Any person wishing to set up a limited liability company (LLC) alone or together with other people must go through certain preliminary steps before submitting the establishment application to the National Trade Register.
Among the necessary documents is the articles of incorporation, perhaps the most important document submitted with the establishment application. Often, the shareholders do not give enough importance to it, often taking a draft of the articles of incorporation that can be found on the Trade Register website, without understanding that in essence the articles of incorporation is a agreement with clauses that regulate the future activity of the company, as well as the relations between the shareholders. In the following, we will present some aspects that must be taken into account when drafting the articles of incorporation.
1. CAEN codes
Usually the shareholders choose to mention in the articles of incorporation a very long series of CAEN codes, but their simple mention in the articles of incorporation does not give the company the right to perform the respective activities. In order to prevent the payment of a fine, the shareholders must ensure that those CAEN codes were mentioned in the model 2 declaration at the establishment and appear as activities that the company can perform at the headquarters, secondary offices or third parties.
2. The continuity clause with the heirs
According to art. 229 of Law 31/1990: “The companies in collective name or with limited liability are dissolved by the bankruptcy, incapacity, exclusion, withdrawal or death of one of the associates, when, due to these causes, the number of associates has been reduced to one”. More precisely, if the articles of incorporation do not stipulate that the company is to be “taken over” by the heirs of one of the shareholders or by the heirs of the sole shareholder, the company must enter into dissolution which has the effect of ceasing its existence. Moreover, in the situation described above, the company will no longer be able to make decisions, as it will not be able to meet the necessary quorum, will no longer be able to honor its existing contractual relations with third companies and will have to take steps to appoint an expert to deal with its liquidation and dissolution
3. The right of preemption in case of cession of the social parts
The establishment of a company is essentially based on the trust that each shareholder has towards the other shareholders, but there are times when, for various reasons, one of the founders wants to sell his business (social shares) to a third party. Depending on its percentage, this approach can substantially affect the company, as decisions can be made according to a certain quorum and a certain number of shares and we have to imagine the situation in which the majority of the social shares is sold. In addition, this assignment is most often made to a person outside the company, and former partners will have to coexist in the life of the company with this new person.
Therefore, it is recommended to mention in the articles of incorporation a right of preemption of the shareholders towards the shares held by the others, so that whenever one of the partners expresses its intention to sell its own shares, the others will have a preemption right to that sale in order to keep and continue the activity of the company with the persons who were from the beginning at its management.
4. Decision making within the company
The company law stipulates that certain decisions regarding the company are taken with a simple majority, absolute or unanimous, depending on the complexity of the decision and the way in which it influences the company. However, the shareholders may provide for more restrictive measures regarding the assignment of shares, revocation of the administrator, change of the object of activity of the company, in order to establish for important decisions (from their point of view) the need to meet the will of the shareholders unanimously. Without meeting the necessary quorum, the decisions will not be able to be taken by the shareholders that hold the majority of the social shares and thus, the minority associations will be able to be protected from this point of view.
5. Cases of withdrawal / exclusion
The legal provision list several cases of exclusion or withdrawal of the shareholders from the LLC, these being exhaustively provided by art. 222 and art. 226, however, considering the legal contractual nature of the articles of incorporation, the parties (shareholders) have the possibility to provide other cases of exclusion / withdrawal, so that it is not necessary to initiate an action in court to decide on the withdrawal / exclusion of one of the shareholders.
That is why it is recommended that the articles of incorporation should be drafted from the beginning in such a way as to provide for the will of the parties and to prevent situations in which the law contains provisions contrary to their will.