The article was first published in Invest Romania, November 2006 issue.

The Bill for amending Company Law no. 31/1990 as subsequently modified,
supplemented and republished (the “Company Law Bill”) was approved by the Senate on 30
August 2006 and is currently at the Chamber of Deputies commissions undergoing a fast-track
approval process.

The over one hundred eighty proposed amendments of the Company Law Bill are meant
to transpose the acquis communautaire on privately-held companies’ law and to adapt the
Romanian company law to the O.E.C.D. corporate governance standards. The amendments
target the development of the Romanian business environment and the stimulation of foreign
investments.

1. Highlights of the Proposed Amendments

(i) Establishment of companies
Joint stock companies may be set up by at least two shareholders, instead of five
shareholders which is currently minimum number of shareholders for such companies.
The minimum share capital for joint stock companies shall be of RON 90,000. The
Government may amend the amount of the minimum share capital in accordance with the
exchange rate so that it represents at all times the RON equivalent of EUR 25,000.

(ii) Dual administration system
Investors shall have the possibility to choose between two administration systems either
the current, unitary system with Board of Directors or the dualist one where the company is
managed by a Directorate and a Supervisory Board.
If the dual management system is chosen, the management of the company shall be
performed exclusively by the Directorate whilst the Supervisory Board shall permanently
supervise the way the Directorate manages the company. The number of the members of the
Supervisory Board may range from three to eleven.
If the unitary system is chosen and the obligation to audit the financial statements exists
under the law, then the joint stock company shall be managed by at least three directors. In case
the management duties are delegated to managers, the majority of the members of the Board of
Directors shall be made up of non-executive directors, i.e., directors that were not appointed as
managers.
The articles of association may provide that the meetings of the Board of Administrators,
of the Directorate or the Supervisory Board may also take place via remote communication
means, such as videoconference.

(iii) Business judgment rule
The status of the directors is reconsidered by imposing new concepts such as diligence
and loyalty duties towards the company or the business judgment rule. A director shall not
breach the due diligence obligation if upon making a business decision he is reasonably entitled
to consider that he is acting in the company’s interest and based upon adequate information.

(iv) Decision making process
The notification term for convening the general meeting of shareholder is increased from
15 days to 30 days, while the quorum and majority requirements are reduced. Hence, the
ordinary general meeting of shareholders may validly decide in the presence of shareholders
holding at least one fourth of the voting rights with a majority of the votes cast and certain
decisions of the extraordinary general meeting of shareholders such as merger or increase of the
share capital shall be taken in the presence of shareholders holding at least one fourth of the
voting rights with the majority of two thirds of the voting rights.

(v) Authorized capital
By the constitutive act the Board of Directors, in the unitary system or the Directorate, in
the dual system may be authorized to increase the share capital up to a certain determined
nominal amount, i.e., the authorized capital by issuing new shares in exchange for the
contributions. This authorization may be given for a maximum period of 5 years.

(vi) Spin-off
A company could spin-off part of its assets and transfer them to one or several existing
companies in exchange for shares of the recipient companies which could be assigned either to
the shareholders of the existing company (spin-off in the interest of shareholders) or to the
transferring company itself (spin-off in the interest of the company).