Can you charge interest?
Yes, the lender can benefit from interest under a loan agreement granted to a company. The parties can determine the amount of interest freely, or they can choose to use the legal interest rate established by Ordinance no. 13/24.08.2011 regarding the remunerative and punitive legal interest for monetary obligations, as well as for the regulation of some financial-fiscal measures in the banking field. It is calculated according to the interest rate published by the National Bank of Romania from time to time.
How many types of interest are there?
Interest can represent a ”price” of the loan or a penalty.
The first category refers to remunerative interest designed to recompense the lender for the assistance provided to the borrower and to account for the absence of the corresponding funds for a specific period.
The second scenario refers to the penalty interest intended to penalize the failure to repay the loan by the specified deadline. The latter serves to indemnify the borrower for the lack of funds and, additionally, acts as a deterrent against the aforementioned breach of contract.
Are you bound to set a due date for reimbursment?
Not mandatorily, but strongly recommended. As per the general regulations outlined in the civil code, a loan agreement lacking a specific timeframe or established for an indefinite period will be subject to repayment within a period determined by the court. This determination considers factors such as the loan’s purpose, the nature of the obligation and borrowed assets, the circumstances of the parties involved, and any other pertinent considerations. While it might be challenging to envision such a scenario when the loan is provided by the sole or majority partner, it remains a possibility, especially when the lender is a third party. In instances where conflicts arise between the borrower and the company regarding loan repayment, the matter could escalate to court, a situation that is suboptimal for all parties. This risk can be mitigated by specifying a repayment term to avoid ambiguity and potential disputes.
Is it possible to secure the loan?
Certainly. The civil code provides various forms of guarantee for the repayment of monetary obligations, serving as effective remedies in case of non-repayment of borrowed amounts.
For loans extended to a company, the following types of guarantees might be efficient:
Personal guarantees:These fiduciary guarantees involve an individual, often a shareholder, undertaking the responsibility to repay the loan if the company fails to do so. The personal guarantor is personally liable with their own assets.
Real Guarantees:These encompass mortgages on movable or immovable assets owned by the company or its shareholders. Real guarantees prove effective by restricting access to the mortgaged asset to a certain extent (through completion of necessary publicity formalities). In the event of non-payment, the lender has the option to enforce the guaranteed object.
Important note: mortgages must adhere to specific legal requirements based on the nature of the asset. For instance, mortgages on immovable assets must be formalized in authentic form by a notary public. The recommended approach is to execute a separate mortgage agreement to ensure compliance with these requirements.
Warranties on shares. Shares, securities, and other financial instruments are eligible for mortgaging. Specifically, the shares of a limited liability company can be mortgaged, contingent upon obtaining the consent of the shareholder who owns them.
However, it is imperative to ensure compliance with the company’s bylaws. Notably, a limited liability company (SRL) is structured with consideration for the individuals associated with it. Consequently, the transfer of shares to individuals external to the company is only permitted if it has been sanctioned in accordance with the conditions stipulated in the articles of association. As a result, guarantees on the company's shares are effective in limited scenarios, such as: (i) in the case of an SRL with a sole shareholder, (ii) when guarantees are provided in favor of a shareholder, or (iii) when there is explicit approval from the shareholders, meeting the majority requirements as mandated by law or bylaws of the company.
Is there any risk associated with the loan agreement?
As long as the loan is genuine and the firm uses the resources to carry out its intended activities, there should be no problems. Unfortunately, practice has proven how some shareholders can divert the loan agreement from its purpose, by granting fictitious loans designed to create the appearance of debts of the LLC to them. Such practices are not permitted and will be sanctioned according to the law, by cancellation of the related contracts in insolvency proceedings, criminal sanctions or other remedies.
