Institutional conflict at CFR SA: the share capital of a subordinate company, the stake of a tough confrontation

The tensions between the management of Electrificare CFR and the sole shareholder, CNCF CFR SA, have surfaced in an open conflict regarding the way to cover the company's historical accounting losses, a dispute that raises serious questions about both the corporate governance and the financial strategy of the company that supplies traction energy for the railway network, according to an article published by Club Feroviar.

According to the cited source, the differences were formalized through a decision of the General Meeting of Shareholders adopted at the end of last year, a document that records direct accusations against the general manager and the financial manager, accused of having violated their mandate contracts.

According to the AGA decision, the executive management proposed reducing the share capital of Electrificare CFR to cover the accounting losses from previous years, an approach firmly rejected by the sole shareholder. CFR SA representatives claim that the material presented by the management does not correctly reflect the situation of unrecovered losses and ignores the explicit requests previously submitted, which led to the finding of a violation of the contractual provisions assumed by the company's management. Consequently, the AGM rejected the agreement in principle to initiate the procedure for reducing the share capital, invoking the provisions of the company's Articles of Association.

However, the decision does not stop at a simple formal rejection, the cited source mentions, because the Board of Directors was mandated to analyze in detail the way in which the financial information was presented and to take the necessary legal measures, including in relation to the responsibilities of the general manager and the financial manager. Basically, the conflict was moved from the area of a simple divergence of vision to the area of a possible contractual liability of the executive management.

The stakes of the dispute are significant. Electrificare CFR has a share capital of approximately 742 million lei, and the company's management believes that using it to cover accounting losses would free up profits obtained in previous years to finance future investments. In contrast, CFR SA seems to favor a classic solution, namely covering losses by distributing profits already made, which reached 20.39 million lei in 2023 and 9.3 million lei in 2024.

Basically, we are dealing with radically different visions on the role of share capital and on the company's development direction, which, in the absence of conciliation, could have a negative effect on one of the two companies.

Behind this confrontation are also Electrificare CFR's expansion ambitions. The cited source specifies that unofficial information circulated last year indicated the company's intention to enter the electricity production market, a step that would require substantial investments and, implicitly, the availability of significant financial resources. Reducing the share capital to clean up the balance sheet would facilitate, in the management's view, redirecting profits to such projects, but this strategy does not seem to be accepted by the sole shareholder.

The AGM decision sets January 14, 2026 as the deadline for adopting the necessary measures, but the conflict is far from being closed. It is unlikely that the management of Electrificare CFR will definitively abandon its proposal, as there are premises for resuming this topic in future meetings. In this context, the dispute risks turning into a test of strength between the executive management and the state shareholder, with potential consequences on the stability of the management, the investment strategy and even on the functioning of an essential link in the national railway infrastructure.