CG16_Chapter-24_Romania

Published by Global Legal Group, with contributions from:

Aksac Law OfficeAllensALRUD Law FirmArzinger & PartnersAshurst LLPAstreaBEITEN BURKHARDTBlake, Cassels & Graydon LLPbpv Hügel Rechtsanwälte OGCAJIGAS PARTNERS, S.L.Dorsey & Whitney LLPFerraiuoli LLCGlatzová & Co.GRATA Law Firm LLPHadiputranto, Hadinoto & Partners

Haxhia & Hajdari Attorneys at LawLendvai PartnersLenz & StaehelinLinklaters LLPLobo & Ibeas AdvogadosMcCann FitzGeraldNielsen Nørager Law Firm LLPNishimura & AsahiPortilla, Ruy-Díaz y Aguilar, S.C.TrilegalUGGC & AssociésUSCOV | Attorneys at lawWaselius & WistWBW Weremczuk Bobeł & Partners Attorneys at LawWH Partners

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A practical cross-border insight into corporate governance

9th Edition

Corporate Governance 2016

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DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

Country Question and Answer Chapters:

1 Albania Haxhia & Hajdari Attorneys at Law: Eris Hysi & Artan Hajdari 1

2 Australia Allens: Vijay Cugati & Kate Towey 9

3 Austria bpv Hügel Rechtsanwälte OG: Dr. Elke Napokoj, LL.M. 17

4 Belarus Arzinger & Partners: Dmitry Viltovsky 23

5 Belgium Astrea: Steven De Schrijver & Thomas Daenens 31

6 Brazil Lobo & Ibeas Advogados: Paulo Eduardo Penna 39

7 Canada Blake, Cassels & Graydon LLP: Frank P. Arnone & Madison Kragten 47

8 China Linklaters LLP: Fang Jian & Grace Yu 54

9 Czech Republic Glatzová & Co.: Jindřich Král & Milan Prieložný 61

10 Denmark Nielsen Nørager Law Firm LLP: Peter Lyck & Thomas Melchior Fischer 67

11 Finland Waselius & Wist: Fredrik Lassenius 75

12 Germany BEITEN BURKHARDT: Dr. Axel Goetz & Julia Schanz 82

13 Hungary Lendvai Partners: András Lendvai & Dr. Gergely Horváth 89

14 India Trilegal: Kosturi Ghosh & Bhusan Jatania 93

15 Indonesia Hadiputranto, Hadinoto & Partners: Mark Innis & Andrew Frans 99

16 Ireland McCann FitzGerald: David Byers & Paul Heffernan 105

17 Japan Nishimura & Asahi: Nobuya Matsunami & Kaoru Tatsumi 112

18 Kazakhstan GRATA Law Firm LLP: Marina Kahiani & Lola Abdukhalykova 119

19 Malta WH Partners: Ruth Galea 134

20 Mexico Portilla, Ruy-Díaz y Aguilar, S.C.: Gonzalo Eugenio Ruy-Díaz Benhumea 141

21 Morocco UGGC & Associés: Ali Bougrine 148

22 Poland WBW Weremczuk Bobeł & Partners Attorneys at Law: Łukasz Bobeł & Krzysztof Weremczuk 154

23 Puerto Rico Ferraiuoli LLC: Fernando Rovira-Rullán & Yarot Lafontaine-Torres 161

24 Romania USCOV | Attorneys at law: Silvia Uscov 167

25 Russia ALRUD Law Firm: Anton Dzhuplin & Victoria Sivachenko 174

26 Spain CAJIGAS PARTNERS, S.L.: José Manuel Cajigas García-Inés & Pilar López Muñoz 181

27 Switzerland Lenz & Staehelin: Patrick Schleiffer & Andreas von Planta 190

28 Turkey Aksac Law Office: Arzu Aksaç & Yaprak Derbentli 197

29 United Kingdom Ashurst LLP: Bruce Hanton & Vanessa Marrison 205

30 USA Dorsey & Whitney LLP: Robert A. Rosenbaum & Cam C. Hoang 216

Contributing EditorsBruce Hanton & Vanessa Marrison, Ashurst LLP

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Account DirectorsOliver Smith, Rory Smith

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Chief Operating OfficerDror Levy

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ISBN 978-1-911367-00-0ISSN 1756-1035

Strategic Partners

The International Comparative Legal Guide to: Corporate Governance 2016

EDITORIAL

Welcome to the ninth edition of The International Comparative Legal Guide to: Corporate Governance.

This guide provides the international practitioner and in-house counsel with a comprehensive worldwide legal analysis of the laws and regulations of corporate governance.

The guide is divided into country question and answer chapters. These provide a broad overview of common issues in corporate governance laws and regulations in 30 jurisdictions.

All chapters are written by leading corporate governance lawyers and industry specialists, and we are extremely grateful for their excellent contributions.

Special thanks are reserved for the contributing editors, Bruce Hanton and Vanessa Marrison of Ashurst LLP, for their invaluable assistance.

Global Legal Group hopes that you find this guide practical and interesting.

The International Comparative Legal Guide series is also available online at www.iclg.co.uk.

Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected]

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Chapter 24

USCOV | Attorneys at law Silvia Uscov

Romania

5. central depositories;6. clearing house/central counterparty;7. market operators/system;8. insurance and/or reinsurance brokers; and9. administrators of private pension funds and voluntary

pension fund managers. ThisRegulationshallbeappliedinconnectionwithspecific

provisions relating to the governance system set out in specificlegislationapplicabletoregulatedentities.

In the Capital Market Law no. 297/2004, there are additional rules and principles for companies admitted to trading on stock markets.

c) Under the Corporate Governance Code issued by the Bucharest Stock Exchange (hereinafter, BSE): on a voluntarily basis for the companies listed on the BSE.

1.2 What are the main legislative, regulatory and other corporate governance sources?

Mandatory corporate governance sources:a) Companies Law no. 31/1990;b) Capital Market Law no. 297/2004, which regulates the

establishment and functioning of financial instrumentsmarkets with their specific institutions and operations, aswell as collective investment undertakings, with the purpose ofraisingfundsthroughinvestmentsinfinancialinstruments;

c) GEO no. 109/2011 concerning the corporate governance of state-owned enterprises (SOEs) – especially Chapter 5; and

d) Regulation no. 2/2016 on the application of corporate governance principles by entities authorised, regulated and supervised by the FSA, which entered into force on 23 March 2016 and shall be applied starting from 1 January 2017. According to Article 3 of GEO no. 93/2012 concerning the organisation of FSA, this organism is entitled to issue mandatory regulation and to apply sanctions.

Non-mandatory corporate governance sources refer to regulations issued by different organisms, such as regulated market operators (BSE, SIBEX) and the central depositories or clearing houses which may establish specific rules and principles fortargeted companies. The best-known non-mandatory corporate governance source is the Code of Corporate Governance, which was issued by the BSE on 11 September 2015 and which entered into force on 4 January 2016. This is currently applicable together with the Compendium of Corporate Governance practices, explaining the principles and provisions of the BSE’s Code of Corporate Governance

1 Setting the Scene – Sources and Overview

1.1 What are the main corporate entities to be discussed?

In Romania, there is a primary legislation source applicable to all companies (Companies Law no. 31/1990), which sets mandatory rules that can be considered as a minimum set of rules and principles for jointstockcompanies in thecorporategovernancefield. Thischapter focuses on general applicable provisions.However, themaincorporateentities forwhichspecificcorporategovernance regulations have been adopted are:a) Under the Government Emergency Ordinance no. 109/2011

concerning the corporate governance of state-owned enterprises (hereinafter, GEO no. 109/2011): mandatory compliance for Romanian public enterprises.

The notion of public enterprises consists of:i) autonomous public entitities (in Romanian, “regie

autonomă”) set up by the state or an administrative-territorial unit;

ii) national companies where the state or an administrative-territorial unit is the sole shareholder or majority shareholder; and

iii) companies to which one or more of the public enterprises mentioned above (in points i) and ii)) hold a major participation or a participation which ensures control.

They are exempted from the provisions of GEO no. 109/2011 regarding banking financial companies and insurance andreinsurance companies, as well as companies conducting activities of national interest on defence, public order and national security.

b) Under the Regulation no. 2/2016 on the application of corporate governance principles by entities authorised, regulated and supervised by the Financial Supervisory Authority (hereinafter, FSA) which entered into force on 23 March 2016 and shall be applied starting from 1 January 2017: mandatory compliance for companies operating on non-banking financial markets and who are authorised,regulated and supervised by the FSA.

These are the following:1. financialinvestmentservicescompanies;2. investment management companies;3. collective investment undertakings/alternative investment

funds (AIF), established by the articles of incorporation;4. alternative investment fund managers (AIFM);

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the holder rights granted to shareholders with ordinary shares, including the right to attend the general meeting, except the right to vote, and right to be paid before ordinary shares shareholders are paid out. Shareholders also have the right to gather preference shares in Special Assemblies, in accordance with the provisions of the company’s bylaws.Any paid share entitles one to vote at the General Assembly, unless the bylaws have not provided otherwise or if they may limit the number of votes belonging to shareholders who hold more than one share.One or more shareholders representing, individually or together, at least 10% of the share capital may request the court to appoint one or more experts to examine certain transactions in the management of the company.

2.2 What responsibilities, if any, do shareholders have as regards the corporate governance of their corporate entity/entities?

There are no responsibilities for the shareholders to participate in corporate governance (see question 4.1).

2.3 What shareholder meetings are commonly held and what rights do shareholders have as regards them?

According to Article 110 and the following of the Companies Law no. 31/1990, general meetings are ordinary and extraordinary. When bylaws do not provide otherwise, they will be held at the company headquarters and at the place indicated in the convening notice.The Ordinary General Assembly meets at least once a year, within fivemonthsofthefinancialyear.In addition to the discussion of other issues on the agenda, the general meeting is required:a) todiscuss,approveormodifytheannualfinancialstatements,

based on reports submitted by the Board of Directors or the Management Board and Supervisory Board of auditors or, whereappropriate,financialauditorandfixthedividend;

b) to elect and dismiss members of the Board or the Supervisory Board and the auditors;

c) in the case of companies whose financial statements areaudited,toappointordismissthefinancialauditorandfixtheminimumdurationofthefinancialauditcontract;

d) tofixtheremunerationdueforthecurrentBoardmembersorSupervisory Board members and auditors, if not established by the constitutive act;

e) to decide on the Board of Directors or the Executive Board;f) to establish the income and expenses and, where appropriate,

theworkprogrammeforthefollowingfinancialyear;andg) to decide the pledge, lease or closing of one or more units of

the particular society.To validate the proceedings of the Ordinary General Assembly, the shareholders must hold at least one-quarter of the total voting rights. Decisions of the Ordinary General Assembly shall be taken by majority vote. Bylaws may provide higher requirements of quorum and majority.The General Assembly is convened by the Board of Directors or the Management Board whenever necessary. The Board of Directors, and respectively the Management Board, immediately call a General Assembly at the request of shareholders representing, individually or together, at least 5% of share capital or a smaller share if the bylaws so provide and if the request contains provisions pertaining to Assembly prerogatives.

and providing information about international best practices. The Manual for Reporting Corporate Governance aims to help companies disclose corporate governance information and explain deviations from the BSE’s Code of Corporate Governance.Furthermore, even the American Chamber of Commerce in Romania (AmCham) issued a Code of Corporate Governance. According to the Preamble of this Code, it establishes a set of principles and recommendations for joint stock companies registered in Romania and members of AmCham Romania. Its aim is to cover principles in the Romanian legislation regarding companies, as well as to introduce new recommendations where the law is silent and, thus, where there are doubts.Last, but not least, there are also non-regulatory corporate governance sources inserted in the articles of association or bylaws of the company. (Please note that, in this chapter, reference to bylaws shall be considered as being made to articles of association and to bylaws.)

1.3 What are the current topical issues, developments, trends and challenges in corporate governance?

The Final Report on the evaluation of the implementation of GEO no. 109/2011 issued by the Ministry of Public Finance mentions that the progress in implementing the GEO is disappointing. Board members who were removed from these positions were replaced with temporary members, and in more than 200 companies in the central government’s portfolio, the appointment and selection process had not even started. “There is no institution clearly responsible for overall

monitoring of the implementation of the GEO no. 109/2011. There are no deadlines or penalties imposed for non-compliance. Implementing Agencies are central government entities that do not have proper incentives to foster implementation. On the contrary, it is possible that ministries are more interested in maintaining the current situation.

One of the worst consequences of politicisation is unstable governance in public enterprises. Each cabinet reshuffle, each change of the ruling coalition was associated with changes in the composition of general directors and Boards of public enterprises.”

As an example of the lack of interest, the bill for the approval of GEO no. 109/2011 concerning the corporate governance of state-owned enterprises registered at the Parliament under no. PL-x 47/2012 was sent for further report to the Standing Committees of the Chamber of Deputies on 23 October 2012, and the bill has not been included on the agenda ever since.The most obvious impact is that GEO no. 109/2011 brought the public enterprises sector and its problems on the public agenda.On the other hand, private joint stock companies seem to have assumed more seriously the rules and principles of corporate governance issued by the organisms that regulate them.

2 Shareholders

2.1 What rights and powers do shareholders have in the operation and management of the corporate entity/entities?

According to Article 94 of the Companies Law no. 31/1990, the principle is that a company’s shares are of equal value and give the owners equal rights. However, according to Article 95 of the same law, the company may issue preference shares, which offer

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assets in his own personal benefit or in the benefit of third parties, knowing or having to know the fact that in such a way the company shall not be able to perform its obligations”.Article 169 of the Law no. 85/2014 on insolvency proceedings states the liability of the managing organs’ members. Theoretically, shareholders can be also considered liable as any other person that has contributed to the insolvency of the debtor by one of the expressly mentioned deeds.Romanian doctrine also analyses, as indirect application of this doctrine, the joint tax liability with the debtor declared bankrupt or insolvent under tax law and presumptions regarding the action for annulment of the legal acts of the debtor under the insolvency law.

2.5 Can shareholders be disenfranchised?

According to BSE’s Code, the rules of General Assemblies of shareholders should not restrict the participation of shareholders in General Assemblies and the exercising of their rights.However, according to the Companies Law no. 31/1990, the voting right is suspended for shareholders who are not current with due payments.Shareholders who are members of the management bodies may not vote in respect of shares which they own, either personally or by proxy, their discharge or a problem when their person or their administration would be in discussion. However, they can vote for the annual financial statement if the majority provided by law or bylaws cannot be accomplished.A shareholder who, in a certain operation, has, either personally or as the agent of another person, an interest contrary to the company, will have to abstain from deliberations on that operation. A shareholder who contravenes this provision is liable for damage caused to the particular society, if without his vote the required majority would not have been obtained.

2.6 Can shareholders seek enforcement action against members of the management body?

In general, management bodies are responsible to particular societies for damage, when damage would not have occurred if they had exercised their duties of supervision.The administrators are jointly liable with their immediate predecessors if, being aware of the irregularities committed by them, they failed to communicate them to the auditors or, where appropriate, the internal auditors and the financial auditor. Similar provisions exist for SOEs, where joint liability does not extend to administrators who have recorded their opposition to a specific Decision in the Register of the Management Board and have informed internal auditors, the financial auditor and the tutelary public authority on it in writing.An action against the administrators, directors or members of the Management Board and the Supervisory Board for damages caused to the company by them in breach of their duties to the company belongs to the General Assembly of shareholders that shall decide with the majority of cast votes.If the General Assembly of shareholders does not bring an action for damages or does not follow the proposal of one or more shareholders to initiate such action, shareholders representing, individually or together, at least 5% of the share capital are entitled to bring an action for damages in their own name, but on the company’s behalf.

Also, one or more shareholders representing, individually or together, at least 5% of share capital are entitled to request the introduction of new items on the agenda.The Extraordinary General Assembly convenes whenever necessary to take Decisions concerning:a) changing the legal form of the company;b) relocation of the company;c) change of the company’s object of activity;d) the establishment or dissolution of some secondary units,

i.e. branches, agencies or other such units without legal personality, unless the bylaws provide otherwise;

e) extending the duration of the company;f) capital increase;g) reduction of share capital or reunification by issuing new

shares;h) merger with another company or division of the company;i) anticipated dissolution of the company;j) conversion of registered shares into bearer shares or bearer

shares into registered shares;k) conversion of shares from one class to another;l) conversion of a category of bonds or shares in another

category;m) bond issuance; andn) any other amendment of the bylaws or any other resolution

requiring the approval of the Extraordinary General Assembly.

To validate the proceedings of the Ordinary General Assembly, the presence of shareholders holding at least one-quarter of the total voting rights is required. Decisions are taken by the majority of votes held by the shareholders who are present or who are represented. The Decision to change the main activity of the company, reduce or increase the share capital, change of legal form, merger, division or dissolution of the company shall be taken by a majority of at least two-thirds of the voting rights held by shareholders who are present or who are represented. Bylaws may provide higher requirements of quorum and majority.The Decision of a General Assembly to modify the rights or obligations relating to a class of shares shall take effect only upon approval of this Decision by the Special Assembly of shareholders in that category. The above-mentioned provisions concerning the convening of a quorum and conduct of General Assemblies of shareholders shall also apply to Special Assemblies.

2.4 Can shareholders be liable for acts or omissions of the corporate entity/entities?

Although the principles of the piercing the corporate veil doctrine are present throughout the legislation, Romania does not have a coherent body of law and the application in court is minimal.Application of this doctrine can be found in Article 237, paragraphs 2, 3, and 4 of the Companies Law no. 31/1990. Paragraph 2 states the principle of limited liability of associates, while paragraph 3 states that “the associate who, in the fraud of creditors, abuses the limited nature of his liability and his legal personality different than that of the company is unlimitedly liable for the due liabilities of the dissolved company, respectively liquidated” and paragraph 4 completes it, “especially when such an associate disposes of the company assets as if they were his own or diminishes the company



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the ordinary General Assembly of shareholders. If their dismissal occurs without just cause, Management Board members shall be entitled to payment of damages.The General Assembly of shareholders appoints Supervisory Board members.The number of members of the Supervisory Board is set by the bylaws. It may not be fewer than three and no more than 11. AccordingtotheBSE’sCode,thesebodiesshouldhaveatleastfivemembers each.Supervisory Board members may be revoked at any General Assembly of shareholders, with a majority of at least two-thirds of the votes of shareholders present.In SOEs, the Management Board should have 3–7 members and Supervisory Board 5–9 members.Common provisions:The Companies Law no. 31/1990 states, as a principle, that bylaws or a Decision of the General Assembly of shareholders may provide that one or more members of the Board of Directors should be independent, while there are other corporate governance sources that come with additional regulation, GEO no. 109/2011 stating as mandatory that the majority of Board of Directors’ members should be independent and BSE’s Code stating as a recommendation the number of independent member for the Board of Directors or Supervisory Board and the conditions which must be met for a member of these bodies to be considered independent.Procedures for the selection and appointment of administrators are differentiated by type of SOEs, but have some elements in common: the selection is an open process that addresses to all potential candidates invited to enroll though national and international media channels; and the selection is based on clear criteria set by human resources specialists.Within 90 days of the appointment of its Board of Directors/Supervisory Board, they must submit for approval of the tutelary public authority for autonomous public entities or of the general meeting of shareholders for the other SOEs the management plan that includes management strategy during the mandate to achieve objectives and performance criteria set out in mandate agreements.According to GEO no. 109/2011, minority shareholders with over 10% of the voting rights may require the use of cumulative voting methods to appoint board members.According to the Capital Market Law no. 297/2004, Board of Directors or Supervisory Board members of the companies admitted to trading on a regulated market may be elected by cumulative voting methods. Attherequestofasignificantshareholder,appointmentby this method shall be mandatory. Also, for each of these bodies, thereshouldbeatleastfivemembers.

3.3 What are the main legislative, regulatory and other sources impacting on contracts and remuneration of members of the management body?

All corporate governance sources listed above (see question 1.2) contain provisions regarding contracts and remuneration of members of the management body, of which GEO no. 109/2011 contains the most specificof them(e.g. in themandateagreement,alongwithspecificperformancecriteria,thecontractshouldprovidequantifiedtargets on reducing outstanding debts and losses and increasing profits,turnoverandlabourproductivity).

2.7 Are there any limitations on, and disclosures required, in relation to interests in securities held by shareholders in the corporate entity/entities?

According to Capital Market Law no. 297/2004, a person who, due to its purchases or to those of persons with whom he acts in a concerted manner, is holding more than 33% of the voting rights in a company is obliged to launch a public offer addressed to all holders of securities and covering all their holdings as soon as possible, but no later than two months after reaching this holding.Until this public offer is launched, rights related to securities exceeding the threshold of 33% of the voting rights of the issuer are suspended, and such shareholders and persons with whom he acts in a concerted manner cannot acquire by other operations, shares of the same issuer.

3 Management Body and Management

3.1 Who manages the corporate entity/entities and how?

In Romania, there are two systems of management: one-tier system (the joint stock company is managed by one or more administrators, the number being always odd – when multiple, they constitute a Board of Directors); and two-tier system (the joint stock company is managed by the Management Board and Supervisory Board. The joint stock company management rests solely with the Management Board,whichfulfilsthenecessaryandappropriateactionstoachievethe object of the company, except for those reserved by law for the Supervisory Board and General Assembly of shareholders. The Management Board exercises its powers under the control of the Supervisory Board).

3.2 How are members of the management body appointed and removed?

One-tier system: TheOrdinaryGeneralAssembly of shareholders, except the firstadministrators who are appointed through the bylaws, appoints the administrator/Board of Directors.Candidates are nominated by current members of the Board of Directors or by shareholders.The Ordinary General Assembly of shareholders or the Board of Directors may dismiss them at any time. If a revocation occurs without just cause, they are entitled to payment of damages.In SOEs, the Board of Directors should have 5–7 members for autonomous public entities and 5–9 members for the other companies, and shall be constituted mostly of members who do not have executive functions and who are independent. The state has basically two seats reserved in each Board of Directors.Two-tier system: The Supervisory Board appoints members of the Management Board and also assigns one of them as president of the Board.Management Board members cannot simultaneously be members of the Supervisory Board. Members of the Supervisory Board cannot be employees.The Supervisory Board may dismiss Management Board members at any time. Bylaws may provide that they can be removed also by



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Two-tier system:The Management Board represents the company in connection to third parties and the courts, while the Supervisory Board represents the company in connection to the Management Board.At least once every three months, the Management Board submits a written report of the Supervisory Board on the management of the company with regard to its work and its possible evolution.Besides the regular information provided above, the Management Board communicates to the Supervisory Board any information on eventsthatmayhaveasignificantinfluenceonthecompany.The Supervisory Board has the following main responsibilities:a) permanent control, to be exercised over the Management

Board’s management;b) appointment and removal of the Management Board’s

members;c) verificationofcompliancewiththelaw,thebylawsandthe

Decisions of the General Assembly of shareholders for the company’s management operations; and

d) reportage, at least once a year, to the general assembly of shareholders on the supervisory activities.

In exceptional cases, when the company’s interest so requires, the Supervisory Board may convene a General Assembly of shareholders.The company’s management responsibilities cannot be transferred to the Supervisory Board. However, the bylaws may provide that certain types of operations cannot be conducted without the consent of this body. If the body does not agree to such an operation, the Management Board may require the consent of the ordinary General Assembly. Decision of the General Assembly on such an agreement is given by a majority of three-quarters of the votes of present shareholders. Bylaws cannot establish another majority or stipulate other conditions.

3.7 Whatarethemainspecificcorporategovernanceresponsibilities/functions of members of the management body and what are perceived to be the key, current challenges for the management body?

Management bodies have an obligation to communicate with stakeholders on the basis of a communication strategy that at least meets the following requirements:a) ensures fair treatment for shareholders and stakeholders;b) communicates information in a timely manner; andc) provides a transparent framework for communication.

3.8 What public disclosures concerning management body practices are required?

Annual financial statements are usually required to be disclosedto the public. Also, for listed companies, the director’s report accompanyingthefinancialstatementsandtheauditor’sreportaresubmitted to the competent tax authorities and, together with the annualfinancial statement, they shallbemadepublic through theTrade Register.

3.9 Are indemnities, or insurance, permitted in relation to members of the management body and others?

Romanian legislation does not prohibit indemnities or insurance.

3.4 What are the limitations on, and what disclosure is required in relation to, interests in securities held by members of the management body in the corporate entity/entities?

Romanian legislation does not contain direct references to limitations on interests in securities held by members of the management body, members of the management body being permitted to own shares. However, there are numerous provisions relatedtoconflictofinterestsapplicableinthesecases.

3.5 What is the process for meetings of members of the management body?

The quorum is at least half of the members of each of these bodies, if the bylaws do not provide a higher number.The resolutions of each of these bodies shall be taken by a majority vote of present members. Decisions regarding the appointment or revocation of the presidents of these bodies shall be taken by a majority vote of the body.One-tier system: The Board of Directors shall meet at least once every three months. The Board of Directors shall also be convened upon motivated request of at least two of its members or the general director. In this case, the authors of the request set the agenda. Two-tier system:The Supervisory Board shall meet at least once every three months. The Supervisory Board shall be convened at any time upon motivated request of at least two of its members or of the Management Board’s members.

3.6 What are the principal general legal duties and liabilities of members of the management body?

One-tier system: The Board of Directors is responsible for carrying out all the necessary and appropriate to achieve the objects of the company, except those reserved by law for the General Assembly of shareholders.The Board of Directors has the following core competencies, which cannot be delegated to the directors:a) determining the main directions of activity and development

of the particular society;b) establishing accounting policies, financial control systems

andfinancialplanningapproval;c) appointing and removing directors and determine their

remuneration;d) supervising directors;e) preparing the annual report, organising the General Assembly

of shareholders and implementing its Decisions; andf) requesting the opening of the insolvency proceedings,

according to Law no. 85/2014 on insolvency proceedings.Also, directors cannot be delegated tasks assigned to the Board of Directors by the General Assembly of shareholders.The Board of Directors may delegate the company’s management to one or more directors by appointing one of them as general director.Directors may be appointed from among the administrators or outside the Board of Directors.



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of 32,000,000 lei, or average number of 50 employees during the financialyear)are,ingeneral,audited.However,anycompanycandecide to be subject to the audit.The Board of Directors or Supervisory Board may establish a formalandtransparentframeworkwiththefinancialauditor.Thisframework is to provide accurate, complete and timely information on how the principles and practices of financial reporting areapplied, including for prudential reporting.

4.4 What corporate governance information should be published on websites?

In general, for all companies, upon request, each shareholder will be informed of the results of the voting for the Decisions taken at the General Assembly. If the company has a website of its own, the results will be published on this website within 15 days from the date of the General Assembly.According to BSE’s Code, the remuneration policy for the Board members, the annual cash distribution or dividend policy principles and the forecast policy should be published on the company’s website.According to GEO no. 109/2011, SOEs must publish the convening notice and Decisions of the General Assemblies of shareholders, annual financial reports, the annual audit report, the Board ofDirectors’ structure and management structures, information about affiliates’transactions,andremunerationpolicy.Failure by members of the Board of Directors or, where applicable, by the Supervisory Board of the public enterprise of these provisions, constitutesacontraventionandispunishablebyafineof5,000leito 10,000 lei.

5 Miscellaneous

5.1 What, if any, is the law, regulation and practice concerning corporate social responsibility?

In general, corporate social responsibility is not regulated, but companies develop it as part of their marketing strategy.According to the recommendations mentioned in BSE’s Code, if a company supports various forms of artistic and cultural expression, sports activities, educational or scientific activities, and considersthe resulting impact on the innovativeness and competitiveness of the company as part of its business mission and development strategy, it should publish the policy guiding its activity in this area.

5.2 What, if any, is the role of employees in corporate governance?

There are no responsibilities for employees to participate in corporate governance.

4 Transparency and Reporting

4.1 Who is responsible for disclosure and transparency?

The companies, through their management bodies, are responsible fordisclosureandtransparency.Therearealsospecificprovisionsin special regulations indicating precisely the responsible body.

4.2 What corporate governance related disclosures are required?

In addition to the corporate governance disclosures mentioned above, as a recommendation, BSE’s Code provides for Board members:■ thataBoard’smemberprofessionalcommitments,including

executive and non-executive Board positions in companies and not-for-profit institutions, should be disclosed toshareholders and to potential investors;

■ information on any relationship with a shareholder whoholds, directly or indirectly, shares representing more than 5% of all voting rights should be disclosed to the Board; and

■ transparencyrelatedtoremunerationmatters.The corporate governance statement submitted to BSE should contain information on the number of meetings of the Board and the committees during the past year, attendance by directors (in person and in absentia) and a report of the Board and committees on their activities. Accredited journalists may also participate in the General Assembly of shareholders, unless the Chairman of the Board decides otherwise.In SOEs, the General Director or, where appropriate, the Management Board submits a report which provides information on the implementation of its mandate, significant changes in thebusiness situation and in the external aspects that could affect public enterprise’s performance and its strategic outlook quarterly to the Board of Directors or, where appropriate, to the Supervisory Board.Board of Directors or, where appropriate, the Supervisory Board of the public enterprise shall submit semi-annually to the General Assembly of shareholders, a report on the work of administration, which includes information on the implementation of the mandate agreements of directors or the Management Board members, details onoperationalactivities,thecompany’sfinancialperformanceandthe company’s half-yearly accounting reports.

4.3 What is the role of audit and auditors in such disclosures?

The financial statements of large and medium entities and thoseof public interest are required to be audited. Entities that exceed the limits of at least two of the following three criteria at the date of balance sheet (total assets of 16,000,000 lei, the net turnover



Rom

ania

Silvia UscovUSCOV | Attorneys at law23 Titus St., Ground FloorDistrict 4BucharestRomania

Tel: +40 745 947 310Email: [email protected] URL: www.uscov.eu

Silvia Uscov is a Managing Partner of the firm, overseeing the Bankruptcy and Restructuring workgroup. As an experienced business attorney, she draws on her experience in corporate law, commercial litigation and dispute resolution.

She has dealt with corporate liability and liquidations for the banking and industrial sector, assisting a wide range of clients both on the side of creditors and debtors.

Silvia has an M.A. in Criminal Law and a Diploma in International Relations from the Romanian Diplomatic Institute (Ministry of Foreign Affairs), and is a graduate of the Law School of the University of Bucharest.

She is a native speaker of Romanian, fluent in English and conversant in French.

Silvia’s clients range from an agriculture business with a €300 million turnover and a major Polish clothing retailer to a British-owned business management consultancy, a media outlet and a major street furniture producer. She contributes regularly to www.juridice.ro, a very active website for the law practice community.

With USCOV | Attorneys at law, customers have all their bases covered. This is a full-service law firm which offers the finest legal advice in an extensive array of practices. With a thorough understanding of clients’ needs, the firm provides highly efficient legal services.

Through a dedicated team of experts, the firm offers support for Insolvency, Bankruptcy & Restructuring, Corporate Law – Mergers and Acquisitions, Business Crime Law, Litigation and International Dispute Resolution, Arbitration, Investment Management, Private Equity and Venture Capital, Project Finance & Infrastructure, and Real Estate.

USCOV | Attorneys at law routinely collaborates across practices, and works as an extension of their customer’s teams. This enables the firm to solve complex client problems efficiently and creatively, while being as responsive as possible to our clients’ business needs; all this while maintaining a reputation for strong teamwork and collegiality.


59 Tanner Street, London SE1 3PL, United KingdomTel: +44 20 7367 0720 / Fax: +44 20 7407 5255

Email: [email protected]

www.iclg.co.uk

Other titles in the ICLG series include:

■ Alternative Investment Funds■ Aviation Law■ Business Crime■ Cartels & Leniency■ Class & Group Actions■ Competition Litigation■ Construction & Engineering Law■ Copyright■ Corporate Immigration■ Corporate Recovery & Insolvency■ Corporate Tax■ Data Protection■ Employment & Labour Law■ Enforcement of Foreign Judgments■ Environment & Climate Change Law■ Franchise■ Gambling■ Insurance & Reinsurance■ International Arbitration

■ Lending & Secured Finance■ Litigation & Dispute Resolution■ Merger Control■ Mergers & Acquisitions■ Mining Law■ Oil & Gas Regulation■ Outsourcing■ Patents■ Pharmaceutical Advertising■ Private Client■ Private Equity■ Product Liability■ Project Finance■ Public Procurement■ Real Estate■ Securitisation■ Shipping Law■ Telecoms, Media & Internet■ Trade Marks

Documents

CG16_Chapter-24_Romania