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Company & Commercial

Romania

Overview
Including: Articles of Incorporation; Shares; Registration; Rights of Founders; Acquisition of Shareholders' or Directors' Property; Profit Disbursement; Statutory Bodies; Amendment of the Articles of Incorporation; Dissolution; Criminal Provisions.

Including: Legislative Framework; Company Features; Corporate Forms; Joint Stock Company; Limited Liability Company; Regies Autonomes; Foreign Companies

A foreign company may set up an agency (representative office) in Romania once it has received authorization to operate from the Foreign Affairs Ministry. This update explains how to apply for such authorization and sets out the legal regimes that apply to agencies.

Romanian companies that have not yet paid up their share capital to the minimum limit required by law have been given 60 days in which to increase their share capital accordingly. Failure to do so will result in the winding up and liquidation of defaulting companies.

Romanian company law provides that the activities of directors should be monitored to ensure the smooth operation of a company. Specially appointed company auditors regulate the administration of joint stock companies, partnerships limited by shares and limited liability companies. This update outlines their main duties.

Under Romanian company law, company administrators may be either individuals or legal persons. This update outlines administrator's rights, obligations, powers and liability. It also explains what is required to become an administrator and how this contract may be terminated.

Including: Relevant Legislation; Company Features; Company Forms; Joint Stock Company; Limited Liability Company; Regies Autonomes; Foreign Companies

Competition

Romania

Overview
Including: Main laws and regulations; Competent authorities; Economic concentrations; Anti-competitive practices; Abuse of dominant position; Penalties.

The recent entry into force of the new Criminal Code and Criminal Procedure Code has brought a number of changes to the Competition Law, one of the most significant of which pertains to Competition Council dawn raids. Although the amendments should be seen as a step in the right direction, especially in terms of compliance with EU human rights law, further steps still need to be taken.

The Romanian Competition Council recently launched its second sector inquiry into the pharmaceuticals industry. The inquiry will highlight certain aspects raised by producers' commercial activities in Romania – specifically, the causes of delays in generics entering or penetrating the market and the extent to which the direct-to-pharmacies model fits into the legal framework.

The Competition Council marked the end of 2012 by announcing the conclusion of two investigations into alleged bid-rigging practices surrounding public tender procedures organised by two of Romania's most important public undertakings. In addition, the procedure by which the council took control of the Supervisory Board in the Railway Sector from the Ministry of Transport came to a greatly anticipated end.

Two high-profile investigations into the pharmaceuticals sector have been closed. One, which did not result in penalties, raised the question of when an association's lobbying, for its members' benefit, may amount to an anti-competitive agreement. In the other, pharmaceutical companies Bayer and Sintofarm and certain distributors were fined around €12 million for having concluded anti-competitive agreements.

In what is quickly becoming an established tradition, the Competition Council has issued its third annual report on competition in key sectors of the economy. Focusing on banking, pharmaceuticals and public procurement, it highlights the sensitive sectors that the council may be targeting for investigations and, for the first time, outlines the indicators used by the council in assessing levels of competition in a particular sector.

The modernisation of Romania's competition rules affects a wide array of substantial and procedural matters. New rules on penalties and fines - and the overall benefit to the business environment - are changes for the better. However, amendments on the presumption of dominant position, the right to a hearing and the authorisation fee appear to depart from the EU model.

More updates >

Corporate Finance/M&A

Romania

New enactments have amended the legal framework for privatization. The procedure for certifying a company's debts to the state budget has been modified, and a new body has been created to implement government strategies regarding the privatization process and the economic development of the private sector.

The privatization process for state owned companies in Romania has been improved. Competitive and clear privatization methods are now used to ensure the swift transfer of state owned property into private ownership and the effective privatization of major companies.

Corporate Tax

Romania

Overview
Including: Profit tax; Value added tax; Local taxes and duties; Fiscal procedure.

Implementing stock option plans in Romania involves a degree of uncertainty due to the lack of clear and detailed legal provisions on their applicable tax treatment. Considering recent practice, the tax treatment applicable to stock option plans and employee reward schemes in general should be clarified in order to give companies a better perspective on their tax obligations and those of their employees.

The need to maintain existing clients' loyalty while attracting new clients has increasingly led suppliers and providers of goods and services to extend the grace period for payment of the goods or services. This in turn has led supplier companies to identify solutions to improve their cash flow, two of which are factoring and forfaiting operations. However, issues arise as to whether these operations are subject to value added tax.

The price for which physical goods and intangible properties are transferred or services are provided at the intra-group level is a problem facing most companies and multinationals operating in Romania, especially considering the increasing number of inspections conducted by tax authorities relating to transfer pricing. A recent symposium highlighted services usually monitored by the authorities.

The amendments to the Fiscal Code introduced by Emergency Government Ordinance 24/2012 have been clarified somewhat by the provisions of a government decision. However, this decision omits certain essential clarifications that had been included in the consultation draft, such as those concerning the scope of application of Article 52(1) of the Fiscal Code, which deals with withholding tax.

Insolvency & Restructuring

Romania

Overview
Including: Main laws and regulations; Entities subject to insolvency procedure; Mandatory conditions for the commencement of the insolvency procedure; Procedures.

The bankruptcy procedure for credit institutions in Romania is subject to a special government ordinance that provides derogative provisions from the Insolvency Law in order to protect the banking system. Ordinary provisions of the Insolvency Law are applicable to credit institutions only where the special legislation regarding bankruptcy of credit institutions contains no relevant provisions.

According to the Insolvency Law, the judicial administrators, liquidators or creditors' committee of a company subject to an insolvency procedure are entitled to claim the cancellation of certain transactions concluded before the opening of the insolvency procedure. The applicable period varies from 120 days to three years before the opening of the insolvency procedure, depending on the type of transaction in question.

Under Romanian corporate law, company directors are usually held liable to the company only with respect to acts performed in the name of or on behalf of the company. However, the situation might change when the company becomes subject to insolvency procedures. In case of bankruptcy, the creditors of the insolvent company may file a direct legal action against the company's directors.

Telecommunications

Romania

Overview
Including: Legislative Framework; Regulatory Bodies; Authorization Regime; Licences; Transitional Provisions; Operators with Significant Market Power; Dispute Settlement Procedure; Network Access and Interconnection; Rights of Access to Property; Universal Service Principle; User Protection; Consultation Procedure

A recent government decision explains how the Ministry of Communications and Information Technology will award licences for the use of radio frequencies for 3G communications. Four licences will be awarded by international auction and will remain valid for 15 years, with a further 10-year extension possible on request.