On What Grounds Can a Shareholder Be Excluded from an LLC?

Grounds for Shareholder Exclusion from an LLC

Article 222 of Legea nr. 31/1990 (Companies Law No. 31/1990) provides the following grounds for exclusion:

• The shareholder fails to make the contribution to which they committed
• The shareholder is in a state of bankruptcy or has become legally incapacitated
• The shareholder with unlimited liability wrongfully interferes in management or uses the company's funds and assets without the consent of the other shareholders
• The shareholder-director commits fraud against the company or uses the company signature or share capital for their own benefit or that of others

An important aspect: a shareholder who is not a director cannot be excluded under the general category of fraud against the company. This ground is reserved exclusively for shareholders who also hold the position of director.

ÎCCJ Decision No. 28/2021: The List is Exhaustive

Published in Monitorul Oficial (Official Gazette) on May 26, 2021, ÎCCJ Decision No. 28 of May 10, 2021 (Decision of the Înalta Curte de Casație și Justiție - High Court of Cassation and Justice) established that the grounds for shareholder exclusion provided by Article 222 of Law No. 31/1990 are not supplemented by the provisions of Article 1,928 of the Civil Code regarding "well-founded reasons."

The ÎCCJ held that the manner in which the legal text is drafted leads to the conclusion that the enumeration it contains is not illustrative, which implies, in the absence of any contrary indication, the impossibility of exclusion in situations other than those regulated.

Thus, there are no scenarios left outside the regulation where the law would allow a shareholder to be excluded from a limited liability company. Therefore, it cannot be considered that the special norm would be supplemented by the general one.

Contractual Exclusion Clauses

Although the legal grounds for exclusion are exhaustive, shareholders have the right to provide for other exclusion clauses in the articles of association. This contractual freedom allows the exclusion mechanism to be adapted to the specifics of each company, provided that these clauses are included from the moment of incorporation or adopted subsequently with the agreement of all shareholders.

Therefore, careful drafting of the articles of association becomes an essential protection tool for shareholders — both for those who wish to prevent deadlocks in the company and for those who want to ensure they cannot be excluded on unregulated grounds.

Author: Atty. Adelina Mares