Administration of joint stock companies (I)

In order to be able to usefully assess whether the joint stock company is the appropriate business model for the medium and long term plan and purpose of the business, it is important for investors to be informed about the basic issues of the executive management of the company.

The joint stock company is managed by one or more directors, the number of directors is always odd. When there are several directors, they form a board of directors and elect a chairman from among them (if the joint-stock company reaches a certain size that requires by law the auditing of financial statements, then the appointment of three directors is mandatory). The chairman of the board of directors can also be appointed by the general meeting and can be dismissed at any time by the body that elected/appointed him. The Board of Directors meets at least once every 3 months.

During their mandate, directors may not enter into an employment contract with the company. If the directors have been appointed from among the company’s employees, the individual employment contract shall be suspended for the duration of the term of office.

In a joint-stock company, management duties may be delegated to a director/directors, in which case he/she will also appoint the general manager.

The Board of Directors has the following basic powers, which cannot be delegated to directors:

(a) to determine the main lines of business and development of the company;

  1. b) to establish accounting policies and the financial control system, and to approve financial planning;
  2. c) appointing and dismissing directors and determining their remuneration;
  3. d) supervising the work of the directors;
  4. e) preparing the annual report, organizing the general meeting of shareholders and implementing its resolutions;
  5. f) filing a petition for the opening of insolvency proceedings.
  6. g) the duties received by the board of directors from the general meeting of shareholders

(1) The board of directors may delegate the management of the company to one or more directors, appointing one of them as general manager.

Directors may be appointed from among the directors or from outside the board of directors.

The directors shall be responsible for taking all measures relating to the management of the company within the limits of the company’s objects and subject to the exclusive powers reserved by law or by the articles of association to the board of directors and the general meeting of shareholders. The manner of organizing the work of the directors may be laid down in the Articles of association or by decision of the board of directors. The directors shall keep the board of directors regularly and comprehensively informed of the operations undertaken and those envisaged.

Directors within the meaning of the law shall be only those persons who have been appointed as such by the board of directors and to whom the board of directors has delegated management powers. Directors will be registered by the Board of Directors in the commercial register, stating whether they act jointly or separately.

Directors shall be jointly and severally liable with their immediate predecessors if, being aware of irregularities committed by them, they fail to report them to the auditors or, where appropriate, to the internal auditors and the financial controller.

Dualist system

The articles of association may stipulate that the public limited company is managed by a management board and a supervisory board. This system of management of the joint-stock company is called “Dualist system”.

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The main management structure of the company in Romania is the general meeting of associates / shareholders. The constitutive act establishes the rules for convening and adopting decisions and whether the exercise of the vote can be delegated by special mandate by the associate / shareholder who cannot take part in the meeting. In the limited liability company, each shareholder entitles the holder to one vote in the respective meeting. The general meeting of associates has the following main obligations: ✓ to approve the annual financial statement and to establish the distribution of the net profit. ✓ to appoint the administrators and the censors, to revoke / dismiss them and to discharge them, as well as to decide to contract the financial audit, when it is not obligatory, according to the law; ✓ to decide the pursuit of the administrators and censors for the damages caused to the company, designating also the person in charge to exercise it; ✓ to modify the constitutive act.
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The limited liability company is the most common form of company in Romania, being the legal entity that best serves the interests of investors both from the point of view of the reliability of the activity, and from the perspective of its management. The limited liability company is abbreviated "SRL" in Romania and is the equivalent of the American limited liability company Limited Liability Company (abbreviated to LLC) or the German economic structure "Gesellschaft mit beschränkter Haftung" (abbreviated to GmbH), or the structure called "limited" , the structure used in most Latin American states.
The limited liability company is characterized by:
✓ the character intuitu personae, which means that this economic structure is based on the trust between the associates;
✓ the division of the share capital into fractions called shares, which cannot be negotiable securities;
✓ the liability of the associates is limited to their contribution to the share capital.
The limited liability company may also have a single partner, natural or legal person, of Romanian or foreign nationality, who will be the owner of all shares. Instead, the maximum number of associates is 50 people.
At present, the Romanian law no longer conditions the subscription and payment of a certain amount as share capital.
Through registration, the company acquires legal personality, becoming, under the law, a collective subject of law. The conclusion given by the judge is sent, ex officio, to the Official Gazette of Romania for publication at the expense of the company and to the Financial Administration in whose territorial area is the main headquarters of the company for fiscal registration, mentioning the registration number in the Trade Register .

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