Incorporation of Companies in Romania

Legal Framework Company Law no. 31/1990 Trade Registry Law no. 26/1990

Types of Corporate Business Entities

Limited Liability Company (Romanian: societate cu raspundere limitata , S.R.L.) Stock Company (Romanian: socieate pe actiuni, S.A.); General Partnership (Romanian: societate in nume colectiv, S.N.C.); Limited Partnership (Romanian: societate in comandita simpla, S.C.S.); Partnership limited by shares (Romanian: societate in comandita pe actiuni, S.C.A.). Most of the companies incorporated in Romania are limited liability companies and stock companies, because of the fact that the partners/shareholders are held liable within the limits of their subscribed equity.

Types of Companies:

Person companies (Romanian: societati de persoane): general partnership, limited partnership, partnership limited by shares, limited liability companies. These companies are established in consideration of the persons that set up the company. There are stricter rules when it comes to transferring the shares and taking decisions in the company. Capital companies (Romanian: societati de capitaluri): limited liability companies, stock companies.

Incorporation of a company:

Can last up to five working days from the submitting of the documents at the trade registry; It is prolonged with 15 days when the word Romanian or national is included in the company s name; Certain approvals are necessary, depending on the object of activity of the company.

Headquarters of the company:

It is not allowed for more companies to have their headquarters in the same location, except for some specific situations (for example if they establish their headquarters temporarily at the headquarters of a law firm and they do not unfold any activities there); It is allowed for more companies to have their headquarters in the same building, apartment, provided that the location enables the independent functioning of more companies and that each company has at least one room that it uses solely (the room must be identified on the sketch/ plan of the building attached to the application that is submitted at the trade registry);

CAEN code and object of activity

CAEN code of the object of activity (Romanian: CAEN Clasificarea activitatilor din economia nationala, classification of the activities from the national economy); Activity field, main activity field (only one can be chosen), auxiliary activity fields (there is no limit to how many can be chosen, but it is not recommended to choose all CAEN codes because some require authorizations); The main activity field, as well as the auxiliary activity fields must be included in the incorporation documents of the company; The main activity field may be changed by decision of the associates; The auxiliary activities may be extended or restricted anytime, by filling an application at the trade registry, without a decision of the associates.

List of the documents that should be submitted at the trade registry for the incorporation of a company:
Applications (they can be found on the website of the trade registry); Reservation of the name of the company (the name can be reserved at the trade registry, except for names that include certain words Romanian, national; these require a special approval ); Proof that the share capital has been payed by the shareholders to a bank account opened on the name of the company (the capital has to be paid at least partially, depending on the type of company; for the limited liability company it has to be paid fully); Declaration of the administrator that it fulfills the conditions required by Romanian law to be administrator and that it accepts the position in the company; Declarations of the shareholders that they fulfill the conditions required by Romanian law to be shareholders; Signature sample of the administrator;

List of the documents that should be submitted at the trade registry for the incorporation of a company:
Proof of the right to have the headquarters established in a certain location from Romania (for example property title of the building, rental agreement); Power of attorneys from the shareholders if they do not submit the documents themselves; Incorporation documents (articles of incorporation, constitutive act); they should be signed either by the shareholders or by the persons empowered to represent them based on a special power of attorney. The substantially and formal requirements of these documents are included in Company Law 31/1990.

Particularities of S.R.L.

The minimum social capital is of: 200 RON; the value of a social part cannot be lower than 10 RON; It can be established even only with a sole associate, either natural or legal person; a natural or a legal person (Romanian or foreigner) can act as sole associate only for one limited liability company; Particularity: A limited liability company cannot have as sole associate a company which is held by a sole person;

Particularities of S.R.L

Is managed by one or more administrators, natural or legal persons, that are empowered to represent the company before third parties. Every share gives the right to a vote. The decisions need in principle the absolute majority of the shareholders, as well as the absolute majority of share capital. Still, it can be stipulated expressly in the incorporation document of the company that the absolute majority of the share capital is enough for taking a decision. Transfer of the shares in the company can be done unlimitedly among the shareholders of the company; to third parties only provided that shareholders holding at least 75% of the share capital agree to the transfer. The convening of the general meeting of the associates can be done by the administrator/ shareholders holding at least 25% of the share capital. The convening must be done 10 days before the actual meeting and the agenda of the meeting has to be transmitted to all participants. In case there is only one shareholder, all the prerogatives of the general meeting of the shareholders shall be exercised by the sole shareholder.

Particularities of S.A.

The minimum social capital: 25.000 EURO; the nominal share value cannot be lower than 0,1RON; the minimum number of shareholders cannot be less than 5; All shares have the same nominal value and they can either be bearer stock (Romanian: actiuni la purtator) or registered stock (Romanian: actiuni nominative). Stocks are divided between ordinary stocks and preference stocks (they are entitled to dividends before ordinary shares but lack the right to vote in the general meeting); If the constitutive act does not provide otherwise, the transmission of the shares does not require the approval of the other shareholders;

Particularities of S.A.

The convening of the general meeting of the shareholders is done at least once a year and whenever else it is considered necessary. General meetings can be ordinary (for the approving of the annual financial situations) or extraordinary (for the increase of the share capital, for taking decisions on the division or merging of the company), depending on the importance of the agenda. The quorum of the general meeting varies, depending on the type of general meeting and on whether it is the first convening with the same agenda or not; Special rules regarding the shares transactions, the increase of the social capital, other important amendments of the constitutive acts are applicable to the public listed stock companies (open companies).

Duration, Expenses, other related Information

Generally, the total cost of establishment of a limited liability company amounts to Euro 300-2,000 (all registration and honoraria fees included); Standby companies: if a company justifies no interest in running its activity on a limited basis, it has the possibility to file an application with the trade registry office for the suspension of its activity (for a max. of 3 years); as a consequence, the company is not required, within the suspension period, to submit all the financial reports as in the case of the companies who activate effectively.

Options

In the registration file at the Trade Registry Office, the company can choose the special regime in order not to pay V.A.T, if the company estimates a turnover lower than Euro 35,000 annually. If the amount of Euro 35.000 is exceeded, the V.A.T regime is automatically applicable.

Options
A company can choose in the registration with the trade registry office the micro-company regime, if the following requirements are fulfilled (art. 112 of the Fiscal Code): It has as object of activity the production of goods, services supply and/or trade; It has between 1 9 employees (this condition needs to be fulfilled within 60 days from the registration date at the Trade Register Office); Maximum annual turnover is Euro 100,000 (or RON equivalent); The share capital is not owned by the state or local authorities.

The company that does not fulfill one of above-mentioned conditions shall be automatically subject to corporate income tax in the following business year (the profit tax represents 16 %).; The company can chose the micro-company regime from its incorporation.

Thank you!

Daniela Chiriac 0722 513 890 av.daniela.chiriac@gmail.com