What is a commercial company / Limited liability company / Joint stock company / Limitation of liability of partners / shareholders / Documents required to set up a company / How we can help you
What is a trading company
For the purpose of carrying on business, one or more natural or legal persons may form a partnership with a view to setting up a company.
After the legal reform of 2011 the name “commercial companies” was replaced by the name “companies” but, for ease of expression, we will continue to refer to the old name.
A commercial company is an entity with legal personality, having a specific object of activity (carrying out commercial activities) and its own assets assigned to the realisation of this object.
The company acts in its relations with third parties (e.g. customers, suppliers) through its management bodies (e.g. sole administrator, board of directors, managing director, etc.) and its obligations are secured by its own assets (e.g. property owned by it, money available in bank accounts, etc.).
Limited liability company
The most common commercial companies in Romania are limited liability companies (LLCs).
The spread of these types of companies can be explained by reference to the minimum requirements imposed by law, both in terms of establishment and organisation and operation:
- can be set up by one or more persons;
- the minimum share capital is 200 lei;
- may be administered by one or more administrators;
- up to a certain turnover, benefit from certain tax breaks;
- the setting up of such a company takes about 10 working days.
Joint stock company
In second place in the ranking of companies in Romania are joint stock companies (S.A. – urile).
In general, joint stock companies are used to carry out commercial activities of a certain scale (e.g. retail chains, pharmacy chains, listed companies, national companies, strategic companies, etc.).
The requirements for setting up such a company are slightly higher than those for limited liability companies:
- can be set up by at least 2 shareholders;
- the minimum share capital is 25.000 Euro;
- may be managed by a trustee or by a board of directors/supervisory board and management board;
- in certain cases the financial statements are subject to financial audit;
- to the extent that the company is listed on a stock exchange it must meet a number of specific transparency requirements;
- can be subject to corporate governance.
Limitation of liability of partners/shareholders
Irrespective of the type of company (limited liability or joint-stock company), what must be borne in mind is that it is the company, as a legal entity, which is liable to third parties for the obligations undertaken.
In other words, in the case of both types of companies, the partners or shareholders have no liability for the obligations assumed by the company towards third parties (e.g. authorities, customers, suppliers, partners, etc.).
Third parties can only claim against the company with which they have a contractual and/or other relationship and not against the partners/shareholders.
Documents required to set up a company
As a general rule, the following documents are required to set up a company:
- proof of reservation of the name of the future company;
- the company’s articles of association (consisting of the memorandum and articles of association);
- a contract to prove proof of the future registered office;
- evidence of share capital formation;
- identity papers of the partners/shareholders/directors;
- individual declarations by the partners/shareholders/directors that they are not in any case of incompatibility.
For more details on how to register a company, please go to the section Registering with the Trade Register.
How we can help you
Our lawyers can give you legal advice on setting up any type of company:
- the advantages and disadvantages of each type of company;
- advice on choosing the type of company that best suits your requirements;
- drafting and preparing all the necessary documents for the establishment of the company;
- securing for a limited period the future company’s headquarters at our premises;
- filing the documents and pursuing the establishment of the company;
- obtaining from the authorities all the documents establishing the company.
Additional information on the establishment of commercial companies