The National Council of Small and Medium Enterprises in Romania (CNIPMMR) announced on Monday that it rejects the introduction of mandatory professional liability insurance for companies.
CNIPMMR President Florin Jianu stated on Monday that the introduction of the new administrative and tax burden for companies, under the sanction of dissolving the company in case of non-compliance, will have a strong impact on start-ups.
“The CNIPMMR rejects the proposed introduction of the obligation to conclude, each year, a professional liability insurance contract meant to cover expenditures on insolvency, dissolution, liquidation and judicial deregistration,” Florin Jianu stated on Monday.
He states that companies are at risk of no longer being able to carry out their activity, falling under the threat of dissolution, while at the same time entrepreneurial initiative is being dissuaded.
On April 19, the National Trade Registry Office (ONRC) published, for public debate, the bill on the trade registry, which seeks to also amend Corporate Law no.31/1990 by introducing new administrative duties for entrepreneurs, namely the conclusion of mandatory professional liability insurance contracts each year. The bill stipulates that within a period of six months from the moment it comes into force, the professionals registered with the Trade Registry have the obligation to conclude professional liability insurance contracts for insolvency, dissolution, liquidation and judicial deregistration, under the sanction of dissolution in case of non-compliance.
Thus, the proposal is that companies should be forced to conclude, each year, a professional liability insurance contract that would cover at least the costs of insolvency, dissolution, liquidation and judicial deregistration procedures. Moreover, the annual insurance contract is to be lodged with the Trade Registry, in view of registration.
In case the professionals fail to register, the National Trade Registry Office will be able to order the dissolution of the companies, at their expense, on a case-by-case basis.
“Based on the substantiation that accompanies the bill, we notice that the legislator did not carry out the SME Test and does not intend to do so, since Section 3 of the bill (Socio-economic Impact, Impact on the Business Environment), reads: “Not the case.” This type of insurance should not be confused with the professional liability insurance contract concluded by lawyers, notaries public, physicians, which covers the contractual liability they undertake before their clients/beneficiaries for any damage caused to them,” CNIPMMR representatives state.
Likewise, it is not clear which insurance companies will want to sell this insurance to start-ups and SMEs in general, being known that these types of enterprises are most frequently exposed to the risk of cessation of activity.
“We note that on the insurance market such services offered to SMEs do not exist at this moment, insurance companies not being interested in offering this type of policy. In the few cases in which insurers agree to offer such policies, the policies are offered to companies that also have other types of policies and have a long history of collaboration with the insurer, corroborated with the fact that this insurance is not offered for all lines of activity (basically it is offered only to some of the large companies),” Florin Jianu added.
It is not clear what will be the price of this insurance that would cover at least the cost of insolvency, dissolution, liquidation and judicial deregistration procedures, entrepreneurs being obligated to cover costs that they cannot control and that are up to the will of other private companies.
The CNIPMMR recalls that there is a Liquidation Fund set up in line with Law no.85/2014 on insolvency and insolvency prevention procedures.