Societate cu Raspundere Limitata (SRL)
Romanian start-ups usually choose the legal form of the SRL. It offers the advantages of a low minimum share capital of around EUR 40 (RON 200) and manageable corporate governance.
A PE/VC Fund can supervise its investment with the reservations of approval by the shareholders' meeting for certain decisions of the Management.
The SRL is managed by the directors (administratori), who represent the company individually or in its entirety as members of the Board of Directors (Consiliul de Administratie). There is no provision for a supervisory body in addition to the shareholders' meeting. In order to supervise the Management, the articles of association may provide for reservations of approval by the shareholders' meeting for certain decisions and information rights in the run-up to shareholders' meetings.
Whether investors can be granted an observer seat status by contract is questionable. Observer seats grant a contractual entitlement to attend Board of Directors meetings. In the absence of case law, the classification of the Observer as a de facto managing Director cannot be ruled out.
Societate pe Actiuni (SA)
Conversion into an S.A. is usually only carried out in preparation for an IPO.
A PE/VC Fund can participate in the Supervisory Board in a dualistically structured SA.
The SA can be organised monistically or dualistically. The monistic organisation is common. The Board of Directors (administratori) manages the business of the SA, whereby the Board of Directors can delegate the management to a Management Board and from this to a General Manager (CEO). As with the SRL, it is unclear whether observer seats are allowed. In order to monitor the management, the articles of association may provide for reservation of approval by the shareholders' meeting for certain decisions and information rights in the run-up to shareholders' meetings.
The dualistic organisation, in which the Supervisory Board (consiliul de supraveghere) supervises the Management Board (directorat), is less common.
A PE/VC Fund may accept a seat in a Supervisory Board in a dualistic structure. In a monistically structured company, participation in the Board of Directors is not permitted. Due to legal uncertainty, an observer on the Board of Directors should also be avoided.
The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.
In collaboration with: Kinstellar
Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018