by Vlad Cuc
There are several legal ways through which a Romanian company can be dissolved. Our team of lawyers in Romania can provide an extensive presentation on what you should expect with each of the below mentioned situations, and you should also know that our team can offer legal representation when dissolving your business, which can be done through the following:
- exceeding the limited timeframe for which the company had been initially incorporated for;
- the impossibility of fulfilling the company’s object of activity;
- declaring annulment of the company or through a Decision of the General Shareholder Assembly;
- decision of Tribunals, on the request of each associate for well-founded reasons as well as conflicts between associates resulting in cease of company’s activity;
- company’s bankruptcy and other reasons stipulated by law or by the articles of association.
The process of dissolving a company will be continued by the liquidation procedure. Still, it must be noted that dissolving a company may not be followed by the process of liquidation, but this can be done only in certain situations. This procedure has to be registered with the Trade Register, and later on, be published in the Official Monitor.
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What is the dissolving procedure with the Romanian Trade Register?
The Trade Registry procedure is formed of 3 steps, which can be detailed by our team of Romanian lawyers. Here, you can see the basic aspects you should follow in this case. The first step is to file a number of requested documents (Shareholder Decision, official request) and the payment of taxes.
The next step is filing a second set of documents (documents from appointed liquidators) and payment of taxes, which will be followed by filing a third set of documents (the request to dissolve the company, the financial situation for liquidation, the Certificate of Registration, the Fiscal Certificate etc).
In certain cases, the shareholders of SRL companies (limited liability companies) are able to decide – at the time of dissolving the company – upon the liquidation method of the company, when agreeing upon the assignment and liquidation of the company’s patrimony and when insuring payment of debt to potential creditors.
On the date the judge’s decision is taken to dissolve the company, the entity enters liquidation, per the provisions of the law and a liquidator has to be either hired by the company or appointed by the judge. Any remaining assets of the dissolved company shall be assigned to the shareholders. You can always address to our Romanian law firm for legal representation in this procedure.
Dissolving a legal entity in Romania
Those who want to dissolve their company will follow one of the options presented at the beginning of the article. The procedure will also be influenced on whether the company has debts or not. It is understandable that in the case in which the company does not have any debts, the process of dissolving the legal entity will be much more simpler. The same applies if the company’s members agree upon the dissolution of the company.
When debts are involved and when the associates have different opinions with regards to the direction in which the company should be oriented (opposed to dissolution), then the procedure will be much more complex; our team of Romanian lawyers can guide you throughout the entire process, which can be highly influenced by the value of the debt the company has.
Please mind that in this situation, when the debt is very high, the sole option available for the investors is to go through the insolvency procedure. When the associates do not agree with the idea of the dissolution of the company or do not agree with the terms that will be applied in this case, then the only option they have is to address their case to a local court.
In order to consider that the associates agree on the termination of the company, a majority vote has to be taken, which represents 50% of all the company’s shareholders plus one shareholder. This is the general consensus with regards to this process, but it is necessary to verify the stipulations of the company’s articles of associations, as different rules may be expressed. In this sense, we highly advise you address to our Romanian lawyers.
A company can be dissolved when it is represented by a single shareholder as well. However, this procedure is much simpler, as the decision and the approval on the dissolution of the company has to be taken by the said shareholder.
As mentioned above, investors who have to close their company have to complete certain legal procedures with the National Trade Registry Office, as well as with the Official Monitor. You should know that the publication of the papers in the Official Monitor implies the payment of the fee, charged per each page of the documents that need to be published in accordance with the requirements of the law.
How many businesses were closed down in Romania?
The number of businesses which have to be dissolved and liquidated in Romania varies from one year to another due to various reasons, same as it does when referring to the registration of new legal entities, a decision that is influenced by the new tax policies adopted by the government, the incentives businesses can obtain, the economic situation of specific business sectors and so on. The latest statistics provided by the National Trade Registry Office show the following data:
- in the first 5 months of 2019, the institution registered more than 62,500 applications for dissolving and liquidating local businesses (legal entities and sole traders);
- this accounted for a relevant increase in the number of closed businesses – an increase of 75% compared to the first 5 months of 2018;
- however, it must be noted that in the period of January – May 2019, the institution registered more than 68,200 new businesses;
- the highest number of closed businesses was in Bucharest (6,572 companies), Iasi (3,623 businesses) and Maramures (2,534 companies);
- the lowest number of requests for dissolving companies was registered in Harghita (503 companies), Covasna (469 companies) and Ialomita (458 companies).
For more details on the process of dissolving a Romanian company, we invite you to contact our law fir in Romania for legal representation. Our team is prepared to provide you with tailored advice suitable for the characteristics of your situation (company debts, number of shareholders, legal entity, the need to start the insolvency procedure, the need to address to a court and so on).