by Vlad Cuc
As a general rule, foreign investors do no have to respect any specific investment criteria in order to register a Romanian company, even though in certain economic sectors a special permit will be required by the local authorities. Our team of Romanian lawyers can provide an extensive presentation on the types of companies that can be registered in this country, and may also assist investors in registering any of the business forms presented below, but also registering them for tax purposes, including for VAT.
The registration procedure itself requires the fulfillment of certain legal formalities such as registration with the Trade Registry of Romania and Fiscal Administration (which is actually done automatically by the Trade Register). The incorporation of a company is done by filing the company's articles of association with the Trade Register.
From the date of registration in the Trade Register, the company will acquire legal personality as a merchant and can therefore commence its economic activity. The Law nr.31/1990, the Romanian law regulating the commercial companies that can be set up here, their formation and the way they ought to conduct their activity, establishes five types of legal entities investors can select if they want to register a Romanian company.
It represents the most common way to start a business in Romania and it is also the preferred legal entity of foreign investors registering a Romanian company. It is incorporated with a capital of RON 200. It can be founded by a single shareholder.
The main feature of a limited company is obviously that the liabilities of social debts is limited to contributions to subscribed and paid shares. As we presented above, the minimum share capital for a Romanian limited liability company is of RON 200, which has to be divided into shares that have a value of minimum RON 10. The maximum number of partners that can associate in a limited liability company is 50.
These shareholders or associates can be legal entities or natural persons. A Romanian LLC can have one or more directors, who may have full or limited powers; they can be Romanian or foreign citizens. The term of a Romanian director may be limited or unlimited. In case the LLC has a sole shareholder, then this shareholder can also be an employee of the respective company (in this case a Labor Agreement must be drafted and filed with the Labor Chamber in Romania).
The company can be administrated by a sole administrator or a board of administrators if the administration system is unitary or by a directorship and a board of supervisors if the company is administrated in a dual system of administration; our team of Romanian lawyers can offer more information on the types of administration systems this type of company can have.
It does not represent a very common type of Romanian entity. This type of company is based on the full trust of the associates. The Collective Name Company must be registered by minimum two founders (known as shareholders). The company’s share capital is comprised of interests and they are not transmissible. The company guarantees its obligations through the assets owned.
When it comes to the share capital of the Collective Name Company, the law does not impose a minimum amount for the share capital, which means that the shareholders are free to determine the amount of the capital according to the needs of the company. One of the most important obligations of the shareholders of the Collective Name Company is not to compete with the activity of the company.
Thus, the company’s shareholder is not allowed to be the member of another unlimited liability company registered in the same field of activity. The most important feature of this company is the fact that the shareholders are personally liable for the obligations of the company.
This liability is subsidiary and this means that the creditors of the company will first try and obtain the debt from the company and only if the company does not pay its debt, then the creditors can recover the debt from the shareholders. The shareholders have the following rights:
It represents a type of company that is not registered on a common basis in Romania. The characteristic element of this type of company is the fact that it has two types of shareholders - the shareholders that are personally liable for the obligations of the company and who are called “comanditati” and the shareholders that are only liable based on the amount of the shared capital that they subscribe, which are called “comanditari”.
The law does not establish a minimum number of shareholders, but it’s mandatory for the company to have at least a shareholder that is personally liable for the company’s debts and another shareholder who is liable only to the amount of his or her participation at the company’s capital.
The decisions regarding the company are taken by the vote of the majority of shareholders. The administrators of the company can be appointed only from the shareholders that are personally liable for the obligations of the company. The company’s interests may be transmitted to other entities, but this can happen only as long as the company’s statutory document mentions the right do to so.
It is not a very common type of Romanian entity. This business form is similar with the “Sleeping Partnership Company” because it needs to be incorporated by at least two shareholders, and just like in the case of the “Sleeping Partnership Company”, the company’s shareholders have different types of liability, and this can be presented by our team of lawyers in Romania.
The main difference between the two types of companies is that the Partnership Limited by Shares Company has a shared capital formed of stocks. The liability for the company’s obligations is different for the shareholders, thus, there are shareholders that are personally liable for the obligations of the company and they are called ”comanditati”. Our law firm in Romania can provide further details regarding the rights and the obligations of the company’s founders.
The other types of shareholders, “comanditari”, are liable for the company’s debts only to the amount with which they have participated at the company’s share capital. This business form must be incorporated with a minimum share capital of RON 90,000 (or its equivalent in EUR, which is EUR 19,042). The company can be administrated only by the shareholders that are personally liable for the company’s obligations.