Romania’s Constitutional Court (CCR) ruled on February 13 that a new law that eliminates corporate governance principles from over 100 state-owned companies is unconstitutional.
According to CCR, the Parliament didn’t follow all legal steps when adopting this law.
The law in question aimed to change the Government’s Emergency Ordinance 109 from 2011, which introduced corporate governance principles in state-owned companies. The ordinance, which was adopted at that time under pressure from Romania’s foreign creditors, forced companies controlled by the state to organize transparent selections for the board members and executive directors and to eliminate political appointments in these companies. The recently adopted law aimed to eliminate this obligation and allowed the Government to decide which companies would follow the corporate governance principles and which would not.
Big companies in the energy sector, such as Hidroelectrica, Nuclearelectrica, Romgaz, Complexul Energetic Oltenia, and other important state companies would have been exempted from the obligation to name politically independent managers.
U.S. group Franklin Templeton, which manages local Fondul Proprietatea, a shareholder in many state companies, harshly criticized the new law saying that it marked the darkest day of corporate governance in Romania. The group asked President Klaus Iohannis to send the law back to the Parliament for reexamination.