Recent public discussions have been initiated concerning amendments to legislation governing incorporation and operation of limited liability companies (S.R.L.), among which we shall focus strictly on measure regarding increase of minimum share capital (legal provisions are also introducing amendments regarding regime of fiscal inactivity, transfer of shareholdings, and continuation of company’s activity in event of death of sole or majority shareholder).
Law Project on establishing certain measures for recovery and efficiency of public resources and for amendment and supplementation of certain normative acts (PL-x no. 246/2025), for which Romania’s Government has assumed responsibility before Parliament, is currently subject to a constitutional review before Constitutional Court.
Proposal publicly presented in mid-August to increase minimum share capital of S.R.L.’s to Lei 8,000 has been abandoned. Current version of Law Project provides for following thresholds regarding minimum share capital:
- for newly incorporated S.R.L.’s, minimum share capital is Lei 500;
- for existing S.R.L.’s, upon entry into force of law, share capital shall be determined based on amount of net turnover reported in financial statements for previous financial year, as follows: if net turnover exceeds Lei 400,000, minimum share capital shall be Lei 5,000. Already registered S.R.L.’s will be required to increase their share capital within maximum 2 years as of lasw’s entry into force date.
Failure to comply with legal obligation regarding minimum share capital may result in company’s dissolution at request of any interested party.
Brief historical background: under initial form of Law no. 31/1990, which entered into force in 1990, minimum share capital of S.R.L. was set at Lei 100,000 (old currency, taking into account denomination of national currency beginning July 1st, 2005). In 1997, as a result of rampant inflation, minimum share capital of S.R.L. was set at Lei 2,000,000 (old currency, respectively ne Lei 200 following denomination).
Minimum share capital for S.R.L.’s remained unchanged until 2020, when both minimum share capital requirement and obligation to provide capital proof contribution upon registration were repealed.
Public explanations regarding proposed increase of S.R.L.’s share capital are contradictory; therefore, we refer strictly to Explanatory Memorandum, which states legislative rationale, as follows (quote): “…increasing legal responsibility of limited liability companies (SRL) toward creditors, including state, by establishing share capital based on level of net turnover…”.
In our opinion, arguments supporting increase of minimum share capital of S.R.L.’s are not based on a sound analysis, considering following three (3) main arguments:
- minimum value established is insignificant (Lei 500 and, respectively, Lei 5,000) in relation to socio-economic context and minimum turnover threshold used as a reference, and, therefore, does not constitute a meaningful monetary value intended to cover potential debts, including fiscal liabilities;
- share capital does not constitute a reserve that must be retained by S.R.L. for purpose of paying potential debts, but may be used/spent by company for current operations;
- share capital represents only a debt of L.T.D. toward its shareholder(s), being solely an accounting value, and not a cash fund from which creditors may be satisfied.
Therefore, legislative amendments concerning minimum share capital of S.R.L.’s represent nothing more than an additional bureaucratic requirement, lacking any real effect in terms of reducing situations where companies fail to pay their debts to creditors, including those owed to the state.
