Interpretative Ruling of the Supreme Court of Cassation concerning questions in the field of commercial companies and registrations pursuant to the Commercial Register and Register of Non-Profit Legal Entities Act

The Supreme Court of Cassation (SCC) issued a new Interpretative Ruling No. 1/2020 of 31 May 2023 in interpretative case No. 1/2020 of the General Assembly of the Civil and Commercial Divisions of the SCC to answer questions in the field of company law commercial companies and registrations pursuant to the Commercial Register and Register of Non-Profit Legal Entities Act.

The first question concerns the case of death of a sole owner of the capital of a limited liability company who is also the general manager of the company. The answer of the SCC is that in case of death of a person fulfilling both roles and when the person’s successors have not undertaken any action under article 157(1) of the Commerce Act (CA), the company shall not be dissolved by law as of the time of death but shall instead be dissolved by a court ruling on an application by a prosecutor. The situation is identical in terms of legal consequences to a situation where no general manager is registered for the company. For the purpose of protecting successors, any application that may have been filed by the prosecutor shall be rejected if successors constitute company bodies and register a general manager of the company by the end of the oral arguments on the substance before the relevant courts. The second method to protect successors is provided for in CA article 274(1), i.e. the activity of the dissolved company shall continue provided that the stage of distribution of company assets has not been reached yet.

The second question dealt with in the interpretative ruling concerns the admissibility of the application under CA article 74(1) to repeal a decision of the General Meeting of a limited liability company to dismiss a general manager if a decision has been adopted under a previous item on the agenda to remove the general manager as a partner. The answer of the SCC is that it is admissible to join the application under CA article 74(1) and an application to repeal a decision to remove the general manager as a partner insofar as the decision for dismissal of the general manager is caused by the decision to remove the partner who is also the general manager and is related to the right of that person to effective remedy.

The next question relates to the removal of a partner for actions in his/her capacity as general manager. According to the interpretative ruling, the partner shall be removed for the following violations he/she committed in his/her capacity as general manager: non-performance of obligations to assist the activity of the company; failure to execute the decisions of the General Meeting; acting against company interests. Pursuant to CA article 141(5) the general manager may request to be deleted from the Commercial Register by submitting a written notice to the company. Within one month of receiving said notice, the company must request the registration of the general manager’s dismissal in the Commercial Register. If the company fails to do so, the general manager may him/herself request said registration of dismissal, which shall be registered regardless of whether a new person has been selected as a replacement or not. The answer of the SCC is that the general manager’s notice shall be submitted to the company and any person who agrees to receive the notice, other than the departing general manager him/herself, can legitimately receive the notice on behalf of the company.

The fifth answer by the SCC is that in case of inaction by the bodies of the company, the departing partner who has submitted a prior notice cannot legitimately request by him/herself the registration of his/her departure from a limited liability company in the Commercial Register or the Register of Non-profit Legal Entities.

In addition, the interpretative ruling answers three questions pertaining to the Commercial Register and Register of Non-Profit Legal Entities Act (CRRNLEA). The first question concerns the powers of the court in cases of appeal against a refusal by a registration official to register, notify or delete a submitted request in a situation where the official did not give the necessary instructions pursuant to CRRNLEA article 22(5) (said provision requires the registration official to give instructions to the requesting entity to remedy a non-compliance when the registration, deletion or notification request submitted by a company or a non-profit legal entity is not accompanied by all documents required by law or when the required state fee has not been paid). The answer of the SCC is that in case of appeal of such refusal, the court must give instructions for the missing documents required by law to be provided and then assess whether all conditions are met for the requested registration, notification or deletion. The court does not have the power to repeal the refusal merely because the registration official did not give instructions.

The second answer related to CRRNLE is that the registration official is required to enter in the CRRNLE the information related to a transfer of company shares even if no registration was made of information ensuing from previous transactions with those shares for which registration was required, provided that the documents enclosed with the request make it possible to establish compliance with the legal provision concerning transfer of company shares (CA article 129). The registration official shall not register in the CRRNLE any information related to transfer of company shares in a limited liability company which came after the entry in the register of a freeze on those shares.

In cases of transfer of shares between partners, the negative condition of CA article 129(1), second sentence does not apply (i.e. the condition that the company should have paid all employment salaries, benefits or mandatory social security contributions required by law to the employees, including employees whose employment was terminated up to three years prior to the transfer of the company share).

The last answer of the SCC is that CRRNLEA article 25 does not allow the appeal of orders of registration officials reflected in the electronic registers other than refusals on submitted requests for registration, deletion and notification.