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Bogdan Cristian Trandafirescu - The Dualist Management System of A Joint - Stock Company - A Novelty For The Romanian Law
Bogdan Cristian Trandafirescu - The Dualist Management System of A Joint - Stock Company - A Novelty For The Romanian Law
(The 6th International Conference of PhD students, University of Miskolc, Hungary, 12-18 august
2007, Published by University of Miskolc, Inovation and Thechnology transfer centre, ISBN 978-
963-661-783-7 Ö ISBN 978-963-661-782-0 )
ABSTRACT
The dualistic system of administration of a joint - stock company, a novelty for the
Romanian law, is sanctioned for the first time by the recent Law no 441/2006, a law in which
important modifications are made to Law 31/1990 with reference to the commercial companies.
In the present study we are going to analyse the modality of implementing the dualistic system in
the Romanian law ( taking as terms of comparison the specialized German and French
legislations ) and to estimate how this system will be received by the Romanian commercial
practice.
1. GENERAL CONSIDERATIONS
By the Law no 441/20061 important modifications have been brought to the Law of
commercial companies no 31/1990 in the context of the harmonization of the Romanian
legislation with the communitary acquis and with the modern legislations of the European Union
countries. From the numerous novelties brought by Law 441 we are going to deal with the
analysis of the dualistic system of administering a joint – stock company.
Initially, Law 31/1990 consacrated the classic conception regarding the administration of
a joint – stock company ( administration Council and management committee ); Law 441/2006
brings significant modifications to this classic ( monistic ) system and introduces , as an
alternative modality, the dualistic system of administration – the notions of “board of directors”
and “monitoring council” appear for the first time in the content of the law.
The monistic administration system was criticized in the specialized literature2 for the
reasons that a unique authority ( the administration council ) exercises both the function of
management, of directorship and the control of this directorship.
In comparison to the increase of the role of the administration council in the detriment of
the general assembly ( formally the supreme body ), the monistic system of administration tends
to be replaced by the more modern, dualistic system, the latter implying a board of directors (
managers ) and a monitoring council. The board of directors is appointed for a certain period of
time by the supervision council and may engage the company in any kind of legal operations and
1
Law no 441 of 27 November 2006 for the modification and completion of Law 31/1990 regarding the commercial
cocieties republished and of Law 26/1990 regarding the Register of Commerce, Monitorul Oficial , no. 955 of 28
November 2006.
2
CÎRCEI, E. : Societăţile comercilae pe acţiuni, Ed.All Beck, Bucureşti, 1999, p.271; SCHEAUA, M. : Legea
societăţilor comerciale nr. 31/1990.Comentată si adnotată, Ed.All Beck, Bucureşti, 2000, p.302-303.
represents it in court. The supervisors council is elected by the general assembley and has as main
attributions the appointement of the board of directors, the control of its activity, the recalling of
its members and the convening of the general assembly3.
The dualistic system has its origins in the German Law ( the 1937 Law ), the management
of the company being shared, as we showed above, between the directors ( Vorstad ) and the
supervision council ( Aufschtsstrat ). Only exceptionally, this council can intervene for the
authorization of certain very important documents4.
The German System was adopted also by the French legal practice, by the Law 66-537
from 24 July 19665 regarding the commercial companies, but in parallel with the classic system,
the joint – stock companies having the possibility of option between the two types of
administration. At present, the regulation in discussion is included in the French Commercial
Code ( Livre II, Titre II, Chapitre V, Section 2, Sous section 2 – Du directoire et du conseil de
surveillance, Articles L 225-57 à L 225-93) 6.
Although presented as being modern, this system was not as successful in France as it had
been estimated. On the 1st of January 1992, the joint-stock companies administrated by a board of
directors and a monitoring council represented only 1,62%.
This failure was said to be the result of the formalism provoked by the duality of the
bodies and by the difficulty to, practically, separate the management from control. These reasons
even determined some companies which had adopted the dualistic system, to re-adopt the
traditional one 7.
As we mentioned above, the Law no 441/2006 introduces, beside the unitary system (
Art.137 - Art.152 ), the dualistic sustem of administration of a joint – stock company (Art. 153-
Art. 15311).
We must underline, from the very beginning, that the dualistic system is optional, any
company having the possibility of option, between the classic system ( the unitary system,
according to the new terminology ) of administration and the dualistic one. This form of
management can be settled at the establishment of the company, in its constitutive documents or
afterward, consequent to a modification of the constitutive act by the decision of the
extraordinary general assembly ( art 153 let. 1 and 2 ).
In its present form, the Law 441, like the French Law, does not explicitly restrict the
application of the dualistic system only to the joint-stock companies, creating, thus, the
possibility of extending the application of this system to the other varieties of trade-companies.
But now a normative act is being elaborated which is to modify the Law no 441 and which (
among the other provisions ) expressly restricts the application of the dualistic system to the
joint-stock commercial companies, the initial omission being thus corrected.
The regulation under discussion was inspired by the French Law, as results both from the
organisation of the articles and from the very conception ( the spirit ) of the law.
3
ŞTEFĂNESCU, B.; RUCĂREANU, I.. : Dreptul comerţului internaţional, Ed.Didactică şi Pedagogică, Bucuresti,
1983, p.62.
4
SCHEAUA, M.. : Legea societăţilor comerciale nr. 31/1990.Comentată si adnotată, Ed.All Beck, Bucureşti, 2000,
p.302-303.
5
Loi n 66-537 du juillet 1966 sur societes commerciales, J.O. du 26 juillet 1966, http://www.admi.net/jo/loi66-
537.html .
6
http://www.legifrance.gouv.fr/.
7
SCHEAUA, M.. ,op.cit., p.303.
2.1. The Board of directors
The management of the joint-stock company is incumbent upon the board of directors
exclusively, which does everything that is necessary and useful for the achivement of the
company’s object of activity, except those legally reserved for the monitoring council and for the
general assembly of shareholders. The board of directors experts its prerogatives under the
control of the monitory council.
The members and their assignment. The board of directors can be formed by one or
several members ( natural persons ), their number having always to be an odd number. When
there is only one member he or she is called single general manager. We must mention, though,
that in the case of the joint-stock companies whose annual financial accounts must be legally
audited, the board is formed of at least three members.
The assignment of the members is incubent upon the control council which, at the same
time, appoints one of them in the position of President of the Board. The constitutive document
specifies the duration of a director’s mandate, which cannot last longer than four years. The
members of the board cannot be members of the monitoring council at the same time.
The members of the board may be recalled whenever the monitoring council considers it
appropiate; the establishing document may also settle that they can be recalled by the general
assembley of the shareholders as well.
In the case their being recalled occurs without a rightful reason, the members of the board
are entitled to claim compensations-payments. In the case of the vacancy of a position of a
member of the board, the monitoring council shall proceed to the assignment of a new member,
without delay, for the period remaining until the expiration of the mandate.
The relations of the board with the third parties and with the joint-stock company. The
board represents the company in relation to the third parties as well as in Court. If not otherwise
stated in the establishing document, the members of the board can represent the company only
when they are acting together. In the case when the members of the board can represent the
society only by acting together, they can, by their unanimous agreement, mandate one of them to
conclude certain operations or types of operations. The monitoring council represents the
company in its relations with the board.
The obligations of the board to inform the monitoring council. At least once every three
months, the board must present a written report to the monitoring council with reference to the
management of the company, to its activity and its possible evolution.
Besides this periodical information report, the board communicates the monitoring
council, in due time, any information regarding any events that could have a significant impact
upon the situation of the company. The monitoring council can ask from the board any
information considered necessary in exercising its control attributions and may do verifications
and investigations corresspondingly. Each member of the monitoring Council has acces to the
information transmitted to the council. The board of directors presents the annual financial
accounts and its annual report as soon as they have been elaborated. At the same time the board
presents the monitoring council its detailed suggestions regarding the distribution of the profit
resulted from the balance sheet which it is going to present in the general assembly.
3. CONCLUSIONS