Applicable sanction regarding the breach of the separation of powers principle within the companies' governance

• Author: Simona Chirica
• Pages: 220-232

Applicable sanction regarding the breach of the separation of powers

principle within the companies' governance

Lecturer SimonaăCHIRICĂ

1

Abstrac t

Compan ies part icipate at the civil circuit by conclu ding legal docu ments.

Accordi ng to the prin ciple regardi ng th e separa tion of pow ers in the company 's

govern ance, a distinctio n must be made between the duties of the compa ny's sharehol ders

genera l assembly and th e duties of the admin istrator. Thus, shareh olders genera l assembly

hold s the delib erative po wer of th e company and d etermines the worki ng strateg y of the

compan y, whereas th e administra tor expresses, ex ecutes the wi ll of t he shareholde rs

genera l assembl y and conc ludes legal documents in the name a nd o n the beha lf of the

compan y. Such l egal do cuments are con sidered the do cuments of the compan y itself. From

the persp ective of the two manag ement bodies, we can ask ourselves wha t is the appl icable

sancti on wh en t he sha reholders g eneral asse mbly decides to nomina te a th ird person to

represent the co mpan y for the signing of a le gal doc ument? From a certain point of view

this represents an extensio n of the legal powers, througho ut the legal d ocuments o f th e

compan y's bodies (inclu ding the sharehold ers genera l assembly's resolu tions) and a breach

of the exclusive duties of the admini strative bod ies of a company. The app licable san ction

regardi ng such lega l documents is no n-existence o f legal acts.

Keyword s: compani es' g overnance, trad e law, sharehold ers, th e separation o f

powers pri nciple.

JEL Cla ssification: K22

1. Preliminary issues

Any legal entity participates at the civil circuit by concluding legal

documents. In order to comply with their activity object, companies are also

participants of this civil circuit. In this regard, companies must fulfill certain

obligations under Law no.31/1990 regarding the Law of Companies, republished

including the subsequent amendments and inclusions ("Companies ' Law")

2

, as

well as the provisions under the New Civil Code ("NCC")

3

. To be more precise,

companies must comply with the legal provisions regarding (i) incorporation,

(ii) registration, (iii) functioning, (iv) dissolution, merger and demerger of the

1

Simona Chirică - Law Department, Bucharest University of Economic Studies,

s.chirica@schoenherr.ro .

2

Law no. 31/1990- Companies' Law, p ublished in t he Official G azette of Romania, no. 126-127

dated 17.11.1990

3

Romanian Civil Code, p ublished in the Official Gaz ette of Romania, no 511 dated 24.07.2009.