As of October 22, 2023, a number of significant legal amendments come into effect regarding the relationships between shareholders and founders of commercial companies in the Republic of Moldova. These amendments introduce essential reforms to the Limited Liability Company Law No. 135/2007 and aim to enhance the business environment, facilitate investments, and strengthen shareholder relationships.
These legislative amendments represent a significant step in the reform of the relationships between shareholders and founders of commercial companies in the Republic of Moldova, as well as alignment with international best practices in the regulation of commercial entities and the standards of the European Model Companies Act.
This information outlines the most significant legal changes:
Shareholders’ Agreement Conclusion
One of the major changes involves the introduction of a new provision regarding the shareholders’ agreement. This provision allows shareholders to enter into agreements that regulate the exercise of rights within the company, including voting on company decisions and the transfer of ownership interests, the assumption of obligations such as voting in a specific manner, the coordinated management of the company's actions, or abstaining from certain actions. The content of the shareholder's agreement is typically confidential. The company will be informed about the existence of a shareholders’ agreement and its most relevant provisions. Interested parties may notify the state registration authority in order to enable legal instruments such as buy-sell options, the drag-along and tag-along options, and the contractual pre-emption right.
Purpose of the Company Identification
According to the amendments, in addition to the goal of profit and increasing the company's value, companies can now declare non-lucrative purposes, such as those related to social entrepreneurship.
Squeeze Out Possibility
The law has been supplemented with Article 471, which allows minority shareholders to withdraw from the company without the consent of the majority, and without being obliged to sell their ownership interests.
Regulations on Abandoning the Proportionality Rule
The amendments allow shareholders to set in the Articles of Association a different ratio between the value of the ownership interest (i.e. share) and the associated rights. This change allows for the diversification of contributions from each shareholder and encourages investors with limited financial resources to participate in commercial companies.
Incentive Capital
The concept of "incentive capital" for employees has been introduced, allowing them to participate in the financial benefits of the company or become fully-fledged shareholders. This measure aims to motivate employees with outstanding performance and increase productivity.
Simplification of Company Formation and Elimination of the Maximum Number of Shareholders
The incorporation procedure for companies has been simplified by establishing the Articles of Association as the sole founding document. Additionally, the maximum number of shareholders for limited liability companies has been eliminated, providing more flexibility in the ownership structure.
Right to Choose Statutory Changes
Shareholders now have the right to decide which changes to the company's data will be included in the Articles of Association and which will only become binding through a general meeting of shareholders registered in the State Register of Legal Entities.
Changes in Assets and Share Capital
The legal changes include acceptance of contribution to the share capital with intellectual property rights, the conversion of a pecuniary obligation into a contribution to the share capital, and clarification of the procedure for increasing the share capital through additional contributions.
Liberalization of Certain Rules
Shareholders now have the option to choose alternative solutions regarding proportionality between the value of the ownership interest (i.e. share) and associated rights, distribution of net profit, intermediate payment of dividends, and other aspects.
Shareholder Rights and Good Faith Exercise of Rights
Shareholders' access to information and documentation has been expanded, and rules regarding expulsion from the company and shareholder liability have been adjusted to ensure fair treatment. Another significant change concerns Article 11 of Law No. 135/2007, which now includes a general provision regarding the exercise of rights in good faith and the assurance of equal treatment among shareholders.
The most important legal amendments will be addressed in separate articles by ACI Partners.
By Nicolina Turcan, Associate, ACI Partners