Fiscal package 2: Extended liability for company administrators in Romania

The new liability limits for directors and shareholders in Romania – What risks arise in 2025

Fiscal Package 2 aims to reduce the phenomenon of company decapitalization in Romania and to further hold administrators accountable. Stricter liability is introduced for situations in which the company grants loans or distributes interim dividends without proper regularization. In such cases, administrators and shareholders risk sanctions, and tax attorney authorities receive additional powers for control and fines.

A key element is the establishment of joint liability between the company and the shareholder who benefited from dividends or loan repayments in violation of the law. This approach requires administrators to closely monitor the share capital and net asset levels to avoid penalties.

Additionally, administrators must consider that failing to comply with bank account obligations, establishing legal reserves, and covering accounting losses may be interpreted as negligence. In these circumstances, the role of a business lawyer or corporate lawyer becomes important in preventing disputes.

Changes to company legislation concretely expand the limits within which administrators and shareholders can be held liable. One of the most important changes concerns the distribution of dividends when net assets fall below half of the share capital, meaning dividends cannot be paid before the net assets are restored.

Clear administrative sanctions are also introduced, consisting of fines ranging from 10,000 to 200,000 RON, applied by tax authorities for romanian company that distribute dividends or grant loans without following regulations. This approach aims to increase financial discipline and reduce the risk of insolvency. Administrators must view the new liability limits as a set of firm obligations..

Creditors of romanian company benefit from enhanced protection. If net assets fall below half of the share capital and the company does not restore them within the legal term, administrators and shareholders may be held liable for damages caused to creditors.

Converting shareholder or associate loans into company share capital becomes mandatory in certain situations to prevent depletion of company resources. This means that share capital acquired through conversion can replace debts owed to associates, strengthening the company’s assets and protecting creditors. Therefore, a corporate lawyer or business lawyer can provide strategic consultancy to prevent personal exposure to liability and ensure correct management of tax obligations and company obligations

Strengthening the Liability Regime of Administrators for Bringing Companies into Insolvency in Romania

Administrator liability is strengthened through a direct link between mismanagement actions and the risk of insolvency. If the company becomes insolvent due to illegal dividend distribution or loan grants, administrators can be sued to cover the damages. Failure to maintain legal reserves or to uphold minimum net asset levels relative to minimum share capital constitutes a violation. This may trigger responsibilities of an administrator towards creditors and result in joint liability between the company and associates.

To reduce these risks, romanian company should closely collaborate with a business lawyer or business attorney who monitors legal and fiscal aspects. Periodic checks regarding fiscal status at tax attorney authorities and specialized consultancy on share capital increase procedures are essential tools to prevent insolvency.

Liability of Administrators and Shareholders to Creditors under the New Capital Requirements in Romania

Creditors enjoy enhanced protection. If net assets drop below half of minimum share capital and the company does not restore them within the legal term, administrators and shareholders may face shareholder liability for damages caused.

Conversion of shareholder or associate debts into company share capital becomes mandatory in certain situations to prevent depletion of company resources. This ensures company share capital obtained through conversion replaces loans, preserving the company’s assets.

Joint Liability of the Company and Shareholders/Associates Who Received Interim Dividends in Romania

A central aspect of the law is establishing joint liability between the company and the shareholder/associate who received interim dividends illegally. This directly penalizes abusive business transfer of share capital.

In case dividends have not been regularized and net assets fall below the legal minimum, tax attorney authorities can apply significant fines. Civil consequences may also arise, placing the responsibilities of an administrator under scrutiny. Collaboration with a business lawyer or corporate lawyer becomes necessary to verify compliance in dividend distribution and business transfer, reducing litigation and sanction risks.

Bank Account Obligations, Capital Increase, and Fiscal Inactivity – Additional Risks for Administrators Not Complying with the Law in Romania

Administrators must ensure an active bank account through which all company transactions are processed. Lack of an active bank account may raise suspicions of fiscal misconduct and attract fines from tax attorney authorities.

If net assets fall below legal thresholds, administrators are obliged to carry out share capital increases. Failure to do so engages the responsibilities of an administrator directly towards creditors and fiscal authorities.

“Given the new rules regarding share capital, bank account, dividend distribution, and tax obligations, administrators and shareholders must pay special attention to compliance with all procedures and deadlines imposed by the trade registry and tax attorney authorities. Noncompliance can lead to sanctions, administrator liability, and risks for the company,” stated Dr. Radu Pavel, Managing Partner.

Finally, fiscal inactivity declared by tax attorney authorities may lead to loss of VAT deduction rights and severe penalties. To avoid these consequences, administrators should periodically seek consultancy from a business lawyer, tax attorney, or corporate lawyer, especially in sensitive processes such as start a business in Romania, set up a company, company formation in romania, or starting up your own business.

In conclusion, the 2025 legal framework strengthens administrators’ and shareholders’ liabilities, making the safety of the company dependent on compliance with rules regarding share capital, bank account, dividends, company share capital, business transfer, and reporting to tax attorney authorities. Constant collaboration with a business lawyer or business attorney is no longer merely recommended but a practical necessity to protect the company and its administrators.

Pavel, Margarit and Associates Law Firm is one of the top law firms in Romania, providing high-quality legal services. The firm’s clients include multinational and domestic companies of great magnitude. In 2024, the law firm’s success stories brought it international recognition from the most prestigious international guides and publications in the field. As a result, Pavel, Margarit and Associates Law Firm ranked 3rd in Romania in the Legal 500’s ranking of business law firms with the most relevant expertise. The law firm is internationally recognized by the IFLR 1000 Financial and Corporate 2024 guide. Additionally, Pavel, Margarit and Associates Law Firm is the only law firm in Romania recommended by the international director of Global Law Experts in London in the Dispute Resolution practice area. All relevant information about Pavel, Margarit and Associates Law Firm can be found on the website www.avocatpavel.com.