ROMANIA Law and Practice Contributed by: Lucian Bondoc, Bogdan Bunrau and Diana Ispas, Bondoc si Asociatii
9. Defensive Measures 9.1 Hostile Tender Offers
laid down in the recently revised Bucharest Stock Exchange Corporate Governance Code emphasise that while the board has a duty of care towards the company and its shareholders, its activity must con - sider the interest of other stakeholders as well. Under certain circumstances, the directors may be liable to other stakeholders. Yet, even in this instance, a third party having suffered damage as a result of an action or omission of the director, should normally sue the company, not the director, to the extent that the direc - tor acted within the apparent limits of his or her pow - ers as a director. If the director acted outside his or her powers as a director, a third party could directly file a claim against the director based on his or her personal tort liability. The rules regarding firms in difficulty may also need to be considered, depending on circumstances. 8.2 Special or Ad Hoc Committees The establishment of ad hoc committees is not com - mon in business combinations in Romania. 8.3 Business Judgement Rule In Romania, courts of law rule on the legality of matters and not on opportunity or business-related aspects. In principle, pursuant to the business judgement rule as regulated under the Romanian Companies Law, directors are deemed to have complied with their duty of care and are exempt from liability if, when adopting a business decision, they reasonably believe that they are acting in the best interests of the company and on In more complex business combinations, particularly those involving the retention of the target company’s management team post deal closure, it is custom - ary for legal, financial and tax advice to be sought on behalf of the managers. 8.5 Conflicts of Interest the basis of adequate information. 8.4 Independent Outside Advice The legislation contains specific provisions in respect of shareholders and directors and potential conflicts of interest, and there have been disputes on such mat - ters – eg, involvement in the decision-making process despite existing conflicts of interest.
Romanian law does not distinguish between hos - tile and friendly offers. Consequently, the rules with respect to the conduct of takeover bids will apply accordingly. Romanian legislation has implemented the board neutrality rule and consequently, from the takeover announcement until the closing of the offer, the board of directors cannot take actions that would affect the possible takeover – ie, they are prohibited from taking any measures that may affect the assets or the objec - tives of the takeover bid, except for ordinary admin - istration measures. 9.2 Directors’ Use of Defensive Measures The board neutrality rule prevents the board of direc - tors from taking any adverse action (except for meas - ures taken in the course of ordinary business) without the specific post-bid approval of an extraordinary gen - eral meeting (EGM) of shareholders. However, directors may seek out another more favour - able bidder (or “white knight”) and attempt to build a defence by expressing a negative opinion of the strat - egy to be implemented by a bidder, or the potential consequences of this strategy, thereby attempting to convince the shareholders to resist the hostile takeo - ver bid. The opinion of the board of directors must be sent to the competent authority, the bidder and the regulated market. 9.3 Common Defensive Measures The most common defensive measure when facing a hostile takeover bid is probably for the EGM of share - holders to empower the board to search for an alter - native bid. 9.4 Directors’ Duties Since directors must comply with the board neutrality rule, their primary duties are to comply with applicable legal requirements in cases of takeover bids seeking to obtain control of the target company. For exam - ple, the board’s should express its opinion within five working days of the receipt of the preliminary offer announcement and may consider convening the EGM
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