Romania: Legislative update – important changes for companies

Overview

On 15 August, the Ministry of Finance made publicly available a draft legislative package that introduces changes to Romania's corporate framework, with a particular focus on limited liability companies. These reforms aim to strengthen fiscal discipline and improve transparency.

The authors highlight below the main changes which will impact the activity of the Romanian companies:

New Inactivity Triggers and Deadlines

• Companies without a bank account in Romania or those filing financial statements more than five months late will be automatically declared fiscally inactive.
• Companies inactive for more than one year (or more than three years for voluntary suspension) will face insolvency, liquidation or dissolution procedures initiated by the Romanian Tax Authority.
• Transitional measures require companies already inactive for over three years to reactivate within 30 days. Companies inactive for less than three years are required to reactivate within 90 days from the date the new law enters into force. 

These measures aim to eliminate "ghost" companies and enhance the accuracy of the business environment, supporting better tax collection and compliance.  

Mandatory Bank Account Requirement

• All companies are required to open and maintain at least one bank account in Romania or with the State Treasury throughout their existence.
• Newly established companies must open a bank account within 30 days of incorporation.
• Failure to comply with this obligation constitutes a contravention and is subject to fines ranging from RON 3,000 to RON 10,000. 

These measures aim to ensure financial transparency and traceability, supporting better fiscal oversight and compliance. 

New Conditions for Opposability of Share Transfers to the Tax Authority

The draft bill establishes new conditions in order to make the transfer of shares opposable towards the Romanian Tax Authority. Under the proposed rules, a share transfer will only be recognised by the tax authority if the following requirements are met: 

• Control-changing share transfers must be notified to the Romanian Tax Authority within 15 days.
• For companies, particularly limited liability companies, with outstanding state debts, guarantees must be provided before the Trade Registry records the transfer.
• The Trade Registry requires approval from the Romanian Tax Authority, and guarantees will be enforced if debts remain unpaid after 60 days. 

These rules aim to prevent companies from avoiding payment of their debts to the state by transferring shares to someone else. The goal is to ensure that any outstanding debts are paid even if the ownership of the company changes.  

Increase in Minimum Share Capital

• The new minimum share capital for limited liability companies is RON 8,000 (approximately EUR 1,600). 
• Existing limited liability companies must increase their capital at the first amendment of their articles of association, but no later than two years from the law's entry into force.
• Non-compliance may result in court-ordered dissolution.

Raising the minimum capital is intended to increase the financial responsibility of company founders and protect creditors, addressing the ease with which companies could previously be set up with minimal resources.  

Dividend and Loan Restrictions

• Companies paying quarterly dividends are not allowed to grant loans or advances to shareholders or affiliates until all interim dividends are regularised at year-end.
• Dividends from current profits can only be distributed after covering accumulated accounting losses and setting up legal or statutory reserves.
• If a company's net assets fall below the legal minimum, dividends (including interim dividends) may only be distributed after the net asset value is restored.
• If the company has debts to shareholders and fails to restore its net assets within the legal deadline, these debts must be converted into share capital, thereby increasing the share capital of the company.
• When net assets fall below half of the share capital, the company cannot distribute dividends nor grant or receive loans to or from shareholders or affiliates. Persistent shortfalls require mandatory conversion of shareholder loans into capital, thus increasing the share capital.
• Violations result in joint liability for directors and shareholders, as well as fines ranging from RON 10,000 to 200,000. 

These provisions aim to prevent decapitalisation, ensure that dividends are distributed only when legally and financially justified, and require companies to restore their net asset position before making distributions to shareholders. 

Next Steps

The draft bill is currently in public debate and may be subject to further changes following stakeholder feedback. All interested parties may submit proposals, suggestions and opinions regarding the draft bill within 10 calendar days of publication. After the consultation period, the draft will enter the parliamentary process.

All companies – especially limited liability companies – should audit their capitalisation, net assets, intra-group loans and share-transfer pipelines now to anticipate and prepare for the new requirements.

authors: Stefan Popa, Mihaela Popescu, Alina Cristea