Up Again Romania: Governance


1. What are the key topics that boards should focus on to ensure proper discharge of their duties as directors, as their businesses return to work following a lockdown?

A definitive picture of the much-anticipated return to work is not yet available in relation to this section and the authorities are assessing the situation on a daily basis, so many options are being considered.

There are many challenges ahead for companies and their management, and overcoming them will depend largely on their ability to navigate the ever-changing regulatory framework and take full advantage of the supportive measures granted by the authorities.

As one of the core duties of directors is to ensure the financial stability of a company, the board should analyse and decide whether the company qualifies for any of the relief programmes and facilities offered by the Romanian state in response to the economic struggles that the lockdown brought on many businesses (e.g. requesting a state of emergency certificate, benefiting from the facilities granted to small and medium enterprises, the legal moratorium on loan repayments). In this regard, please see the Government Relief and Tax section of these FAQ.

Another key consideration is the postponement of reporting duties for companies, most notably the extension until 31 July 2020 of the deadlines for filing financial statements for 2019 and annual accounting reports ended on 31 December 2019. Also, the deadline for submitting the statement on the ultimate beneficial owner of an entity has been extended until 1 November 2020.

With respect to the organisation of the general meetings of shareholders, the Romanian government recently adopted the Government Emergency Ordinance no. 62/2020 for instituting certain measures for companies on the convening of statutory bodies (GEO 62/2020). This legislation creates an exceptional framework for the convening of general meetings of shareholders and the adoption of shareholders’ resolutions during the state of emergency and for a period of two months after it ends. However, GEO 62/2020 is not applicable to listed companies.

GEO 62/2020 institutes different rules from the general regime set out by Company Law no. 31/1990, mainly by:

  • allowing both joint-stock and limited liability companies to hold general meetings of shareholders by electronic means of direct communication (tele/videoconference observing certain conditions set forth by GEO 62/2020);
  • allowing voting through email correspondence (provided that a qualified electronic signature is incorporated, attached or logically associated with the email) and other means of long distance communication; and
  • broadening the allowed means for the convening of shareholders regarding such meetings.

Similar conditions are also applicable to board meetings.

The provisions of GEO 62/2020 are applicable even in the event where the articles of association of a relevant company do not allow, or explicitly prohibit holding general meetings of shareholders by such means.

Also, in line with this extension of deadlines for submitting financial statements, GEO 62/2020 has extended the term for convening an ordinary general meeting of shareholders of joint-stock companies until the same date (31 July 2020).

With respect to the organisation of general meetings of shareholders of listed companies, a new regulation has been passed by the Financial Supervisory Authority providing for the holding of shareholder meetings through electronic means, including voting through email correspondence.

Another important provision is contained in the legislation for establishing the framework of the state of alert, which has replaced the state of emergency. This law was adopted by the Romanian Parliament on 14 May 2020 and came into force on 18 May 2020. It operates a suspension on the obligation of directors to file for insolvency if the company meets the legal requirements in that regard. This obligation is suspended for the duration of the state of alert (i.e. 30 days initially, starting on 18 May 2020, with the possibility of extension).

Directors should also note that the validity of the documents issued by public institutions, authorities and authorised private entities is maintained throughout the state of alert, and for a period of 90 days after the date the state of alert ceases..

2. Should boards adopt particular governance practices in this context?

The key governance practices boards should consider revolve around ensuring business continuity and facilitating the use of electronic means to hold virtual board meetings and adopt resolutions, even when in-person gatherings are prohibited or not recommended.

The conduct of the board can serve as an example and a model of conduct for employees (for businesses where remote work and limiting in-person interactions are a possibility).

The possibility of using electronic signatures for corporate documents and commercial contracts should be assessed, and compatibility with regulatory requirements should be ensured.

3. To what extent are boards being encouraged to take into account corporate purpose and values in the context of COVID-19 and a return to work?

All indications show that the move to returning to business will be sequential, with a continuing emphasis on working from home where possible. There continues to be a strong emphasis for businesses on physical distancing, hygiene, and tracking.

Any business planning a return to the workplace for at least some positions must consider how it will deal with employees concerned about the possible health risk – even when the company has changed the way it does things – and don’t want to return.

And businesses should also prepare for the opposite situation: if a business wants to continue in working-from-home mode, it must consider how it will respond to staff who are finding it difficult at home and want to move back to the workplace.

Boards should consider what it will mean for individual staff members if school children are unable to return to school. Businesses may need to find work arrangements that can accommodate their employees' childcare needs.

The authorities are currently implementing measures to facilitate a safe and gradual return to work, as the country is transitioning to a state of alert and some of the affected sectors of the economy are slowly resuming activity. Some of the key rules and principles that have been established for businesses and business leaders as part of the state of alert regulatory package are:

  • organising the return to work by taking mandatory or recommended preventive measures – for example, epidemiological triage performed by way of temperature checks; mandatory use of protective masks for all visitors and personnel; periodic medical checks; office space distancing; regular cleaning and disinfection of the workplace; providing individual protective equipment; and
  • depending on their field of activity, giving employees the option of teleworking or working from home.

Though companies and management can easily find themselves engulfed in the day-to-day challenges that this unprecedented situation entails, it is crucial to stay close to the values that define their organisation, and to articulate a purpose and set goals that inspire and motivate employees.

For more information about employees returning to work, please see the People sectionof these FAQ.

Finally, a return to some form of lockdown cannot be ruled out, depending on how the epidemic progresses. Boards should review how their business plans for the lockdown performed and whether there are any lessons for the future.


4. Your company is facing liquidity issues as a result of COVID-19:

a. What are the repercussions for continuing to operate your company?

Liquidity shortages generate slow payment of short-term debts, such as taxes, wages or payments to suppliers.

The consequences are not limited to slow payment of short-term debts; they can also involve inaccessibility to credit and finance funds, which, in turn, can lead to further liquidity issues, creating an endless chain of undesirable effects.

Further, the company’s stock market prices may decrease, given that investors look for companies with substantial cash reserves.

Another area affected by a liquidity shortage is the business’ expansion plans, because that implies further investment, which may not be available anymore.

b. Do you have to file for insolvency if your company cannot pay all its debts as they fall due?

As per the provisions of Law no. 85, the insolvency procedure is initiated by the submission of a request to the competent authority. This request can be submitted by the debtor, one or more creditors, or by the people/entities expressly provided by law.

The debtor is obliged to submit its request to the competent authority no more than 30 days after the occurrence of the state of insolvency. Therefore, if the debtor is insolvent, filing for insolvency is mandatory, not optional.

c. Are there any steps that should be taken to minimise the risk of your actions as director being challenged?

According to Law no. 85, when facing financial difficulties, the debtor can resort to:

  • ad-hoc mandate (mandat ad-hoc); or
  • an agreement with creditors (concordat preventiv).

Regarding the ad-hoc mandate, the proxy’s objective is arranging an agreement between the debtor and the creditors, with the purpose of overcoming the financial difficulties, while also preserving employees’ jobs, and satisfying claims against the debtor.

With respect to the concordat preventiv, the director appointed by the court for this specific matter shall, among others, draft, with the debtor, a proposal, and a project and a recovery plan, regarding successfully surpassing the financial difficulty.

Both the proxy and the director appointed by the court should be insolvency practitioners. If the strategy to be adopted is prepared by a professional specialised in insolvency, the risk of the debtor’s director’s actions being challenged is diminished.

d. Will your company be wound up if you fail to make payments when due?

Law no. 85 provides two forms:

  • presumed insolvency, which is when the insolvent debtor has not paid its debts towards creditors for more than 60 days as of their due date
  • imminent insolvency, which is when it is proved that the insolvent debtor will not have sufficient available funds to pay its debts at the due date

The general insolvency procedure can lead to two courses of action – reorganisation, or bankruptcy/liquidation.


This course of action is aimed at rescuing the insolvent debtor, while also ensuring (at least, partial) payment of debts towards creditors; it is based on a reorganisation plan, which must be approved by the creditor’s assembly confirmed by the syndic judge (the judge who has specific responsibilities within the insolvency and bankruptcy procedures), and may cover:

  • the debtor’s operational and/or financial restructuring;
  • corporate restructuring by changing the debtor’s share capital; or
  • decrease of the debtor’s activity by liquidation of assets.

Bankruptcy and liquidation

This targets the liquidation of all of the debtor’s assets, and the distribution of the proceeds to the debtor’s creditors, as per the order under Law no. 85, followed by the debtor’s dissolution.