Simplifications concerning corporate law in Romania, July 2020

After a long and drawn out legislative process commenced in 2017, Law no. 102/2020 amending and supplementing the Companies Law no. 31/1990 (“Law 102/2020”) has finally entered into force on July 5, 2020, setting in place major changes to the corporate regulatory framework.

The adoption of Law 102/2020 was adifficult legislative process. Following its adoption by the Chamber of Deputies, at the end of 2019, the President of Romania requested there-examination of the same. After overcoming this impediment, the Constitutional Court was seized by the Government with a plea of unconstitutionality regarding the same, on multiple unconstitutional grounds. However, the Constitutional Court dismissed the plea of unconstitutionality and Law 102/2020 was promulgated by the President of Romania.

The changes brought by Law 102/2020 are sure to bevery welcomed by the business environment, as some of the most restrictive provisions of Companies Law no. 31/1990 have been eliminated, as follows:

• the restriction preventing an entrepreneur from holding the position of sole shareholder in more than one Romanian limited liability company;
• the restriction preventing the set-up of several registered offices in the same premises;
• the need to obtain neighbours’ approval for setting up the registered office in residential buildings despite no commercial activities being undertaken therein.

The above-mentioned restrictions made incorporation of Romanian limited liability companies more difficult than expected and generated delays in obtaining all documents required for incorporation before the Romanian Trade Registry.

Therefore, the changes brought by Law 102/2020 detailed below will facilitate the Romanian business environment, contributing to the elimination of obstacles and thus encouraging entrepreneurial initiatives.