Financing Through Ordinary Shares

Most Romanian companies are severely undercapitalized. Financing through the issuance of ordinary shares means raising capital from a (usually minority) shareholder base that implicitly invests in the existing vision and managerial talent — in other words, in you and your team.

  • Unlimited-term capital
  • No interest payments
  • Preferred by stock market investors
I want to finance my company
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Why Ordinary Shares?

Problem — most Romanian companies lack sufficient equity capital. Solution — a capital increase through cash contributions. Sounds great, right? We’ve just offered you a solution that sounds like a slogan on a T-shirt: stop being poor. Or like saying depression can be cured by being happy. We know, we know — the real issue is how. Who shows up and drops a bag of money on your desk? And what do they want in return?

But what if there were a better way? Namely, primary public offerings or private placements, followed by stock exchange listing. We know — it’s not exactly a walk to the corner shop, but the result is a (usually minority) shareholder base that implicitly invests in your vision and managerial talent — in other words, in you and your team. This gives you strategic freedom, and your main concern is no longer how to physically make room at the table, but how to treat all shareholders fairly, in line with market rules and common sense.

Secondary and Subsequent Offerings

Unlike bonds, shares allow — and frequently use — the possibility of public offerings or private placements for the sale of already existing shares. In local terminology, this is called a secondary offering, and the proceeds go not to the issuer but to the selling shareholders, who finance their own activities. There are also hybrid offerings or placements, but these are rarer due to operational complexity, as they involve multiple sellers and a capital increase with new shares that must be accommodated even if not all offered shares are subscribed.

You are not limited to primary offerings. You can also launch subsequent or secondary offerings — use whichever term you prefer, we won’t mind — which follow the initial offering and are useful not only for raising additional capital, but also for increasing the issuer’s public profile among active market investors.

How Long Does Listing Take?

Let’s be serious for a moment. Just like with public offerings and bond placements, investors accessible through Investimental expect the issuing company to commit firmly to listing through the offering documents. In public offerings, this usually happens quickly — within one month after the offering closes. For private placements, the process takes longer, typically around three months after completion.

Similarly to bonds, depending on the chosen structure, the time from contract signing to cash receipt by the seller may be around 3–4 months for private placements or 6–8 months for public offerings (the latter requiring ASF approval prior to the offering). These timelines may extend further if the company’s operations or organizational structure are highly complex, or if insufficient internal resources are allocated to the process.

Main Listing Requirements

Want to be admitted to trading? Depending on the market where your shares will be listed, your company must meet certain criteria. As with bonds, it must have at least three years of published financial statements, with the most recent one to three annual statements audited. For the main market, there are also profitability requirements.

The issuer must also have a Board of Directors consisting of at least three members (in some cases at least five) and include specific provisions in its articles of association required by the legislation of the market where it will be listed. For shares, these requirements are stricter than for bonds, as they also cover the organization of the General Shareholders’ Meeting and the payment of potential dividends.