Comments on the envisaged measures regarding companies corporate governance
17.04.2020 – Author: Mihai Fifoiu
On 14 April 2020 the Romanian Ministry of Justice published a new draft emergency government ordinance on certain measures regarding the holding of general meetings of shareholders and meetings of the management bodies (the “EGO”). Such EGO is intended to ease the holding of such meetings in the context of the restrictions applicable during the state of emergency.
Although the efforts of the Romanian authorities in this respect come after one month as of declaring the state of emergency, the initiative is welcomed and we hope that it will address several issues that the companies are confronting with nowadays during their decisional process.
While the draft is subject to public debate until 22 April 2020, we have highlighted below some aspects that will have to be closely revised and addressed in the final form of the EGO:
- Article 1 provides that the shareholders can be convened by any means of remote communication, provided that each shareholder has notified in writing to the management its postal address or e-mail address. The new convening procedure will most certainly be easier to implement, however there is no deadline indicated for the shareholders to notify their contact details to the company. Moreover, what should be the approach in case not all shareholders notified their contact details to the company? In such case, most probably, the general rules on convening will have to be applied, which may result in very little value added through this EGO.
- Article 1 and 2 of the EGO provide that in case of emergency, the legal deadlines for the convening of the meeting, the amendment of the agenda and the communication of the consolidated agenda can be reduced to the maximum limit of half of the ones mentioned by the Law no. 31/1990 (the “Companies Law”). The current wording could be clarified to state that, in case the reduced deadlines do not result in a round number, such number should be rounded up to the closest higher number; such amendment would aim at protecting the shareholders’ rights and avoid future disputes on this matter.
- It is not clear who should sign the minutes of the meetings of the corporate bodies held in accordance with the provisions of the EGO. Although there is no express sanction provided in this respect, it is advisable to clarify such matter in order to avoid potential nullity claims.
- There are cases in which the Companies Law provides the mandatory secret vote (g., appointing or revoking directors, censors, financial auditors). The EGO seems to recognize that secret vote is mandatory in certain cases and it even reinforces such obligation; it is however very difficult to imagine how secrecy of vote can be ensured while voting in a meeting held by teleconference or videoconference, therefore it is advisable to have these items on the agenda voted only by correspondence.
- Article 8 of the EGO provides that the decisions of the general meetings of shareholders held during the state of emergency, but before the entering into force of the EGO, cannot be annulled for failure to observe the rules on holding the meetings and of voting if such meetings were held and the votes were exercised through one of the means provided for by the EGO. Assuming that the intention behind this article of the EGO is to cover and confirm certain situations occurring before its entry into force, such approach can raise constitutionality concerns in terms of retroactive effects of the law.
- Since article 12 of the EGO provides for an extension of the deadline to convene and hold the ordinary general meetings of shareholders in case of joint stock companies until 15 July 2020, it is expected for such to be correlated with an extension of the deadline to submit the annual financial statements with the tax authorities. Currently, it is envisaged to extend such deadline for submitting the financial statements until 31 July 2020.
We hope that the working draft will be improved including by considering and implementing in the final form of the EGO the comments from the business environment since the passing of such legal enactment as soon as possible would be more than useful.