A. Distraint and sale of shares
Pursuant to changes set forth in Law no. 152/2015 amending and supplementing specific normative acts on registrations in the Trade Registry, now the creditors of a shareholder have the possibility to put distraint on and sell the shares of their debtor. Therefore, the opposability of the garnishment and the distraint shall be registered with the Trade Registry, at the request of the foreclosure body.
Previously, such possibility was duly regulated for joint stock companies only. In case of a limited liability company, the creditors were able to exercise their rights over the part of benefits due to the shareholder debtor either after the closing of the financial year, or after the liquidation process, in case the company is dissolved. Therefore, the only possibility to foreclose the shares granted to the shareholder’s creditors was the garnishment of the shares that were due following the liquidation process. In other words, the creditors of the shareholder debtor used to enforce the garnishment over a receivable affected by the prior condition of the dissolution and liquidation of the limited liability company.
Law no. 152/2015 expressly sets forth that not only the shares of a joint stock company, but also the shares of a limited liability company may be put under distraint or sold by the creditors of the shareholder debtor.
Moreover, new obligations must be complied with by the management bodies of the company which is subject to share foreclosure, i.e. the directors and managers of the company are compelled to provide to the mortgagee and/or foreclosure body any necessary information (including, but not limited to the financial statements of the company) for the assessment of the shares subject to foreclosure, and are responsible to facilitate the share take-over.
B. Mortgage over the shares
Law no. 152/2015 expressly sets forth that the shares of a limited liability company may also be subject to mortgage, thus supplementing the provisions on share transfer of the Companies Law no. 31/1990. Namely, it was provided for that the mortgage over the shares may be constituted in favour of third parties only upon the consent of the shareholders representing at least three quarters of the share capital of a limited liability company.
Previously, such possibility was duly regulated for joint stock companies only. In practice, however, as of the entry into force of Law no. 99/1999 on measures to accelerate economic reform, the movable mortgage over the shares and the opposability towards third parties have been registered with the Electronic Archive of Security Interests. Such procedures follow the same steps as the ones when guaranteeing with shares of a joint stock company (i.e. shareholders’ consent, conclusion of a mortgage agreement, registration with the Electronic Archive of Security Interests and the Shareholders’ Register).
The above changes came into force on July 16th, 2015, but the mortgage over the shares shall be enforced and related obligations of the management bodies shall apply only to mortgages constituted after the entry into force of Law no. 152/2015.