The Law No. 163/2018 for amending and supplementing the Accounting Law no. 82/1991 (“Accounting Law”), the Companies Law No. 31/1990 (“Companies Law”) and the Law No. 1/2005 pertaining to the organization and operation of cooperatives, has been published in the Official Gazette of Romania No. 595/12 July 2018 and enters into force on 15 July 2018.
Prior to this amendment, dividends could be distributed to the shareholders only based on annual financial statements, so that no interim dividends could be lawfully distributed.
Main amendments to the Companies Law:
- Dividends may be optionally distributed to the shareholders quarterly based on interim financial statements, subject to an annual settlement based on the annual financial statements. Dividends may be optionally paid quarterly within a deadline established by the general shareholders meeting or, as the case may be, by special laws. Any balances resulting from the distribution of such interim dividends, as recorded in the annual financial statement, shall be paid to the shareholders within 60 days from the approval of the annual financial statement related to the closed financial year, failing which the company will owe to the shareholders a penalty interest calculated according to art. 3 of the Government Ordinance No. 13/2011 pertaining to the remunerative and penalty statutory interest (currently 10.5% per year), unless a higher interest rate is provided by the articles of association or the shareholder’s resolution approving the annual financial statements;
- The annual financial statements shall mention any partial distribution of dividends among the shareholders during the financial year and settle accordingly any balances. In the event that the shareholders owe any balances further to such settlement, they shall be paid to the company within 60 days from the approval of the annual financial statements failing which they will owe to the company a penalty interest calculated according to the same rules as set out above. Interim or annual dividends that were paid in violation of the law shall be repaid to the company, if the latter proves that the shareholders were aware of such irregular distribution or should have been aware of it, under the given circumstances;
- The status of dividends partially distributed during a financial year shall be made available to the shareholders at the company’s registered office starting with the calling date of the general shareholders meeting, along with the annual financial statement, the annual report of the board of directors/management board and supervisory board, and the proposal on the distribution of dividends;
- Is punished by imprisonment from one year to five years the founder, director, general manager, manager, member of the supervisory board or the management board or the legal representative of the company who receives or pays dividends, in any form, from fictitious profits or that could not be distributed during the financial year based on the interim financial statement and annually based on the annual financial statement, or in a manner contrary to those resulting from such statements.
Main amendments to the Accounting Law:
- The amounts related to the interim allocation of dividends are registered in the accounting records and reflected in the interim financial statements as receivables against the shareholders;
- The profit may be optionally allocated to the shareholders quarterly during the financial year, within the limit of the quarterly net accounting profit plus any potential retained earnings and amounts withdrawn to this purpose from the available reserves, minus any carried forward losses and statutory or legal reserves, based on the interim financial statements approved by the general shareholders meeting;
- Such amounts allocated during the financial year must be settled subsequent to the approval of the annual financial statements and any surplus of dividends distributed and paid during the financial year shall be repaid within 60 days from the approval of the annual financial statements. Such repayment obligation lies with the persons who received dividends quarterly and the company’s management is bound to follow-up the recovery of these amounts and adopt the required measures;
- The trading companies, national companies, autonomous public entities (“regii autonome”), national research-development institutes, cooperative companies and other legal persons, which opt for the quarterly distribution of dividends, must draw up interim financial statements;
- The interim financial statements shall be audited provided that the annual financial statements of the relevant entity must be audited according to the law or are optionally audited;
- The interim financial statements are subject to verification by censors (“cenzori”) provided that the annual financial statements of the relevant entity are subject to verification by censors (“cenzori”), according to the law.
