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a candle for my son!

GOVERNMENT OF ROMANIA

CHAMBER OF DEPUTIES                                                                                     SENATE

LAW 137
On Actions to Accelerate Privatization

The  Parliament adopts this Law.

 Chapter I. General Provisions

 Article 1. The legal framework for accelerating the privatization process is hereby set on the following tenets:

  1. Ensuring the transparency of the privatization process

  2. Sale at the market price resulted on demand-offer ratio with due consideration of each and every item of the tender offer

  3. Ensuring the equal treatment of buyers

  4. Implementation of pre-privatization restructuring programs focused on shedding assets, social assets in particular.

  5. Reconsideration of the companies debts of to enhance the attractiveness of the privatization offer

  6. Special administration instituted over the privatization period

Article 2. The provisions of this Law shall apply to the companies in which state or a local public administration authority is a shareholder or partner, irrespective of the regulatory act under which such companies were established, as well as to the regies autonomes. 

Article 3. For the purpose of this Law, the following terms and phrases have the following meanings: 

  1. Company means any commercial company in which the state or a local public administration authority is a shareholder, irrespective of the regulatory act it was set up under

  2. Regie Autonome means an economic agent established under Law No.15/1990 on re-organizing state-owned economic units into regies autonomes and companies, as amended, and the one set up under the Law on local public administration No.69/1991, as amended, as well under Law on local public administration No.215/2001.

  3. Shares means securities issued by companies; shares may be common or preferred, in accordance with Law 31/1990 on commercial as republished and amended; the provisions of this Law concerning shares shall apply to quotas, too.

  4. Social Assets means assets or groups of assets belonging to the patrimony of a company or regie autonome, such as: nurseries, kindergartens, medical offices, primary health care units, hostels or blocks of flats, cafeterias, power or heating plant units, school facilities of any kind, sports grounds and recreation facilities of whatever type, local or regional utilities, appurtenances, etc. including their equipment and the land attached thereto;

  5. Privatization Agent means any legal entity, Romanian or foreign, specialized in financial activities, in mergers and acquisitions, such as banks, investment banks, investment companies and funds, financial companies, incorporated providers of accounting, advisory, and securities market intermediation services, as well as law firms or professional law associations, whether they act in their individual capacity or in association; the point should be made here that foreign legal entities may join a Romanian legal entity or firm in the above said categories.

  6. Special Administration during the Privatization Period is the procedure in place from the publication in Romania’s Official Gazette, Part I of the ministerial order of the public institution involved or from the issuance of the decision by the manager of the local public administration authority for setting up the special administration procedure, until the transfer of share ownership in case of completed privatization or until the date provided for in the order or decision. 

  7. Not finished investments means investment objectives in different execution stages, including those in the stage of approved projects, that fit into the sectoral development strategies of the Government and that need to attract funds from the private sector;

  8. Builds, operates and transfers means method by which the investor builds, finances, develops and operates the objective for a determined period of time after which it transfers the objective to the initiator, in full operational capacity and free of any liens and obligations;

  9. Builds, holds and operates means method by which the investor is entrusted the objective he finances, develops and operates for an undetermined period of time, by observing the sectorial regulations in force;

  10. The option right is the right of the investor that subscribed and paid the capital contribution, following a capital increase, to subsequently buy from the public institution involved, stakes of shares held in the respective company, under the terms and within the deadlines agreed on the date of the share capital increase.

CHAPTER II

Divestiture of State Ownership

Article 4. Divestiture of state ownership in the economy is to be achieved by the following procedures:

  1. Sale of shares

  2. Increase of the share capital by private capital contribution.

  3. Transfer of social assets either for a price or for free

  4. Any combination of the procedures at a. through c.

Section I

Sale of Shares

Article 5

(1) Shares may be sold at the demand-offer ratio market price, even if it is below the offer price established by the public institution involved. The public institution involved is the sole authority that may decide upon the opportunity of concluding the share sale-purchase contract in consideration of the other elements of the tender offer besides the price. Judicial and arbitration bodies are not entitled to judge the opportunity to conclude the transaction but its lawfulness. 

(2) For specific companies, determined by Government decision, depending on the field of activity, the size of the share capital, the number of employees, financial status, degree of industrial development and unemployment rate in the region where it carries out the commercial activity, the block of shares owned by the public institution involved may be sold at the symbolic price of EURO 1. In this case, the public institution involved selects the buyer depending on the other elements of the purchase offer, respectively: the volume of committed investments, the number of jobs to be created and the working capital. The selection criteria and the detailed terms of the sale shall be determined by the methodological norms issued for the implementation of this Law

(3) No individuals or legal entities, Romanian or foreign, may take part in the privatization process if, having entered into share sale-purchase contracts with the public institution involved, such contracts were cancelled ex nunc for causes attributable to them alone, by a definitive and irrevocable Court or Arbitrage decision or as a consequence of the subsequent conditions stipulated in the shares sale-purchase contracts, as well as those that have outstanding budgetary debts. 

Article 6. 

(1) A presentation file shall be prepared prior to the sale, depending on the privatization method and the offered block of shares, in line with the Methodological Norms issued for the implementation of this Law.

(2) The presentation file shall also state the industrial and intellectual property rights. The Company’s unique administrator, board of administration or general director, as applicable, shall provide in the form of a notarized statement on their accountability the data and information on company’s economic, financial, legal and patrimony status that are stated in the presentation file or the offer. 

(3) Should the public institution involved decide to sell the shares by public offer or specific capital market techniques, on domestic or foreign stock exchanges or other formal markets, the offer shall be drafted in compliance with the legal regulations in force for the capital market.

(4) For the sale of block of shares accounting for up to 5% of the companies’ share capital, a simplified company profile shall be prepared by the public institution involved.

Article 7. 

(1) The sale shall be preceded by a sale advertisement or sale offer valid for minimum 30 days but not more than 180 days from the date of publication. 

(2) The public institution involved may decide, on good grounds, to extend the validity of the sale offer for successive periods that cannot exceed 30 days each and which cannot sum up to more than 180 days. 

Article 8. 

(1) For the sale of blocks of shares that account for over 33%, the public institution involved or the privatization agent have the obligation to apply for the issuance of budgetary liabilities certificates to determine the outstanding liabilities of the companies undergoing privatization. 

(2) The territorial offices of the Ministry of Public Finance, for the state budget, and the other ministers and institutions, for the state social security budget, special funds, as well as the local public administration authorities, for the local budgets, shall issue budgetary liabilities certificates within 30 days from application’s registration, these representing the exclusive proof of the respective budgetary debts of the company. 

(3) Budgetary liabilities certificates shall be issued free of charge. 

Article 9. Exceptionally, subject to national or international economical and political circumstances, to the interest taken by potential buyers or to other circumstances that may adversely impact the outcome of a specific privatization process, the management of the public institution involved may decide to alter or cancel the sale offer, as well as to amend the privatization method, according to the principles of the law herein, under the terms provided by the methodological norms issued for its implementation. 

Article 10.  

(1) An association of employees, members of the administration board or pensioners who retired from a company may acquire shares/quotas in the respective company 

(2) The sale shall be achieved by any of the techniques provided for at Art. 13 of GEO No.88/1997 regarding the privatization of companies approved by Law no. 44/1998, as amended and completed, subject to the provisions of Art. 5 par.(1) of this Law. 

Article 11.  (1) To speed up the privatization process, the public institution involved shall ensure the access of prospective investors in the company prior to the sale of the presentation file, in order to help them make an opinion on the company, aiming to shorten the time of decision making upon the acquisition of the block of shares that will be offered for sale in the respective company. 

(2) The information made available by the company shall be only general public data, and the visits shall be basically technical in character, to allow investors to assess the current situation of the company, its post-privatization prospects and the minimum investment requirements. 

(3) After the sale of the presentation file, upon the prospective buyer request, subject to the terms of the Methodological Norms issued for the implementation of this Law, the public institution involved and the company undergoing privatization have the obligation to ensure free access to all but confidential data and information on the company’s operations so that he effects its own company assessment report.

Article 12.

(1) All companies, irrespective of the structure of the share capital, for which no land ownership certificate was issued, will prepare and submit to the institutions entitled to issue land ownership certificates, within 60 days after the law herein comes into force, all documentation needed in view of obtaining such a certificate. 

(2) The institutions entitled to issue certificates of land ownership have the obligation to issue these documents within 15 days from date of application and to  send a copy thereof to the public institution involved within 5 day from issuance. 

(3) Companies’ administrators have the obligation to apply for the registration of the capital increase with the Registry of Commerce within 30 days of issuance of the certificate. 

(4) In case the administrators do not request the registration of the share capital increase within the deadline provided in paragraph (3), the Office of the Registry of Commerce will register the increase upon the request of the public institution involved. 

(5) If the issuance of the certificate of land ownership was not accompanied, before privatization, by the appropriate capital increase, or if the certificate is issued after privatization, the share capital shall be increased by law with the value of land, which will be considered as contribution in kind of the state or of a local administration entity, as applicable, in exchange of which additional shares shall be issued, to be held by right by the public institution involved. 

(6) If the share capital is increased with the value of land subsequent to the privatization of the company, its buyer or the lawful successor thereto shall enjoy preference rights for the purchase from the public institution involved of a percentage of the newly issued shares that will ensure him an equal participation in the share capital as before the capital increase with the land value. 

(7) The buyer or lawful successor thereto may exercise its preference within 15 days of registration of the share capital increase. 

(8) The selling price for the additional shares issued in respect of the land, in case the preference is exercised, shall be the offer price determined by the public institution involved, in conformity with the methodological norms issued for the implementation of this Law. The shares shall be paid in full or in installments. The transfer of the ownership rights over the sares shall occur when the shares are fully paid up. 

(9) If no preference is exercised within the deadline provided by paragraph (7), the block of shares in respect of the land may be sold by the public institution involved by any of the techniques provided by Government Emergency Ordinance No.88/1997, as amended and completed. 

(10) Until the expiry of the deadline for the exercise of the preference, the voting rights given by the shares issued as provided at (5) shall be suspended. 

Article 13. 

(1) With a view of accelerating the privatization process, within ten days the company files the required documentation, the relevant environmental authority shall issue the environment notice for privatization. Should the notice is not issued within the deadline, the commercial company shall be deemed to operate in compliance with the legal provisions in force on environmental protection. 

(2) The public institution involved has the obligation to include in the presentation file or, as the case may be, in the public offering prospectus the environment obligations and liabilities established by the environmental notice, based on the information included in the environmental audit accepted by the competent environment authority. 

(3) The provisions at (1) shall apply also to the sale of assets owned by a company or regie autonome the operations of which are assessed by the laws in force to impact the environment. 

(4) The issuance/review of the environment notice is free of charge for the companies in red in the last financial year. 

Section II

Increase of Share Capital  by Private Capital Contribution 

Article 14.      

(1) The public institution involved may decide to propose in the General Shareholders’ Meeting the reduction of the state’s shareholding in companies by issuing a public offer for the increase of the share capital of such companies.                       

(2) The public offer shall be made after a feasibility study requested by the public institution involved indicated the capital requirements. 

(3) The share capital shall be increased by a contribution in cash or in kind with state or the art technological equipment, according to the feasibility study and to the provisions of the methodological norms issued for the implementation of the law herein. 

(4) Should the public institution involved decide, on the basis of the feasibility study, to increase the share capital, with a view to support the company, the general meeting of shareholders shall give to current shareholders preferred rights to subscribe within ten days from the issuance of the offer. 

(5) Any interested investor may subscribe for both the shares that would be claimed by the public institution involved and for the shares that would have gone to the shareholders that chose not to exercise their preferred rights. 

(6) As an exception to Law No.31/1990, should the public institution involved decide to divest the state participation by capital increase, a general meeting shall be called within two business days of making the decision and held within five days of its public notice. 

(7) A shareholders’ general meeting decision to increase the share capital may be appealed within five days of its being made public. 

Section III

Assignment of Social Assets at a Price or For Free 

Article 15.

(1) Companies in which the state or a local public administration authority has a stake in may either assign social assets for free and with priority to public institutions and central or local public administration authorities or sell them to any other interested natural or legal person, except for those that were claimed under the provisions of Law no. 10/2001 regarding the legal status of some buildings abusively taken over between March 6, 1945 – December 22, 1989, as subsequently amended. 

(2) Should the company decide to apply the provisions set forth at par. (1), the general meeting of shareholders shall be called within two business days of making its decision and held within five days of advertising it. 

(3) The general meeting shall decrease the share capital from the stake held by the state or local public administration authority, in case of transfer for free.

CHAPTER III

Special Measures in the Privatization Process

Article 16.  

(1) Special administration is established at the companies in which the state has a majority stake and which are being privatized, by order of the minister of the public institution involved or decision of the head of the local public administration authority. 

(2) Special administration during the privatization period means management of company affairs by virtue of a mandate given by the public institution involved, to a special administrator. 

(3) The mandate given by the public institution involved shall define the way the company is to be governed and managed, and the actions to be taken to speed up the privatization process. 

(4) Subject to the economic and financial situation, and the privatization strategy applicable to each company, the mandate shall also specify the extraordinary actions to be taken prior to the public sale advertisement, with special reference to: 

a)      Spin off, mergers, asset sales

b)      Workouts with/without layoffs

c)      Externalizing/transfer of activities and/or social assets

d)      Certain, liquid and due debts swap into shares;

e)      Observing the economic and financial discipline and of rescheduling schemes for the outstanding debts to the services suppliers that were drafted according to paragraph (5), letter (a);

f)        Any other actions that may make companies more attractive to privatize 

(5) As soon as the special administration procedure is established at a company, the following exceptional provisions take effect

a         no regie autonome, national company, national society, of fully state-owned company that supplies power, natural gas, water, and such basic services for the operation of a company may alter, deny or temporarily cut the supply of such services to a company undergoing privatization. The company has to request an outstanding debts rescheduling scheme with the services suppliers, to pay its current billings recorded after introducing the special administration procedure as well as the installments agreed according to the rescheduling scheme. In case the company fails to pay its current billings and the installments according to the rescheduling scheme, the services suppliers can cut the services 

b        budgetary creditors, upon request of the special administrator, shall lift all encumbrances on the company assets that are to be sold, externalized or transferred to make the company more attractive for privatization, and the proceeds from the sale of assets are distributed pro rata to the budgetary creditors that instituted the encumbrances according to the methodological norms issued for the implementation of the Law herein. 

c         budgetary creditors shall discontinue, until the transfer of the ownership over the shares, any enforcement action that may have been taken against the company and initiate no further similar proceedings. 

(6) The special administration in the privatization period ends when share ownership rights are assigned, in the case of completion of a privatization, or at such a date as determined by order or decision. 

Article 17.  

(1) Within 30 days of establishing a special administration at the companies slated for privatization upon the request of the public institution involved, the receivables owned by the Bank Asset Resolution Authority – AVAB – on such companies shall be swapped into shares. 

(2) The resulting shares shall be conveyed on the basis of a protocol to the public institution involved to sell them along with its own stake of shares and at the same price. 

(3) The proceedings of the sale shall be divided between the two institutions pro rata with the number of sold shares, after deducting the expenses incurred by the public institution involved. 

Art. 18. – (1) The public institutions involved and the budgetary creditors shall grant to majority state-owned companies under privatization, upon request of the involved public institution, the following incentives that will be depicted in the presentation file:

a)      total or partial exemption from payment of the budgetary liabilities overdue as of December 31, 2001, consisting in taxes, duties, contributions and other budgetary incomes, as well as those arisen from the own receivables of the involved public institution or from budgetary credits administrated by the same. In case of partial exemption, the balance shall be repaid in installments, according to the schedule approved by the budgetary creditor, respectively the involved public institution, as the case may be.

b)      total or partial exemption from payment of the liabilities owed to local budgets, overdue as of December 31, 2001, consisting in taxes, duties, contributions and other incomes, as well as those arisen from the own receivables of the local public administration authority or from budgetary credits administrated by the same, that may be granted by decision of the local council. In case of partial exemption, the balance shall be repaid in installments, according to the schedule approved by the local public administration authority.

c)      exemption from payment of the delay increases and penalties of any kind related to the budgetary liabilities due and unpaid as of December 31, 2001, that are specified in the budgetary liabilities certificates issued on date the share sale-purchase contract is executed. 

 (2) Provisions of par. (1) letter a) do not apply to the overdue budgetary liabilities owed by the companies to the Health Insurance Fund, for which the following incentives are granted:

a)          payment rescheduling of the overdue budgetary liabilities consisting in the contribution to the Health Insurance Fund, over a 5-year period with a 6 months grace period, part of the rescheduling period.

b)          Exemption from payment of the delay increases and penalties related to the liabilities provisioned at letter a). 

(3) The National House for Health Insurance, by chairman order, establishes the payment rescheduling terms and determines the amounts representing delay increases and penalties related to the liabilities provisioned at par. (2). 

(4) Provisions of par. (1) and (2) do not apply to overdue budgetary liabilities representing contribution for additional pension, individual contribution for social insurance, employees’ contribution of 1% to the Unemployment Fund as well as employees’ contribution of 7% to the Health Insurance Fund, customs suspended VAT, tax on salary income, tax on dividends and other withholding taxes, that will be repaid in installments according to the schedule approved by the budgetary creditor administrating the respective income. 

(5) The incentives provided by par. (1), (2) and (3) become invalid if the ownership right over the shares is not transferred. 

(6) The payment incentives provisioned by par. (1), (2) and (3) become also invalid if the company fails to repay its current budgetary liabilities in each fiscal year that are due starting with the first day of the month after the present law becomes effective. . In case the company fails to repay on maturity its current budgetary liabilities, then the company may repay them in maximum 90 days, together with the related delay increases and/or penalties, but not later than December 20 of each fiscal year. 

(7) The failure to abide to the approved terms and conditions for granting the incentives provided by par. (1), (2) and (3) causes their cancellation, the start or resuming, as the case may be, of the foreclosure procedure in respect of the entire unpaid amount and the obligation to pay the delay increases and penalties applied from date when terms and/or conditions were breached.

(8) The amounts for which incentives provided by par. (1), (2) and (3) do apply are the ones determined in the budgetary liabilities certificates issued according to the provisions herein, based on controls, by the territorial bodies of the Ministry of Public Finance, Ministry of Labor and Social Solidarity, National House of Health Insurance and the public administration local authorities in case of local budgets, as well as in the notifications issued by the public institution involved, that are updated until execution of the share sale-purchase contract. 

(9) Crediting ministries and central or local public authorities shall issue the budgetary liabilities certificates attesting the amounts subject to incentives, within 30 working days from request made by the public institution involved. 

(10) Companies for which share sale-purchase contracts were concluded after December 1, 2001, as well as the ones undergoing privatization procedures on the date this Law comes into force, will enjoy the incentives provided in the share sale-purchase contracts or in the normative acts by which the privatization strategies were approved, respectively the rescheduling of the budgetary liabilities over a 5-year period and exemption from payment of the delay increases and penalties of any kind. 

(11) To the amounts representing budgetary liabilities rescheduled for payment, increases are owed and computed according to the legal provisions, payment of such increases being performed together with the respective installment. During the grace period granted within the rescheduling scheme, the increases due according to the law are paid on a monthly basis. 

(12) The payment incentives provided by this article are granted by common order of the budgetary creditors and the public institution involved. 

(13) The criteria for selection and meeting the incentive granting grid are established by the public institutions involved together with the involved crediting budgetary institutions according to the methodological norms issued for implementing this Law. 

(14) By exemption from Law no. 143/1999 regarding the state aid, the Competition Council will issue the legal decision by emergency procedure so that the payment term provisioned by contract is respected.

(15) The suspension of the foreclosure procedure provisioned by art.16 par. (5) letter c) is extended over the period the payment incentives provided by this article are performed. 

Art. 19. – (1) Within 90 days from date the ownership right over the company’s shares is transferred, upon company’s request, the utilities providers – regies autonomes, national companies, integrally state-owned companies – will be able to approve, subject to the agreement of the Ministry of Public Finance  and of others budgetary creditors, the total or partial exemption, the rescheduling over a 3-5 year period or the swap into shares of the certain, payable and due receivables against the company. The buyer within the share sale-purchase contract concluded with the involved public institution will have a preference right over the shares resulted further to the swap. 

(2) In case the consent for the approval of the payment facilities provided in paragraph (1) is obtained, the Ministry of Public Finance can grant similar incentives, in terms of amounts and timelines, to the utilities providers for the payment of debts to the state budget with the facilities given they granted according to paragraph (1). 

Article 20.  In well grounded cases, the public institution involved may shorten by up to two-thirds any timeline provided in this Law as well as in Government Emergency Ordinance No.88/1997 on privatizing companies, as amended. 

Article 21.

(1) By order of the minister of the public institution involved or a decision of the head of the local public administration authority, special administration proceedings may be established also at the commercial companies that do not operate or meet the requirements of Art. 232 of Law No.31/1990, as it was republished, for which the respective measures have not been implemented 

(2) The public institution involved shall specify in its mandate how the company is to be managed and governed, as well as the steps to be taken for its dissolution and liquidation 

CHAPTER IV

Attracting private capital in the field of utilities

Art. 22 – Based on a request for proposals made by the public institution involved, investors may take part in the capital increase of the companies in the field of utilities, having an option right for the purchase of shares stakes. 

Art. 23 – The public institution involved and/or the company, as initiators, will seek to attract private capital in investments for:

a)      carrying out not finished investments;

b)      rehabilitating some economic objective. 

Art. 24 – (1) Attracting private capital in investments can be made through public-private partnership using the following methods:

a)      builds, operates and transfers;

b)      builds, holds and operates.

(2) In the field of energy, the production, transportation and distribution companies as well as the local public authorities, as the case may be, are authorized to conclude long term energy purchase contracts based on the approval of the in line regulatory authorities with the production companies that entered in public-private partnerships, provided the confirmation of ministries involved and local authorities, as the case may be, and the Government’s approval. 

Art. 25 – The initiator has to make public its intention to attract private capital in investments by publishing a request for proposals. 

Art. 26 – The contractual elements negotiated with the investor whose offer was selected according to one of the methods provided by art. 24 will be submitted for approval, as the case may be, to the Government, according to the methodological norms issued for the implementation of the law herein. 

CHAPTER V

Guarantees and Damages That May Be Granted to Buyers

Article 27. The public institution involved may, under the sale purchase contract, indemnify the buyer for damages arisen from environmental liabilities incurred by the company for past activities, undisclosed to the buyer by the public institution involved or by the environmental authority. 

Article 28.  The public institution involved may negotiate and secure the buyer against damages incurred thereto as a consequence of company liabilities, toward third parties included, or losses sustained from actions, acts and operations that were not disclosed to the buyer and may have been unknown to the buyer at the time of company assessment in preparation for its report, even though the cause for such actions, acts and operations did exist at the time the contract was made. 

Article 29.

(1) The public institution involved shall compensate the buyers it has concluded shares sale-purchase contracts with for the damage suffered by them further the restoration in kind of the real estate that had been taken by the state to its former owners by final court rulings. 

(2) The value of the damage provided at (1) shall be determined by common agreement with the buyer, failing which it shall be settled in court. 

Article 30.

(1) In every case, the cumulated indemnifications granted under Arts. 27-29 may not exceed 50 percent of the price effectively paid by the buyer.

(2) The state guarantees payment of these damages by the public institutions involved within the limit provided in paragraph (1).

(3) The provisions of art. 324 of the Government Emergency Ordinance no. 88/1997, approved by Law no. 44/1998 as amended, remain applicable only to the shares sale purchase contracts executed before the law herein comes into force. 

CHAPTER VI 

Special Provisions on the Merger, Spin off, Dissolution and Liquidation of the Companies Subject to Privatization 

Article 31. 

(1) The representatives of the public institutions involved in the general meeting of shareholders of the majority state-owned companies shall ask the board of administration to call a general meeting within 5 days of request to decide on the merger, split, or dissolution and liquidation. 

(2) By derogation from the provisions of art. 117 of Law no. 31/1990, the convocation for the meeting shall be published in a newspaper of national circulation and in another newspaper widely disseminated in the community the commercial company head office is located in at least 3 days before the date of the shareholdersgeneral meeting. 

Article 32.

(1) Within 10 days of approval by the shareholders’ general meeting of the merger or spin off of the company, the board of administration shall finalize the documents required.

(2) A general shareholders meeting decision on the commercial company merger or spin off may be appealed within 5 days of publication. 

(3) The draft merger or spin off plan designed in conformity with Law No.31/1990 on companies as it was republished, shall be filed by the commercial company administrator with the Registry of Commerce within 3 days. 

(4) The creditors of the company that is about to merge or spin off with claims prior to the publication of the merger or spin off plan may state their objection within 5 days of publication of the general meeting’s merger or spin off decision. 

(5) The objection filed in compliance with the provisions at (4) shall be given fast-track  treatment in a competent court.  

Article 33. 

(1) At the time of the dissolution and liquidation decision, the general meeting of shareholders shall end the mandate of the board of administration of the company and designate a unique administrator thereof until a liquidator or a privatization agent is appointed. 

(2) The general meeting decision to dissolve and liquidate the commercial company may be appealed within 5 days of its being made public. 

Article 34.  

(1) Within 2 days of the public notice of the dissolution/liquidation decision, the unique administrator shall notify the company’s known creditors by fast recorded delivery service and place an advertisement in a widely circulated national newspaper as well as in electronic format. The notice and the advertisement shall specify the company’s total debt as supported by the financial and accounting records, the receivables that are fully or partly balanced by the creditor’s payables to the company, the ranking of the claims and the deadline for creditors to state their intention to file a statement of claim. The deadline for filing such statements may not go beyond twenty (20) days from the publication of the advertisement. 

(2) The right of appeal against a receivable claim or amount, or its ranking shall cease after 20 days from the publication of the advertisement.

(3) The creditors’ claims filed with the competent Courts, under the terms of paragraph (2) do not suspend the progress of the liquidation procedures of the companies. 

Article 35.

(1) Filing of the decision of dissolution at the Registry of Commerce entails suspension of  all court and out-of-court cases against the company, the prescription of the creditors’ debt recovery timeline and all enforcement proceedings on the company. 

(2) The general meeting of shareholders may cause the end of the voluntary liquidation upon receipt of a letter of intent from a prospective buyer for the majority stake. Under the circumstances, the share sale-purchase contract shall specify how and when debts are to be repaid. As of the date the general meeting of shareholders makes the decision to end voluntary liquidation proceedings, the company shall be placed under special administration pursuant to Article 16. 

Article 36.

(1) Within ten days of taking office, the liquidator shall compile the list of creditors and made it available to creditors at the company’s head office. 

(2) The right to challenge a receivable claim or amount, or its ranking of priority shall cease in 15 days from the liquidator’s written notice thereof. 

Article 37.  

(1) Assets shall be sold by outcry auction, by sealed bids or negotiation, subject to the provisions of the methodological norms issued for the application of this Law. 

(2) The contract of sale of the adjudicated asset shall be made within 10 business days from adjudication date , failing which it shall be null and void.  The liquidator may extend the term by up to 5 business days.

Article 38.

(1) The liquidator shall make payments toward liabilities to satisfy the creditors, whether or not their claims are falling due, from the proceeds of the sale of company’s movable and immovable assets and from receivables collected from third parties, ranked as follows:

a         to cover the expenses entailed by the sale or liquidation proceedings

b        to pay the salaries for up to 6 months before the general meeting’s decision of dissolution/liquidation was filed with the Registry of Commerce.

c         to satisfy the secured creditors who were given a securities interest over the company’s movable or mortgage over the immovable property from the proceeds of the sale of such property. These provisions shall apply also to special privileges

d        to pay the outstanding debts to the state and local public administration authorities consisting in taxes, charges and other fiscal liabilities, pursuant to the law, in contributions to the state social insurance and in contributions to the special funds

e         to pay the state receivables arisen from the amounts paid by the Ministry of Public Finance for executed guarantees granted for domestic and foreign credit, as well as for state-contracted foreign loans wherefrom subsidiary loans were made to the company.

f          to pay the debts accrued from state loans, including for payment of the debts arising from  the loans made to pay the gas and electricity bills in conformity with the regulations in force at the time of lending, as well as from the credits extended to the company by a partner or shareholder that represented the state, including those accruing from transfers made by it for free

g         to pay unsecured creditors

h         to pay the shareholders

(2) No proceeds may be distributed to creditors unless the decisions to the requests made in conformity with Article 36 (2) are final or unless the appeals to such decisions have been resolved. 

CHAPTER VII

Resolution of Disputes 

Article 39. An application to challenge an operation or action provided in this Law and Government Emergency Ordinance No.88/1997 on companies’ privatization approved by Law No.44/1998, as amended, or to exercise a right granted thereby shall be made within one month of the applicant’s awareness, or required awareness,  of the operation, or of the granting of the right, except for the applications for the enforcement of liabilities arising from the sale-purchase contracts for the shares of companies in the portfolio of the public institution involved or from the termination of such contracts, to which the general prescription term applies. 

Article 40.

(1) The applications for the re-examinations of an operation or action provided in this Law and Government Emergency Ordinance No.88/1997 on privatizing commercial companies approved by Law No. 44/1998, as subsequently amended, are to be handled by commercial departments of tribunals as urgent and priority cases. 

(2) If the parties have good reasons to press their inability to fully prepare their defense, the court may make an exception and postpone the hearing just once for no more than 5 days. 

(3) The court shall make its judgment within 3 days of the hearing and notify it to the parties within 5 days of making it. 

Article 41.

(1) Share sale - purchase contracts concluded by the public institution involved as part of the privatization process are enforceable if buyers default on their money related obligations. Securities interest concluded between the public institution involved and the buyer also represent writs of execution 

(2) The notice sent by the public institution involved to the buyer on contract dissolution by the effect of the resolutive agreement is the writ that serves as a basis for re-registration as shareholder of the public institution involved at the private independent registry of the commercial company’s  shareholders and at the Registry of Commerce, no further formalities being required. 

CHAPTER VIII 

Privatization Agents 

Article 42. 

(1) In order to speed up the privatization process, the public institutions involved may assign specific rights and powers to privatization agents under a mandate. 

(2) Privatization agents shall report on their activities to the assignor public institutions involved, on request, and shall have exclusive right to carry out the tasks assigned to them during their mandate. A mandate may be given for the privatization/workout/liquidation of a company or of company pools included in special privatization/workout/liquidation programmes and selected by the public institution involved in conformity with the methodological norms issued for the application of this Law for the sale of either shares or assets. 

(3) Public institutions involved cannot mandate the privatization agents with the attributions under art. 16. 

Article 43. Within 15 days of receiving the privatization advisor’s proposed plan for share/assets sale, the assignor public institution involved shall either conclude the share/asset sale purchase contract or else give its reason for turning the proposal down. 

Article 44. Pursuant to the provisions of this Law, privatization agents shall, in exercising their powers in respect of a company or companies pool, act in the name and on behalf of the public institutions involved and enjoy, under the mandate they were given, every right associated with the activities of such companies, including the exercise of powers and special benefits granted to the public institutions involved under this Law and the methodological norms issued for its implementation, except for the right to claim dividends and any preference rights. 

Article 45. The public institution involved shall choose from a short list of bidders for mandate contracts pursuant to the methodological norms issued for the implementation of this Law. Invitations shall be sent out only to those potential privatization agents pre-qualified by the public institution involved on the basis of a given set of selection criteria. Irrespective of whether they act individually or in association, the said  privatization agents, , have to meet a minimum of qualification standards. 

Article 46. As an exception to Government Ordinance No. 79/1999 on the organization of legal workout and liquidation practitioners, privatization agents may also engage in winding-up operations and distribution of the company’s patrimony. 

CHAPTER IX

Final and Transitory Provisions

Article 47. 

(1) In the case of companies declared closed end companies according to the law regulating the capital markets, the public institutions involved may sell their shares by any method provided at Article 13 of Government Emergency  Ordinance No.88/1997, as amended, whatever the provisions of the articles of association are. 

(2) The shareholders of the commercial companies referred to at (1) shall exercise their preference right to buy shares as laid down in their articles of association within 15 days of the public notice of sale by the public institutions involved, failing which the public institutions involved shall sell their stock by any of the techniques provided herein to any prospective buyer. 

(3) The public institutions involved shall sell the stock of closed end companies by any technique provided herein also where the other shareholders enjoying preference rights have exercised that right, but either the sale was not concluded or they have refused three times in succession to give the public institution involved their agreement to sell shares to third parties, should such agreement be required by the articles of association. 

Article 48. For the companies undergoing the privatization process as of the date the law herein comes into force, the special administration procedure is lawfully introduced for the privatization period. 

Article 49 – The undergoing privatization techniques and asset sale procedures as of the date the law herein comes into force, shall continue, according to the provisions herein, with the past actions and phases acknowledged as valid. 

Article 50.  

(1) The companies where the state or a local public administration authority is a majority shareholder may participate with capital contribution to the set up of joint ventures, Romanian legal persons.

(2) The set up of joint ventures will be made by association with legal or natural persons with majority private capital.

(3) The newly created joint venture will have a preference right over the purchase of the assets, fixed assets and tangible and intangible assets of the founding company, where the state or a local public administration authority is a majority shareholder and which are necessary and directly concur to the establishment of the core activity of the joint venture.

(4) The joint venture may exercise its preference right within 15 calendar days after notification on the sale intention is sent to the founding company where the state or a local public administration is a majority shareholder.

(5) In case the preference right is not exercised the founding company where the state or a local public authority is a majority shareholder will be able to sell its goods provided in paragraph (3) according to the legal provisions in force.

Article 51.       The expenses of the public institutions involved include the following:

a)      the organization and operating expenses which, in the case of public institutions involved, other than the Authority for Privatization and Management of State Ownership and the Office of State Ownership and Privatization in Industry are limited to those made for the purpose of privatization;

b)      the expenses related to the payment of the fees for consultants, privatization agents or law firms and those for preparing and carrying out companies’ privatization. Upon the proposal of the public institution involved, by Government Decision, these expenses can be supported by the company subject to privatization

c)      expenditure for the preparation of privatization and post-privatization appraisal reports, expert reviews, bails, assessments in the case of disputes, fees paid to law enforcement officers, compilation of the documentation required for the environmental permits and similar;

d)      the costs involved in the voluntary dissolution and liquidation of companies 

e)      the contribution of the public institutions involved to the increase of the share capital in selected companies as the law provides

f)        payments effectively made to buyers by the public institution involved in security interests and/or damages paid to buyers to address or resolve their claims, as well as the indemnification payable under Arts. 27-29 herein

g)      expenditure aimed at co-funding PHARE projects, including those being implemented by the public institutions involved as of the date of effectiveness of this Law 

Article 52.  The Authority for the Privatization and Management of State Ownership has its head office in the city of Bucharest at 50, captain Alex. Serbanescu St., district 1. 

Article 53

(1) Within 30 days after Law herein comes into force, the Authority for Privatization and Management of State Ownership, the Ministry of Public Finance, the Ministry of Labor and Social Solidarity, the Ministry of Industry and Resources will draft and submit to the Government for approval the methodological norms for its implementation.

(2) Breaching the provisions of the law herein represents a contravention if not committed in such a manner as to be qualified, according to penal law, as infractions.

(3) The methodological norms for implementation of the law herein will provide clauses regarding the sanctioning regime for the actions whose violation represents a contravention, the fees to be applied, as well as the authorities empowered to enforce the respective measures. 

Article 54 – The provisions herein are supplemented with those of the Government Emergency Ordinance no. 88/1997 

Article 55 – The provisions herein are to be applied to all public institutions involved in the privatization of companies where the state is a shareholder. 

Article 56. 

(1) When this Law takes effect, the following provisions are abrogated: paragraph (14) of art. 82 of Government Ordinance no. 11/1996 regarding the execution of budgetary debts, published in the Official Gazette of Romania, part I, no .23/31.01.1996, approved by Law no. 108/1996, as subsequently amended and completed;, Letters a,c,k and l of Art. 3, Art. 42, Art. 6, Art. 7, paragraph (2)  and (3) of Art. 9, , paragraph 4 of Art. 13, paragraphs 1,3,4, 5,6,8 and 9 of Art. 14, Art. 152,  Art. 19,  paragraphs 2,3,4 and 5 of Art. 31, section I of Chapter V2, paragraphs 2,3 and 4 of Art. 322, Art. 323, Art. 324, paragraphs 1, 2 and 3 of Art. 329, Arts. 3210, 3211, 3212, paragraphs 1 and 3 of  Art. 3213, Art. 3214  , paragraph 2 of Art. 3215, Art. 3217, paragraph 2 of Art.3218, paragraphs 1 and 3 of Art. 3219 , paragraphs 1 and 4 of Art 3221, Art. 3228, Art. 3231, paragraphs 1 and 2 of Art. 342, Art. 343, paragraphs 1, 2 and 3 of Art. 344 and Art. 41 of Government Emergency Ordinance No. 88/1997 on privatizing commercial companies published in the Official Gazette of Romania, part I, no. 381/29.12.1997 made into Law No.44/1998, as subsequently  amended and completed, as well as any other contrary provisions. 

(2) As of the date the Law herein comes into effect, paragraph (2) of art. 1 of Government Emergency Ordinance no. 296/2000 regarding the establishment of the Authority for Privatization and Management of State Ownership, published in the Official Gazette of Romania , Part I, no. 707 of December 30, 2000, approved with amendments and completions by Law no. 225/2001, published in the Official Gazette of Romania, part I, no. 229/04.05.2001, is abrogated. 

This law was adopted under the terms of art. 113 of Romanian Constitution, upon Government’s undertaking the responsibility before the Chamber of Deputies and Senate, in the joint session of ………, 2002. 

PRESIDENT OF THE CHAMBER OF DEPUTIES

Valer DORNEANU

PRESIDENT OF THE SENATE

Nicolae VACAROIU


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