The Constitutional Court (C.C.R.) has declared unconstitutional the bill under which authorised natural persons (PFA), individual enterprises and family enterprises could have converted into limited liability companies (SRL).
In its a priori review of constitutionality, the Constitutional Court on Thursday unanimously upheld an objection of unconstitutionality raised by the High Court of Cassation and Justice and found the Law supplementing Government Emergency Ordinance No. 44/2008 on the conduct of economic activities by authorised natural persons, individual enterprises and family enterprises to be unconstitutional in its entirety.
The law was adopted by Parliament in October and would have introduced Article 33(1) into GEO 44/2008, reading: “(1) By way of exception to Articles 21, 27 and 33, authorised natural persons, individual enterprises and family enterprises may, after at least one year of operation, opt to change their form of organisation into a company in one of the forms provided for in Article 2 of Companies Law No. 31/1990, republished, as amended and supplemented, if they submit the following documents to the trade register office in whose territory the company will have its registered office: a) the registration certificate obtained under this emergency ordinance; b) the company’s articles of association and proof of the contributions paid under them, except for limited liability companies; c) proof of the registered office; d) the tax certificate; e) the VAT registration code, where applicable. (2) A company set up under paragraph (1) keeps its tax identification code and its VAT registration code. (3) Within 3 working days of the documents being submitted, the competent authorities shall issue the registration certificate of the new company.”
Through this legislative change, authorised natural persons (PFA), individual enterprises and family enterprises could have reorganised, by conversion, into one of the entities regulated by Article 2 of Companies Law No. 31/1990, namely: a general partnership, a limited partnership, a joint-stock company, a partnership limited by shares or a limited liability company.
In essence, the Constitutional Court held that the legislator’s intention to give authorised natural persons, individual enterprises and family enterprises the option of changing their form of organisation into one of the company forms provided for by Companies Law No. 31/1990 is not accompanied by a concrete legal procedure that would allow this change to actually take place, given the different legal regime of companies regulated by Law No. 31/1990.
The Court found that merely exercising an option granted by law to entities without legal personality, even when accompanied by the submission of documents, is not sufficient and cannot automatically and fully bring the legal regime of economic entities without legal personality, regulated by Government Emergency Ordinance No. 44/2008, into line with that of companies with legal personality, regulated by Law No. 31/1990, republished, as amended and supplemented, nor does it trigger the corresponding application of the procedure laid down by Law No. 31/1990 for changing the form of companies.
The Court further held that, since the conversion procedure and the substantive and formal conditions required to convert an entity without legal personality into a company are not laid down expressly and unequivocally, the challenged law creates, in some respects, the conditions for inconsistent application of the rules it introduces and, in some cases, makes it impossible to apply the law at all, owing to the defective, imprecise and incomplete drafting of its provisions, contrary to the constitutional provisions on the principle of legality, as regards the quality of the law.