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Company Law Reform Slaps Simplification Wrist
On 2 March 2012, the Official Gazette revealed the Government Emergency Ordinance no.2/2012 (GEO 2/2012) implemented by Romania to simplify its mergers and spin-offs process. GEO 2/2012 is in response to the European Commission's claims that the country has failed to communicate how it will implement required reporting of liabilities in cases of mergers and spin-offs. Taxand Romania explores the details of the GEO and its potential impact on those involved.
Romania's GEO provides simplification methods for the processes involved in both national and cross-border company mergers and the creation of spin-off companies. These methods include:
- The simplification of the publicity formalities for the merger or spin-off project - companies can now use their own web page to publicise the project provided the website allows for free, continuous publication of the legal documents
- Simplified procedures for mergers by absorption when the absorbing entity holds at least 90% shares within the absorbed company
- Simplified procedures for spin-off companies, where the spin-off's contribution to the share capital of its 'parent' company remains unchanged
- Under specific conditions, shareholders can exert their right to withdraw up to 30 days after the publication of a merger or spin-off project should they disagree
- Certain companies will not be required to prepare pre-merger/spin-off financial reports - these include companies who publish bi-annual reports that are also available to shareholders, and companies whose shareholders and voters agree
Romania's Company Law simplification via GEO 2/2012 is multi-faceted and a part of the country's wider legislative reforms to encourage economic stability. This particular GEO, however, also impacts any company outside of Romania involved in a cross-border merger or spin-off activity with the country. Will the legislative clarity that this particular GEO suggests, catalyse cross-border activity with Romania? The very nature of the GEO being implemented as a response to accusations that specific mergers and spin-off legislation has not been upheld, could mean otherwise.
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