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Company Formation in Romania

Updated on Tuesday 15th December 2020

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by Vlad Cuc

A business in Romania can be registered by both natural persons and legal entities. Romanian companies are registered with their own bank accounts and a minimum share capital, can own their own patrimony and can set up their own management structure. At the same time, any local business must have a registered office in Romania. 

LOWEST TAXES IN EUROPE FOR THE ROMANIAN MICRO-COMPANY (Up to 1,000,000 EUR): 

Up to 1% corporate tax and 5% dividend tax.

 

A foreign company can be sole shareholder (if LLC) or the foreign company can be shareholder together with at least one other shareholder which can be legal entity or private person (if joint stock company).

The most common way to open a company in Romania is by registering a limited liability company (societate cu raspundere limitata – SRL). Companies in Romania can also take the form of partnerships and joint stock companies, which are commonly incorporated in this country. Depending on the nature of the activity developed here, these companies that can also be liable for the payment of VAT in Romania. 
 
In order to open a Romanian company, it is necessary to register it with the National Trade Register Office, an institution which operates under the Chamber of Commerce and Industry in Romania. This body, the National Trade Register Office, is set up as a public institution that gathers data on all companies that are registered at a national level. You can get more information about company formation in Romania from Avocati.ro, an excellent online resource. 
 
 
How to Open a Company in Romania.png

 

Click to download our free guide to forming a Romanian Company, containing information for the setup of Romanian branches and representative offices, joint stock and SRL companies. The guide offers details on setup costs, procedures, documents and requirements. It provides information on the procedure and requirements of opening a company in Romania, the costs associated with the registration procedure, as well as on the documents that have to be submitted with each particular institution. Contact us to find out how to register a Romanian Micro-Company and pay 3% tax!

Our Romanian law firm can assist local and foreign investors throughout all the procedures related to the registration of a local business. 

We will reserve a company name at the National Trade Register on your behalf;

We will draft the following documents:

- affidavits - they must be completed following the standard format, as requested by the Romanian law,

- specimen signature - it must be signed by the persons who will be company directors

- the articles of association and by-laws of your future Romanian company.

Our team of lawyers in Romania can also assist on the below mentioned procedures (or they can represent the investors throughout each incorporation step): 
 
  • subscribe the share capital on your behalf – it varies in accordance with the business form that was selected for incorporation;
  • open the company's bank account with the bank of your choice (our Romanian lawyers can assist in depositing the initial share capital, which depends based on the selected business form, but it also refers to the additional current account for the company’s operations; both types of Romanian bank accounts can be set up without your personal presence in Romania);
  • offer a suitable company office that is necessary for the registration formalities (also, our law firm is able to provide virtual office services in Romania, including: mail forwarding, local phone numbers and secretarial services);
  • submit company documents with the local Trade Register and represent investors in front of the Trade Register judge.

 

How long does it take to open a Romanian company? 

 
The procedure of company formation in Romania will take five working days (this is calculated since the date in which all the necessary documents are subscribed with the local authorities). In order to register a limited liability company, the necessary minimum share capital is of EUR 40, while for a joint stock company, the capital is established at EUR 25,000. 
 

What type of Romanian company should I create?

Foreign investors can open the following types of Romanian companies (structures): the Romanian SRL, the Romanian subsidiary, the Romanian branch, the Romanian representative office (liaison office). The representative office in Romania can be established only for certain types of activities; our team of Romanian lawyers can offer advice on the documents necessary to register a liaison office here.

 

How can an investor register a Romanian SRL?

 
Since the Romanian SRL is the most common business form selected for registration in this country, we will present below the steps for forming this type of company. Prior to starting the registration process, the investors must gather all the documents and information required by the local authorities. Some of the most common information that must be presented upon the registration of a new Romanian business are the following: 
 
  • personal information regarding the company’s shareholders, such as their names, nationalities, country of residence and date of birth;
  • the name of the person who is appointed as a general manager;
  • the company’s proposed name and the business activities that will be developed here;
  • the participation of each shareholder at the company’s capital, the nominal value of each share and the percentage of shares owned by each shareholder;
  • the company’s registered office (the proof regarding this information is done through various documents that attest the fact that the company operates in the given location). 

 

 

 

 
 
 
The procedure of company formation in Romania starts by selecting a suitable company name. In order to do so, the investor has to reserve a company name by completing a reservation form, that will be then submitted with the Trade Registry. Following this procedure, the institution will issue a certificate (on the same day) that will certify the fact that the company name was reserved. This document is available only for a period of three months.  
 
Foreigners who are not residents of Romania may also register a business here, but they will need to declare on their own responsibility that they do not have any fiscal debts in the country where they reside. This document generally has to be submitted in original. If the document is written in a foreign language, a certified translation has to be added to the file, and this is done through a public notary. 
 
Once all the required document are submitted with the Trade Register Office and after the institution will verify the applicant’s file, the company will receive a unique registration code (CUI). Formally, a company is recognized as a legal entity in Romania once it is registered with the Trade Register. 
 

Are there any other types of Romanian SRL? 

 
Yes, the legislation in Romania provides an alternative to the Romanian SRL; this is represented by the Romanian SRL-D, which was designed to assist young entrepreneurs in starting a business. This business form is especially addressed to persons who have never been the associates or the owners of other companies in Romania or in any other country of the European Union (EU). 
 
The SRL-D can be formed by maximum five shareholders and it can only enter specific types of activities. For example, the SRL-D can’t have as its business operations activities that are related to fields such as: insurance, gambling, real estate, tobacco or alcohol. Since this legal entity was designed to encourage the participation of young persons in the business environment, the advantage of the SRL-D is given by the fact that it can benefit from various governmental grants and tax exemptions. 
 

Is there vital information I should know related to forming a company in Romania?

Every type of Romanian company has its specifics and limitations. For instance, the Romanian representative office may only start marketing activities; it can’t be registered with the purpose of developing commercial operations. We recommend you to contact us before making a final decision.

 

What are the requirements for the shareholders/directors of a Romanian business? 

When opening a company in Romania, foreign investors are not imposed with any restrictions. Thus, a Romanian company can be set up by both local and foreign shareholders and there are no nationality restrictions regarding the company’s directors. Romanian law also allows corporate shareholders and directors.

 

What are the duties of the Romanian Trade Register?

 
Legal registration operations such as the formation of new Romanian companies, change of the social headquarters of the company, change of any clause of the articles of association, cession of social shares and others, require the verification of the file and documents by a clerk and a Trade Register judge. 
 
The Trade Register judges review the submitted information, the correctness of the paperwork from the legal point of view (articles of incorporation, affidavits, specimen signatures etc.) and either request further information from the shareholders and/or directors or their representatives or approve the operation.
 
From the date of approval of the incorporation of a Romanian company, the Romanian Trade Register usually requires approximately 3-5 business days to issue the Certificate of Incorporation. Other useful information about the Trade Register and its activities throughout Romania are presented below:
 
  • the Trade Register is a public institution and is obliged under the local law to issue, on the expense of the person requesting it, official copies of the documents registered in its database;
  • it must also provide information regarding the registered data and to offer information in regards to the existence of certain documents in the records of the Romanian Trade Register;
  • the decisions of the Trade Register judges are open to appeal in a term not exceeding 15 days;
  • the Romanian Trade Register has set up offices in 42 counties, at a national level.
 

What is the legislation regulating the activity of the Romanian Trade Register? 

 
The activity of the Romanian Trade Register is regulated by multiple rules of law; our team of Romanian lawyers can present at length the basic regulations referring to this institution, which is regulated by the Law no. 26/1990 – the law on Trade Register. The activity of the institution also falls under the regulations of the Law no. 31/1991 – the Law on Companies, the Law no. 33/2000 – on insurance activity and insurance supervision and others. 
 
The activity of the institution also falls under the regulations of the Law no. 161/2003, the Law no. 297/2004, the Law no. 359/2004, the Law no. 566/2004, the Law no. 1/2005, the Law no. 93/2009 or the Law no. 202/2010. Additional rules of laws and decrees are applicable as well and this why we highly recommend businessmen or to any interested party to request information from our team of Romanian lawyers.  
 

How many businesses were registered in Romania in 2019? 

 
Since the Trade Register is the main institution where local businesses are registered, the institution also holds the current statistics on the businesses incorporated here. The latest data for the current year (2019) covers the period of January to September, and foreign or local investors should know that: 
 
  • the highest number of companies registered with the Trade Register between January-September 2019 was recorded in Bucharest, the capital city of the country, which accounts for 13,542 businesses (all business types included);
  • more than 4,000 businesses were registered in the counties of Timis (4575 companies) and Iasi (4320 companies);
  • the number of businesses registered in Iasi increased on year-to-year basis by 18.10%;
  • in Cluj, one of the largest cities in Romania, there were incorporated 5043 companies;
  • in Brasov, another important city in Romania, the number of companies registered in the same period was of 3837;
  • on a year-to-year basis (compared to the period of January-September 2018), the number of businesses registered in Brasov increased by 33.60%;
  • in Prahova there were 3849 new incorporations, marking an increase of 33.70% compared to the same period of 2018.
 

Short history of the Romanian Trade Registry 

 
The history of the Romanian Trade Registry (in the legal sense of the word) begins in 1864, when the authorities of that time created the Chambers of Commerce and Industry. In 1884, a new legislation was created, the Law on Companies Registration, which stipulated that the data on local businesses must be registered and maintained following specific rules by the Trade Registry.
 
Throughout the years, the institution maintained its activities, up until 1950, when the Trade Registry was abolished as a consequence of the political regime that was installed in the country at that time. The institution ceased its operations up until 1990, after the fall of the communist regime. Since 2002, the institution operates under the Romanian Ministry of Justice and, since then, it became a full member of international structures, such as the European Commerce Registers’ Forum and the Corporate Registers Forum.   
 

How can one register a business with the Trade Register in Romania? 

 
The procedure on how to start a business in Romania depends on the type of legal entity that is selected for incorporation. All types of companies that are recognized under the Romanian law have to be registered with this institution and this also refers to businesses that are not considered corporate bodies (such as the sole trader); our team of lawyers in Romania can provide legal assistance on how to register a local company.  
 
Thus, the documents required by the institution will also vary. In the case of a private limited company, one of the most common ways to start a business here, investors have to prepare numerous documents and this is why we recommend to get in touch with our team of Romanian lawyers. For this type of company, there are 19 documents that have to be completed, for example.  
 

Verification of a Romanian company

 

There are quite a few reasons why a foreign investor would find necessary it necessary to conduct verification of a Romanian company; the most important being:

 

  • The imminent entering into a contractual relationship with the respective company. In this case the foreign party would prefer to gain insight into some background information about the respective Romanian party;
  • A pre-verification before purchasing shares or entering into any kind of joint venture with the Romanian company. This could include a wide array of verifications, legal as well as financial.
  • A verification of a certain shareholder to better understand the value of shares the person (or other legal entity) holds. This might be required for different kinds of procedures abroad (such as personal background checks).

In the opinion of our law firm the verifications of a Romanian company will have to be treated separately as there are 2 different types of verifications:


1) The regular verification of a company. This includes:


- obtaining a trade register extract (company information is public in Romania) which can show the following information: company name, address, date of registration, shareholders and directors as well as some additional information;
- obtaining the last official copy of the company’s Articles of Association (stamped by the Romanian Trade Register);
- obtaining the last filed accounts of the company, filed with tax authorities and which can be obtained through the Romanian Ministry of Finance. These records show the income of the company, profit etc. There is a very important note here: the last filed accounts can only be provided if the respective Romanian company has actually filed any accounts. Although these filings are compulsory, many companies do not file on time. Even so this is a good indication on the good standing of the respective company.

An important matter to be taken into consideration when performing a verification of a Romanian company or its shareholders:

  • Romania does not have a database to verify the assets and/or real estate properties of a person or company. One can find out the owner of a certain property for instance however in the order for this to happen he will have to have the full details of the property in question. A simple search on the properties owned by a company is not possible.

 

2) A complete due diligence procedure performed on the Romanian company. This is usually done before a merger/acquisition, purchase of shares etc. and can include:

 

  • All the verifications performed at par. 1 above;
  • Legal due diligence. This can apply to: all past contracts, business relationships, and payments related to the contracts with business partners, investors etc. as well as real estate purchases for instance. This verification can be rather straightforward or can take an important amount of time depending on the volume of work: number of contracts signed, transactions, and general company activity.
  • Financial verification (audit). This implies verification of all the financial transactions, good standing with the Romanian tax authorities, general financial situation, lawful issuance of all financial documents (invoices, payments etc.). Basically this kind of verification insures that a respective Romanian company has a all accounting and financial records and tax payments up-to-date and per the legislation in effect.

See other related info:

Types of Romanian Companies

Establishing a representative office or company branch

Purchasing real estate in Romania

 

NOTE: This is not intended to be a complete list of documents or a complete set of costs to set up a Romanian company . Contact us for in-depth information. Our Romanian law firm is prepared to assist foreign investors in any matter concerning the legislation regulating the activities of local businesses.  

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