditors even if they possess shares in the partnership.

Limited Liability Company

General Assembly

The associates’ decisions are to be made in the meeting of the general assembly.

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Quarom. The general assembly makes decisions by the vote of the absolute majority of the associates and of
the participating shares.

The vote of all associates is needed for decisions having as their subject amendments to the constitutive act.

Each social participating share gives the right to one vote.

The assembly of the associates has the following main duties:

a) to approve the balance sheet and to establish the allotment of the net profit;

b) to appoint the administrators and the auditors, to dismiss them and to release them of their activity;

c) to decide upon the suing of the administrators and auditors for damages caused to the company, also
designating the person in charge of taking action against them;

d) to modify the constitutive act.

Management

The company is administered by one or several administrators, associates or non-associates, appointed through
the constitutive act or by the general assembly.

Shares
Definition.

The shares are debt titles issued by a company of capital incorporated in accordance with law 31/1990.

Types

By way of transfer the shares can be of two types:

a) registered or

b) bearer shares

The kind of shares shall be determined by the constitutive act; otherwise they shall be bearer shares. The
registered shares may be issued in a material form, on paper support or in a dematerialized form by registration
in account.

The nominal value of a share shall not be lower than 0,1 ron.

The shares will contain

a) denomination and life of the company

b) date of the constitutive act, number in the trade register under which the company is incorporated and number
of the Official Gazette of Romania, Part IV, in which the publication was made;

c) the registered capital, number of shares and their running number, nominal value of the shares and the
deposits made

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d) advantages granted to founders.

For registered shares the name, first name and shareholder’s place of residence when it is a natural person,
denomination, the registered office and incorporation number of the shareholder when it is a legal person shall
be indicated too.

The shares have to be equal in value; they grant equal rights to the possessors. Still, certain categories of
shares which confer special rights to their holders may be issued according to the constitutive act.

In case a registered share becomes property of several persons, the company does not have the obligation to
register the assignment as long as those persons will not appoint a sole representative in order to exercise the
rights resulting from share.

In case a bearer share becomes property of several persons, they have to appoint a common representative,
too.

Preference shares which benefit of priority dividends without the right to vote may be issued and confer to the
holder:

a) the right to a priority dividend out of the distributable profits obtained at the end of the given financial year,
before any other payments;

b) the rights recognized to shareholders of ordinary shares, except for the right to attend and to vote, based on
these shares, in the general meetings of the shareholders.

The shares with priority dividends, without the right to vote, can not exceed a quarter of the registered capital
and shall have the same nominal value as ordinary shares have.

Preference shares and ordinary shares can be converted from one category into the other by the decision of the
extraordinary general assembly of the shareholders.

Shareholders of each category of shares shall meet in special meetings, according to the conditions prescribed
by the company’s constitutive act. Any holder of such shares may attend these special meetings.

Trasfer of shares.  The property right over the bearer shares is transferred by simple assignment. The property
right over registered shares is transferred by the statement made in the shareholders’ register of the issuer,
subscribed to by the assignor and the assignee or by their proxies and by the mention made on the share. Other
modalities to transfer the property right over registered shares could be prescribed by the constitutive act.

The exercising of the right to vote is suspended for the shareholders not updated on the payments which are
falling due.

The company can not purchase its own shares, either directly or by proxies acting in their name but on its behalf,
except for the case the extraordinary general meeting of the shareholders decides otherwise.

The value of the shares purchased by the company, including those existing in its portfolio, cannot exceed 10%
of the subscribed registered capital.

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Bonds
Definition

The bonds are debt titles issued by companies of capital by which the holder gets a right in relation with the
company and the issuer assumes the obligation to pay interest when due and repay it as specified.

Features:

1. The nominal value of a bond cannot be lower than 2,5 ron.

2. The bonds of the same issue must have equal value and give equal rights to their possessors.
3. The value of the subscribed bonds must be fully deposited.
4. The nominal value of the bonds convertible into shares shall be equal to the value of the shares.
5. The bonds are reimbursed by the issuing company when they fall due.
6. The convertible bonds may be converted into shares belonging to the issuing company under the
conditions established in the public offer prospectus.

The bondholders’ rights

The bondholders can gather in a general assembly to deliberate upon their interests. The meeting will be
convened at the expenses of the company that issued the bonds upon the request of a number of bondholders
who represent the fourth part of the titles issued and not yet reimbursed or, after the appointment of the
representatives of bondholders upon their request.

The bondholders’ meeting legally set up has the powers:

a) to appoint a representative of the bondholders and one or several deputy members having the right to
represent them before the company and in court, establishing their remuneration; they may not take part in the
company’s administration, but they will be able to attend its general meetings;

b) to carry out all the acts of supervision and protection of their mutual interests or to authorize a representative
to carry them out;

c) to set up a fund, drew out from the interests due to bondholders in order to cover the expenses necessary for
the protection of their rights, establishing, at the same time, rules for the administration of this fund;

d) to oppose to any modification of the constitutive act or loan conditions, by which the bondholders’ rights might
be affected;

e) to pronounce their opinion concerning the issue of new bonds.

For the validity of the proceedings, the decision has to be made with a majority of at least one third of the titles
issued and not reimbursed; in the other cases, the holders’ attendance is required to the meeting, representing
at least two thirds of the titles not yet reimbursed and the favourable vote of at least four fifths of the titles
represented in the meeting.

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The Exclusion And The Withdrawal Of The
Associates
Exclusion

That associate can be excluded from a general partnership, a limited partnership, or a limited liability company
who:

a) being noticed that he is put into delay, does not make the contribution he has committed himself to make;

b) having unlimited liability, has declared bankruptcy, or became under a disability;

c) having unlimited liability without any right interferes in administration;

d) being a managing associate, defrauds the company or uses the registered signature or the registered capital
for his own benefit or for others.

The provisions are also to be applied to the active partners of the limited partnership by shares.

The exclusion is delivered by a court decision on request of the company or of any associate.

The excluded associate is liable for losses and he has a right to benefits to the day he has been excluded, but
he will not be in a position to ask for their liquidation, until they are allotted according to the provisions of the
constitutive act.

The excluded associate has no right to a proportional part of the social assets, but he is only entitled to a sum of
money representing the value thereof.

The excluded associate stays liable against third parties for the operations carried out by the company until the
date the final decision concerning the exclusion is delivered

Withdrawal of the associates

The associate in a general partnership, in a limited partnership or in a limited liability company may withdraw
from the company:

a) in the cases stipulated by the constitutive act;

b) with the agreement of all the other associates;

c) in the absence of such provisions in the constitutive act or when the agreement of all the associates can not
be reached still the associate may withdraw for justified reasons, based on a court decision, subject only to an
appeal, within 15 days as from the day the decision has been notified.

The rights of the withdrawn associate, for which he is entitled against his participating shares, shall be
determined with the agreement of the associates or by an expert designated by them or, in case of
misunderstanding, by the court.

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Dissolution & Liquidation Of Commercial
Company
Law 31/1990 provisions present some general cases of dissolution and special procedures for certain types of
companies.

Ceasing the existence of a commercial company supposes two steps, as follows:

– the dissolution of the company, which involves operations that prepare the cease of the company’s existence.
During the dissolution, the legal personality of the company is not affected. However, the commercial company
is not able any more to perform its normal activity. In most cases, the dissolution is followed by the liquidation of
the commercial company.

– the liquidation of the company that involves operations concerning the conversion of the company’s assets into
cash, the payment of the creditors from these amounts and the distribution of the rest to the associates. During
the liquidation, the company maintains its legal personality, but only for the purpose of performing the operations
required for its liquidation.

Dissolution

The dissolution of commercial companies may be decided in three ways, as follows:

– by the associates;

– by the court of law;

– by law. It means that in this case the dissolution of the company is imposed by a provision of the law.

The Law no. 31/1990 republished provides general cases of dissolution of commercial companies and special
cases which are applicable to certain juridical form of commercial companies.

1. General cases

a) expiration of the period established for the life of the company; In this case, the associates must be asked by
the administrators, at least 3 months before the final moment, whether they intend to extend the company’s
existence.

b) impossibility to carry out the object of activity of the company or its fulfillment;

c) the declared nullity of the company;

d) the decision of the general assembly;

e) the court decision, initiated by any one of the associates, for justified reasons, such as serious dispute
between the associates that hinder the company’s operation;

f) bankruptcy;

g) other reasons as prescribed by the law or by the constitutive act of the company;

38
In the cases prescribed at a, consultation of the associates must be held, at least 3 months prior to the
company’s expiration date, regarding the possible extension of its life. When such a consultation lacks, at the
initiative of any one of the associates the court may order, by a decision, the carrying out of the consultation.

           

2. Special cases

1) The joint-stock company (company by shares) enters dissolution:

a) in the case the administration board or the directorate notices, following the anual losses, that the active of the
company (established as the difference between the total active and the totality of debts) has diminished to less
than half of the social capital.

b) The latter case is applicable also to limited liability company.

2) The general partnership and limited liability companies are dissolved through bankruptcy, legal inability,
exclusion, withdrawal or death of one of the associates when, owing to these causes, the number of the
associates was reduced to only one.

An exception makes the case where the constitutive act contains a clause according to which the company may
continue its existence with the heirs or when the only remaining associate decides the company to continue in
the form of a limited liability company with one sole associate.

The provisions of the preceding paragraphs are to be applicable also to the limited partnership or limited
partnerships by shares providing those clauses are applicable to the only active or the only sleeping partner.

3. Other cases of dissolution

At the request of the local chamber of trade and industry or of any interested person, the Tribunal can decide the
dissolution of the company, in the cases when:

a) the company lacks the bodies required by the constitutive act or these bodies cannot meet any more;

b) the company did not submit within 6 months from the legal required terms the financial statements and other
documents

c) the company ceased its activity or it has no known registered office or the associates have disappeared or
they have no domicile or known residence.This is not to be applied in case the company was temporarily
inactive, a fact notified to the public fiscal agencies and registered with the trade register. The duration of
inactivity cannot exceed 3 years.

Dissolution’s effects

Dissolution of the company has, as an effect, the beginning of the liquidation procedure. Dissolution may take
place without liquidation in case of merging or of total division of the company and in other cases stipulated by
law.

39
As from the moment of dissolution, the managers cannot start new operations; otherwise they are personally
and jointly liable for the operations they started. The ban imposed is to be applied as from the day the time
established for the company’s life expires or as from the date of its dissolution as decided by the general
assembly or as declared by a court decision.

Even under these conditions, the company maintains its legal personality during the liquidation operations until
the liquidation is finished.

The dissolution of the company, before expiration of the period established for its duration, becomes effective
against third parties only after a thirty days’ interval has passed from the publication in the Official Gazette of
Romania.

Dissolution of a limited liability company with an only associate brings about the universal transfer of the
company’s assets towards the only associate, without liquidation.

Liquidation

The liquidation of commercial companies involves all the operations concerning the conversion of the company’s
assets into cash, the payment of the creditors from these amounts and the distribution of the rest to the
associates. During the liquidation, the company maintains its legal personality, but only for the purpose of
performing the operations required for its liquidation. However, all the documents issued by the company must
mention that it is subject to the liquidation process.

In order to declare the company’s liquidation, we need official receivers, natural or legal persons, authorized by
law, the official receivers are obliged, along with the company’s managers, to make an inventory and to draw up
a balance sheet to ascertain the exact situation of the company’s assets and liabilities and to sign them.

Even if the constitutive act of the company stipulates provisions concerning the company’s liquidation, the
following rules shall be observed in liquidating and distributing the social assets:

– until the liquidators take over their duties, the administrators must continue their mandate;

– the act of appointing the liquidators or the judgment that replaces it and any subsequent act concerning their
replacement must be deposited with the Office of the Register of Trade in order to be registered and published in
the Official Monitor of Romania.

All the documents issued by the company must show that it is undergoing liquidation.

The liquidators are entitled to exercise the powers conferred upon them by the associates or shareholders,
under the same conditions as those requested by the law for their appointing.

Official receivers obligations

a) to make an inventory and to draw up a balance sheet to ascertain the exact situation of the company’s assets
and liabilities

40
b) to receive and keep the company’s assets, the registers committed to them by the managers and the
documents of the company.

c) to  keep a register with all the liquidation operations, by their date order.

d) to request the erasing of the company from the trade register.

Official receivers rights

a) to go to law and be sued to the benefit of the liquidation;

b) to carry out and to conclude the trading operations related to liquidation;

c) to sell, by public auction, the real estate and any movable estate of the company; the goods cannot be sold in
the lump;

d) to make transactions;

e) to liquidate and to cash in the company’s debts even in case of the debtor’s bankruptcy, issuing a receipt;

f) to contract bills of exchange, to make unmortgaged loans and generally to carry out all other necessary acts.

The company’s liquidation must be completed within 3 years at the most as from the date of its dissolution. For
justified reasons the court may extend the said time limit with not more than 2 years.

After the liquidation is completed the official receivers must request the erasing of the company from the trade
register.

Beside the provisions of the present title, the rules established under the constitutive act or law are also applied
to the companies undergoing liquidation to the extent to which they are not incompatible with the liquidation.

All the documents issued by the company must show that it is undergoing liquidation.

Liquidation of partnerships, sleeping companies or limited liability companies

a) Replacement of the management

As a result of dissolution, the managers must be replaced by official receivers. This procedure may be a
voluntary or a legal one.

The official receivers’ appointment in the general partnerships, limited partnerships or limited liability companies,
will be made by all the associates, unless otherwise stipulated by the company contract.

If the unanimity of votes cannot be met, the appointment of the official receivers will be made by the court, upon
the request of any associate or manager, by listening to all the associates and managers.

The associates or managers may appeal against the court ruling within fifteen days from the judgement.

b) Drawing the final situation and the distribution

41
After having completed the liquidation of the general partnership, limited partnership or limited liability company,
the official receivers must draw up the liquidation balance sheet and propose the distribution of assets between
the associates.

The unsatisfied associate may enter a caveat within 15 days from the notification of the liquidation balance sheet
and the distribution draft.

In order to settle the caveat judgement, the liquidation problems will be separated from those regarding the
distribution, which may not concern the official receivers.

After expiration of the period or after the court decision on the caveat remained final, the liquidation balance
sheet and the distribution are considered approved and the official receivers are discharged of their
responsibilities.

Liquidation of companies by shares and of sleeping companies by shares

a) Replacement of management

The appointment of the official receivers in the joint-stock companies and limited partnerships by shares is made
by the general assembly which decides the liquidation, unless otherwise stipulated by the constitutive act.

The general assembly makes decisions with the same majority stipulated for the modification of the constitutive
act.

If the majority was not met, the appointment will be made by court, upon the request of any of the managers or
associates, the company and those who requested the appointment being summoned. This ruling may be
appealed within fifteen days from the delivery of the court decision.

The managers will submit to the official receivers a report about administration for the time elapsed since the
latest approved balance sheet and until the moment the liquidation started.

The official receivers are entitled to approve the report, to appeal or to support the disputes that may occur.

b) Drawing the final situation and the distribution

When one or several managers are designated as official receivers, the report concerning the managers’
administration will be deposited with the trade register office and it will be published in the Official Gazette of
Romania, Part IV, along with the final liquidation balance sheet.

When the duration of administration exceeds a financial year, the report must be attached to the first balance
sheet, which the official receivers submit to the general assembly.

Any shareholder may enter a caveat within fifteen days from the publication.

All the caveats entered will be connected to be settled by a single court award.

42
Any shareholder is entitled to intervene in court and the ruling of court will also be opposable to the non-
intervening shareholders.

If the liquidation lasts longer than a financial year, the official receivers are obliged to draw up the yearly balance
sheet observing the provisions of the law, and of the constitutive act.

After the liquidation has been completed the official receivers draw up the final balance sheet indicating the
quota allotted to each share, out of the company’s assets distribution.

The balance sheet signed by the official receivers, along with the auditors’ report will be deposited with the trade
register office in order to be registered and it will be published in the Official Gazette of Romania, Part IV. Any
shareholder may enter a caveat

If the period stipulated by law  has elapsed without any caveat being entered the balance sheet is considered
approved by all the shareholders and the official receivers are delivered of their duties on condition that all the
company’s assets should be distributed.

Independently of the expiration of the term, the receiving bill for the last distribution will stand for the approval of
the account and of the distribution made to each shareholder.

The sums of money due to the shareholders, which were not cashed in within two months as from the
publication of the balance sheet, shall be deposited with the Savings and Consignments Office or with a banking
company or one of the branches thereof, indicating the shareholder’s name and first name when the shares are
registered ones or the order numbers of the shares when they are on bearer.

The Merger And The Split-Up (Division) Of

Commercial Companies
The merger

The merger of commercial companies may be accomplished in two ways, as follows:

– by acquisition of a company by another one (merger by acquisition);

– by creation of a new company (merger by fusion), meaning the merger of two or several companies for the
purpose to set up a new company.

The merger is decided by each participating company, under the conditions stipulated for the amendment of the
company’s constitutive act.

The merger may also be accomplished between commercial companies of different juridical forms.

Generally, the merger has, as an effect, the dissolution without liquidation of the company which ceases to exist
and the universal transfer of its assets towards the benefiting company.

The associates of the company that ceases its existence receive parts of interest, social parts or shares in the
benefiting companies. In certain cases, such associates may also receive compensations in money, which may
not exceed 10 % of the value of their parts of interest, social parts or shares.

43
In the case of merger by creation of a new company, the new company that is set up shall come into existence
under the conditions provided by law for the agreed juridical form of company.

The effects of the merger of commercial companies

The merger of commercial companies has the following effects:

1. the universal transfer of the patrimony of the company that ceases its existence to the benefiting company.

Thus, in case of the merger by absorption, the absorbing company acquires the rights and obligations of the
absorbed company and in case of the merger by fusion the rights and the obligations of the companies which
cease to exist are transferred to the newly set up company.

2. the dissolution without liquidation of one or several commercial companies that cease to exist.

The merger by creation of new company has also, as an effect, the incorporation of the new company.

The division (the split-up)

The division of commercial companies may be accomplished in two ways, as follows:

– by total division, meaning the transfer of the patrimony of one company which ceases to exist to two or several
existing companies or which are newly set up;

– by partial division, meaning the transfer of a part of company’s patrimony to one or several existing companies
or which are newly set up. In this case, the divided company continues to exist.

The division is decided by each participating company, under the conditions stipulated for the amendment of its
constitutive act.

The division may also be accomplished between commercial companies of different juridical forms.

The associates of the divided company receive parts of interest, social parts or shares in the benefiting
companies. In certain cases, such associates may also receive compensations in money, which may not exceed
10 % of the value of their parts of interest, social parts or shares.

If the division has as an effect the creation of one or several commercial companies, the new companies that are
set up shall come into existence under the conditions provided by law for the agreed juridical form of company.

The effects of the division of commercial companies

The division of commercial companies produces the following effects:

1. the transfer of the patrimony or only a part of the patrimony from the divided company to the benefiting
companies.

Thus, the benefiting companies which come into possession of goods of the divided company are liable towards
the creditors for the obligations of the divided company proportionally to the acquired goods, unless there had
been established other proportions.

44
2. the setting up of one or several commercial companies. However, as we mentioned before, the division does
not produce in all cases this effect. Thus, it is possible to transfer the patrimony or a part of the patrimony of the
divided company to one or several existing companies.

The total division has also, as an effect the dissolution without liquidation of the divided company.

The merger or division plan

As we have mentioned before, the merger or division operation is decided by the General Meeting of each
participating company, under the conditions requested by the law for the amendment of the constitutive act of
the company.

Based on these decisions, the administrators of the participating companies have to draw up a merger or
division plan, which must provide the following elements:

1. the juridical form, denomination and headquarters of each company involved in the operation;

2. the grounds and the conditions of the merger or the division;

3. the limits and the evaluation of assets and liabilities which are to be transferred to the benefiting companies;

4. the modalities to hand over the parts of interest, social parts or shares and the date from which they entitle the
owner to collect dividends;

5. the exchange rate of the parts of interest, social parts or shares and, as the case may be, the amount to be
paid as compensation in money;

6. the value of the merger or division premium;

7. the date of the merger or division balance sheet, date which shall be the same for all companies involved;

8. any other information that may present interest for the operation.

The merger or division plan must be registered within the Register of Trade and published in the Official Monitor
of Romania.

Any creditor of the companies that merge or are divided who is the owner of a receivable prior to the publication
of the merger or division plan has the right to bring an opposition to the merger or division operation.

The opposition may be brought within 30 days from the date of the publication and must be filed at the Office of
the Register of Trade which must send it to the court of law. The opposition suspends the merger or the division
operation until the day when the court’s judgment concerning the opposition becomes irrevocable.

The special obligations of the administrators concerning the merger or the division

 The administrators of the companies which are going to merge or to be divided must submit to the associates
the following:

1. the merger or division plan;

2. the general report of the administrators which must mention the exchange rate of the parts of interest, social
parts or shares;
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3. the internal auditors’ report;

4. the merger or division balance sheet;

5. the situation of contracts related to operations of more than 10,000 lei each, currently in progress and their
distribution to the benefiting companies, in the case of division.

Within two months from the expiry of the term provided by the law for the creditors’ opposition or from the date
the judgment rejecting the opposition had become irrevocable, the General Meeting of each participating
company must decide concerning the merger or division operation.

The constitutive acts of the newly set up companies are approved by the General Meeting of the company
(companies) that ceases to exist.

In the case of merger by absorption, the associates of the absorbing company have to conclude an addendum to
the constitutive act which must be registered within the Register of Trade and published in the Official Monitor of
Romania.

The date of merger or division operation

According to the law, the merger or division operation is considered as accomplished on the following dates:

1. in case one or several new companies are set up, on the date of the new company’s incorporation within the
Register of Trade;

2. in the other cases, on the date the mention regarding the increase of the absorbing company’s registered
capital has been registered in the Register of Trade.

The Insolvency Procedure

Definition

            The object of the law is to institute a procedure aimed at covering the liabilities of the debtor who is in
state of insolvency, either by the reorganization of his activity or by the liquidation of certain assets of his estate
until the extinguishment of liabilities, or by means of bankruptcy.

In the Romanian Commercial Law, the debtor who is confronted with financial difficulties may be subject to the
insolvency procedure, which is regulated by the Law no. 85/2006 on the insolvency procedure.

Law no. 85/2006 on the insolvency procedure, it aims to enable all creditors to recover their receivables.

The Law no. 85/2006 provides that the insolvency means that state of the debtor’s patrimony characterized by
the impossibility to pay from the available funds the existing due debts.

Insolvency, by law 85/2006, means that situation of the debtor’s patrimony characterized by the
impossibility to pay from the available funds the existing debts.

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Characters

1. It is a collective procedure.

It means that all the creditors benefit from the procedure even if only one of them has requested the opening of
the insolvency procedure.

2. It is a unitary procedure, meaning that the law regulates the same procedure for all the creditors.

3. It is a general procedure, meaning that it is applicable to the whole patrimony of the debtor.

4. It is a judicial procedure, meaning that the insolvency procedure is opened and carried out before the court of
law and under its authority.

Forms

Insolvency can take two forms:

a) obvious insolvency – when after 90 days from the due time, the debtor hasn’t paid one or more debts

b) imminent insolvency – when it is proven that it will be impossible for the debtor to pay at due time the debts.

The procedures

The Law no. 85/2006 provides two categories of procedures for debtors who are facing insolvency, meaning
who are not able to pay their debts, as follows:

1. the general insolvency procedure that applies in most cases.

The debtor who is subject to the general insolvency procedure shall undergo in a successive manner the judicial
reorganization procedure and the bankruptcy procedure or only one of them.

The judicial reorganization procedure aims to rescue the debtor and it supposes the confirmation of a
reorganization plan, providing specific means of paying its debts. If such a reorganization plan is successful, the
debtor will continue his activity. Otherwise, the syndic judge may approve the beginning of the bankruptcy
procedure.

The bankruptcy procedure aims to liquidate the debtor’s assets in order to pay all his debts. At the end of the
bankruptcy procedure, the debtor ceases his existence.

2. the simplified insolvency procedure that applies only to certain categories of debtors who shall directly
undergo the bankruptcy procedure.

We should also mention that the Law no. 85/2006 divides the insolvency procedure in two periods. Thus, the
procedure begins with an observation period in order to establish the economic and social situation of the debtor
for the purpose of determining whether he may be rescued through the judicial reorganization procedure. During
this period the debtor is allowed to continue his activity.

At the end of the observation period, the syndic judge pronounces by a judgment either the beginning of the
judicial reorganization procedure based on a plan, or the application of the bankruptcy procedure.
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Categories of debtors that may be subject to the insolvency procedure

Generally, the insolvency procedure may be applied to merchants as well as to non-merchants legal persons
that carry out economic activities.

As a consequence, the following categories of debtors may be subject to the general insolvency procedure:

1. commercial companies;

2. co-operative companies;

3. co-operative organizations;

4. agricultural undertakings;

5. economic interest groups;

6. any other private legal person that carries out economic activities.

The Law no. 85/2006 also provides the categories of debtors that may be subject to the simplified insolvency
procedure, as follows:

1.  individual merchants;

2. family partnerships;

3. merchants that are normally subject to the general insolvency procedure, as mentioned above, which comply
with one of the following conditions:

a. they have no asset in their patrimony;

b. their constitutive acts or accounting documents are lost;

c. their administrator can not be found;

d. their headquarters no longer exist or they do not correspond any more to the address registered within the
Register of Trade.

4. debtors, meaning merchants or non-merchants, that are normally subject to the general insolvency procedure,
as mentioned above, which had not submitted to the court of law certain documents requested by the Law no.
85/2006 in connection with the insolvency procedure;

5. commercial companies that have been dissolved before bringing the claim for the opening of the insolvency
procedure;

6. debtors, merchants or non-merchants, that have declared in the claim for opening the insolvency procedure
their intention to be directly subject to the bankruptcy procedure or those which are not entitled to be subject to
the judicial reorganization procedure.

The participants within the insolvency procedure

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According to the Law no. 85/2006, the bodies that apply the insolvency procedure are as follows:

1. the court of law;

2. the syndic judge;

3. the judicial administrator;

4. the judicial liquidator.

Also the following bodies are participants in the insolvency procedure:

1. the Assembly of the creditors;

2. the committee of the creditors;

3. the special administrator.

The court of law

All proceedings concerning the insolvency procedure, except for the appeal against the judgments of the syndic
judge, are under the exclusive competence of the tribunal or commercial tribunal, if any. having jurisdiction over
the place where the headquarters of the debtor are situated.

The appeals against the syndic judge’s decisions are under the competence of the Appeal Court. The appeal
term is 7 days from the notification of the judgment.

The syndic judge

Within the insolvency procedure, the syndic judge has mainly coordination and supervision tasks. In fulfilling his
duties, the syndic judge may appoint specialized persons, experts, also establishing their remuneration.

According to the Law no. 85/2006, the main duties of the syndic judge are as follows:

1. to decide by judgment upon the opening of the insolvency procedure and upon the beginning of the
bankruptcy, either in the general or simplified procedure;

2. to decide by judgment upon the legal contest of the debtor against the claim brought by the creditors in order
to open the insolvency procedure;

3. to appoint the temporary judicial administrator or liquidator, to set out their powers and to replace them if
necessary;

4. to confirm the judicial administrator or liquidator appointed by the Assembly of the creditors;

5. to decide by judgment upon the actions brought by the judicial administrator or liquidator;

6. to decide by judgment upon the legal contests of the debtor, the committee of creditors or any interested
persons against the measures taken by the judicial administrator or liquidator;

49
7. to decide by judgment upon the demands concerning the withdrawal of the debtor’s right to manage his
activity;

8. to confirm the reorganization or liquidation plan after it has been voted by the creditors;

9. to decide by judgment upon the closing of the proceedings.

The judgments provided by the syndic judge are final and executory. However, they may be appealed before the
Court of Appeal.

The judicial administrator

On the recommendation of the creditors’ committee, at the first meeting of the creditors’ Assembly, the creditors
holding at least 50% of the total value of the claims may decide to appoint a judicial administrator, natural or
legal person, and to fix his remuneration. This judicial administrator appointed by the creditors replaces the
temporary one appointed by the syndic judge.

The judicial administrator, natural or legal person, as well the representative of the legal person, must be an
authorized practitioner in insolvency.

According to the Law no. 85/2006 on the insolvency procedure, the main powers of the judicial administrator are
the following:

1. to examine the economic situation of the debtor and his commercial activity;

2. to elaborate the reorganization plan;

3. to supervise the operations of administration of the debtor’s patrimony;

4. to manage the debtor’s activity;

5. to convene and to preside the meetings of the creditors’ Assembly and the General Meetings of associates or
shareholders of the debtor;

6. to bring actions for declaring void any act concluded by the debtor and causing damage to the creditors’
rights;

7. to maintain or terminate certain contracts concluded by the debtor;

8. to verify the claims of the creditors and to draw up the list of claims.

The special administrator

If the debtor is a legal person, after opening the procedure, the debtor’s General meeting of associates or
shareholders appoints a representative as special administrator, in order to represent the debtor’s interests as
well as the interests of the debtor’s associates or shareholders, and to participate in the procedure on behalf of
the debtor.

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After the withdrawal of the debtor’s right to manage its activity, the debtor will be represented by the judicial
administrator or liquidator who will also manage its activity. Thus, the mandate of the special administrator will
be reduced to representing the interests of debtor’s associates or shareholders.

The main duties of the special administrator are as follows:

1. he expresses the debtor’s intention to enter into the bankruptcy or to reorganize its activity;

2. he proposes a reorganization plan;

3. he manages the debtor’s activity under the supervision of the judicial administrator after the confirmation of
the reorganization plan;

4. he participates in the inventory of the debtor’s assets after the beginning of the bankruptcy procedure;

5. he receives the notification concerning the closing of the proceedings.

The liquidator

In case the syndic judge decides upon the beginning of the bankruptcy procedure he must appoint a liquidator.
The judicial administrator’s powers cease upon the establishment of the liquidator’s powers by the syndic judge.
The former judicial administrator may also be appointed as liquidator.

The main powers of the liquidator are the following:

1. to manage the debtor’s activity;

2. to bring actions for declaring void any act concluded by the debtor and causing damage to the creditors’
rights;

3. to make an inventory of the debtor’s assets;

4. to maintain or terminate certain contracts concluded by the debtor;

5. to verify the claims of the creditors and to draw up the list of claims;

6. to sell the assets of the debtor.

One of the most important powers for both the liquidator and the judicial administrator is the power to bring
actions for the declaration of nullity of any act concluded by the debtor to the detriment of his creditors.

In this respect, the syndic judge may be requested, within one year from the opening of the insolvency
procedure, to declare void the juridical acts concluded by the debtor to the detriment of his creditors during the
last 3 years prior to the beginning of the procedure.

The Assembly of creditors

It is made up of all the known creditors of the debtor. It is convened and presided by the judicial administrator or
liquidator, unless the law or the syndic judge requires otherwise.

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It may also be convened at the request of the committee of creditors or at the request of creditors holding at
least 30% of the total value of receivables.

Two delegates of the debtor’s employees may attend the meetings of the Assembly of creditors. They are
allowed to vote for the claims representing salaries and other rights of the employees.

The committee of creditors

The syndic judge appoints a committee of creditors made up of 3-7 creditors from the creditors that owns
receivables having the highest value.

At the first meeting of the creditors’ Assembly, the creditors may appoint a committee of creditors made up of 3
or 5 creditors from the first 20 creditors based on the amount of the debts. The committee of creditors appointed
by the creditors’ Assembly shall replace the committee previously appointed by the syndic judge.

The main duties of the creditors’ committee are as follows:

1. to analyze the debtor’s financial situation and to make proposals to the Assembly of creditors concerning the
continuation of the debtor’s activity and the reorganization plan;

2. to analyze the reports drafted by the judicial administrator or liquidator and to contest them, if necessary;

3. to ask the withdrawal of the debtor’s right to manage his activity;

4. to bring actions for the cancellations of certain transfers of patrimonial nature, made by the debtor to the
detriment of the creditors, whenever such actions have not been brought by the judicial administrator or
liquidator.

The opening of the insolvency procedure

The insolvency procedure begins based on an action brought before the tribunal by the debtor, by the creditors
or by other persons or institutions provided by the law.

The creditors’ action

Mandatory conditions for starting  the insolvency procedure

Law no. 85/2006 sets up three mandatory conditions, which need to be cumulatively met in order for the
creditors to start the insolvency procedure against their debtor:

(I) the debts must exceed RON 45,000 or 6 national average salaries for debts arisen from labor relations;

(II) the debtor should face an impossibility to pay its debts;

(III) the debtor should be in an impossibility to pay its mature debts with cash, for over 90 days as of the due
time. The liquidities shortage refers to the balance in the debtor’s bank account and the available cash.

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Should the conditions stated at points (II) and (III) above be cumulatively met, the debtor itself is compelled to
file with the tribunal a motion for the commencement of the general or simplified insolvency procedure.

The debtor’s action

When it faces insolvency, the debtor itself is obliged to bring an action before the tribunal in order to request the
opening of the insolvency procedure.

The debtor is allowed to request either the opening of the reorganization procedure, based on a plan, or the
beginning of the bankruptcy procedure. However, there is one exception. Thus, the debtor is not entitled to
request the opening of the reorganization procedure when he had already been subject to the reorganization
procedure during the last 5 years before the present request.

The debtor’s action must be brought within 30 days from the occurrence of the state of insolvency. In this case,
the syndic judge shall pronounce the opening of the insolvency procedure.

The effects of the insolvency procedure’s opening

According to the Law no. 85/2006, the opening of the insolvency procedure has the following main effects:

1. all the other judicial or extra judicial actions brought by the creditors against the debtor for the payment of their
receivables are suspended. It means that the creditors shall be paid only within the insolvency procedure;

2. no interest, penalty of any kind or expense can be added to the creditors’ claims after the opening of the
procedure;

3. the administrators of the debtors legal persons are not allowed any more to alienate, without the consent of
the syndic judge, their parts of interest, social parts or shares of the debtor subject to the procedure;

4. all the acts, operations and payments performed by the debtor after the opening of the procedure are void;

5. the withdrawal of the debtor’s right of administration, consisting of the right to manage his activity, to
administrate his assets and to dispose of them, unless the debtor has declared his intention of reorganization.
However, the debtor’s right of administration is withdrawn by law on the date the syndic judge pronounces the
beginning of the bankruptcy procedure.

The first measures taken after the opening of the procedure

After the opening of the procedure, the judicial administrator must notify the creditors, the debtor and the
Register of Trade where the debtor is registered, in order for a mention to be made.

The notification must provide the following:

a. the term for the creditors’ opposition to the judgment concerning the opening of the procedure, when it was
pronounced at the request of the debtor;

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b. the term for the registration of the creditors’ claims

c. the term for verifying the claims and for drawing up, posting and notifying the preliminary list of claims;

d. the term for drawing up the final list of claims;

e. the place and date for the first creditors’ Assembly.

Within the terms provided by the notification, all the creditors have to apply for the registration of their claims.

The debtor, the creditors and any other interested person may contest the receivables and the preference rights
registered by the judicial administrator in the preliminary list of claims.

After solving all the problems regarding the claims, the judicial administrator or liquidator must register at the
tribunal the final form of the list of claims.

The reorganization plan

The following categories of persons may propose a reorganization plan:

a. the debtor, with the approval of the General Meeting of associates or shareholders, within 30 days from the
presentation of the final list of claims;

b. the judicial administrator, from the moment of his appointment till 30 days after the presentation of the final list
of claims;

c. one or more creditors holding at least 20% of the total value of the debts, within 30 days from the presentation
of the final list of claims.

The plan may provide either the reorganization and the continuation of the debtor’s activity or the liquidation of
some assets from its patrimony.

The reorganization plan must mention specific means for the accomplishment of the reorganization of the
debtor’s activity and the payment of its debts, as follows:

a. allowing the debtor to maintain, in full or in part, the right to manage his activity, under the supervision of the
judicial administrator;

b. the ways of obtaining financial resources for supporting the achievement of the plan and their sources;

c. transferring all or some of the assets of the debtor to one or several natural or legal persons;

d. the merger of the debtor with another legal person;

e. the liquidation of all or part of the debtor’s assets or their distribution to the debtor’s creditors, on the account
of their claims;

f. the amendment of the debtor’s constitutive act;

g. the extension of the maturity date of the creditors’ receivables and the modification of the rate of interests or
penalties.

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The judicial reorganization

In case of judicial reorganization, after the confirmation of the reorganization plan by the syndic judge, the
debtor’s activity is managed by the special administrator under the supervision of the judicial administrator.

During the judicial reorganization, the debtor is obliged to comply with the provisions of the reorganization plan.

If the plan is successful, the debtor is allowed to continue its activity. In case the debtor does not comply with the
reorganization plan or such plan is not successful, the syndic judge pronounces the beginning of the bankruptcy
procedure.

The bankruptcy

The bankruptcy procedure becomes applicable in the following cases:

1. the debtor expresses the intention to enter into the simplified insolvency procedure;

2. the debtor does not express the intention to reorganize its activity;

3. upon the creditors’ action for opening the insolvency procedure the debtor contests its state of insolvency but
the syndic judge rejects the debtor’s legal contest;

4. none of the persons provided by the law proposes a reorganization plan;

5. the proposed reorganization plan is not accepted by the creditors’ Assembly and confirmed by the syndic
judge;

6. the debtor does not comply with the reorganization plan;

7. the reorganization plan is not successful, meaning the continuation of the debtor’s activity during the
reorganization causes damages to its patrimony.

The judgment by which the syndic judge decides upon the beginning of the bankruptcy procedure must provide
the following:

1. the dissolution of the debtor legal person;

2. the withdrawal of the debtor’s right to manage its activity;

3. appointing a temporary judicial liquidator within the general insolvency procedure and the confirmation as
judicial liquidator of the judicial administrator within the simplified insolvency procedure

4. notifying the beginning of the bankruptcy procedure.

There are several stages to be observed during the bankruptcy procedure, as follows:

1. drawing up the list of creditor’s claims;

2. making an inventory of the debtor’s assets;

55
3. the sale of the debtor’s assets by auction or by direct sale;

4. the payment of the creditors from the amounts obtained from selling the debtor’s assets;

5. drawing up the final report by the judicial liquidator and its approval by the syndic judge;

6. closing the proceedings.

Upon selling the debtor’s assets, the Law no. 85/2006 provides the payment of taxes, stamps and all sale–
related expenses as well as the payment of secured creditors, meaning the creditors who have mortgage rights
or pledge rights on debtor’s assets.

After the payment of secured creditors, the claims of the unsecured creditors must be paid in the following order:

1. the taxes, stamps and any other expense related to the procedure;

2. the claims arising from labor relations;

3. the claims representing credits, with the related interests and expenses, granted by credit institutions after the
opening of the procedure as well as the claims arising from the continuation of the debtor’s activity after opening
the procedure;

4. the budgetary claims;

5. the claims representing amounts due by the debtor to third parties on the basis of certain obligations of
alimony, allowances for minors or payment of some periodical amounts in order to the provide the means of
living;

6. the claims representing the amounts established by the syndic judge as alimony for the debtor and his family,
in case the debtor is a natural person;

7. the claims representing banking credits, with the related expenses and interests, those arising from the
delivery of products, the performance of services or other works, as well as from rents;

8. the other unsecured claims.

Natural Persons – Merchants

In order to be qualified as a merchant, the natural person must fulfill several conditions, as follows:

1. to have full concrete capacity. Thus, a natural person may be a merchant only after he is 18 years old

As a consequence, the minors and the persons under judicial interdiction are not allowed to be merchants.
Therefore, when the minor inherits the stock-trade of a merchant, the business can be continued in the name of
the minor by his legal representative.

2. to perform trade as a profession, on a regular basis.

3. to perform trade in his own name. Thus, the merchant undertakes the risks related to the performance of
commercial activities and he is liable toward third parties with his patrimony.

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However, in order to protect the public interest, the law provides that certain categories of natural persons are
not allowed to be merchants. Thus, the commercial activity is incompatible with certain positions or professions
such as judges, public prosecutors, officers, public servants, priests, lawyers, doctors. In addition, a person who
was convicted for committing a crime that is incompatible with commercial activity cannot be a merchant.

Thus, according to the law, Romanian citizens or nationals of one of the EU Member States may perform
commercial activities on the Romanian territory, in an independent manner, or may set up a family enterprise or
individual enterprise.

Definitions

1. An individual enterprise is an economic enterprise, without legal personality, organized by an individual

entrepreneur;

2. A family enterprise is an economic enterprise, without legal personality, organized by an individual

entrepreneur with his family;

3. An individual merchant is a natural person authorized to perform any kind of economic activity
permitted by law, mainly using its workforce;

On the strength of the right of free initiative, free association and settlement, any natural person, Romanian
citizen or citizen of another EU or European Economic Space member state, can perform economic activities on
Romania territory, in conditions provided by the law. Economic activities can be performed in all branches,
handicrafts, activities or professions which the law doesn’t forbid in an express manner for free initiative.

According to art. 4 of the Emergency Ordinance no. 44/2008, the natural persons mentioned above can carry out
economic activities as follows:

a) individually and independently, as individual merchants;

b) as promoters, holders of an individual enterprise;

c) as members of a family enterprise.

First of all, in order to carry out an economic activity, these persons must have a professional headquarters on
the territory of Romania, in conditions provided by the law. Secondly, they have to apply for registration in the
Register of Trade and ask for authorization.

Also, in order to be able to operate in legal terms, they are obliged to obtain, before starting the activity,
authorizations, approvals, licenses and other similar, provided in special laws, to perform certain economic
activities.

REGISTRATION AND AUTHORIZATION

The individual merchants and the promoter and holder of an individual enterprise are obliged to ask for their
registration in Register of Trade and authorization of operation, before starting the economic activity as individual
merchants, respectively  natural persons’ promoters which hold an individual enterprise. The representative of
family enterprise is obliged to ask for registration in Register of Trade and authorization of operation, before
starting the economic activity. If it doesn’t forward a petition in term of 7 days since conclusion of memorandum

57
of association, any member of family enterprise can ask for registration in the Register of Trade and
authorization of operation. The petition for registration in the Register of Trade and authorization of operation
must be forwarded in a term of 15 days since the constitutive act was concluded.

Conditions to perform economic activities in one of the forms provided above:

a) the persons must have minimum 18 years of age, in case of natural persons which ask authorization to
perform economic activities according to Art. 4 letters a) and b) of the Emergency Ordinance no. 44/2008 and for
family enterprise representative, respectively 16 years of age, in case of family enterprise members;

b) they cannot have committed facts punished by financial, custom laws and laws on financial-fiscal discipline,
like those stipulated in the tax offence record;

c) they must have a professional headquarters

d) they must declare on own responsibility that meet the operation conditions provided by the legislation specific
to the sanitary, sanitary-veterinary, environment and labour protection branches.

The individual merchants, the promoter and holder of an individual enterprise and family enterprise have the
professional headquarters declared by registration petition in the Register of Trade and authorization of
operation.

To set up the professional headquarters is necessary that the individual merchants, the individual enterprise
holder or any member of the family enterprise, depending on the case, to hold a commonage over the property
which they want to be the professional headquarters.

Performance of economic activities through a permanent headquarters by citizens of other EU member states or
European Economic Space is accomplished according to the provisions in force on permanent headquarters.

Petition for registration in the Register of Trade and authorization of operation will be laid down to the Register of
Trade attached to the Law court from the county where the inquirer sets up its professional headquarters.
Registration in the Register of Trade of the individual merchant, individual enterprise and family enterprise is
performed based on  motivated resolution of the manager of the Office of Register of Trade attached to the Law
court. If documents laid down in the petition’s support are incomplete, then the manager of the Office of 
Register of Trade attached to the Law court will order by motivated resolution to be awarded a term of maximum
15 days for their completion. The term will be communicated to the inquirer either immediately, if he is present,
or by a recommended letter with receiving confirmation.

In all cases it will be indicated the documents which follows to be laid down until the given term. By motivated
inquirer’s request, the term of 15 days can be prolonged. If legal conditions are not met, then the manager of the
Office of  Register of Trade attached to the Law court will order by motivated resolution to be rejected the
petition of registration in the Register of Trade and authorization of operation for the individual merchant,
individual enterprise or inquiring family enterprise. Against the resolution given by the manager of the Office of  
Register of Trade attached to the Law court can be forwarded a complaint in term of 15 days from the date when
it was given or its communication, depending on the situation.

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If registration in the Register of Trade and authorization of operation for the individual merchant, individual
enterprise and family enterprise was admitted, the Office of Register of Trade attached to the Law court will
release the certificate for registration, containing a sole registration code, certificate of findings issued based on
the declaration on own responsibility, as well as other documents provided by the law, depending on the
situation. Certificate of registration, containing the sole registration code, is the document attesting the
registration in the Register of Trade, authorization of operation, as well as recording by the competent fiscal
body. A person can have a single certificate of registration for legal status, i.e. the one for individual merchant,
holder of an individual enterprise or member of a family enterprise it was authorized for. Changing the
professional headquarters and main activity objective is registered in the Register of Trade, by application
accordingly to the Emergency Ordinance no. 44/2008. Bias points are registered in the Register of Trade,
complying with the provisions on professional headquarters and application accordingly to the Emergency
Ordinance no. 44/2008.

The individual merchant, the holder of individual enterprise and the representative of family enterprise will
perform the single entry book-keeping, according to the regulations on organization and management of single
entry book-keeping by the individual merchants which are contributor, according to the provisions of the Law No.
571/2003 on Fiscal Code, with further changes and completions.

LEGAL REGIME OF INDIVIDUAL MERCHANT

In order to perform the activity for which an individual merchant has been authorized, the individual merchant
may collaborate with other natural persons authorized as individual merchant, promoter and holder of an
individual enterprise and representative of a family enterprise or with natural persons or legal entities in order to
perform an economic activity, without changing its legal status.

The individual merchant may employ third parties by means of an individual labour agreement recorded at
labour territorial inspectorate according to the law.

A person may cumulate the quality of individual merchant with the one of employee of a third party operating
either in the same field or in another economic activity field than the one for which the individual merchant is
authorized.

The individual merchant shall not be considered employee of third parties with whom it collaborates, even if the
collaboration is exclusive. An individual merchant performs its activity by using, mainly, its own workforce and
professional abilities. It cannot also cumulate the quality of natural person entrepreneur holder of an individual
enterprise. The individual merchant may require the change of the legal status acquired and the authorization as
natural person entrepreneur holder of an individual enterprise. The individual merchant shall account for its
obligations by the dedicated assets if set up and, in addition, by its entire patrimony and in case of insolvency, it
shall be subject to the procedure provided by the Romanian Law.

Creditors shall execute their debts according to the common law if the individual merchant is not a trader. Any
interested person may prove its trader quality during the insolvency procedure or separately, by means of a
declaratory action if it has a justified legal interest.

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The individual merchant shall cease its activity and shall be cancelled from the trade registry in the following
cases:

a) by death;

b) by free will;

c) according to art. 25 of the Law no. 26/1990, republished, with the further amendments and supplementing.

The cancellation application accompanied by a true certified copy of justifying documents, as the case may be,
shall be submitted by any interested person to the trade registry office near the court of law where it has its
professional headquarters.

LEGAL REGIME OF A NATURAL PERSON ENTREPRENEUR HOLDER OF AN INDIVIDUAL ENTERPRISE

The individual enterprise does not acquire legal personality by registration in the Register of Trade. The natural
person entrepreneur holder of an individual enterprise is, at the date of its registration in the Register of Trade, a
natural person trader.

In order to organize and operate its undertaking, the natural person entrepreneur, as natural person employer,
may employ third parties by means of an individual labour agreement recorded at labour territorial inspectorate
according to the law, and may collaborate with other individual merchants, with other natural persons
entrepreneurs holders of individual enterprises or with representatives of family enterprises or with other legal
entities, in order to perform economic activity, without changing its legal status.

The natural person entrepreneur holder of an individual enterprise shall not be considered employee of third
parties with whom it collaborates, even if the collaboration is exclusive.

The natural person entrepreneur holder of an individual enterprise may also cumulate the quality of employee of
a third party operating both in that field as well as in another field of economic activity than the one in which the
individual enterprise is operating.

The natural person holder of an individual enterprise shall account for its obligations by the dedicated assets if
set up and, in addition, by its entire patrimony, and in case of insolvency, it shall be subject to the procedure
provided by the Romanian Law.

The natural person entrepreneur holder of an individual enterprise shall cease its activity and shall be cancelled
from the Register of Trade in the following cases:

a) by death;

b) by free will;

c) according to art. 25 of the Law no. 26/1990, republished, with the further amendments and supplementing.

The cancellation application accompanied by a true certified copy of justifying documents, as the case may be,
shall be submitted by any interested person to the trade registry office near the court of law where it has its
professional headquarters.

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If the natural person entrepreneur holder of an individual enterprise ceases its activity and is cancelled from the
Register of Trade due to his death, inheritors may continue the undertaking if they so desire, by means of an
authenticated statement, within 6 months as of the inheritance division date. In case of several inheritors, they
shall appoint a representative in order to continue the economic activity as family enterprise.

The activity may be continued under the same company, on condition of mentioning the successor quality.

LEGAL REGIME OF FAMILY ENTERPRISE

A family enterprise consists in 2 or several family members. The members of a family enterprise may be, at the
same time, individual merchants or holders of individual enterprises. Moreover, they may also cumulate the
quality of employee of a third party operating both in that field as well as in another field of economic activity than
the one in which the family enterprise is operating.

The members of a family enterprise are insured in the public pensions system and other social insurances rights
and have the right to be insured in the health and unemployment social insurance system according to the legal
provisions.

A family enterprise may not employ third parties by means of labour agreement.

As validity condition, a family enterprise is established by means of an incorporation agreement concluded by

the members of the family in writing. The incorporation agreement shall provide the members’ names and
forenames, the representative, date of drafting it, participation of each member to the undertaking, participation
conditions, shares in which net incomes of the undertaking shall be divided, relationship between the members
of the family enterprise and withdrawal conditions, under the absolute nullity sanction.

The representative appointed by means of the incorporation agreement shall manage the family enterprise’
interests based on a special power of attorney, in the form of a private signature writ. The special power of
attorney shall be signed by all legally competent members of the undertaking and their legal representatives with
a restricted legal competence.

In order to perform the activity for which it has been authorized, the family enterprise, by means of its
representative, may collaborate with other natural persons authorized as individual merchants, natural persons
entrepreneurs holders of individual enterprises or representatives of certain family enterprises  or with other
natural persons or legal entities in order to perform an economic activity, without changing its legal status.

A family enterprise does not have its own patrimony and shall not acquire legal personality by registration in the
Register of Trade. The members of a family enterprise may provide in the incorporation agreement of the family
enterprise the set up of dedicated assets. In this case, the participation shares of the members to the set up of
the dedicated assets shall be established in the incorporation agreement or an addendum thereof. If the
members of the undertaking unanimously agree, the shares may be different than the ones provided for the
participation to net incomes or losses of the undertaking.

The members of the family enterprise are natural persons traders as of the date of its registration in the Register
of Trade and shall account, jointly and indivisibly, for the debts incurred by the representative by operating the
undertaking by means of the dedicated assets, if set up, and, in addition, by the entire patrimony, according to
the participation shares.
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The decisions on the current management of the family enterprise shall be made by the representative of the
family enterprise. The acts of disposal over the assets included in the activity of the family enterprise shall be
made by simple majority consent of undertaking’s members, on condition that this majority also includes the
consent of the owner of the asset object of the act.

The documents by which assets are acquired for the performance of family enterprise’ activity shall be
concluded by the representative, without members’ prior authorization, if the value of the asset for which the
document is concluded does not exceed 50% of the value of the assets included in the undertaking and the
amounts of money made available to the undertaking at the date of the document. Acquired assets are co-
property of the members depending on the shares.

A family enterprise shall cease its activity and shall be cancelled from the Register of Trade in the following
cases:

a) more than half of its members have deceased;

b) more than half of its members require its cessation or withdraw form it;

c) according to art. 25 of the Law no. 26/1990, republished, with the further amendments and supplementing.

The cancellation application accompanied by a true certified copy of justifying documents, as the case may be,
shall be submitted by any interested person to the trade registry office near the court of law where it has its
professional headquarters.

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