News › Weekly Alert Article

Company Law Reform Slaps Simplification Wrist

15 May 2012

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

Taxand Romania explores the latest draft of legislation changes here

Taxand's Take

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.

Your Taxand contact for further queries is:
Angela Rosca
T. +40 21 316 0645

Taxand's Take Author