Romanian Corporate Governance: Board Compliance

Introduction — Why Corporate Governance Matters for Foreign Investors

Corporate governance in Romania is a critical area of law that directly impacts the success and compliance of any business entity operating within its jurisdiction. For foreign investors looking to establish or expand their presence in Romania, understanding the board requirements, governance structures, and compliance obligations is essential to avoid legal pitfalls and ensure smooth operations.

The Romanian legal framework, primarily governed by Legea societăților nr. 31/1990 (the Companies Law), establishes distinct governance requirements depending on the type of company. This guide provides a comprehensive overview of board requirements for the two most common company forms: the Societate cu răspundere limitată (SRL) — Limited Liability Company, and the Societate pe Acțiuni (SA) — Joint-Stock Company.

Types of Companies and Their Board Structures

The Companies Law No. 31/1990 differentiates between several company forms, with the most relevant for foreign investors typically being:

Comparative Overview: SRL vs SA Governance

Aspect	SRL (Limited Liability Company)	SA (Joint-Stock Company)
Governance System	Single or multiple administrators. No distinct 'board' structure mandated.	One-tier: Board of Directors (Consiliu de administrație). Two-tier: Directory (Directorat) + Supervisory Board (Consiliul de supraveghere).
Minimum Members (Board)	Min. 1 administrator. No maximum, but practical limits apply.	One-tier BoD: Min. 3, Max 11. Two-tier: Directorat: Min. 3; Supervisory Board: Min. 3, Max 11.
Legal Basis	Legea societăților nr. 31/1990, art. 78-83.	Legea societăților nr. 31/1990, art. 137-203.
Appointment Authority	Associates' decision (documented in constitutive act or separate resolution).	General Assembly of Shareholders (AGA).
Mandate Duration	As per constitutive act; typically indefinite or for a specified term.	Max. 4 years, renewable (for BoD/SB members).
Independence Req.	None explicitly by law, unless voluntarily adopted in constitutive act.	Mandatory for certain non-executive directors in public SAs (Legea nr. 24/2017, ASF Reg. 5/2018).
Audit Committee	Not legally mandatory, unless specifically large entity requiring statutory audit.	Mandatory for SAs subject to statutory audit (e.g., public companies, credit institutions), must have at least 3 members, majority independent.
General Manager	Administrator(s) typically fulfill this role. Can delegate specific tasks.	Usually appointed by Board of Directors (one-tier) or Directorat (two-tier). Can be a board member.
Decision-Making	As per constitutive act (e.g., simple majority of administrators).	Defined by constitutive act and internal regulations (e.g., ordinary/qualified majority).
Public Disclosure	Basic details at Trade Register.	Extensive disclosure for public SAs (ASF filings, annual reports, corporate governance statements).
Complexity & Cost	Lower complexity, lower legal and administrative costs.	Higher complexity, higher legal and administrative costs, especially for public SAs.
Shareholder Rights	Simpler, direct relationship with associates.	More formalized, regulated by Legea nr. 31/1990 and Legea nr. 24/2017 (for public SAs).

Key Considerations / Common Pitfalls

Recent Changes 2026

While there are no specific, sweeping changes to the fundamental Companies Law (Legea nr. 31/1990) or the primary governance structures (SRL, SA one-tier/two-tier) scheduled for 2026 regarding board requirements, it is crucial to highlight a significant system change impacting employment records:

Transition from ReGES to ReGES-Online: As of January 1, 2026, the electronic register for employees, previously known as ReGES, will be replaced by ReGES (Registrul General de Evidență a Salariaților) or ReGES-Online. This change was introduced by Hotărârea Guvernului nr. 295/2025 pentru aprobarea Normelor metodologice de aplicare a Legii nr. 53/2003 – Codul muncii, privind înființarea și administrarea Registrului General de Evidență a Salariaților, publicată în Monitorul Oficial al României, Partea I (Government Decision No. 295/2025 for approving the Methodological Norms for the application of Law No. 53/2003 – Labour Code, regarding the establishment and administration of the General Register of Employees).

This is relevant for corporate governance as many administrators or executive directors may also hold individual employment contracts with the company (in addition to their mandate contract). Any such employment relationship must be meticulously registered and updated in the new ReGES-Online system. Non-compliance with ReGES requirements can lead to administrative fines ranging from RON 500 to RON 8,000 for each undeclared or improperly declared employee (Legea nr. 53/2003 – Codul muncii, art. 260 alin. (1) lit. e) și alin. (5), publicată în Monitorul Oficial al României, Partea I, nr. 72 din 5 februarie 2003, as subsequently amended).

Beyond this, corporate governance frameworks are continually evolving, particularly under the influence of EU directives. While 2026 doesn't mark specific structural changes, ongoing amendments to capital market laws, sustainability reporting (e.g., CSRD – Corporate Sustainability Reporting Directive - Directive (EU) 2022/2464 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU), and broader ESG (Environmental, Social, Governance) considerations will increasingly impact board responsibilities and disclosures for larger companies and those operating in specific sectors. It is advisable to maintain ongoing legal consultation to stay abreast of these developments.

Frequently Asked Questions

1. What are the main differences between an administrator in an SRL and a director in an SA?

In an SRL, the administrator(s) typically hold both management and representation powers, directly managing the company's daily operations and representing it in dealings with third parties. There isn't a strict separation between executive and non-executive roles. In an SA, especially with a one-tier system, the Board of Directors sets the strategy and supervises the executive management, while day-to-day operations are delegated to executive directors (often including a general manager). In a two-tier SA, the Directory handles daily operations under the supervision of the Supervisory Board. The SA structure emphasizes a clearer separation of powers and responsibilities, particularly for oversight functions, compared to the more consolidated role of an SRL administrator.

2. Can a foreign national serve on a Romanian company's board?

Yes, absolutely. Romanian law does not generally restrict foreign nationals from serving as administrators, directors, or supervisory board members. There are no nationality requirements. However, foreign nationals will need to provide valid identification, and for registration with the Trade Register, their identity documents (e.g., passport) will be required. For non-EU citizens, it is important to ensure their residency status in Romania (if applicable) is compliant with immigration laws, although a board mandate itself does not automatically grant residency or work permits if no actual employment contract is involved for daily operations.

3. What are the consequences of failing to register a board member change with the Trade Register?

Failure to register any change in the composition of the company's administrative bodies (administrators, directors, supervisory board members) with the Trade Register within the legally stipulated timeframe (typically 15 days from the date of the decision) can have several adverse consequences. Firstly, it can lead to administrative fines imposed by the Trade Register Office, typically ranging from RON 100 to RON 1,000. More significantly, actions taken by board members whose appointment has not been registered may be challengeable by third parties on grounds of lack of publicity. While internal validity remains, external recognition and enforceability against third parties may be compromised, creating legal uncertainty and potential liability for unregistered individuals or the company itself.

4. Are independent directors mandatory in Romania, and if so, for which companies?

Independent directors are mandatory only for certain types of companies, specifically for Societăți pe Acțiuni (SAs) whose securities are admitted to trading on a regulated market (i.e., publicly traded companies). Legea nr. 24/2017 and ASF Regulation No. 5/2018 require a certain proportion of non-executive directors on the board of directors or supervisory board to be independent. Furthermore, for SAs subject to statutory audit (including public SAs), the audit committee must be composed predominantly of independent non-executive directors. For SRLs and non-public SAs, the appointment of independent directors is optional and a matter of best practice or internal corporate policy, rather than a legal requirement.

5. What is the role of an audit committee in a Romanian SA?

An audit committee in a Romanian SA (when legally required or voluntarily established) has a crucial oversight role. Its primary responsibilities include monitoring the financial reporting process, overseeing the effectiveness of the company's internal control and risk management systems, monitoring the statutory audit of the annual and consolidated financial statements, and reviewing and monitoring the independence of the statutory auditors or audit firm. This committee enhances corporate governance by providing an independent layer of oversight over financial integrity and compliance, reporting directly to the board of directors or supervisory board, and ultimately to the general assembly of shareholders. Its existence significantly strengthens investor confidence.

6. What is the maximum number of SAs a person can be an administrator of simultaneously in Romania?

According to Legea societăților nr. 31/1990, art. 73 alin. (3), no person can be an administrator (or director/member of the supervisory board) in more than 10 Societăți pe Acțiuni (SAs) simultaneously. This restriction is intended to ensure that individuals dedicating their time to managing or supervising a company can do so effectively, without being overburdened by excessive commitments. There is no such explicit numerical limit for administrators of Societăți cu răspundere limitată (SRLs).

7. What happens if a board member breaches their fiduciary duties?

If a board member (administrator, director, or supervisory board member) breaches their fiduciary duties (duty of loyalty, duty of diligence) towards the company, they can be held personally liable for damages caused to the company. This liability can be invoked by the company itself, or by shareholders representing at least 5% of the share capital who have not participated in the decision that led to the breach (Legea societăților nr. 31/1990, art. 155 for SRL, and art. 144(10) or 153^21 for SA, depending on the system). The breach could involve gross negligence, mismanagement, conflicts of interest not properly disclosed or managed, or acting outside the company's best interest. Depending on the severity and nature of the breach, statutory liability can be civil or, in cases involving fraud or certain criminal offenses, even criminal.

8. How does the ReGES system impact board members?

ReGES (Registrul General de Evidență a Salariaților) is Romania's electronic register for employee records. It impacts board members who also hold an individual employment contract with the company. While a board mandate is typically governed by a civil mandate contract (contract de mandat) and not by the Labour Code, some board members (especially executive directors or administrators in SRLs) may also be simultaneously employed by the company under a separate employment contract for specific operational roles. In such cases, their employment details (start date, salary, position, contract type, etc.) must be accurately and timely registered and updated in the ReGES system. Failure to comply with ReGES requirements for such employment relationships can lead to significant fines levied by the Territorial Labour Inspectorate (ITM).

9. What are the ongoing responsibilities of a company's board in Romania?

The ongoing responsibilities of a company's board in Romania include: (1) Strategic oversight and decision-making aligned with the company's objectives and long-term interests. (2) Monitoring the performance of executive management and ensuring proper implementation of strategy. (3) Overseeing financial reporting, internal controls, and risk management systems. (4) Ensuring compliance with all applicable laws, regulations, and the company's constitutive act. (5) Approving significant transactions, budgets, and business plans. (6) Reporting to the general assembly of shareholders on the company's activities and financial performance annually, and more frequently for public companies. For public companies, proactive engagement with shareholders and compliance with investor relations guidelines are also key.

10. How are conflicts of interest managed for board members or administrators?

Conflicts of interest for board members or administrators must be carefully managed to ensure decisions are made in the company's best interest. Typically, this involves: (1) A duty to declare any actual or potential conflict of interest to the board or other relevant corporate bodies. (2) Recusal from discussions and voting on matters where a conflict exists. (3) Establishing clear internal policies outlining the process for identifying, declaring, and managing conflicts of interest. For SAs, especially public ones, the constitutive act and any internal corporate governance codes often include specific provisions regarding related party transactions and conflict of interest management. Failure to declare or manage conflicts appropriately can lead to personal liability for the board member and potential invalidation of the related corporate decisions.

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Conclusion and Next Steps

Navigating the nuances of corporate governance in Romania, particularly concerning board requirements and compliance, is a critical undertaking for foreign investors. The legal framework, primarily Legea societăților nr. 31/1990, alongside specialized laws for public companies, mandates specific structures, responsibilities, and duties for administrators and directors. Understanding the distinctions between an SRL and an SA, choosing the appropriate governance system, and meticulously drafting constitutive acts are foundational steps.

Ongoing compliance, including timely registration of changes with the Trade Register, adherence to independence requirements for public entities, and diligent management of fiduciary duties and conflicts of interest, is paramount. The shift to ReGES-Online for employment records also highlights the need for continuous vigilance regarding administrative and regulatory changes.

Foreign entities may consult legal counsel on Romanian corporate law requirements, compliance, risks, and governance.

This article is for informational purposes only and does not constitute legal advice. For specific situations, please consult a specialized lawyer.

Corporate Governance in Romania: Board Requirements and Compliance Overview for Foreign Investors