In the Official Gazette (Part I), no. 667 of 20 July 2023, Law no. 222/2023 was published, which introduced a number of amendments and additions to the Law on Companies no. 31/1990, as well as Law no. 265/2022 on the Trade Register and for the amendment and completion of other normative acts affecting the registration in the Trade Register.
According to the Explanatory Memorandum, the regulatory object of the new act is the transposition of Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border transformations, mergers and divisions by systematically integrating the provisions concerning these operations into the general regulatory framework in the field of companies – Company Law no. 31/1990, but also by correlating other relevant legal provisions, meaning that the document also proposes the appropriate completion of the provisions of the Law no. 265/2022 on the trade register and for the amendment and completion of other normative acts with an impact on the registration in the trade register.
Therefore, three new chapters have been introduced in Title VI of Act No 31/1990: Chapter IV entitled “Cross-border merger”, Chapter V entitled “Cross-border transformation” and Chapter VI entitled “Cross-border division”.
Cross-border merge:
Joint stock companies, limited partnerships, limited liability companies – Romanian legal entities – and European companies with registered office in Romania may merge, according to this law, with companies having their registered office or, where applicable, their central administration or principal place of business in other Member States of the European Union or states participating in the European Free Trade Association, hereinafter referred to as Member States, which are governed by their legislation and operate in one of the legal forms provided for in Annex II to Directive (EU) 2017/1. 132 of the European Parliament and of the Council of 14 June 2017 on certain aspects of company law, published in the Official Journal of the European Union, L series, No 169 of 30 June 2017.
Joint stock companies, limited partnerships with limited liability, limited liability companies – Romanian legal entities – and European companies with registered office in Romania may merge with companies having their registered office or, where applicable, their central administration or principal place of business in other Member States and which, without falling within the types of entities referred to in the previous paragraph, have legal personality, have their own assets and liabilities which represent the sole source of guaranteeing the company’s obligations and are subject to disclosure formalities similar to those provided for in Directive (EU) 2017/1. 132, if the law of that Member State permits such mergers.
If the acquiring company is a limited partnership limited by shares, established and operating under Romanian law, the shareholders of the company being acquired shall always be the limited partners of the acquiring limited partnership limited by shares, unless otherwise provided for in the decision approving the merger project.
The following are exempted from the application of the provisions of this chapter (cross-border mergers):
– companies regulated by Law no. 297/2004, as amended and supplemented, by Government Emergency Ordinance no. 32/2012 on undertakings for collective investment in transferable securities and investment management companies, as well as for amending and supplementing Law no. 297/2004 on the capital market, approved with amendments and additions by Law no. 10/2015, as amended and supplemented, by Law no. 74/2015 on alternative investment fund managers, as amended and supplemented, by Law no. 24/2017 on issuers of financial instruments and market operations, republished, as amended and supplemented, by Law no. 126/2018 on markets in financial instruments, as amended and supplemented, by Law no. 243/2019 on the regulation of alternative investment funds and for the amendment and supplementation of certain regulatory acts;
– companies subject to resolution instruments, powers and mechanisms, recovery and resolution measures and crisis prevention measures provided for by Law no. 312/2015 on the recovery and resolution of credit institutions and investment firms, as well as for the amendment and completion of certain regulatory acts in the financial sector, as amended and supplemented;
– companies that are in the process of liquidation and have started to distribute assets to shareholders;
– companies in insolvency or insolvency prevention proceedings, provided for by Law no. 85/2014 on insolvency prevention and insolvency proceedings, as amended and supplemented;
– merger operations subject to Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), published in the Official Journal of the European Union, Series L, No 294 of 10 November 2001.
The Romanian law is the law applicable to the procedures and formalities of the cross-border merger with a view to obtaining the preliminary certificate by the companies participating in the merger, Romanian legal entities, respectively to the procedures and formalities carried out with a view to registering the newly incorporated company in the commercial register as a result of the cross-border merger or, as the case may be, with a view to registering the information concerning the amendment of the articles of association of the absorbing company, Romanian legal entities, in the latter two cases, also establishing the date from which the cross-border merger takes effect.
The newly established company as a result of the cross-border merger may have one of the company forms provided for in the first two paragraphs.
For the purposes of this law, cross-border merger is the operation whereby:
a) one or more of the companies listed in Annex II to Directive (EU) 2017/1. 132, at least two of which are governed by the laws of two different Member States, are dissolved without going into liquidation and transfer all their assets and liabilities to another company in exchange for the distribution to the shareholders of the company or companies being acquired of shares or securities representing the capital of the acquiring company and, if applicable, a cash payment of up to 10% of the nominal value of the shares or securities representing the capital thus distributed; or
b) several companies, among those listed in Annex II of Directive (EU) 2017/1. 132, at least two of which are governed by the laws of two different Member States, are dissolved without going into liquidation and transfer all their assets and liabilities to a company which they incorporate, in exchange for the allotment to their members of shares or other securities representing share capital in the newly incorporated company and, if applicable, a cash payment of not more than 10% of the nominal value of the shares or other securities representing share capital so allotted;
c) a company listed in Annex II to Directive (EU) 2017/1.132 is dissolved without going into liquidation and transfers all its assets and liabilities to another company governed by the law of another Member State which holds all its shares, stocks and shares equivalents or other securities representing share capital;
d) one or more of the companies listed in Annex II to Directive (EU) 2017/1. 132, transfers, as a result of dissolution without liquidation, all its assets and liabilities to another existing company, the acquiring company, without the issue of new shares, stocks or shares equivalents or other securities representing share capital by the acquiring company, provided that one person directly or indirectly holds all the shares, shares or other securities representing the capital of the merging companies, or provided that the members of the merging companies hold the shares or other securities representing the capital in the same proportion in all the merging companies.
The cash payment may exceed the amount referred to in points (a) and (b) if the laws of at least one of the Member States of which the merging companies or the newly formed company is a national allow that percentage to be exceeded.
The managers or board members of the companies to be involved in the merger shall draw up a joint cross-border merger plan, which must include at least:
a) the legal form of the company, the name and registered office of all the companies participating in the merger;
b) the legal form of company, business name and registered office of the newly formed company, if any;
c) the conditions for the allotment of shares or other securities representing the share capital to the acquiring company or to the newly created company;
d) the rate of exchange of the shares or other securities representing the share capital and the amount of any cash payments;
e) the date from which the shares or other securities representing the capital referred to in point (c) entitle the holders to participate in profits and any special conditions affecting that entitlement;
f) the rights granted by the acquiring or newly created company to holders of shares, units or other securities representing share capital conferring special rights or the measures proposed in respect thereof;
g) any special advantages granted to directors or managers or, as the case may be, members of the supervisory board or the management board;
h) information concerning the valuation of the assets and liabilities transferred to the acquiring company or newly incorporated company;
i) the date from which the transactions of the acquired company are treated for accounting purposes as belonging to the acquiring company or newly incorporated company;
j) the implications of the merger for the workforce;
k) the date of the financial statements of the participating companies which were used to determine the terms of the merger;
l) if applicable, information on the procedures for determining employee participation and other arrangements for employee involvement in the business of the acquiring or acquired company;
m) the price of the shares, stocks or other securities representing the share capital in the event that the shareholders exercise their right to withdraw from the company, and the e-mail address to which the shareholders may send their declaration of withdrawal;
n) any guarantees granted to creditors, such as real or personal guarantees.a) the legal form of the company, the company name/name and registered office of all companies participating in the merger;
On the joint merger project the draft articles of association of the merging company will be attached to the to be set up, respectively the draft amending act of the act of the draft memorandum of association of the acquiring company, as well as the financial statements approved and audited in accordance with the law, which may not be more than older than 6 months before the date of the draft terms of merger.
At least six weeks before the date of the general meeting convened to approve the merger cross-border merger, the joint draft terms of cross-border merger and the annexes shall be made available to the members and employees, at least in the following format electronically, by posting on the company’s website, in accordance with the provisions of article 25128 paragraph (3), or by electronic transmission, members and employees shall also receive notice in accordance with Article 25128(1).
Joint draft terms of merger shall be examined by an independent expert for each of the companies involved in the merger, or by one or more experts for all the companies participating in the merger Romanian legal persons or companies with registered office in Romania, expert(s) who prepare(s) an expert report. valuation report, which shall be made available to the shareholders with at least one month’s notice. before the date of the general meeting convened to approve the merger cross-border merger, at least in electronic format. The assessment, following supporting the activity of verifying the legality of the merger in accordance with the provisions of article 25133, is impartial and objective, being carried out in accordance with the provisions of Government Ordinance no. 24/2011 on some measures in the field of property valuation, approved with amendments by Law no. 99/2013, with subsequent amendments and additions.
Valuation report shall specify whether the price of the shares, stocks or other securities of securities representing the share capital established for the associates exercising the right of withdrawal and the exchange rate of the shares, units or other securities representing the share capital are appropriate. In carrying out the valuation, the independent expert shall take into account the market price of the shares, shares or other securities representing the share capital of the participating companies prior to the publication of the draft terms of merger or the value of the companies, excluding the effect of the proposed merger, the price of the shares or other securities representing the share capital, which shall be determined in accordance with the valuation methods recognised by the valuation standards in in force at the valuation date. The report must, at least:
a) indicate the method or methods used to determine the price of the shares or other securities representing the share capital;
b) indicate the method or methods used to determine the exchange rate of shares or other securities representing share capital;
c) state whether the method or methods used are appropriate for valuing the price of the shares or other securities representing share capital and the exchange ratio, indicate the values arrived at by using the valuation methods and give an opinion as to the relative importance attributed to the methods in question in arriving at the value so determined and whether different methods have been used in the merging companies;
d) describe any difficulties encountered in the course of the valuation.
The examination of the draft terms of cross-border merger by one or more independent experts and the preparation of a report are not required in the case of single-member limited liability companies or in the case of companies where all members agree to waive the draft terms.
If approval of the merger by the general meeting is not required, the expert’s report shall be made available to the shareholders at least one month before the date of the general meeting of any of the other merging companies. If the law applicable to each of the merging companies provides for an exemption from the approval of the merger by the general meeting of members, the expert’s report shall be made available to the members at least one month before the date fixed for its approval by the board of directors or, as the case may be, the management board.
At least one month before the date of the general meeting convened for the approval of the cross-border merger, each of the Romanian legal entities and/or European companies with registered office in Romania participating in the cross-border merger shall submit to the Trade Register Office the joint cross-border merger project, accompanied by a statement on the manner of publication of the merger project and a notification informing the shareholders, the creditors and the representatives of the employees of the merging companies or, if no representatives have been appointed, the employees themselves that they may submit comments on the draft terms of cross-border merger at least 5 days before the date of the general meeting, and the declaration on the administrators’ own responsibility provided for in Article 25133, paragraph 3, point (i).
Within 45 days of the date of publication of the common draft terms of cross-border merger in accordance with the provisions of Article 25128, any creditor whose claim is prior to that date and not due on that date and who is dissatisfied with the guarantees granted by the common draft terms of cross-border merger shall notify the merging company of whose creditor it is in order to grant appropriate guarantees.
Within 15 days of the expiry of the time limit referred to above, the company shall send the creditor an offer to grant guarantees.
The creditor’s request shall be heard urgently and with priority. If more than one application is made, they shall be joined together.
The pre-certificate of cross-border merger can only be issued if the company provides evidence of the provision of securities according to the common draft terms of merger or following the notification of the company or according to the court decision.
For a period of two years from the date on which the cross-border merger takes effect, in accordance with the provisions of Article 25136(3), any claim by any creditor who has a claim prior to the date of publication of the draft terms of merger and not yet due on that date in respect of that claim may be submitted to the competent court in whose territorial jurisdiction the merging company whose creditor is the merging company has its registered office.
If the absorbing or newly incorporated company is a European company having its registered office in Romania, the administrators of the merging companies shall ensure that the right of involvement of the employees in the company’s activity is respected, according to the provisions of Government Decision no.187/2007.
If the absorbing company or the newly incorporated company is a Romanian legal entity or a European company with its registered office in Romania, the management authorities of the merging companies in which mechanisms for employee involvement operate may, without prior negotiation, be subject to the reference provisions laid down in Article 12-23 of Government Decision no. 187/2007 or to comply with these provisions starting from the date of registration in the commercial register of the amendment of the memorandum of association of the absorbing company or from the date of registration of the newly established company, mentioning this option in the merger project.
The company participating in the merger submits, in accordance with the provisions of Article 84 of Law no. 265/2022, to the Trade Register Office an application for the issuance of the certificate prior to the cross-border merger, accompanied by the following:
the common draft terms of cross-border merger, in the form approved by the general meeting of the shareholders of the merging company/companies;
the report of the directors or, where appropriate, of the members of the management board, to which shall be annexed, where appropriate, the comments of the employees or their representatives and those of the members and/or creditors on the common draft terms of cross-border merger and, where appropriate, the opinion of the employees or their representatives on the report referred to in Article 25125 and, where appropriate, the agreement of the members to waive the drawing up of the report and/or evidence that the conditions laid down in Article 25125(3) and/or (5) have been fulfilled;
the independent expert’s report referred to in Article 25126;
the resolution of the general meeting(s) approving the cross-border merger;
information on the fulfilment of the legal requirements regarding the participation of employees and other ways of their involvement, including, if applicable, on the start of the negotiation procedure, according to the provisions of the Government Decision no. 187/2007, as well as on the number of employees of each of the companies participating in the merger at the time of drafting;
documents evidencing the provision of securities in accordance with the common draft terms of cross-border merger or following the notification of the company by creditors in accordance with the provisions of Article 25131 paragraph (1), or, if applicable, the securities provided in accordance with the court decision on the creditors’ claim, as well as the court decision, in copy;
documents attesting the existence of the availability for payment, within the legal term, of the price of the shares or other securities representing the share capital and, if applicable, of the monetary compensation established by court decision, as well as the court decision, in copy;
if an application for annulment or declaration of nullity of the decision of the general meeting of shareholders approving the cross-border merger has been filed, the court decision rejecting the application, in copy;
a declaration on their own responsibility by the administrators or, as the case may be, the members of the management board confirming that, according to the data held and the checks carried out on the basis of the principle of prudence and diligence of a good administrator, the financial situation of the company involved in the merger, at the date of the declaration, ensures the fulfilment of the obligations towards the shareholders and creditors arising from the cross-border merger, in accordance with the provisions of Articles 25130 and 25131.
If all the procedures and formalities relating to the cross-border merger are completed in accordance with the law and the reports provided for in Articles 25125 and 25126 are drawn up in accordance with the law, the Registrar shall issue the certificate prior to the cross-border merger, the format of which shall be approved by order of the Minister of Justice.
Cross-border merger which has been subject to the control of legality, according to this law, cannot be abolished after the date on which it takes effect.
Legal basis:
– Law 222/2023 for the modification and completion of the Companies Law no. 31/1990, as well as of the Law no. 265/2022 on the trade register and for the modification and completion of other normative acts with an impact on the registration in the trade register;
– Law 31/1990 1) Companies – republished, with subsequent amendments and additions.