Cleanup among small Romanian companies

Friday was the last day when companies could conclude the procedures for increasing their share capital up to the level required by the law, namely 2 million lei for limited liability companies and 25 million lei for joint-stock companies.

Almost 188,000 companies had failed to comply with the share capital increase requirements by the end of July, which is more than a quarter of the total number of limited liability and joint-stock companies (SRL, SA and SCA) having been registered with the National Office of Trade Register (ONRC) by that date.

Romania’s Chamber of Commerce representatives say it is quite unlikely that this situation should significantly change in August. They explained that those were companies having stopped operating in the meanwhile, as they had been established when it was “trendy” to have your own business or they were merely shell companies for running “fishy businesses”.

A number of 2,502 firms out of the total 26,509 joint-stock companies having been registered with ONRC by the end of July did not apply for share capital increase procedures. More than a quarter (184,864) of the total 668,563 limited liability companies having been registered throughout Romania by the same date failed to increase the share capital to the minimum compulsory level required by the law.

50,929 limited liability companies of the total 168,236 registered in Bucharest did not increase the share capital by the end of July, while 662 companies of the total 5,155 joint-stock registered companies failed to do the same.

According to Law 314 from June 2001, the companies failing to increase the share capital by August 26 will be disbanded and enter the liquidation procedures. The minimum compulsory share capital was stipulated by Law 31/1990, which was re-issued in January 1998.

At the notification forwarded by the territorial chambers of commerce or by the Finance Ministry, the judge delegated to the trade register is enabled to ascertain the disbandment of the companies failing to meet the legal requirements.

These may file an appeal within 15 days from the date when the sentence was delivered. The Court may admit the appeal provided it concludes that one particular company was not able to meet the legal requirements and may grant it a period of three months on to increase the share capital.

The companies failing to increase their share capital will be liquidated within 6 months from the enforcement of Law 314, namely by the end of this year.