Newsletter 9/2018 – Net asset decrease

Considering that the end of the year is coming, we are reminding you the provisions of the legislation for Romanian companies which, as a result of the accumulated losses at the end of the year, present a net assets situation lower than half of the share capital.

 

General aspects

In the event that the company registers losses in the annual financial statements and the net assets are reduced to less than half of the subscribed share capital, the art. 153²⁴ of the Law 31/1990 requires that the board of directors convenes the shareholders’ General Meeting in order to decide about the liquidation of the company.

 

In case the General Assembly decides to proceed with the activity, it’s compulsory for the company to cover the losses reducing the share capital for the corresponding amount, except for the case the company is expected to respect the share capital-losses ratio in the following year.

 

In any case, the share capital cannot be reduced under the minimum amount set by law for each type of company.

 

In order to restore the value of the net assets of the company, we mention the possibility of increasing share capital through cash contribution or, where appropriate, by offsetting liquid and due receivables.

 

Possible consequences

In the absence of any decision about the restoration of the net assets’ value, any interested subject can address to the Court in order to ask for the liquidation of the company.

 

The missed call of shareholders’ meeting can be punished with detention from one month to one year, or with a fine, according to art. 275 of the Law 31/1990.

 

 

 

Disclaimer

The information in this newsletter is intended to give you an overview of legislative news; the newsletter does not contain a complete analysis of each topic. For more information about the subjects presented, please contact us. We do not accept any responsibility for decisions or omissions followed by the use of the content of this newsletter. All Boscolo&Partners newsletters are available at the following address: http://www.crowe.ro.

 

 

Boscolo & Partners