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A New Non-Constitutionality Exception Raised by ZRP’s Attorneys at Law, Allowed by the Constitutional Court

BoD Decisions on Share Capital Increase May Be Challenged by Claim for Annulment in Court  

Bucharest, August 29, 2018: Share capital increase, the procedure by which the shareholding structure or the dilution of the shareholder’s interests may be changed, may be challenged in court, by claim for annulment, like any decision of the general meeting of shareholders. The Constitutional Court has allowed the non-constitutionality exception raised by the team of attorneys at law of Zamfirescu Racoți & Partners (ZRP) regarding certain provisions of the Companies Law. 

Zamfirescu Racoți & Partners team, formed of Alina Tugearu, Partner, and Andra Constantinescu, Senior Associate, has claimed that the exclusion from judicial control of the decisions of the board of directors/managing committee, adopted in the exercise of the powers and duties of share capital increase, delegated by the general meeting of shareholders, breaches free access to justice and the principle of equal treatment in front of the law. 

 The Constitutional Court stated, in essence, that art.114, paragraph (3) of Law no. 31/1990 refers only to the delegated powers and duties regarding the relocation of the registered office and not to the delegated power and duty referring to the share capital increase, in which situation the actual impossibility of referral of the matter to a court, in this latter case, by the interested person, represents a breach of such person’s right of access to justice, thus, allowing ZRP attorneys’ at law arguments. 

Naturally, the law must propose as objective to ensure the operativity of adoption of share capital increase, so necessary for the good functioning of a company. On the other hand, the delegation of this power and duty to the board of directors may not have the consequence of exclusion of these decisions from judicial control, which situation affects legitimate rights and interests of the law subjects entitled to challenge the share capital increase operation. 

“We have claimed that there is no constitutional justification for which the decisions of the board of directors regarding the increase of the share capital to be excluded from judicial control. From now on, the decisions of the board of directors regarding the share capital increase, a major issue for the company, may be challenged in court by claims for annulment. I dear to affirm that one of the major shortcomings of the companies law has been remedied,” Alina Tugearu, Partner of the Dispute Resolution Department of Zamfirescu Racoți & Partners, says.

The decision is final and generally mandatory as of its publication in the Official Gazette, and namely August 01, 2018.