Romania: Corporate law update
SEPARATION OF POWERS
Romanian joint stock companies operate under governance rules establishing two distinct types of shareholder meetings. Ordinary meetings address routine operational matters including budget approval, financial statement review, board changes, and auditor appointments. Extraordinary meetings handle structural decisions such as relocating corporate headquarters, modifying business scope, adjusting share capital, mergers, spin-offs, and amending articles of association.
Directors manage daily operations, business development, and human resources. The law maintains clear separation between shareholder and director authority, preventing unauthorized interference between these corporate bodies.
DELEGATION
To enhance operational flexibility and address timing concerns, the Companies Law permits shareholders to delegate specific powers to boards of directors, including decisions regarding corporate seat relocation, business scope modification, and share capital increases.
CLAIM OF ANNULMENT
The Companies Law restricts annulment claims against board resolutions to those adopted through delegated powers. Previously, board decisions on seat changes, scope modifications, and share capital increases could be challenged. Following amendments, only seat and scope modifications remained challengeable in court, creating legal ambiguity regarding share capital decisions.
COURT DECISION
Constitutional Court Decision 382/2018 determined that Article 114(3) unconstitutionally excluded share capital increase challenges. The court found that denying shareholders’ right to challenge such board decisions violated constitutional access to justice principles. This decision, published August 1, 2018, restored shareholder rights to contest board decisions on share capital increases.
THOUGHTS
The ruling reestablished that delegated board powers face identical legal scrutiny as shareholder resolutions, requiring companies to assess litigation risks when delegating share capital decisions.