Romania: Companies will be able to distribute dividends on a quarterly basis
Overview
The Romanian Parliament approved legislation amending accounting and companies laws to permit quarterly dividend distribution. This represents a significant shift from the previous system, which only allowed annual distributions following approval of yearly financial statements.
Quarterly Distribution of Dividends
Under the new framework, Romanian companies gain flexibility in dividend timing. Companies may now choose between quarterly or annual distribution schedules. “Dividends will be distributable to shareholders quarterly in proportion to their participation in the paid-up share capital based on the interim financial statements.”
Quarterly distributions are limited to available interim profits, plus retained earnings and reserve amounts designated for distribution, minus losses and legally required reserve deposits.
Accounting Treatment
Interim dividend distributions are recorded as shareholder receivables within the company’s accounts and interim financial statements. These interim statements undergo auditing if the company’s annual statements are audited, and they’re subject to censor review where applicable.
Adjustments and Reconciliation
When partial distributions occur during a fiscal year, annual financial statements must document these payments and reconcile any differences. Companies must settle excess distributions within 60 days of annual statement approval, while shareholders must return overpaid amounts within the same timeframe. Penalty interest accrues on overdue payments and reimbursements after this deadline, calculated per applicable regulations.
Legal Enforcement
The law modified criminal provisions regarding unlawful dividend distribution, establishing penalties of one to five years imprisonment for distributing dividends from fictitious profits or contrary to interim or annual financial results.