Introduction: why minority shareholders protection matters
Minority shareholders play a vital role in the corporate ecosystem, contributing capital, oversight, and long-term value. Yet, in closely held Romanian private companies, minority shareholders are often exposed to governance risks—particularly when majority stakeholders use their control to marginalise or override minority interests.
Under Romanian company law, minority shareholders are not without protection. A well-established legal framework provides specific remedies for shareholder disputes, offering tools to address abuses of power, lack of transparency, or decisions that conflict with the company’s interests.
This article explores how minority shareholder rights in Romania are protected by law and what legal mechanisms are available when those rights are threatened.
Legal framework for minority shareholders protection in Romania
In Romania, the primary legislation governing private companies is Law No. 31/1990 on Commercial Companies, which sets out the corporate governance rules applicable to limited liability companies (SRL) and joint stock companies (SA).
Minority shareholders—typically defined as those holding less than 50% of shares—benefit from a number of legal safeguards, particularly in the areas of information rights, decision-making, and judicial remedies. These protections are further supported by provisions in the Civil Code, Company Law, and, in some cases, jurisprudence developed by Romanian courts in commercial litigation.
Information rights and transparency obligations
One of the most fundamental rights of minority shareholders is access to information about the company’s activities and financial position. According to Romanian Company Law, shareholders have the right to:
- Inspect corporate records, including financial statements and meeting minutes
- Request explanations from directors regarding company operations
- Receive timely notification of shareholders’ meetings and proposed decisions
Failure by majority shareholders or directors to provide access to such information may constitute grounds for legal action. Romanian courts have upheld the right of minority shareholders to seek disclosure where refusal appears abusive or obstructive.
Blocking or challenging shareholder resolutions
While majority shareholders can typically pass ordinary resolutions, Romanian law provides minority shareholders with the right to challenge decisions that are unlawful, abusive, or contrary to the company’s best interests.
According to Article 132 of Law No. 31/1990, any shareholder has legal standing to request the annulment of a shareholders’ resolution if it was adopted in breach of the law or the articles of association, if it infringes upon an individual shareholder’s rights, or if it serves the private interest of a specific group to the detriment of the company’s general interest.
These legal actions must usually be initiated within 15 days from the date the resolution was adopted. In practice, Romanian courts will examine both procedural irregularities—such as lack of quorum or improper notification—and substantive issues, including unjustified share dilution or preferential treatment that harms minority shareholders.
Minority shareholders’ thresholds and intervention rights
Romanian law also establishes specific minority thresholds that allow shareholders to take certain actions even in the absence of majority support.
For example, shareholders who hold at least 5% of the company’s shares may request the convening of a general meeting. In the case of limited liability companies (SRLs), any shareholder—regardless of their stake—has the right to propose items for the meeting agenda or to contest decisions they believe are unlawful or damaging to the company.
Additionally, minority shareholders may petition the court to appoint a judicial administrator in situations involving governance deadlock or conflicts of interest. These rights function as institutional safeguards, helping to balance corporate power and promote responsible, transparent governance—particularly in businesses with a concentrated ownership structure.
Legal remedies for abuse of majority control
In more serious situations, minority shareholders may initiate legal action for abuse of rights or minority oppression, particularly when decisions made by the majority consistently harm the company’s interests or unjustly infringe upon the rights of other shareholders.
This can occur, for instance, when dividends are repeatedly withheld despite the company’s profitability, when minority shareholders are excluded from strategic decisions or their shares are unjustifiably diluted, or when directors receive preferential treatment or engage in related-party transactions without proper disclosure or consent.
In such cases, the legal remedies available may include the annulment of the contested resolutions, financial compensation for the affected shareholders, or—in extreme circumstances—company dissolution or enforced exit mechanisms to protect the aggrieved party.
Navigating shareholders disputes in Romania
While the majority rule principle governs most corporate decisions, Romanian corporate law provides meaningful protection to minority shareholders—especially when majority actions cross into the territory of abuse or violate governance standards.
Minority investors in Romanian companies should be proactive in asserting their legal rights, understanding meeting procedures, and documenting any instances of exclusion or mismanagement. At the same time, majority shareholders and directors must remain aware of their fiduciary duties and legal limits, as failure to observe these principles can result in liability and the reversal of corporate actions.
At Iorgulescu-Legal, we advise both minority and majority shareholders in governance disputes, resolution challenges, and risk prevention strategies. If you are involved in a shareholder conflict or wish to strengthen minority protections in your company structure, our team is here to help.