Materiale Drept Comercial

8/13/2019 Materiale Drept Comercial

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Introduction in Commercial Law

The notion of commercial law

Etymologically, the term commerce is juxtaposition between the Latin words cummeaning 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 consumers needs and how fast it secures them. In this respect, th e

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.
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The history of the Romanian Commercial Law

In its beginnings the Romanian commercial law was based on the communitys rules or

on some foreign laws.

The first written rules that had elements of commercial law were Andronache DonicisCode (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.

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.

The Commercial Code was abrogated by the new Civil code adopted in 2009 and which

entered into force in 2011 by law 71/2011.

The new Civil code represents now the main source of law for the relations between

professionals or between professionals and other persons which are govern by

commercial law.

The Professionals

Legal basis: art. 3 Civil code :

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.


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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 hasnt 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:

=>The legal capacity

Can be defined as being the natural persons 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:

=>The abstract capacitythe persons ability to have rights and obligations (granted to

each human being from the moment of birth or, by exception, from the moment of his

conception)


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- Continuation of trade in case of selling the stock trade (good will)

- Exclusive distributor

- Franchisee position

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

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 (vnztor)

-delegate

-commercial traveler (comis-voiajor)

Risk = unlimited liability => debtor of all its commercial obligations > commercial

creditors (as simple creditors) have as warranty the merchants entire present or future

fortune (patrimony)

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

Profitability of merchants 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


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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

Merchants 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 companies5. state companies and national companies6. economic interest groups7. european companies

8. european cooperative companies9. 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.

Art.1 par.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 ownaccounting activity.

1. The obligation to keep specific books

It is provided by the Law no. 82/1991 on the accounting system, republished, amended

and completed. Thus, the merchant is bound to keep the following books:


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- 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 ofJustice.

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.

However, concerning the commercial companies, by the incorporation in the Register of

Trade they get the legal personality, meaning they become legal persons.

Stock-trade (Goodwill)

In common law legal systems, the good willis 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
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In legal systems of French inspiration (Romanian), the good will is more than the

merchants 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 goodssuch 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 11point c form the law, 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.


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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 merchants activity.

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:


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1. Tangible goods

The tangible elements of the goodwill 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.

2. 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.

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 personsthe 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 Companiesthe 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

- action based on unfair competition facts


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

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

- its 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:

- incorporationif it is used

- action for recovery of property (in revendicare)

- action based on unfair competition facts

- action for damages (moral and pecuniary)

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, thequality of merchandises) or subjective (advertising, clients fidelity, shop assistants

behavior.

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


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Commercial frequented place (Goodwill)

It is the capacity to attract clients.

Influenced by:- objective factors (e.g. the place where the shop/headquarters is located, the quality of

merchandise)

- subjective factors (advertising, shop assistants behavior)

- external factors ( the merchants reputation, the merchants partners reputation)

Property and industrial law rights

a) trademarks

b) patents

c) industrial drawings and models

d) copyright

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;
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- 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

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:


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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.

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 withinthe 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.


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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 ofcompany.

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 behalfof 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 forthe 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.


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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.

- 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.


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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 companys 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, theassent, 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:

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 commonactivity;

3. it is a commutative contract because the associates know from the very moment of

concluding the contract which are their mutual obligations;
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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 partnershipor 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.


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

- he must have full concrete capacity;

- 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 thecompany, if any;

- the companys object of activity, specifying the mainfield 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.


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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.

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.


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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 subscriberswho 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 companys 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 companys 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 theseoperations 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.

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.


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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 formthe judgment of authorization of the companys 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 companyapproved 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

companys setting up may be found out. In this case, the company is oblige d 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


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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.

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 theGeneral 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.

Nullity of commercial company

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 companys setting up is the date of its incorporation in the

Register of Trade.
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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 companys 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.

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 companys 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.


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Social Capital

1. The contributions to the registered capital of the commercial companiesThe 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 contributionhas 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 fictivecontribution, 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;
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- tangible movable goods, such as raw materials, merchandise;

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

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 thelatter 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.


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3. The contribution in work (in industry) represents the associates 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.

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 companys 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 companys creditors, in the case of certain juridical

forms of commercial companies, the law requires a minimum amount for the registeredcapital, as follows:

- 25 000 euro, for the company by shares or the limited partnership by shares;

- 200 lei, for the limited liability company.


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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 companys 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 companys 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 companys 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, theassociates 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 capitalwill 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 incase 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 months perio d

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.


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Functioning 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 concretecapacity. 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.

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;
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- 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 companys 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 ones behalf,

interests contrary to those of the company, cannot take part in any proceedings or

decision-making regarding this operation.

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.


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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 theother associates.

b) to participate to losses

c) The associates are unlimitedly and jointly liable for the operations carried out in the

companys 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 persons 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 companys funds more than what was allotted to

him, for the expenses which were incurred or for those he will make in the companys

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 onits 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 fulfillment of the

companys goal, except for the restrictions mentioned by the constitutive act.

They are bound to take part in all the companys 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.


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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.

Masnagers ca be also persons unrelated with the company.

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 therefrom.

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.

The active partners have the right to represent the company, can be elected asadministrators, 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 companys

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 accountand to verify their exactness by means of checking the

commercial registers and the other supporting documents.


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Joint-stock companies

The General Meeting

The General Meeting is the main decisional body, because has the obligation to decideall 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;

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.

With a view to ensuring the validity of the proceedings of the ordinary meeting it isnecessary to have the shareholders attending it representingat 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 unfulfillment of the conditions of paragraph (1) the

meeting gathered after a second convening may proceed upon the issues on the first

meetings 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 companys life;


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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.

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

least1/5 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

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 proceedingsconcerning that operation.

On companys administration

The administration of the company by shares may be performed according to two

systems, as follows:


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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 Boardthe attendance in person of at 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;

b) actual existence of the paid dividends;

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

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

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

Auditors


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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 beshreholders of the compnay execpt of the authorized or certified accountant.

The auditors are bound to supervise the companys 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 regerding 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 toa 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.


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Limited Liability Company

General Assembly

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

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 & Bonds

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

b) bearer shares
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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 ofthe shares and the deposits made

d) advantages granted to founders.

For registered shares the name, first name and shareholders 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;


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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 companys constitutive act. Any holder of such shares

may attend these special meetings.

Transfer of shares

The property right over the bearer shares is transferred by simple assignment. Theproperty 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 ofthe 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.

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.


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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.

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 companys 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 atleast 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 favorable vote of at least four fifths of the titles represented in

the meeting.


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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

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;
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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 thedecision 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.

Dissolution and Liquidation

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

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