New change in recently modified corporate legislation

The position of manager of a trading company will be possible to cumulate with the position of employee of that specific company, in case the person appointed manager will actually perform the duties that pertain to both the managerial position and to the specific employee position.
At the same time, the sole partner may be an employee of the limited liability company whose sole partner they are, but may not also function as a manager. This is according to an emergency ordinance draft intended to modify the law of trading companies.
The Justice Ministry is working on an emergency ordinance that modifies and complements the law on trading companies (31/1990) and the law on trade register (26/1990), which had been modified by law 441 last November. Law 441 drew criticism from some business people (while others hailed it), because it prohibits, under the principles of corporate governance, managers and directors to sign employment contracts with the companies they run.
Managers and directors may only sign management contracts. These stipulations are kept, and the emergency ordinance draft stipulates that joint stock companies shall operate the modifications and register them with the Trade Register within seven months from the enforcement of the new law. Until such steps are completed, the companies may continue to function using the same management structure they had at the time when the law came into force.
Adrian Izvoranu, the general manager of the Alliance of Employer Confederations in Romania says the seven-month deadline, set for companies to comply, is too tight, as “managers donet grow on trees”.
“Therees a lot of paperwork to be altered. Whates more, real managers develop with time. You donet just meet them once and strike a deal about their pay. A management contract is negotiated over many months,” Izvoranu says.
He agrees, however, that managers and directors must not have employment contracts signed with the companies they run, but only management contracts (which are subject to mandate rules), on the grounds that the interests of the two parties diverge and the stipulations in question help clear things up. This is why – he says, the stipulation included in the new draft, namely that the manager of a trading company will be allowed to also be an employee of that company in case the person appointed manager will effectively perform the duties of both positions is a conflict of interests and has to be eliminated.
The new provisions added to the law on trading companies in December caused debates, with one of the objections being that inasmuch as a manager or director does not have an employment contract, they no longer get social security and length of service.
Florin Pogonaru, the chairman of the Business People Association believes that as long as the labour legislation remains socialist in nature (length of service and continuity are very important), any changes made to the commercial sector are purely formal. “We have an old labour legislation, dating from socialist legislation, which clashes with the corporate governance using the OECD model that we want to implement.”