The introduction of new thresholds for minimum share capital, particularly under Law No. 239/2025, marks a significant shift in corporate discipline. While the measure aims to stabilize the business environment, its practical impact on creditor recovery remains a subject of debate.
Adela Nuțăhas spoken to avocatnet.ro on this topic, with the relevant information for all SMEs below.
- To begin with, for readers who may not be familiar with the concept of share capital: what is share capital and what role does it play in a business?
In order to understand the impact of Law No. 239/2025, it is important to clarify the notion of share capital beyond its mere legal definition. Share capital represents the total value of the contributions (in cash or in kind) which the shareholders of a company undertake to make available to it at the time of incorporation or during its existence. It is divided into units known as shares, which cannot be represented by negotiable securities, but which confer upon their holders fundamental rights: the right to participate in the management of the company through voting, and the right to receive a proportionate share of profits in the form of dividends.
The role of share capital in a business is multidimensional, functioning as a point of equilibrium between shareholders, the company, and third parties. Firstly, share capital operates as a minimum entry barrier to the market, suggesting the existence of a threshold of entrepreneurial seriousness and a genuine willingness to assume economic risk. In the 1990s, this function was also evident in the manner in which thresholds were set, in that the level of the minimum share capital was, in practice, correlated with the national minimum wage and was perceived as an initial indicator of creditworthiness and financial stability. Subsequently, in line with a broader trend of regulation and simplification of company law, this requirement gradually diminished, culminating in the 2020 reform in Romania, which allowed the incorporation of a limited liability company with a symbolic share capital of RON 1, a solution justified by the need to facilitate entrepreneurship, but criticised for its effects on commercial discipline.
From a legal perspective, share capital functions as an abstract guarantee, since, although the company’s assets and funds change continuously, the share capital remains a fixed value in the company’s constitutive documents and reflects the level of contributions undertaken by the shareholders. It is not a blocked account, but serves as a reference point for the company’s financial stability. At the same time, share capital delineates limited liability. Shareholders are not liable with their personal assets for the company’s debts, but only up to the amount of the contribution subscribed to the share capital. This also explains the rationale of the new thresholds introduced by Law No. 239/2025, namely the intention to ensure a minimum level of capitalisation capable of reducing the purely formal use of the limited liability company structure and strengthening discipline in commercial relationships.
- From the perspective of creditors, does this measure genuinely improve their chances of debt recovery, or does it merely create a false sense of security?
One of the main arguments advanced by the legislator for increasing the minimum share capital was the enhancement of creditor protection. According to the initiators of Law No. 239/2025, the increase in share capital sought, inter alia, to “enhance the legal responsibility of limited liability companies towards creditors”, given that the previous capital of RON 1 provided no real financial backing and encouraged abusive practices. The explanatory memorandum noted that the almost non-existent former minimum threshold led to undesirable situations, where companies with negligible capital were easily incorporated and subsequently used to accumulate debts and defraud business partners or the State, without administrators or shareholders being effectively held liable for the damage caused. In practice, the absence of any financial “stake” at incorporation facilitated the emergence of shell companies and increased the risk that such entities would leave behind unpaid liabilities.
By imposing a more meaningful threshold, the legislator seeks to reintroduce an element of financial guarantee capable of discouraging such practices and of increasing the likelihood that a company will have at least minimal resources to meet its obligations. Nevertheless, the actual effectiveness of this measure for creditors is debatable, as, under company law, share capital performs a function that is more declaratory and structural than that of an effective guarantee. It does not constitute an untouchable fund reserved for creditors, may be used in the company’s ordinary activity immediately after incorporation, and does not genuinely prevent the diminution of assets or the assumption of excessive obligations. In this sense, the mere increase of the minimum share capital does not, in itself, ensure the existence of assets available for enforcement at the time of execution, and creditor protection continues to depend on the company’s actual solvency, financial discipline, and the mechanisms for preventing insolvency.
On the other hand, the existence of a higher financial threshold at incorporation may have a useful preventive and psychological effect, as it introduces a minimum patrimonial “stake” and may discourage the creation of paper companies used to accumulate debts without a genuine intention to pay, which could indirectly improve financial discipline in the market. However, for creditors, this measure does not amount to a real guarantee and may generate only an appearance of security if viewed in isolation, since the effective chances of recovery still depend on the company’s actual solvency and the existence of attachable assets, rather than on the mere amount of subscribed share capital.
- Were there better alternatives than setting these new share capital thresholds? If so, please provide an example.
The measure of imposing new minimum share capital thresholds was not the only option available to the authorities. There were other ways to achieve the stated objective (namely the protection of creditors and the increased accountability of shareholders) without generally increasing the share capital of all companies. One such alternative would have been to strengthen the legal mechanisms for the personal liability of those who manage or own companies. For example, insolvency legislation already provides for the possibility of triggering personal liability of administrators in cases of fraudulent bankruptcy. However, in practice, such actions are rare and difficult to prove. The authorities could have opted for the simplification and enhancement of procedures through which creditors may seek to hold shareholders or administrators liable where abuses occur (for instance, where they strip the company of assets to the detriment of creditors). Such an approach would target harmful conduct directly, rather than imposing on all companies the obligation to immobilise a fixed amount of capital.
Within the same logic of ensuring genuine accountability of those who manage the company, a more effective alternative to a fixed capital threshold would have been the introduction of a “solvency test” mechanism, as recognised in jurisdictions such as the United Kingdom or the Netherlands. Under such a system, the distribution of dividends, capital reductions, or other significant withdrawals of funds would be permitted only if the administrators expressly certify, on a reasonable and verifiable basis, that the company will be able to meet its due debts within a determined time horizon, subject to personal liability for inaccurate declarations. Such a solution would protect creditors more directly than a static figure, as it specifically addresses situations in which shareholders or administrators deplete the company’s resources prior to the accumulation of debts or before enforcement.
In conclusion, the principal alternative to increasing the minimum share capital would have been an emphasis on qualitative rather than quantitative measures, such as stronger enforcement of laws against fraud and insolvency abuses, education and increased accountability of entrepreneurs, or innovative mechanisms (such as guarantee funds or liability insurance schemes) designed to protect creditors.
- What formalities does, broadly speaking, an increase of a company’s share capital involve?
An increase of share capital involves a relatively standardised procedure. First, the shareholders must adopt a resolution of the General Meeting of Shareholders (or a Sole Shareholder Decision), approving the capital increase and specifying the amount of the increase, the new total value of the share capital, and the method of increase (cash contribution or contribution in kind; as applicable, the incorporation of reserves or undistributed profits, or the set-off of certain, liquid and due debts owed by the company to its shareholders). In the case of limited liability companies, such a resolution is generally adopted unanimously, unless the articles of association provide otherwise.
Subsequently, the increase must be effectively implemented through the payment of the contribution. Most commonly, the contribution is made in cash, in which case the amounts are paid into the company’s bank account, and the bank statement or proof of payment must be obtained after the shareholders’ resolution but before filing the documentation with the National Trade Register Office (ONRC). Where a contribution in kind is chosen, the procedure becomes more complex due to the need for an expert valuation of the assets. In parallel, an addendum and/or an updated version of the articles of association must be prepared, reflecting the new share capital and its structure following the increase (number of shares, nominal value, and, where applicable, changes in shareholdings or the admission of new shareholders).
Finally, the file for registration of the capital increase is submitted to the ONRC. This file includes the registration application, the shareholders’ resolution or sole shareholder decision, the updated articles of association, proof of the contribution, and proof of payment of the publication fees in the Official Gazette. The ONRC reviews the documentation, records the amendment in the register, and orders publication of the relevant notice in the Official Gazette, as of which moment the share capital is officially considered increased.
- What do you recommend companies do in the upcoming period, in the context of the introduction of the new minimum share capital thresholds?
In the forthcoming period, the main recommendation for companies is to treat the new share capital thresholds as a “compliance test” to be addressed in due time, rather than as a last-minute formality. The first step is to verify whether the company falls within the scope of the new requirements (in particular, whether it exceeds the RON 400,000 net turnover threshold) and to establish a clear timeline for the capital increase, so as to avoid the risk of severe consequences, including dissolution requests or reputational constraints in commercial relationships. From a practical perspective, it is advisable for shareholders to decide promptly on the source of the increase (cash contribution or capitalisation of reserves/profits) and to prepare the documentation for the National Trade Register Office (ONRC) well in advance, as the procedure is standardised but sensitive to errors and delays.
At the same time, even companies that are not expressly required to increase their share capital may use this change as an opportunity to “clean up” their corporate profile and strengthen their credibility, particularly if they have retained a purely symbolic capital from the previous period. In other words, the new thresholds should not be viewed solely as a constraint, but as a legislative signal that sustainability and financial discipline will increasingly matter in the assessment of a company, which is why proactive compliance (potentially with legal and/or tax support) will, in many cases, represent the most effective strategy.
The initial article was prepared for avocatnet.ro, as an interview with Alexandru Boiciuc, and published in Romanian by the platform, available for its subscribers HERE.