Commercial Companies.

Introduction
The commercial companies are regulated by Law no. 31/1990 on commercial companies,
republished, amended and completed, which is the general law that regulates the matter. Beside
this general law, there are special laws which regulate specific companies, such as banking
companies, insurance companies and so on. These provisions are to be completed by the Civil
code.
The Law no. 31/1990 regulates the following types of companies:
general partnership;
limited (sleeping) partnership;
limited (sleeping) partnership by shares;
limited liability company;
company by shares or joint stock company.
It contains general rules that are applicable to any commercial company and special rules related
to each category of commercial companies.

The definition
The commercial companies are not defined by the Law no. 31/1990 . In this case, we have to
look for a definition in the Civil Code. The Civil Code regulates the company contract.
Thus, according to article 1881 Civil Code, the company is a contract by which two or more
persons (the associates) agree to put together some goods in order to perform together a certain
activity for the purpose of obtaining and sharing the profits.
This definition refers to the contract, but certain elements may also be used for defining the
commercial company.
Features of a commercial company:
it is set up by a company contract;
the existence of a common fund, constituted by the contributions of the members;
the goal of the associates is to obtain and share the benefits;
affectio societatis, meaning the will of the associates to participate in the performance of the
common activity and the common use of contributions and capital in order to obtain profits.
the economic activity of the commercial company
the commercial company has legal personality, it is a legal person.
As a consequence, taking into account all these elements, the definition of the commercial
company is the following:
The commercial company is a group of persons, set up by a company contract and having legal
personality, in which the associates agree to put together some goods in order to perform
economic activity for the purpose of obtaining and sharing the profits.

The juridical forms of commercial companies

According to article 2 form the Law no. 31/1990 republished, the commercial companies can
only be set up in one of the following juridical forms: general partnership; limited (sleeping)
partnership; limited (sleeping) partnership by shares; limited liability company; company by
shares (joint stock company). Thus, it is not possible to constitute a commercial company in
other form than those provided by article 2 from the Law no. 31/1990 republished.
The differences between the forms of commercial companies are determined by the extent of
liability of associates for the debts of the company.
Therefore:
a. the obligations of the general partnership are secured by its patrimony and the unlimited and
joint liability of all associates.
b. the limited partnership has two categories of partners: active partners and sleeping partners.
The obligations of the limited partnership are secured by its patrimony and the unlimited and
joint liability of active partners; the sleeping partners are liable only within the limits of their
contribution to the capital of the partnership;
c. the limited partnership by shares has also two categories of partners: active partners and
sleeping partners. Its registered capital is divided into shares and its obligations are secured by
the patrimony of the partnership and the unlimited and joint liability of active partners; the
sleeping partners are liable only within the limits of their contribution to the capital of the
partnership;
d. concerning the company by shares, its registered capital is divided into shares and the
obligations of the company are secured by its patrimony; the shareholders are liable only within
the limits of their contribution to the registered capital of the company;
e. the obligations of the limited liability company are secured by its patrimony and the associates
are liable only within the limits of their contribution to the registered capital of the company.
However, the persons who want to set up a commercial company are free to choose between the
five juridical forms provided by the law. The juridical form chosen by the associates must be
mentioned in the constitutive contract of the company. After choosing the juridical form of the
company, the associates are bound to observe the legal provisions which regulate the setting up
and the functioning of that type of company.

The classification of commercial companies

The commercial companies are classified according to several criteria.
1. the most important is the criterion of their nature and the prevalence of personal element
or the material element.
According to this criterion, the commercial companies are divided in two categories:
companies of persons
companies of capitals.
The companies of persons are those commercial companies set up by a small number of persons
taking into account the mutual trust between partners and their personal qualities (intuituu
personae). The general partnership and the limited partnership are companies of persons.
The features of the companies of persons are the following:
a small number of partners;
the liability of the partners for the debts of the company is unlimited and joint. Unlimited
liability means that regardless of his contribution to the registered capital of the company, each
partner is liable for the debts of the company with his own patrimony. Joint liability means that
in the case the commercial company does not pay a debt, any partner can be obliged to pay the
whole amount. However, there is an exception, concerning the sleeping partners of a limited
partnership. Thus, the liability of the sleeping partners for the debts of the partnership is limited
to their contribution to the registered capital.
the registered capital is divided into parts of interest which are not negotiable. They can be
transmitted only under restrictive conditions.
the partners are allowed to contribute with their work to the registered capital of the company.
It means that the undertaking of a partner to perform a certain work on behalf of the company is
considered as a contribution to its registered capital.
the companies of persons are dissolved when they are reduced to a sole partner because of the
bankruptcy, incapacity, exclusion, withdrawal or death of the other partners.
The companies of capital are those commercial companies that are set up by a great number of
associates taking into account only the actual contribution of the associates to the capital of the
company. Thus, the personal qualities of the associates are not important. The limited partnership
by shares and the company by shares are included in this category.
The features of the companies of capital are the following:
a great number of shareholders;
the liability of the shareholders for the debts of the company is limited to their contribution to
the registered capital. There is an exception concerning the active partners of a limited
partnership by shares. Thus, the liability of the active partners for the debts of the partnership is
joint and unlimited.
the registered capital is divided into shares which are negotiable and can be transmitted freely;
 the shareholders are not allowed to contribute with their work to the registered capital of the
company. Thus, the contribution to the registered capital of a company of capitals may be in kind
or in money.
the bankruptcy, incapacity, exclusion, withdrawal or death of a shareholder does not produce
any consequence concerning the dissolution of the company.
We should mention that the limited liability company cannot be included in one of these two
categories. Thus, like the companies of persons, the setting up of a limited liability company is
based on the trust and the personal qualities of the associates.
This feature requires the limitation of the number of associates and restrictive conditions for
transmitting the social parts. However, the liability of the associates is limited to their
contributions to the registered capital, as for the companies of capital.

2. the criterion of the structure of registered capital.

According to this criterion, the commercial companies may be divided in two categories:
commercial companies in which the registered capital is divided into parts of interest such as
the general partnership, the limited partnership and the limited liability company. According to
the Law no. 31/1990 republished, the parts of interest of a limited liability company are called
social parts.
commercial companies in which the registered capital is divided into shares such as the
company by shares and the limited partnership by shares.

3. the criterion of the possibility to issue negotiable instruments (shares or bonds).

According to this criterion, the commercial companies may be:
companies that are allowed to issue negotiable instruments, such as the company by shares
and the limited partnership by shares.
companies that are not allowed to issue negotiable instruments, such as the general
partnership, the limited partnership and the limited liability company.
4. the criterion of the number of associates. According to this criterion, there are:
companies with sole associate such as the limited liability company with sole associate;
companies with two or more associates, such as all the other types of companies.