Contents

Ban of bearer shares from corporate law

Background
In July 2019, new legal measures were introduced to combat money laundering and terrorist financing. The Romanian Companies Act was also significantly amended as a result of this.

Ban on bearer shares
The core of the reform: In order to prevent money laundering and terrorist financing, bearer shares have been completely abolished. This means that only registered shares can be issued.

This precaution is intended to make the beneficial owners or “true” shareholders transparent.

Consequence: Existing bearer shares must be converted into registered shares. In this context, the holders of such shares are obliged to present them within 18 months at the registered office of the relevant public limited company. In addition, they must register as shareholders in the shareholders’ register. The complete identification data of the parties shall be provided. Legal transactions with bearer shares are no longer permitted.

Sanctions
If shareholders with bearer shares fail to comply with their aforementioned obligation, these shares will be cancelled and the company’s share capital reduced accordingly.

Furthermore, in the event that the corresponding conversion does not take place within the 18-month period, the company may be dissolved and deleted from the commercial register.

Conclusion
Overall, the ban on bearer shares will lead to greater transparency of the identity of the shareholders of a public limited company.

In Romania, however, there are currently only a few public limited companies with bearer shares. Furthermore, these companies do not have any significant assets. It can therefore be assumed that the amendment will not have a significant impact on the Romanian economy.

Author: Helge Schirkonyer