company litigation Archives - Pavel, Margarit and Associates

The procedure of the exclusion of a shareholder from a company, in case of a shareholders litigation in Romania, is regulated by Romanian Company Law no. 31/1990. The situations of disputes between shareholders of a company in Romania are various and different, reaching the point where some of the shareholders want to exclude a shareholder in Romania, leading to the exclusion of the director/administrator being ashareholder who inefficiently administrate the Romanian company's activity. All these litigations between shareholders in a Romanian company needs to be correlated with the legal provisions regulated in the Romanian Companies Law no. 31/1990, otherwise, the courts will reject the request. It should be noted that the dissolution of the Romanian company may also be requested due to serious disputes between shareholders in Romania. In this article you will find the conditions that must be met in case of requesting the exclusion of a shareholder for serious disagreements between the shareholders of a Romanian company. A litigation lawyer in Romania can give you the best advice so you can get a decision on the exclusion of a shareholder in Romania. The possibilities to exclude a shareholder from a company in case of shareholders litigation in Romania According to art. 222, the para. (1) of the Romanian Companies Law no. 31/1990, the following categories of shareholders can be excluded in Romania: a) the shareholder who is deemed in default automatically/ipso jure and she/he does not bring the contribution to which she/he was obliged in Romania; b) the shareholder with unlimited liability in a state of bankruptcy or who has become legally incapable in Romania; c) the unlimited liability shareholder in Romaniawho: (i) interferes without right in administration, (ii) without the written consent of the other shareholders, uses the capital, assets or credit of the company for his own benefit or for another person (being obliged to restores to the company the resulting benefits and to pay the compensation for the damages caused), and (iii) has participated, as an unlimited liability shareholder, in other competing companies or companies that have the same object of activity, she/he has carried out operations on behalf of himself or on behalf of other persons, in the same kind of/ similar trade, without the consent of the other shareholders in Romania; d) managing shareholder in Romania who commits fraud in the detriment of the company or uses the company signature or the share capital to benefit himself or others. According to the Romanian Companies Law 31/1990 and the doctrine, the shareholder of a LLC cannot be excluded under the art. 222 para. (1) the letter c) of the Romanian Law no. 31/1990; As previously mentioned, the cases of exclusion are strictly interpreted, the Romanian law not leaving to the discretion of the shareholders the reasons why a shareholder can be excluded in case of serious disagreements in company. In case of such disagreements/litigation between shareholders in Romania which cannot be settled amicably, the only possibility available for the shareholders in Romania is going to court and we recommend to address to a lawyer specialized in the shareholder litigation and exclusion procedure in Romania. This procedure is different than the procedure to dilute a shareholder in Romania. The exclusion of a shareholder in Romania is ruled by the court, in a decision, and, as a result of the exclusion, the court also decides the structure of the contribution to the share capital of the other shareholders. The shareholders excluded from the Romanian company loses the shareholder quality on the date of exclusion. She/He is responsible for damages she/he is entitled to benefits until the day of his exclusion in Romania. The excluded shareholder in Romania remains responsable to the third parties for the operations performed by the company, until the day of the final exclusion decision. Regarding the exclusion of the shareholder and administrator in Romania who commits fraud in the detriment of the Romanian company or uses the company signature or the share capital for the benefit of himself or for others, according to the art. 222, the paragraph (1), the letter d, these facts must be proven before the court. The possibility of obtaining the dissolution of the Romanian company for serious disagreements between shareholders in Romania A special case regarding the exclusion of a shareholder in Romania is that on the possibility of a shareholder to request the dissolution and liquidation of the Romanian company. We also mention the provisions of the art. 227, al (1) lit. e) of the Romanian Companies Law no. 31/1990, according to which any shareholder in Romania, for good reasons (such as disagreements between shareholders that impede the operation of the Romanian Company), may go to the court for the purpose of pronouncing a decision to dissolve the Romanian company. Thus, in case of serious disagreements between the shareholders in Romania, one of them may request the dissolution of the company in Romania, when these disagreements make it impossible to continue the activity of the Romanian company. Serious disagreements between shareholders in Romania also occur when the social interest is replaced by the personal interests, this being common among managing shareholders in Romania who consider that they have discretionary powers over the company's activity "forgetting" that they act in the interest of society, respectively in the interest of the shareholders in Romania. In order to carry out the steps regarding the exclusion of a shareholder and shareholders litigation in Romania, the Romanian Law Firm Pavel, Margarit and Associates, recommends to contact a lawyer specialized in shareholders litigation and exclusion procedure in Romania, who will analyze each matter apart, as well as the applicable Romanian legal provisions in order to identify the best solutions to obtain a decision on the shareholder exclusion in Romania. Pavel, Margarit & Associates Romanian Law Firm is one of the top law firms in Romania, offering top legal advice. The Romanian law firm clients are foreign and top local companies and high worth individuals. In 2021, the success stories of the Romanian Law Firm have brought recognition from the most prestigious international guides and publications. The firm was ranked second place in Romania by the Legal 500 publication. The Romanian law firm is also recognized by IFLR 1000 Financial and Corporate Guide 2021. Pavel, Margarit & Associates Romanian Law Firm is also the only law firm in Romania recommended by the Global Law Experts Director in London in the Dispute Resolution area of Practice. All the relevant information regarding Pavel, Margarit & Associates Romanian Law Firm can be found on the website www.avocatpavel.ro.

How can a shareholder be excluded from a Romanian company in case of disputes between shareholders

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