Proceedings

difficult economic situation at general level, the need to call on credits is more
stringent and this is overlaid over the suspicion of the banks to grant credits which
creates extremely high eligibility criteria which block access to financing. In this case
a company has few solutions to support itself financially:
• Maximum usage of the supplier’s credit;
• Careful following of receivable;
• Cost and unsustainable contract restructuring.
Because of this, it might be recommended from an accounting point of view, but also
fiscally, a relaxation of rules for the exchange differences:
• Either by increasing the degree of debt which allows deductibility of exchange
differences loss;
• Or by separating the accounting aspect from the fiscal one, meaning
recognition of the exchange differences in the PLA at evaluation, but taxing
them at realization.
3. EFFECT ON THE LEVEL OF OWNERS EQUITY
One of the effects of exchange differences registration consists in the reduction of
owners’ equity below the minimum level specified by the commercial company law
or even taking negative values, posing the issue if the continuity principle is still
applicable or even endangering the existence of the company.
„Art. 153 24 . - (1) If the board of administration, respectively directors, find that,
following certain losses, set by the lawfully approved yearly financial
statements, the net worth of the company, determined as a difference between
the total assets and the total debts, reduced to less than half the underwritten
share capital, it will immediately convoke the extraordinary general meeting to
decide if the company must be dissolved
(2) Through the articles of association is can be established that the
extraordinary general meeting can be convoked even for a less significant
reduction of the net worth than the one specified in par. (1), establishing this
minimum level of the net works via reporting to the underwritten share capital.
………………………………..
(5) In the case of non-convoking the extraordinary general meeting as per
par. (1) or if the meeting could not validly deliberate on the second
convocation, any interested party can approach the court to ask the dissolution
of the company. The dissolution can be requested in the case the company’s
obligation acc. to par.(4) is not respected. In either case, the court may give the
company a period, not exceeding six months, to rectify the situation. The
Company shall be dissolved if the net worth cannot be reconstructed up to a
value at least half the share capital until the court decision, regarding
dissolution, becomes irrevocable.. "
Another aspect is related to the degree of debt provided by the Tax Code for
deductibility of interest and exchange differences: the loss from exchange differences
reduces the result and thus the equity result.
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