Open joint stock companies and closed joint stock companies

Although it is the legal act that regulates the establishment and operation of companies, Law 31/1990 does not give us a clear definition of closed or open joint stock companies. The definition of the types of closed or open companies is the result of an overall study of the legislation governing the two types of company.

Closed companies are those joint stock companies in which the shareholders are limited in the possibility of transferring their shares to other shareholders or, if they wish to transfer them to a previously determined third party, this transfer must be approved by the other shareholders.

Open companies are those joint stock companies established by public subscription or which, after their establishment as closed joint stock companies, become open companies by increasing their share capital by public subscription.
Therefore, even if a joint stock company is set up as a closed company, it may subsequently be converted into an open company and fall under the securities market regulations. This transition can be achieved by public subscription of shares. Public subscription of shares is the acceptance of a public offer to the general public to invest in the share capital of a capital company. This acceptance consists of the assumption of a firm obligation to invest in securities offered for subscription.

The purpose of making an offer is to achieve a specific objective, for example to form or increase the share capital of a open joint-stock company by attracting financial resources.
Initial public offering is the first public offering of shares of a public company, after which the company becomes an open company.

The initial public offering is made by an issuer offering for subscription a new issue of securities issued expressly for this purpose, with a view to placing them on the market.

A secondary public offering is made by an owner of securities offering for sale securities previously issued.
In other words, the general legal regime for shares issued by joint stock companies is subject to Law 31/1990, whereas the issue of shares from a public company or which intends to attract financial resources by organising a public offer for sale is subject to a special legal regime, and the special provisions of the updated Law 297/2004 on the capital market become applicable.

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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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