Directors’ Duties in Romania

>> Board Requirements in Romania

Appointment of directors

Under Romanian statutory law, an LLC requires at least one director (with executive or non-executive powers), unless the articles (“the articles”) of the company specify a higher number of directors. There is no maximum number of directors.

In general, there is no maximum duration of the appointment of directors. However, the duration of the mandate may not be undetermined or unlimited – in these two cases, the Romanian commercial register’s interpretation is that the mandate of the director is automatically reduced to a duration of 3 years (the duration provided by the rules applicable to mandate agreements).

Directors are not required to be resident in Romania, however they should be able to enter Romania in order  to comply with their duties and obligations.

There are no formal qualifying requirements for directors.

Any natural person with full legal capacity (ie at least 18 years of age and not regarded as mentally ill) can be appointed a director unless certain restrictions apply.

You are restricted in your capacity to act as a director if you fall into any of the following categories:

  • any person subject of ward of the state or subject to any guardianship
  • any person prohibited by court order or administrative decision to carry out certain professions or business if the object of the company is related to this profession or business
  • any person convicted of certain crimes such as fraud, misappropriation of funds, insolvency

crimes, corruption, forgery, tax evasion or money laundering

Further, a director is generally a natural person, however the position may be held by a legal person. The legal entity acting as a corporate director shall appoint a natural person as permanent representative, the latter being subject to the same conditions and obligations as a director which is a natural person.

Board meetings and composition requirements

The directors of a Romanian LLC are generally not organized as a board of directors, but the articles of the LLC may provide for such possibility. Whenever applicable, the board of directors shall be organised and convened in accordance with the rules provided in the articles.

Signatory rights/powers of directors

Pursuant to Romanian statutory law, the directors have the right to conclude any kind of legal transaction or legal act in connection with the administration of the Company, subject to the restrictions imposed by the law, the articles or the agreement concluded by the director with the company. The material scope of the signatory rights and powers of the directors to third parties can be restricted by the stipulations of the articles, or by shareholder’s resolution and these shall be opposable to third parties if and to the extent the third parties were aware of such limitation. According to Romanian law, the mere publication of such limitations in the Trade Registry (for example, by way of submitting to the Romanian authorities the document through which the limitation are set out) would not trigger the enforceability of the limitations against third parties.

According to Romanian statutory law and unless specified otherwise in the articles, if only one director is appointed, the director shall represent alone the company. If more than one director is appointed, they shall represent the company also individually, but the shareholders may decide to grant joint powers of representation to the directors. This decision must be taken unanimously and provided as such in the articles. However, please note that when appointing a director, the company can grant him sole representation powers and this would need to be registered with the commercial register for opposability purposes.

However, the shareholders, by shareholders’ resolution, could limit the authorities of a director to a certain extent (eg actions requiring the prior approval by the shareholders), and this would only have internal effect until registration with the commercial register of any restrictions. Normally, a director would request instructions from the shareholders before undertaking any extraordinary actions.

Conflicts

Pursuant to Romanian law, the directors are restricted from self-dealing, unless the articles or his appointment resolution specify otherwise. If the director is not exempt from self-dealing he must inform the shareholder and abstain from acting on behalf of one side.

Please note, should the director be the only director/authorised signatory (which often happens in group structures), the only possibility to overcome this situation would be to appoint an additional director, or for company to grant a special power of attorney to another individual/ entity for the purpose of implementing the company’s specific decisions.


Latest version updated 9th April 2018

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