Better Business in Romania Tuca Zbarcea Asociatii

Contents
Introduction 6 Foreword 8
HE Teodor Baconschi, Minister of Foreign Affairs
Romania-A Country Profile 10

with contribution from the Romanian Ministry of Foreign Affairs
Together For Your Business 18

with contribution from the Bucharest Chamber of Commerce and Industry
Corporate Environment Real Estate Creditor & Debtor Disputes Employment Public Procurement & Concessions Competition Intellectual Property Product Liability Pharmaceuticals
Published by uca Zbrcea & Asociaii with contributions from the Romanian Ministry of Foreign Affairs and the Bucharest Chamber of Commerce and Industry. 2012 SCA uca Zbrcea & Asociaii. All Rights Reserved. Printed in Romania. The information contained herein is valid as of 1st of December 2011. No part of this publication may be used or reproduced in any manner without permission from the publisher, except in the context of reviews.
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2012 SCA uca Zbrcea & Asociaii. All Rights Reserved.
Financial Institutions & Security Interests Capital Market Energy EU Community Law
Better Business in Romania
Introduction
In previous editions of this booklet, we were welcoming you with enthusiastic presentations of the transformations Romanias economy went through after the fall of Communism, with legitimate hopes flowing from Romanias accession to the EU, with the optimism of the figures measuring foreign investments on the local market and, generally, with the trust that the entire business environment in Romania has all chances of becoming better: as any other emerging market, ours cannot (could not) other than grow We all know that todays premises are not the same or, if not yet completely different, are undergoing inevitable changes. Romanias economy remains emergent, but the crisis which affects the world today forces a different perspective upon us. After the unprecedented warming of the global economy, we suddenly find ourselves faced with an icy cold wind, causing contraction. Globalthis contraction, too, and expressing itself by a natural tendency of repositioning, reorganization, exorcism. The chaos on the financial markets, the fall of the speculations on the stock exchange and on the real estate market, the chain of bankruptcies, the infections spreading from toxic banking assets, the growing unemployment, the dramatic reduction of trade are only a few of the symptoms the virus attacking the world economy now spreads. Symptoms that we can only expect to inevitably hit our economy too, cause trouble in what we saw as the El Dorado of foreign investment. This dramatic change of perspective forces us to introspection, before anything else, to an effort of realistic repositioning. To adapting to new realities as we go. To redefining better business. It seems like only yesterday that, on the background of the economy growing en fanfare, better meant more (and more and more), but now, better means more efficient and more effective.
This booklet is offered as a support for you and your companys investments in an economy affected, along the others, by global cooling; in an economy which, even though confronted by bankruptcies and reorganizations, by the decline of the real estate market and the soaring unemployment, still looks forward trustfully to investments in infrastructure, environment protection, health and green energy. This year again, Better Business in Romania features valuable contributions from the Ministry of Foreign Affairs, as well as the Bucharest Chamber of Commerce and Industry. Also, HE Teodor Baconschi, Minister of Foreign Affairs of Romania has honored us by contributing a foreword to this new edition. This booklet is made to offer you support in managing the inevitable complications created by the economic crisis but to also give you solid arguments for a better business development in Romania. The sun may shine in wintertime, too. We would be happy if this booklet would help you find and enjoy its warmth. Florentin uca Managing Partner
Although affected by the economic crisis, Romania has done relatively well from a business perspective. This has recently been confirmed by top ranking agencies, and by our European and global partners.
Foreword
The favourable reception of the latest editions of Better Business in Romania determined a legitimate reaction from the authors. I welcome this updated version of a booklet that has proved useful for an improved knowledge of Romanian economy, and is thus of substantial assistance in building corporate decisions and action. This is why the Ministry of Foreign Affairs, on account of its competences in international relations, including its public and economic diplomacy goals, was a natural partner in such an enterprise. Another strong reason for saluting this new edition is based on the reputation, confidence and prestige that our longstanding partneruca Zbrcea & Asociaii succeeded to build, both in the internal and external business community. This years edition of Better Business in Romania offers an updated picture of the most important economic areascorporate sector, privatisation process, financial institutions, fiscal policy, labour legislation and employment, competition, intellectual property rights, energy, environment, real estate, Community lawseen mainly from the point of view of legislation and practices. I consider this update both useful and necessary, given the evolution of the legal framework (with a needed degree of stability and predictability), as well as the effects induced in the Romanian economy by the latest developments in the regional and global environment: the fragile recovery in the most important European countries, dealing with the sovereign debt crisis in the EU, the markets instability, the growing role of emerging economies, the incipient process of global governanceto quote only the most obvious.
The main reason behind these positive reactions was the Governments determination in maintaining its reform commitments. Indeed, the sometimes painful measures implemented in various areas have begun to bear fruit. Fiscal consolidation by cutting public expenditures, a better collection of budget revenues, a unitary waging system in public administration, encouraging investment through the public-private partnership (PPP), sectoral stimulus packages, reforms in education, health, and social assistance are the basis for a robust economic expansion. I expect that the new edition of Better Business in Romania will receive the attention and appreciation it deserves from the business environment, and from a broader public. I take this opportunity to commend the valuable work of the authors, as well as the partnership with uca Zbrcea & Asociaii, which tends to become traditional, to our best common interest. Faithful to its mission, the Ministry of Foreign Affairs shall remain open to dialogue and suggestions from the business community. We shall continue to support it at home, in the European Union and worldwide.
Teodor Baconschi Minister of Foreign Affairs
Romania A Country Profile

An Active European Member
Romania pursues a foreign policy of active involvement in the major political and economic processes at regional, European and global level. Romania is a member state of the NorthAtlantic Treaty Organization (NATO) since 2004 and of the European Union since 2007. It has diplomatic relations with 182 states and an extensive network of diplomatic missions all over the world (more than 100 bilateral and multilateral, plus a significant number of consulates general and honorary consulates), which is an asset for its foreign objectives. In recent years, Romania has focused on efficiently substantiating its role within these two fundamental structures, promoting the consolidation of the Transatlantic link, building a prominent regional profile in the Balkans and at the Black Sea, expanding and intensifying its bilateral relations, while also taking part actively in the UN and other multilateral organizations or fora. The participation in the EUs decisionmaking processes has proven Romanias capacity to contribute to the common European objectives, but also to promote its own national interests in the EU framework. Romania was among the first EU members to ratify the Lisbon Treaty and is actively engaged in its implementation by ensuring a solid national contribution for the European External Action Service. The Commissioner designated by Romania in the new European Commission (20102014) covers an area of outstanding importance at the EU level, with significant financial implicationsAgriculture and Rural Development.
Romania brings a noted contribution to the EUs Common Foreign and Security Policy, and is among top 10 contributors among the member states to EU missions, mainly through its participation in the EU military and police operations in the Western Balkans and Georgia. Romania has also been involved in the EU debates and processes aimed at taking the best policy steps in response to the global financial and economic crisis, and has benefited from strong EU support in addressing its own domestic challenges. Romania has taken an active part in the common European effort to combat financial instability and boost economic competitiveness, being associated to enhanced cooperation mechanisms such as the Euro Plus Pact. It is worth mentioning, in the context, that right after becoming a fullyfledged EU member, Romanias profile as a reliable recipient of FDI increased drastically. A common EU energy security policy, based on diversification and solidarity, is one of the key EU related priorities for Romania. The signing of the Intergovernmental Agreement on the Nabucco gas pipeline (July 2009) and the endorsement of the project by the EU as a strategic component of this diversification approach is a notable success for Romania and its partners. A series of important initiatives have been launched in the EU with Romanias support, such as the Black Sea Synergy and, most recently, the proposal of an EU Strategy for the Danube Region. Romania firmly believes in regional cooperation, especially in Danube Strategy. The EU Danube Strategy is structured into four pillars, which address the major issues. These are connectivity (improving mobility and multimodality, inland waterways, road, rail and air links, encouraging more sustainable energy, promoting culture and tourism, people to people contacts), protecting the environment (restore and maintain the quality of waters, managing environmental risks, preserving biodiversity, landscapes and the quality of air and soils) building prosperity in the Danube Region (supporting the competitiveness of enterprises, including cluster development, developing the knowledge society through research, education and information technologies), strengthening the Danube Region (stepping up institutional capacity and cooperation, promoting security and tackle organized and serious crime). There are 12 priority areas of action, each area coordinated by two countries. Romania is coordinating, together with our partners in Austria, Hungary and Bulgaria, three of the priority areas: inland navigation, risk management, culture and tourism. Romanias efforts are now focused on the implementation of the Strategy. At national level, the management mechanism of the Strategy is functional. It was launched a special framework for the implementation of the EU Danube Strategy: an annual Forum, a steering ministerial Committee (formed by the ministers who have the responsibilities for the priority areas coordinated by Romania), an Advisory Council (representatives of the local and central authorities, academic and private environment), an interministerial Group, a coordination Office in the Ministry of Foreign Affairs and action groups for the main priority areas. We have created a special action group for the financial aspects.
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Romanians priorities in Danube Strategy are related to investments for improving and upgrading navigation, intermodal transport, and environment protection, developing tourism and cultural projects, transfer of knowledge. A strategic priority for Romania is to return to its traditional significant place in the Danube navigation system. Another priority regards providing a modern transport system through upgrading the port infrastructure and by creation of an intermodal logistics centers. The adoption of the EU Strategy for the Danube region and its implementation help deepen the transboundary, transregional and transnational cooperation and coordination, hence, also further integration and stabilization within the Central and South East Europe. This particularly holds true for countries which are not yet EU Member States.
A Reliable NATO Ally

Romania has brought a substantial input to NATOs transformation process. Romania has been engaged in the internal debates of the organization on issues of highest relevance: providing the Alliance with flexible capabilities, renewing NATOs Strategic Concept, promoting the cooperation with the EU, shaping the Allied military missions, developing a NATO antimissile system, defining NATOs role in energy security, combating new threats (such as the cyberdefence). In particular, Romania has had a very solid contribution to the Allied operations in Afghanistan, as Romanian forces not only have been constantly significant in number, but they also have been involved in difficult missions. At the beginning of 2010, Romania decided to supplement its troops in Afghanistan by 600 military to reach a maximum level of almost 1800 armed forces. The full recognition of Romanias outstanding status within NATO, but also on the international stage came with the Allied Summit organized in April 2008 in Bucharest, which was the largest NATO Summit ever and the most important foreign policy event hosted by Romania.
relationship with the Republic of Moldova, based on common historical and cultural ties, is expressed both in supporting the countrys aspirations for European integration and in extending substantial and concrete support bilaterally, in order for Republic of Moldova to be able to reform and to modernize. Romania is tirelessly promoting the strategic and economic importance of the Black Sea region for the EU and NATO. Romania has also been assertive in supporting the consolidation of EU and NATOs relations with Russia based on principles and pragmatic approaches. Romania has developed very close bilateral relations with a significant number of countries from all over the world. It has concluded Strategic Partnerships with the United States, the United Kingdom, France, Italy, Hungary, the Republic of Korea, and very recently, in 2009, with Poland and Azerbaijan, concluded an economic partnership with Germany, and also established special cooperation frameworks with countries such as China, Japan, Turkey or Israel. Cooperation with the United States has been placed at the core of Romanias partnership policy. The adoption of the RomaniaUS Joint Declaration on Strategic Partnership for the 21st century, alongside the signing of the Agreement between Romania and the United States of America on the deployment of the US ballistic missile defense system in Romania on the 13th of September, on the occasion of the visit by the President of Romania to the United States, marked the entry of our bilateral relations into a new stage, broader and deeper. The Joint Declaration reasserts the strategic character of the relations between Romania and the US and sets the pillars of future RomaniaUS cooperation: political dialogue, security, economy, peopletopeople contacts, science and technology, research, education, culture. At the same time, cooperation in the military field and on security issues has long represented the cornerstone of the RomaniaUS Strategic Partnership, and in this context the MD Agreement reconfirms the importance given by both countries to the bilateral collaboration in this area and highly contributes to enhancing the security not only of Romania and the US, but of all NATO members. Beside the adoption of the RomaniaUS Joint Declaration and the signing of the MD Agreement, our countrys military engagement alongside American forces in theatres of operations such as Afghanistan and Iraq, as part of the global fight against terrorism, as well as the 2005 Agreement regarding the activities of US forces located on the Romanian territory, prove the special nature of the bilateral partnership. Moreover, the approval given by Romanias Supreme Council of National Defence in February 2010 to the US request regarding Romanian participation to the future American Missile Defence System in Europe is of highest relevance not only for RomaniaUS strategic cooperation, but also for Romanias national security.
Developing Partnerships and Participation on the International Stage

Romania has firmly supported the integration of Western Balkans states into the EU and NATO and constantly encouraged the European and EuroAtlantic aspirations of the countries from its Eastern neighbourhood. Romania is committed to an active contribution to the EU policy and actions towards the Eastern proximity aimed at anchoring the Eastern neighbours to the EU identity and values. The special
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Especially after the EU accession, Romania has used part of its diplomatic energies to revitalize and/or expand its relations with partners from other regions and continents. Romania is acutely aware of the global significance of developments in Central Asia and the Middle East, and its bilateral relations with countries from these regions have known significant successes for the past years, with positive economic implications. Another foreign policy aspect with particular relevance from a business perspective is that, after 1990, Romania has steadily intensified its relations with international financial organizations, including the International Monetary Fund, the World Bank Group, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Council of Europe Development Bank. Although still difficult, Romanias objective to strengthen relations with the Organization for Economic Cooperation and Development (OECD), with a view to promoting its candidacy for full membership, remains high on the agenda of the Government.
Romanian foreign trade registered a significant increase both from a quantitative and a qualitative perspective, especially during the last years when it displayed annual growth rates above 10%. 2008 marked a peak in foreign trade, the total volume reaching EUR 90 billion (of which EUR 34 billion exports). During the last decade, the main trading partners were Germany, Italy, France, Turkey, Hungary, the Netherlands, Great Britain and Austria. Structurally, the evolution of foreign trade registered significant developments, whereas Romania exported more services and manufactured products with an enhanced valueadded content. These trends reflected the positive effects of economic restructuring, the national economys offering potential and an improved use of access facilities on foreign markets. Currently, EUs weight in Romanias foreign trade stands at over 70%, proving Romanias degree of integration into the European internal market. As a consequence of the global economic crisis that emerged in fall 2008 (leading inter alia to low levels of commercial and credit flows), 2009 was in Romania a year of economic recession. Although the Romanian banking system was solid and the economy registered almost a decade of sustained growth, Romania was affected by the crisis, mainly because of its links with the European and global markets. Last year the economy registered a 7.1% decrease of the GDP (lower than estimated), accompanied by an increase of the budget deficit and of unemployment figures. Governments efforts to mitigate the crisis impact were oriented towards macroeconomic stability, stimulating the economic relaunch and maintaining investors interest. In order to prevent further difficultiesand support the structural reform process, Romania has concluded with European partners and international financial institutions a financial assistance package of up to EUR 20 billion for a period of two years (2009-2011), which was successfully concluded at the beginning of 2011. The main objectives concerning the above-mentioned package focused on balance of payments support, ensuring the credit and investment flows and consolidation of the National Banks reserves. Within this context, Romanias economic perspectives gradually improved. The year 2010 led to a stabilization of the GDP and the economy returned to growth in 2011, with an estimated 1.5% advance for the entire year and an estimated 2% next year. In spite of global financial market tensions and deterioration in domestic asset quality, the banking sector has remained resilient. Continued fiscal consolidation has improved Romanias credibility. The ambitious fiscal consolidation process and structural reforms implemented in 2010 brought encouraging results and it is aimed at ensuring the basis for a sustainable economic recovery on the back of enhanced competitiveness. In this context, the partnership with the European Commission, IMF and the World Bank continued within the framework of a new, precautionarytype, financial agreement (20112013).
A Brief Look into Romanias Economic Evolution after 1990

The economic evolution, after 1990, registered two distinct stages. During the first stage (19901999), Romania passed through an economic recession, deeper in 19901992, when the economy registered a 27% decrease and during 19971999 years, with a 12% downturn. This process, accompanied by an almost permanent inflation and an increase of unemployment, took place in the context of decentralization and privatization measures and, after 1997, of an accelerated economic restructuring. The second period (20002008) witnessed a strong economic recovery, with an average annual growth rate of over 6%, with peaks in 20032008 when Romania scored a strong increase in consumption and productionoriented investments. An enhanced and friendly business environment, the consequences of introducing a flat tax rate and the positive attitude of foreign partners towards Romaniain the context of its NATO and EU accessionsled to record foreign investments flows. During 20052008, direct investments in Romania amounted to approximately 28 billion Euros, more than half of the total foreign investments of the last 20 years. As a consequence of the global economic crisis, the figure registered a downturn in 2009 when it reached EUR 4.89 billion (approx. of the 2008 level). The Romanian economy offers quite a number of competitive advantages which recommends it as one of the favourite destinations for foreign investments in the region. These advantages were enhanced by policy measures and an adequate legal framework promoted by the authorities in this important field of economic development. The
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The Romanian Government maintains its target date for joining the Eurozone (in 2015), within the framework of its continuing efforts towards the fulfilment of Stability and Growth Pact, convergence criteria (we are a member of the Euro Plus Pact), as well as ensuring long term exchange rate stability of the national currency (Leu). The sustained pace of reforms will be maintained with an emphasis on public administrations capacity to manage public funds and to generate EU financed projects; financing priority projects in agriculture, education, healthcare, energy, environment and creating new investment opportunities for investors. Romanias strategic priorities for the forthcoming period aim at developing the infrastructure, ensuring energy security and alternative routes of transport, modernizing the agriculture, improving the education and healthcare quality.
Music and theatre: The biggest classical music festival in SouthEastern Europe, The Enescu Festival, takes place every two years in Bucharest. Every year, in November, Romania hosts an International Chamber Music Festival SoNoRo, in Bucharest and other major cities. An international jazz festival is organized every year in the picturesque mountain village of Grna. The International Theatre Festival in Sibiu brings together participants from 70 countries, presents 350 events in 55 venues, with 60,000 spectators. Cultural promotion: There are Romanian Cultural Institutes in 17 countries and the network is growing. The second biggest building in the world, located in Bucharestthe Palace of Parliamenthosts a museum for contemporary art. Doina, a traditional Romanian folk song is part of the UNESCO Representative List of the Intangible Cultural Heritage of Humanity.
A Cultural and Generational Revival

A new generation of highly skilled and competitive people has largely taken over the leadership both in private and public sectors, boosting Romanias development from all points of view. This can be seen not only in the foreign policy or in business, but also in Romanians vivid cultural life. Here are some fascinating examples of the Romanian creativity after 1990: Cinema: Romanian movies have impressed international juries and audiences in the past years. The Romanian director Cristian Mungiu won the European Film Award of the European Film Academy and the Palme dor prize at the International Film Festival in Cannes in 2007 for his movie 4 weeks, 3 months, 2 days. Police, Adjective, directed by Corneliu Porumboiu was awarded in 2009 with the prize of the International Federation of Film Critics. The Grand Prix of the Jury at the 60th Berlin Film Festival, the Silver Bear, was won by Florin Serbans movie If I Want to Whistle, I Whistle. Two major film festivals with broad international participation take place annually in Transylvania, in Cluj and Sibiu. Movies like Cold Mountain, Amen, Callas Forever were shot in Romania. Francis Ford Coppolas film Youth Without Youth is based on a short story of Romanian reputed philosopher and author Mircea Eliade. Literature: Mircea Crtrescu is the Romanian writer whose works have been translated in over twelve languages after 1989. The 2009 Nobel prize for literature went to the German writer of Romanian origin, Herta Muller, whose books stem from her experience in totalitarian Romania. The Romanianborn writer Marius Daniel Popescu was the winner of Switzerlands prestigious Robert Walser Award for literature for his novel Symphony of the Wolf, based on life experience in Ceausescus Romania. The book of the year in the Czech Republic in 2006 was the novel Simion Liftite authored by the Romanian Petru Cimpoiesu. Romania`s Ministry of Foreign Affairs1 31 Aleea Alexandru, Sector 1, Bucharest, 011822 Phone: (40) 21 319 21 08 or 319 21 25 Fax: (40) 21 319 68 62 www.mae.ro
The Ministry of Foreign Affairs (MFA) takes responsibility only for the content of the above presentation. The MFA encourages private companies to promote their views on the Romanian business environment. Better Business in Romania is a booklet authored by uca Zbrcea & Asociaii.
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Together For Your Business

No Stage in a Companys Life without the Bucharest Chamber of Commerce and Industry!
The first Chamber of Commerce and Industry in the world, forefather and model of all the chambers established ever since, is that of Marseilles, which dates from 1599. In Romania, merchants and manufacturers are organised in guilds and corporations until the Union of the Principalities, in 1859, when business people express their interest in setting up a chamber structure. On the 10th of November 1861, before the first law on chambers of commerce exists in Romania, C.A. Rosetti, senior of the traders in Bucharest, explains the need for chambers of commerce to be independent from the government: The Ministry of Finance, which the trade and industry of the country depend on, cannot, no matter how hard it tries, give special heed to these reforms and improvements, because it lacks the time to do so and, most of all, because the interests of commerce and industry are not always compatible with those of the internal revenue services, but are often conflicting. On the 30th of September 1864, after having been supported by all the enlightened minds of the time, such as Nicolae Kretzulescu and Mihail Kogalniceanu, the law on chambers of commerce is promulgated by its signing by Alexandru Ioan Cuza. On the 28th of January 1868, the Bucharest Chamber of Commerce (Bucharest CCI) starts operatingthe first suchlike institution on the territory of Romania, as it was at that timewith Miron Vlasto as President.
During the inauguration ceremony of the Bucharest CCIs Building on the 23rd of May 1911, HM King Carol I underlines, in few words, the mission of chambers of commerce and their standing in a democratic society: Chambers of commerce and industry have given the government valued support through enlightened counsel and outstanding undertakings. I am most pleased to say that these undertakings and counsel have always had at heart not individual interests, but those of the community. A century later, on the 13th of November 2011, the Bucharest CCI celebrates the centennial of its historical head office by organising an extraordinary concert hosted by the Romanian Athenaeum and performed by the George Enescu Philharmonic Orchestra conducted by Horia Andreescu. The event is honoured with the presence of members of the Royal House of Romania and over 700 participants, close partners of the Bucharest CCIrepresentatives of the diplomatic corps accredited in Bucharest, academics, economic actors. During this special event, Prof. Sorin Dimitriu, Ph. D., President of the Bucharest CCI, announces the decision of the Managing Board that the 2011 Hermes Trophy shall be awarded to HM King Mihai, as a tribute to the Royal House of Romania for its contribution to the modernisation and strengthening of the Bucharest CCI. The Bucharest CCIs activity has always been most rewarding and has given, since the very beginning, effective support to Romanias economic development. As early as June 1868, with the assistance of the Bucharest CCI, the registration of commercial companiesthe ancestor of presentday Trade Registryis introduced for the first time in Romania. The Bucharest CCI is subsequently authorised to publish the average exchange rate of the main foreign currencies, it is coauthor of the text of the first law on trademarks, and initiator of the law on encouraging domestic industry. In 1884, upon proposal of the Bucharest CCI, the law on encouraging domestic industry is promulgated. In 1895, the Bucharest CCI opens the first commercial information office, and in 1899 it announces its position on cartels. In 1926, following a Bucharest CCI initiative, the postal cheque is first introduced as noncash means of payment. The Chamber supports and finances commercial and vocational education and contributes a generous sum to the construction of the Academy of Economic Studies Building. Currently, the Bucharest CCI (www.ccib.ro) has diversified the range of services supplied; thus, throughout the life of a company, the Bucharest CCI can supply traders with counselling and expertise, assisting them in developing their business most rapidly and efficiently.
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As stipulated by the initiators of the first law on chambers of commerce in Romania, the Bucharest CCI continues to be a selfsufficient, nongovernmental, non political, nonprofit, public purpose organisation without a patrimonial purpose, a legal person in its own right, whose aim is to represent, defend and promote the interests of its members and other economic players of Bucharest before the public authorities and domestic and international bodies, for the development of trade, industry, agriculture, services, tourism, etc., in line with market economy requirements. The Bucharest CCI is organised and operates under Law No. 335 of 3rd of December 2007 and its duties still include support to its members in their economic relations with official representatives of both other states, and local public administration authorities, for the economic and social development of Bucharest, including by public-private partnership. Likewise in the past, when the Bucharest CCI used to have its say in the elaboration of laws essential to the development of market economy in Romania, the Chamber continues to send bills to authorised institutions, on its own initiative or after consultation of its members. The Bucharest CCI, represented by Prof. Sorin Dimitriu, Ph. D., President elected in 2008, concludes protocols with local and central public administration authorities and regional structures, for the economic development of Bucharest. Furthermore, under its Articles and in conformity with the objectives set out by the new managing team, the Bucharest CCI initiates, supports and develops promotion, research and development, and innovation programmes and projects, organises training programmes, and promotes EU and international bodies regulations and practices by organising symposia, conferences, seminars and other similar events for both members and other economic operators. The Bucharest CCI organises and manages trade fairs, exhibitions, shows, business forums, economic partnership actions at home and abroad, in own, leased or rented locations; it organises the annual Chart of Top Companies of Bucharest, granting moral rewards to economic actors for their business efforts and stimulating competition. This brief overview of the activities of the Chamber shows beyond any doubt that, as stated herein before, the Bucharest CCI can supply services that make it easier for businesses at any stage in a companys life.
Here are below, with no pretence of exhaustiveness, the main categories of services supplied by the Bucharest CCI for the benefit of the business community. The range of services justifies the Chambers motto, Together for your business.
Registration and authorisation of companies and activities

Information and consultancy on the Romanian business legal environment; Counselling and assistance for registration and authorisation of companies and activities; Counselling and assistance for registration of associations and foundations; Counselling and assistance for the registration of amendments to company formation documents.
Consultancy services to foreign companies and entrepreneurs

Consultancy and assistance on the formalities for setting up representation offices, subsidiaries, branches and companies in Romania; Consultancy and information on the Bucharest business; Organisation of business meetings, partnerships, forums, conferences, company profiles; Evaluation of Romanian companies.
Business information
Supply of information on companies and marketing databases; Business opportunities (demand, supply, tenders, auctions, cooperation and outsourcing); Market surveys and information on areas of expertise; InfoFinfinancial analysis report developed by Bucharest CCI experts based on the analysis of the up to sevenyear evolution of balance sheet data and major indicators such as solvency, liquidity, return on assets and activity; potential commercial or credit risks can be thus identified and clientor supplierrelated risks can be better controlled.
Consultancy and assistance for business development

Information, assistance and consultancy regarding the participation in EU tenders and communityfinanced programmes; Tailormade assistance for companies participation in national and European projects; Assistance in intellectual property rights exploitation; Technology transfer activities; Information on international and foreign trade legislation.
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Events and debates organisation

The Chart of Top Companies in Bucharest, highlighting the best performing economic actors that have their headquarters in the Capital; Hermes Trophy annual awards, for honouring outstanding personalities from outside the chamber system for their contribution to the consolidation of the Bucharest CCI; Counselling and assistance for events organisation; Organisation of meetings on business environment issues (seminars, conferences, forums, workshops, etc.); Organisation of inhouse seminars and workshops on request; Organisation of debates on legislative issues; Organisation of fairs and exhibitions; Assistance to companies for participating in fairs and exhibitions organised by ROMEXPO S.A., by granting discounts; Organisation of scientific events and exhibitions.
the Capital, the Bucharest CCI organises, periodically: Chamber music recitals; Coup recitals; Classical concerts; Book launches. The Bucharest Chamber of Commerce and Industry 2 Octavian Goga Blvd., Sector 3, Bucharest, 030982 Phone: (40) 21 319 01 73 or 319 01 21 Fax: (40) 21 319 01 33 www.ccib.ro
Promotion of company products/services

Organisation of events on company products/services supply; Promotion on the Bucharest CCI website (www.ccib.ro) and its online periodical Afacerea (www.ccib.ro/afacerea); Representing member companies in fairs, exhibitions or economic missions in Romania or abroad; Dissemination of R&D projects results.
Entrepreneurial training and vocational programmes

Organisation of training, courses, including inhouse programmes for entrepreneurs or company employees, with Romanian and foreign expert trainers.
Issue of certificates
Certificates of origin; Force majeure certificates (force majeure cases occurred during operation, on the territory of Bucharest Municipality, based on evidence); Certifying deeds.
Mediation Centre
Settlement of civil and commercial litigations by certified mediators by agreement of both parties, with lower expenses than those incurred by going to court, and in shorter time.
The place where culture and business meet

Under the auspices of the Carol I Trust Foundation chaired by HRH Prince Jean of Luxembourg and set up in order to bring the historical Chamber Building at 4, Ion Ghica St. back into the economic and cultural life of
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Changing the legal form of the company during its operations is possible, with the required corporate approvals, and provided the legal requirements for the new form are met.
Corporate
Overview
Business activities in Romania may be carried out as a rule by companies (which may be owned without any restrictions by Romanian or foreign shareholders) or by other forms of business organizations such as authorized individuals, individual undertakings or family undertakings within the framework set out in the Companies Law No. 31/1990 (the Companies Law) and the Government Emergency Ordinance No. 44/2008 on the performance of business activities by authorized individuals, individual undertakings and family undertakings (GEO 44/2008). Listed companies have to observe also the capital market regulations, which are discussed in a dedicated chapter herein. As a matter of principle, business organizations may conduct any type of activity1 . Limitations, such as special approvals or permits, or restrictions as to the form of company allowed to perform certain activities, may be imposed by law in various business sectors placed under the supervision of a public regulatory authority, such as certain financial services (insurance and banking). The Companies Law provides the limited list of legal forms under which a company may be established in Romania: the general partnership (societate n nume colectiv), the limited partnership with shares (societate n comandit simpl), the limited stock partnership (societate n comandit pe aciuni), the joint stock company (societate pe aciuni) and the limited liability company (societate cu rspundere limitat). Founders are free under the law to choose the type of company they establish, but certain business activities may be conducted only by companies having a certain legal form (e.g. only joint stock companies may operate in insurance or banking).
The types of companies most frequently incorporated in Romania are joint stock companies and limited liability companies, especially due to the limitation of the shareholders liability to the value of their subscribed shareholding. Nevertheless, piercing the corporate veil is expressly regulated, so that shareholders abusing2 the limitation of their liability and the distinct personality of the company, thus deceiving the companys creditors, shall be held liable without limitation for the companys outstanding debts. Registration formalities required to set up a Romanian company usually last three days from submitting the complete documentation with the Trade Registry. Among the most important reflections of the EU norms in Romanias corporate law, we note the following: Romanian companies meeting at least two of the following criteria: (i) aggregate assets amounting to at least EUR 3,650,000, (ii) net turnover amounting to at least EUR 7,300,000 or (iii) number of employees exceeding 50 individuals must prepare their financial statements in accordance with the EC IVth Directive and have them audited, while the companies which do not meet the criteria are permitted to provide only simplified financial statements (even though they may choose to apply the EC IVth Directive, in addition to the Romanian Accounting Standards); Further to Romanias accession to the EU on the 1st of January 2007, business activities may be carried out under the two fundamental freedoms central to the effective functioning of the EU Internal Market: the freedom of establishment and the freedom to provide services. The freedom of establishment enables an economic operator (whether a person or a company) to carry out business activities in a stable and continuous manner in one or more Member States. The freedom to provide services enables an economic operator providing services in one Member State to offer services on a temporary basis in another Member State, without having to establish itself in the second state, too; Romania created the legal environment for the incorporation/authorization of the European companies, free from obstacles arising from disparities and limited territorial application of the national company law, as per EC No. 2157/2001; Also, Romania implemented the European regulations on crossborder mergers. Romanian limited stock partnerships, joint stock companies or limited liability companies, as well as the European companies headquartered in Romania may take part in crossborder mergers.
The available economic activities are listed in an official codeClasificarea Activitilor din Economia Naionalcommonly known as the CAEN Code which represents a transposition of the NACE Code, valid at the European level.
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The law deems abusive the acts of the shareholder to use the companys assets as if they were its own, or to diminish the companys assets for its own benefit, while aware that in doing so the company is hindered in performing its obligations.
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Joint Stock Companies

Shares and share capital
Joint stock companies must have at least 2 shareholders3 and a share capital of at least RON 90,000. The minimum legal share capital value may be changed from time to time so that it reflects the RON equivalent of EUR 25,000. The companys share capital may be formed by contributions inkind, in cash and/ or in receivables. Cash contributions are always mandatory upon the companys establishment. Inkind contributions must be evaluated and effectively delivered to the company (the company being given a real right over the property, such as ownership, or usufruct etc.). Only 30% of the entire subscribed share capital is required upon establishment while the remaining 70% must be paid either within 12 months from establishment, if formed of contributions in cash, or within 2 years, for contributions inkind. Contributions in receivables are deemed paid when the debtor effectively makes the payment to the company. The share capital of a joint stock company may be increased, by issue of additional shares or by increasing the face value of the existing shares, through contributions in cash or inkind, or through the incorporation of the companys reserves (save for the legal reserves), undistributed dividends and share premiums or by setting off outstanding receivables against the company with newly issued shares (debt to equity swaps). Positive balance registered upon the revaluation of the companys assets may not be used to increasing the share capital of a joint stock company. The existing shareholders have a preemption right to subscribing the newly issued shares, as well as for the bonds convertible into shares, pro rata with their participation in the company. Exceptionally, the preemption right may be limited or withdrawn for well grounded reasons by the general assembly of the shareholders, with special majorities: the decision must be passed in the presence of of the subscribed share capital and with the majority of votes of the shareholders present or represented in the respective meeting. In certain cases, the share capital increase or decrease becomes mandatory (e.g. in the event of a reduction of the net assets below half of the subscribed share capital, the share capital must be either increased to a certain level which ensures that the net assets value exceeds half of the subscribed share
capital, or decreased, the minimum share capital requirements observed, with a value equal to that of the losses that cannot be covered from the companys reserves). Failure to observe such provisions could trigger the dissolution of the company although such sanction has been rarely put into practice. Shares may be registered shares or bearer shares. As a matter of practice, bearer shares are rarely used in Romania. Shares may be ordinary (i.e. one share gives right to one vote in the shareholders meeting and to the dividends proportionally to the quota of the share capital) or preferential (i.e. giving priority to dividends but not entitling to voting rights). Preferential shares may account for only up to of the share capital nominal value. The articles of association of a joint stock company may provide for a different number of votes attached to a certain block of shares. One share may be jointly owned by several persons, however, the coowners have to appoint a joint representative to exercise the rights derived from the share. Unless otherwise provided in the companys articles of association, the shareholders may freely transfer their shares to any person. If the company is listed, the transfer has to observe the rules governing the relevant regulated market. Depending on the stock a person wishes to purchase in a listed company, certain procedures shall be observed (i.e. public offers). As a general rule, the joint stock company may acquire up to 10% of its own shares provided they are fully paid. There are few exceptions to this limit, such as where the company acquires its own shares with a view to decreasing the share capital or within enforcement proceedings against a shareholder for debts due to the company. Such shares do not give the right to vote or to receive dividends while held by the company itself. The shares may be subject to security interests, which become opposable towards third parties as of registration with the Electronic Archive for Security Interests.
The Joint Stock Companys management

The main management body of a stock corporation is the General Assembly of Shareholders (the GAS). Depending on the matters to be submitted to shareholders approval, the GAS may be ordinary (e.g. appointing and dismissing the directors and auditors, approving the yearly financial statements and the management report) or extraordinary (e.g. increase/decrease of the share capital, change in the companys legal form, mergers, spinoffs). Shareholders having an interest contrary to the companys interest in the matter submitted for the GAS approval have to refrain from voting.
5 was the minimum number of shareholders according to the form of the Companies Law as in force before the 1st of December 2006. The modification of the minimum number of shareholders in a stock corporation has determined several companies to reduce their number of shareholders to 2 since this brings more flexibility in the operation of the corporate bodies of a stock corporation.
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Under the law, voting rights may not be assigned to any person and any agreements on exercising the vote in a certain manner are null and void.
This latter interdiction raises issues in practice, as it places doubts on the validity of shareholders agreements, especially as regards clauses containing arrangements to exercise the vote in a certain way on specific matters (e.g. when voting to appoint the directors nominated by each of the shareholders). The ordinary and the extraordinary GAS differ as regards the quorum and voting rules. On the first call, the ordinary GAS may duly pass resolutions only (i) in the presence of the shareholders holding at least of the total number of voting rights and (ii) with the majority of the voting rights exercised in the meeting. On the second call4 , there is no minimum share capital required to attend or be represented and the decision will be taken with the majority of the voting rights exercised in the meeting. The constitutive act may not under the law provide for a lower quorum or a higher majority for the second call of the ordinary GAS, a limitation which raised controversy in practice concerning the enforceability of shareholders agreements providing for a certain veto right in relation to important decisions in a joint stock company. In the case of the extraordinary GAS, the presence of the shareholders (or their representatives) holding at least of the total number of voting rights is required at the first call, and 1/5 of the total number of voting rights for the second call. Decisions may be duly passed with the vote of the shareholders representing at least of the voting rights of the shareholders present or represented at the meeting. However, a special majority of 2/3 of the voting rights of the present shareholders is required for decisions on major issues, such as the increase or decrease in the share capital, merger or the company`s winding up. The articles of association may provide for increased thresholds of quorum and voting majorities. The shareholders holding at least 5% of the share capital may request that a GAS be called, or that the agenda of an already convened GAS be supplemented. As well, they may request the auditors to review any act or operation of the company or initiate claim, on the companys account, against the founders, directors or managers of the company for damages they caused the company. The Companies Law provides for two types of management systems available for joint stock companies: the onetier management system, where the management is entrusted to a board of directors (consiliu de administraie) which can or in
certain cases is obliged to delegate management powers to several managers (directori), and the twotier management system, where the effective administration of the company is ensured by an executive committee (directorat) under the control of a supervisory council (consiliu de supraveghere). The managers may also be appointed from among the members of the board of directors, provided that the majority of the board members remain nonexecutive in order to ensure the objectivity of the board and its independence from the management. Certain prerogatives of the board may not however be delegated to the executive officers (e.g., establishment of the main activity and development trends of the company; establishment of the accounting and financial control system and approval of the financial planning; appointment and revocation of the executive officer and the supervision of the executive officers activity; filling the request for the opening of the insolvency procedure, as well as the prerogatives delegated to the board by the general assembly). On the other hand, in the twotier management system, a person cannot hold functions in the executive committee and in the supervisory council simultaneously. The members of the board of directors and the managers, in the onetier management system, and the members of the executive and supervisory committee, in the twotier system, may not be concomitantly employees of the company, their relationship with the company being regulated by a management contract. However, the managers and the members of the executive committee are assimilated with the employees, from the perspective of the taxes due to the social security budgets, which means that, with few exceptions, the same contributions have to be paid in relation to their remuneration as in the case of the employees. There are no residency or citizenship restrictions on the directors, managers, members of the executive or supervisory committees of a joint stock company. The managers of a company opting for the onetier management system and the members of the executive committee in a joint stock company that adopted the twotier management system can only be individuals (natural persons). In practice, the onetier management system is elected by the vast majority of the Romanian joint stock companies In the case of listed companies, the directors may be appointed, at the request of a shareholder holding at least 10% equity participation, by way of cumulative voting, as discussed in the chapter dedicated to Capital Market. There are legal provisions requiring GAS approval on certain operations (e.g. acquisition, transfer or lease of assets amounting to over half of the book value of the companys assets) before the companys directors are allowed to conclude them. In addition, the articles of association may provide for several other operations
The second call takes place when the necessary quorum is not met upon first call.
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which require the GAS prior approval before allowing the management to conclude a transaction. As well, there is a general requirement that directors must refrain from voting on issues wherein they have a direct or indirect interest. As a rule, management members could be held liable only by the GAS for their management operations. However, the shareholders holding more than 5% of the share capital may engage the liability of the management members in case the GAS did not exercise such right. The official receiver appointed in case insolvency proceedings are initiated against companies may also engage the liability of the management members and, failing to do so, the creditors of the concerned company may exercise such right under specific circumstances regulated in the insolvency legislation.
The shareholders having an interest in the matter submitted to the GAS for approval have to refrain from voting. In the event that the GAS cannot validly take a decision due to the absence of the majority required by the law, the GAS may decide at the second call irrespective of the number of the shareholders attending the meeting and of their quota to the companys share capital. The limited liability company is managed by one or several directors, who may be shareholders or third parties. Unless otherwise approved by the GAS, the directors are subject to certain noncompeting restrictions (i.e. they may not hold directorship position in another company conducting the same business or a competing business activity and may not perform, on their own account or on behalf of a third party, the same business activity or a competing business activity). The one and twotier management systems described for joint stock companies, and the limitations attached thereto, are expressly excluded from application in the case of limited liability companies, to the effect, inter alia, that the directors in a limited liability company may be concomitantly employees of that company. The GAS but not the shareholders themselves may engage the management liability. Similar with joint stock companies, the management liability may be engaged during insolvency proceedings by the official receiver or by the creditors.
Limited Liability Companies

Shares and share capital
A limited liability company may have 1 to 50 shareholders and must hold a share capital of at least RON 200 (approx. EUR 50). An individual or a legal entity may be the sole shareholder in one limited liability company only. The sole shareholder of a limited liability company may not be itself a limited liability company owned by a sole shareholder. During the companys life, provided that the abovementioned minimum threshold is observed, the share capital may be either increased or decreased. The rules governing the case of reduction of the net assets below half of the subscribed share capital in joint stock companies apply also to limited liability companies. The shares of a limited liability company cannot be traded on a regulated market. The limited liability company cannot issue bonds. The shares are freely transferable between the shareholders, while transfers towards third parties are subject to the approval of the shareholders holding at least of the companys share capital. The effectiveness of the transfer of shares towards third parties is conditioned by the lapse of 30day opposition term or by the rejection of such opposition through an irrevocable court decision. The opposition term is not applicable to share capital increases through contributions made by third parties.
Authorized Individuals
Authorized individuals may carry on business activities as selfemployed authorized individuals, as owners of individual enterprises, or as members of family enterprises. The owners of individual enterprises are the only authorized individuals able to act as employers and to conclude individual employment agreements with third parties. The activity of the authorized individuals is mainly regulated by the Government Emergency Ordinance No. 44/2008 (GEO 44/2008). Authorized individuals are personally liable for all the obligations undertaken during the business operations. Under GEO 44/2008, Romanian citizens and citizens of EU Member States and EEA are allowed to carry out in Romania, as authorized individuals, all the business activities provided by the CAEN Code. The activities performed by individuals require prior registration with the Trade Registry Office having jurisdiction in the area where the applicants have residence or where the activities are to be carried out. The Trade Registry should issue the registration certificate within a period of maximum 5 business days as of the submission of the application and complete documentation. The registration certificate best expresses the simplified procedure of authorization individuals enjoy, as it incorporates the actual registration of the individual, the required functioning
The limited liability companys management

Decision making in a limited liability company belongs to the GAS. The directors are obliged to convene the GAS whenever necessary, but in any case at least once a year. The shareholders of at least 25% of the share capital have the right to request the convening of the GAS. Unless otherwise provided in the companys articles of associations, the decisions may be passed within the GAS based on the votes of, cumulatively: over 50% of the shareholders and over 50% of the share capital.
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authorisations (e.g. sanitary authorization, fire extinction authorization etc.), as well as the registration of the authorized individual with the fiscal authorities. However, under special enactments, certain activities require additional specific authorisation before beginning the actual operations (e.g. the insurance agent must be authorized by an insurance/reinsurance company). GEO 44/2008 is also not applicable when the permission to practice certain activities is granted through a decision of a specific professional body, as it is the case of lawyers, certified accountants or financial auditors.
Environment
Restructuring Businesses
In the context of the economic and financial crisis, several business restructuring options gathered ground, including mergers, spinoffs transfer of lines of businesses, and acquisition and disposal of assets. The Companies Law regulates in a dedicated chapter the merger and spinoff of companies. The merger may take place either by merging one or more companies into another, existing company (fuziune prin absorbie) or by two or more companies deciding to form a new company (fuziune prin contopire). In the first case, the absorbed companies are dissolved without undergoing liquidation, while in the second case all participating companies (except for newly created one) follow the same process of dissolution without liquidation. Spinoffs are made by transfer of one companys assets and liabilities, either entirely or partially, to two or more existing or newly created companies. The spunoff company is dissolved without undergoing liquidation. Transferring part of one companys assets and liabilities to one or more existing or newly created companies is assimilated to spinoff. Mergers and spinoffs have to be approved by the GAS of each participating company and must follow a specific implementation process. The legal framework applicable to mergers and spin-offs has been amended in the second half of 2010 in view of shortening the deadline for completing such operations, especially through the elimination of the suspensive effect of the opposition filed by the creditors of the companies participating in the operations. Companies in financial trouble may undergo reorganization based on a plan approved within insolvency proceedings before their shares are sold or their assets transferred to third parties. The successful finalization of such reorganization plan offers an important level of comfort to both the creditors of the concerned companies, and to the purchasers of its shares or assets. All such processes involve a multidisciplinary legal analysis. Besides the corporate aspects, the permitting matters (including approvals from the competent authorities and transfer of authorizations) and the employment issues (such as the protection of employees in case of transfer of undertakings) must be carefully assessed.
General. Main Regulations. Regulatory Authorities

Romanian legislation on environment is currently undergoing changes, as implementing new regulations for environmental protection has become one of Romanias legislative priorities after joining the EU in January 2007. During the last years, Romanian authorities have made serious efforts in order to transpose the principles of the relevant EU Directives in this field and, at the time of this analysis, the most important EU Directives already implemented in Romania are the following: Directive No. 96/61/EC concerning integrated pollution prevention and control (the IPPC Directive); Directive No. 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental damage; Directive No. 85/337/EEC on assessment of the effects of certain public and private projects on the environment; Directive No. 2003/35/EC providing for public participation in respect of the drawing up of certain plans and programs relating to the environment and amending Council Directives 85/337/EEC and 96/61/EC with regard to public participation and access to justice; Directive No. 2000/60/EC establishing a framework for Community action in the field of water policy; Directive No. 79/409/EEC on the conservation of wild birds; Directive No. 92/43/EEC on the conservation of natural habitats and of wild fauna and flora.
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The main authorities entrusted with the application of the environmental rules are: The local environmental protection agencies established in each county; The regional environmental protection agencies (i.e. one regional environmental protection agency coordinates the activity of several local environmental protection agencies); The National Environmental Guard. The Ministry of Environment and the National Environmental Protection Agency also have competencies in applying the environmental regulations; however, their implication is limited to projects that may have significant impact at national level, or which may impact on the environment of other states.
The report is submitted by the environmental authority to a public debate. Based on the findings in the environmental impact assessment report and, if the case, on the comments received from the public, the environmental authority takes its decision on issuing the environmental agreement. The decision is published in the media, so as to allow any interested person to challenge it. The environmental agreements are valid for the whole period of project development. The public potentially affected by the project and the NGOs specializing in environmental protection play an important role in the procedure, as they have the right to participate in the process by submitting their points of view in relation to the project and by participating to the public debates organized by the environmental authorities. For projects that may generate impact on the environment of neighboring countries, the Ministry of Environment conducts consultations with the relevant authorities in the possibly affected state. Decisions on issuing the environmental agreement for such cases must take into account the comments and suggestions possibly received from the potentially affected state. The environmental agreement is a prerequisite for obtaining the building permit for projects with significant impact on the environment. In 2009, the framework procedure for issuing the environmental agreement was amended to ensure better synchronization with the legal framework governing the issuance of the building permit.
Implementing Projects Which May Generate an Environmental Impact

Implementing projects that may generate impact on the environment requires a twotier authorization. On the one hand, such projects may only be developed subject to obtaining an environmental agreement (acord de mediu), which sets out the conditions to be fulfilled so as to ensure that the implementation (construction) of the project complies with the statutory environmental requirements. The environmental agreement is one of the documents substantiating the application for a building permit. On the other hand, works may not be commissioned until the operator obtains an environmental authorization (autorizaie de mediu), which is separate from the environmental agreement.
The environmental authorization

While the environmental agreement is the document regulating the implementation of environment impacting projects, activities with possible impact on the environment may only be carried out subject to an environmental authorization. The authorization sets forth the specific technical conditions to be complied with when carrying on a specific activity possibly generating an impact on the environment. The environmental authorization may provide for a set of measures to be implemented in order to reduce the impact on the environment, establishing also the time schedule for implementing the respective measures. Failure to abide by its terms may trigger the suspension or annulment of the environmental authorization.
The environmental agreement

The environmental agreement is issued further to conducting a complex procedure coordinated by the environmental protection agencies at different levels or, in certain cases, by the Ministry of Environment itself. The statutory framework in the field of environmental impact assessment was amended in April 2010 so as to ensure a better implementation of the EIA Directive 2001/42/CE as well as a better synchronization with the legal enactments in the field of building permitting. As a first step of this legal procedure, the environmental authorities conduct a first assessment aimed at establishing the magnitude of the environmental impact possibly generated by the project. For projects deemed to generate minor impact, the law prescribes a simplified permitting procedure, the project developers being allowed to begin construction works without an environmental impact assessment. For projects generating an important impact on the environment, developers are invited to prepare an environmental impact assessment. To this end, after having consulted the interested members of the public, the competent authority prepares a checklist with the items to be covered in the report.
Projects subject to the IPPC Directive

For installations subject to the IPPC Directive, integrated environmental agreements and integrated environmental authorizations are required. The integrated environmental agreement is the document setting out the conditions to be fulfilled so as to ensure that development (construction) of the project complies with the statutory environmental requirements.
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Applying for a building permit is only possible after having obtained the integrated environmental agreement.
Unless the relevant water installations exceed a certain capacity, the use of underground and surface waters is free for small activities specific to households, such as human and animal consumption. The right to use waters for other activities is only granted through administrative acts regulating the terms and conditions of use, namely: The water management permit (aviz de gospodrire a apelor); and / or The water management authorization (autorizaie de gospodrire a apelor). The water management permit is a prerequisite document to beginning construction works for new investment projects built on / near water sources, or related to the use of waters. Applying for the building permit is possible only after having obtained the water management permit. The water management authorization is required before the commissioning and exploitation of new projects erected on / near water sources, or which are related to the use of water. The water management authorization regulates in detail the terms and conditions under which the use of water is allowed. Exceptionally, for certain projects or activities, the law exempts the project developers / operators from their obligations to obtain the water management permit or the water management authorization. In this situation, a mere notification to the relevant branch of Romanian Waters National Company is sufficient.
The integrated environmental authorization sets forth the specific technical conditions to be complied with when operating an installation subject to the IPPC regulations. While establishing measures to reduce the impact is allowed in environmental authorizations, the integrated environmental authorization is issued only if the installation in question complies with the best available techniques. In certain exceptional cases, the integrated environmental authorization may provide for a set of measures ensuring that the operator reaches the statutory requirements within 6 months. In the context of the accession to the EU, Romania faced the challenge of bringing the old installations to meet the best available techniques. Since implementing such techniques could not be achieved in a short period of time, Romania has negotiated transition periods for ensuring progressive compliance of certain installations.
Change of Operators of Impacting Activities

Whenever the operator of an activity generating significant impact on the environment is subject to change of control, sale of assets, merger, spinoff, concession or other operations entailing a change of the operator, such operations must be notified to the environmental protection agency, in order for the latter to inform the parties involved on the specific environmental obligations they must undertake. Having received the list of environmental obligations, the parties involved in any of the operations above will negotiate the allocation of such obligations among them. The exact manner the parties involved understood to split the responsibility for fulfillment of the relevant environmental obligations must be notified to the environmental protection agency.
Emission of Greenhouse Gases

In 2001, Romania was among the first states to ratify the Kyoto Protocol regarding the framework Convention of the United Nations with respect to the climate changes. In 2006, Romania transposed the Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community. As of 1st of January 2007, any operator of equipments listed in Annex I to the Directive 2003/87/EC must hold a greenhouse gas emission authorization and an adequate number of greenhouse gas emission certificates allowing a certain level of greenhouse gas emissions. At the same time, starting with the 1st of January 2007, Romania has implemented a greenhouse gas emission trading scheme. The total number of greenhouse gas emission certificates granted to Romania is approved by the European Commission separately for 2007 and then for each 5year subsequent period. For the first two periods (i.e. for 2007 and for 20082012), operators of installations listed in Annex I to the Directive 2003/87/EC were granted a certain number of free greenhouse gas emission certificates to be used in respect of their polluting activity.
Water Management
While most waters are included in the states public domain and administered by the Romanian Waters National Company (Compania Naional Apele Romne), the Government has the exclusive right to establish the rules governing the use of waters, irrespective of whether water sources are included in the public domain or not.
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For 2007 and 20082012, the greenhouse gas emission trading scheme provides for a certain limited number of certificates forming the national reserve available for new entrants (i.e. installations carrying out one or more of the activities indicated in Annex I to the Directive 2003/87/EC, which has obtained a greenhouse gas emissions permit subsequent to the notification to the Commission of the national allocation plan). Allocation of certificates to new entrants is free and is made on a first came, first served basis. Should the demand from new entrants exceed the number of certificates available in the national reserve, the new entrants who could not obtain free certificates would have to acquire such from the market. For installations which are definitely closed, the relevant greenhouse gas emission certificates are valid only for the closing year; the remaining certificates are to be transferred to the national reserve.
wild birds and Council Directive 2006/105/EC of 20th of November 2006 adapting Directives 73/239/EEC, 74/557/EEC and 2002/83/EC in the field of environment, by reason of the accession of Bulgaria and Romania to the EU. In Romania, there are several types of protected areas, depending on their importance: Protected areas of national interest; Protected areas of international interest; Protected areas of Community interest (Natura 2000); Protected areas of local interest. Depending on the importance of various protection areas, their management may be entrusted to special structures organized for this purpose companies or to custodians, which may be individuals or legal entities. The management of the Danube Delta Wildlife Reservation is entrusted to a speciallycreated entity, the Danube Delta Wildlife Reservation Administration. This entity is under the direct control of the Ministry of Environment and Forests. For each protected area, the administrators or custodians prepare the management plans and the regulations setting forth the rules applicable within the area. Such management plans and regulations are approved by the Romanian Government or, as the case may be, by the Ministry of Environment. The possible influence of any environmental impacting projects on the protected areas is subject to assessment within the environmental impact assessment procedure conducted for the purpose of obtaining the relevant environmental agreement.
Noise Requirements
The Romanian standards in the field of noise pollution stipulate that any constructions which may generate environmental noise must be located in such a way so as the impact over inhabited areas does not exceed certain thresholds. As per the legal provisions in force, the continuous noise level measured in certain technical conditions must not exceed 50 db and level 45 for the noise curve during the day. During the night, the noise level values must be lower with 10 db. Also, the continuous noise level measured inside apartments, schools or libraries (with windows closed) must not exceed 35 db and level 30 for the noise curve during the day. During the night, the noise level values must be lower with 10 db. These thresholds have to be taken into account when developing new projects; at the same time, for projects generating environmental impact, they must be considered when preparing the environmental impact assessment report required for obtaining the environmental agreement. In the field of noise impact. Romania has implemented Directive 2002/49/EC relating to the assessment and management of environmental noise, thus implementing a system aimed at preventing the negative effects caused by environmental noise. Public authorities must prepare noise maps for the noisy areas identified in the law (i.e. big cities, airports, roads, railways and harbors) and propose action plans that would help prevent and reduce the impact of environmental noise.
Liability for Damages Caused to the Environment

The liability for damages caused to the environment is governed by the principle polluter pays. Operators must promptly inform the local environmental protection agency on any damage caused to the environment, as well as on any imminent threat of such damage. In any such situation, the operator must take all necessary reparatory and/or precautionary measures. If the operator does not comply with these obligations, or if the operator is not identified, the relevant environmental protection agency is entitled to take all reparatory or precautionary measures itself, on the account of the operator who has to bear the related costs. In order to recover the costs, the environmental protection agency may proceed to seizing the goods of the operator. If damage to the environment or a threat of such damage is caused by two or more operators, their liability will be joint.
Protected Areas
Romanian legal framework was aligned to the EU requirements primarily through the implementation of Directive No. 92/43/EEC on the conservation of natural habitats and of wild fauna and flora, Directive No. 79/409/EEC on the conservation of
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Private Property
Save for public property, any real estate can be subject to private property rights.
Real Estate
Public Property
Both State and territorialadministrative units (communes, cities, municipalities and counties) own properties consisting of real estate that, according to certain legal principles, belongs either to the public or the private domain. Public property includes all real estate that under the law or by its nature is of public use or interest. As an example, the public property of the Romanian State includes estates such as roads, beaches, parks, railway infrastructure, etc. According to the principles of the Romanian Constitution, real estate in the public domain (i) may not be subject to transfers of ownership right; (ii) may not be subject to enforcement procedures and (iii) may not be encumbered by security interests. Any transaction referring to an asset that is part of the public domain, and which does not observe the abovementioned rules, is deemed to be null and void. Some of the private real estate projects, especially projects developed in partnership with local authorities, involve transfers of lands and buildings from public property into private property or transfers between the public domains of the State and respectively of the cities. The law imposes certain limitations to such transfers. According to the Constitution, assets in the public domain may be exploited by third parties by means of concession. The sale, concession or lease of such real estates should be achieved by means of a public tender. Exceptionally, the right to use real estate belonging to public property may be granted, free of charge and for a limited period of time, to the public utility institutions.
As a general rule, any legal or natural entity may be the holder of private property rights. However, the Constitution and the specific applicable law (Law No. 312/2005 on the right of foreign citizens and stateless individuals, as well as of foreign legal entities to acquire the private property right over lands, which came into effect on the 1st of January 2007) set forth limitations on the right of foreign citizens and stateless individuals to acquire ownership over lands in Romania. Citizens of an EU Member State or stateless individuals domiciled in an EU Member State, who are not Romanian residents, as well as legal persons established under the laws of an EU Member State, will be allowed to acquire ownership over lands in Romania for the purpose of establishing a secondary residence or a business unit starting with 2012. Ownership over agricultural lands, forests or forest lands will be made available to citizens of an EU Member State or to stateless individuals domiciled in an EU Member State, who are not Romanian residents, only starting with 2014, and only provided such persons work as independent farmers and become Romanian residents. NonEU citizens and stateless individuals not domiciled in an EU Member State may only acquire ownership over lands in Romania in accordance with international treaties and to the reciprocity principle, under conditions not more favorable than those set for EU citizens, EU legal persons and, respectively, Romanian citizens. The most practical way for foreign investors to acquire land in Romania is to setup a special purpose vehicle with its headquarters in Romania. This will be a Romanian legal entity and, therefore, will be entitled to acquire land without the legal limitations imposed to foreign citizens.
Formal Requirements for the Valid Transfer of Lands

Under Romanian law, deeds having as object the transfer of ownership over real estate must be concluded in authenticated form (i.e. signed in front of a Romanian public notary), under the sanction of absolute nullity. According to the Romanian Fiscal Code, individuals (natural persons) obtaining income from transferring the right of ownership (or dismemberments of ownership) over real estate (constructions of any kind and the affected land and/or land of any kind without constructions) are compelled by law to pay income tax to the state budget.
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The value of such income tax depends on the transfer price, as well as on the time period elapsed between the date when the real estate was acquired by the seller and the date the seller transfers the ownership and/or dismemberments of ownership over said real estate, as follows: If the ownership (or the dismemberment of ownership) over the real estate has been acquired by the seller within a 3year period prior to its being transferred, the income tax amounts to: (i) 3% of the price, if the price does not exceed RON 200,000, respectively to (ii) RON 6,000 plus 2% of the value exceeding RON 200,000, if the price exceeds RON 200,000; If the ownership (or the dismemberment of ownership) over the real estate has been acquired within a period exceeding a 3-year term prior to the transfer, the income tax amounts to (i) 2% of the price, if the price does not exceed RON 200,000 and (ii) RON 4,000 plus 1% of the value exceeding RON 200,000, if the price exceeds RON 200,000.
Certain limitations to the free legal circulation of real estate are regulated by specific restitution laws (i.e. Law No. 10/2001 regarding the legal regime of certain abusively taken over real estates and Law No. 247/2005 regarding the reform in the fields of ownership and justice, as well as certain adjacent measures): if the ownership title over a real estate which falls within the regulatory scope of the restitution laws is subject to an administrative procedure and/or litigation, the said real estate may not, among others, be validly transferred before such procedures and/or litigation are settled.
Claims Regarding Real Estate Abusively Taken by the Romanian State during the Communist Regime
Within the process of acquiring land for the purpose of developing real estate projects in Romania, real estate investors should always consider the critical issue of claims filed by former owners of real estate abusively taken by the Romanian State during the Communist regime (by way of abusive expropriation, abusive confiscation, abusive nationalization etc.). Starting with 1991, the Romanian Parliament issued a series of enactments regulating the restitution of such real estate, such as: Land Law No. 18/1991 (Legea fondului funciar); Law No. 1/2000 on the reinstatement of the ownership right over agricultural and forest land claimed in keeping with the provisions of the Land Law No. 18/1991 and Law No. 169/1997; Law No. 10/2001 regarding the legal regime of certain abusively taken over real estates between 6th of March 1945 and 22nd of December 1989; Law No. 247/2005 regarding the reform in the fields of ownership and justice, as well as certain adjacent measures, which completes and unifies the general legal framework on restitution of real estate. The rule set forth in the above-mentioned enactments is that restitution of the abusively taken real estate should be made in kind. Specifically, the rights of ownership must be reconstituted for the original real estate, on their original locations/sites. Only should restitution in kind not be possible, the former owners shall be granted compensation. This rule may have significant consequences if, for instance, at the date of the claim, the real estate is public property of a city and subject to a concession agreement awarded to a private investor. As a rule departing from the ordinary legal provisions related to registration within the Land Book, the ownership titles issued based on the
Limitations to the Free Legal Circulation of Real Estate

As a general rule, privately owned real estate may be freely transferred. Exceptions to the free legal circulation rule are included in special laws. For instance, in the case of property rights established5 over certain types of agricultural land regulated by the Land Law No. 18/1991, ownership could not be transferred by its initial owner for a 10year period beginning with the year following the one in which the property was registered. In accordance with the provisions of Law No. 71/2011 for the implementation of Law No. 287/2009 on the Civil Code, this limitation was removed as of the entry into force of the New Civil Code on the 1st of October 2011. Another limitation to the free legal circulation of real estate is included in the Romanian Forestry Code with respect to the transfer of the right of ownership over forest lands, which may only be permitted subject to observing the Romanian States preemption right. Under Law No. 422/2001 on the protection of historical monuments, the Romanian State, respectively the territorialadministrative units, also benefit of a preemption right in cases of transfer of the right of ownership over real estate classified as historical monuments under the applicable legal provisions.
This limitation only applied to the establishment (constituire) of property rights, and not also to the cases of reinstatement (reconstituire) of such rights, two different hypotheses under the law.
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laws on restitution of land properties shall be registered with the Land Book ex officio. Further, Law No. 247/2005 sets forth the legal framework governing compensations, by way of establishing Fondul Proprietatea SA, a securities collective placement body, in the form of a financial investment company. Considering the large number of properties abusively taken by the State between 1946 and 1989, and the multitude of legal issues raised in connection with such properties over the years, also due to changing legislation, a detailed legal due diligence investigation on the background of the ownership title over the relevant real estate (land and/or building) is a requirement before initiating any real estate project in Romania, irrespective of whether the real estate is currently in the States public domain, in the private domain of a city, or owned by legal entity or an individual.
(opozabilitate fa de teri). Therefore, until this change in their legal regime, registrations with the Land Book shall be carried out according to the provisions of Law No. 7/1996 on cadastre and real estate publicity (the Cadastre Law), to the effect of opposability, rather than constitution of rights. In view of the above, recording in the Land Book rights acquired by investors over real estates involved in a project (for instance, rights deriving from concession, lease, a prohibition to sell) is essential in order to ensure the opposability and stability of the right so acquired (while after the finalization of the national general cadastre of Romania such registration will be made for constitutive purposes). The review of the records in the Land Book with respect to a real estate contemplated by the project may reveal issues which significantly influence the development of the project, making it a required step prior to acquiring rights (for instance, the Land Book may reveal that the estate is subject to an interdiction to alienate and to set up mortgages, or that the estate is under concession to a third party, etc.). Besides the new rule on the constitutive effects of Land Book registrations, which has not yet become effective, the New Civil Code also establishes a set of principles concerning the effects of the registration of legal rights, deeds and acts, registration methods, cases where there is a conflict between several forms of registration and the right of any person to have access to public registries, even if such person does not justify an interest. The right to demand fulfillment of registration formalities is protected under the New Civil Code, while contractual clauses seeking to limit the right to perform certain registration formalities are deemed null and void. Where registration procedures related to a deed or right have been performed, third parties may not prove that they were not aware of such deed or right. The provisions of the New Civil Code establish two legal relative presumptions, i.e.: the presumption related to the existence of the registered act or right if it was not amended or deregistered and the presumption of the inexistence of a de-registered deed or act. The Cadastre Law sets forth the manner in which legal operations regarding real estate properties are to be published. The records are kept by the National Agency for Cadastre and Real Estate Publicity, through its territorial units. The general cadastre record system is designed to provide a public record of all transactions and relevant legal issues related to real estate located in the same territorial unit. The Land Book provides for a description of estates (cadastral number of the estate, dimensions of the estate, its categories of use and, as the case may be, the buildings and the location of the estate by indicating neighboring areas), for various aspects related to the ownership right (name of the owner, the legal deed or fact which gives rise to the owners right, any rightsofway, legal facts, personal
Real Estate Publicity

As a major legislative novelty in Romanian real estate regulations, the New Civil Code, in force starting from 1st of October 2011, sets forth the rule according to which the final registration (intabularea) of a certain right with the Land Book will have a constitutive effect, leading to the creation of the respective right, rather than a mere opposability effect, as under the previous rule. Conversely, private ownership over an immovable asset shall cease upon the registration with the Land Book of the (previous) owners waiver thereof, under certain regulated forms, and its de-registration from the Land Book. By way of exception, ownership may also be obtained without registration with the Land Book (which will retain an opposability effect only) when acquired by one of the following means: natural accession, inheritance, forced sale, expropriation for public utility reason or other cases expressly regulated under the law. Real rights acquired by forced sale are not enforceable against good-faith third party acquirers if the enforcement proceedings have not been previously noted in the Land Book. Nevertheless, in order to legally dispose (e.g. sell a property) of a right obtained by one of the abovementioned legal means, the owner will have to previously register its ownership right with the Land Book for opposability purposes. However, this set of new rules shall only become applicable after the complete implementation of the unitary and mandatory cadastral system providing a technical, economical and legal record of real estate, a system already initiated in Romania starting with 1996. Until the national general cadastre system is fully in place, and final registrations will become constitutive of rights as envisaged by the New Civil Code, the public record system will only have the purpose of making such rights opposable against third parties
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rights or other legal relations or actions taken in connection with the property) as well as for aspects regarding the background of various dismemberments of ownership (the right to use the land located under the construction, the right to use, the right to dwell on, the rightsofway related to the land, mortgages and real estate privileges, leases and assignments of income exceeding 3 years, actions regarding garnishee proceedings, pursuit of the estate or of its proceeds). If a certain right over real estate is recorded in the Land Book, it is presumed to exist, if acquired or set up in good faith and lacking any proof to the contrary. Registrations in the Land Book do not represent an absolute evidence of the right of ownership over the real estate property. The New Civil Code expressly includes and generalizes rules previously applicable only in certain matters, such as rules concerning the effect of enforceability against third parties (opposability), the rank of registration and, where expressly provided by the law, the constitutive effect of registration. Therefore, as a general rule, rights, deeds or acts are enforceable between the parties even lacking registration formalities. It is also provided that a performed registration formality does not substitute the conditions which are required for the valid existence of the deed. In addition to the above, the registration does not interrupt the statute of limitation. Besides the above, as of the entry into force of the New Civil Code, provisional Land Book registrations and Land Book notations have a legal character and may be done only in the cases expressly provided by the law. Real rights (drepturi reale) which are subject to a condition precedent or to a condition subsequent may not be registered with the Land Book, and maybe recorded as provisional Land Book registrations only. Lacking evidence that the condition precedent affecting a right provisionally recorded with the Land Book was met, the right shall be deregistered ex officio within 5 years as of the date of its registration. Conditions subsequent shall also be deregistered ex officio if deregistration for having met the condition was not requested within 10 years as of the registration of the affected right. Under the New Civil Code, registrations with the Land Book become effective as of the date on which the registration application is registered with the Land Book. The New Civil Code also sets forth in detail provisions regarding the order of priority between concurrent titles or multiple registrations in the Land Book. Where there are concurrent titles emanating from the same predecessor in title, the holder of a Land Book registered right is deemed to be the first person who made such registration, irrespective of the date of the title on which the Land Book registration relies upon.
As for leased assets, the New Civil Code sets forth that, if ownership over the leased asset is transferred, the lease contract shall be enforceable against the acquirer pursuant to the following rules: In the case of immovable assets registered with the Land Book, only if the lease agreement was noted therein; In the case of immovable assets not registered with the Land Book, only if the certified date (data cert) of the lease agreement is previous to the date of the ownership transfer; In the case of immovable assets subject to publicity formalities, if the lessee fulfilled such formalities; In the case of other movable assets, if upon the ownership transfer date, the asset was used by the lessee.
Construction
Construction works can only be performed on the basis of a building permit (autorizaie de construcie) that is issued by the local public authorities with a view to ensuring compliance of future construction with the legal provisions regarding location, design, and scope thereof.
Town planning documentations

The main town planning documentations are the General Urbanism Plan (Plan Urbanistic GeneralPUG), the Local Urbanism Plan (Plan Urbanistic Zonal PUZ) and the Detailed Urbanism Plan (Plan Urbanistic de DetaliuPUD). The PUG has a general applicability to a certain locality, and establishes, inter alia, the limits of the intramuros territory (the city limits), the use to which the intramuros lands (located within the city limits) may be put, the protected areas (as the case may be), the development of the technical infrastructure, requirements pertaining to the location and characteristics of the constructions. The PUG represents the guideline for the development of a certain locality and may be updated from time to time, every 10 years at most. In this respect, based on the head architects specialized report, the mayor shall initiate the procedure for procurement of PUG updating services and extension of the inforce PUGs validity term, with at least 18 months prior its expiry. At the same time, the Local Committees/ General Council of Bucharest Municipality are entitled to extend by means of a decision the validity term of the PUG until the entry into force of the new PUG, however without exceeding two years from the expiry of the initial validity term. The PUZ mainly ensures coordination between the development plans and the PUG of a specific locality. The PUZ is prepared for each specific area of the respective locality and refers to: (i) street network organization; (ii) urbanarchitectural organization, depending on the urban structure; (iii) land usage; (iv) infrastructure
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development; (v) technical regime applicable to the respective area, and (vi) protection of historical monuments located in the relevant area. The PUZ is approved by the Local Council of the City Hall where the land is located. Once approved, it becomes compulsory for the respective area in relation to the technical parameters contained, and it may not be amended for a period of 12 months after its approval. The PUZ establishes regulations with respect to the construction regime, function of the area, maximum permitted height, land use coefficient (Coeficient de Utilizare al TerenuluiCUT), land occupancy ratio (Procent de Ocupare al Terenului POT), buildings alignment receding planes and distances to lateral and backside limits of the plot, architectural features of the buildings, permitted materials. The PUD is a specific regulation that setsforth detailed requirements regarding the location and area of a construction on a specific plot, as well as its harmonization to surrounding areas. The PUD includes, inter alia, regulations regarding: (i) accessibility and connection to the urban networks; (ii) general constraints regarding the built volumes and the fittings; (iii) functional and esthetical harmonization of the construction with the surrounding areas. The PUD shall have the exclusive nature of a specific regulation of a plot in relation to the neighboring plots. This cannot change the plans with a higher rank, but only detail the specific construction fashion considering the function of the area and the architectural identity thereof. According to the legal provisions currently in force (Government Emergency Ordinance No. 7/2011 for the amendment and completion of Law No. 350/2001 on territory management and urbanism), the initiative of preparing the land development and town planning documentations exclusively belongs to the public administration authorities Should the application for the issuance of an urbanism certificate (certificat de urbanism) seek an amendment to the town planning documentations (e.g. PUZ) approved for such area, or should the specific conditions of the location or nature of the investment objectives require it, the local public authority shall be entitled, for specific cases, to condition the authorization of the investment on the preparation by care of the private investor who filed the application, of a PUZ and on the approval thereof by the local public authority or, for some other cases, to condition the authorization of the investment on the preparation and approval of a PUD. Starting from the 1 of January 2012, no town planning documentations (such as PUZ or PUD) having the purpose to bring into legality certain constructions built without a building permit or failing to comply with the provisions of the building permit may be initiated and approved. Decisions approving town planning documentations issued in breach of the law may be annulled at the prefects request, or upon a notification from the general inspector of the State Inspectorate in Constructions, county head architect, or central specialized authorities.
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The construction requirements established under the town planning documentation are described, for individualized parcels of land, through urbanism certificates. The purpose of such certificates, which may be issued at the request of any interested person (individual or legal entity), is mainly to: (i) provide information on the legal, economical and technical regime of a certain plot, including in relation to the buildings erected thereon, (ii) detail the town planning requirements that apply to it and (iii) indicate the approvals and permits required in order to begin construction on the plot. The urbanism certificate is issued by the same authorities issuing the building permit, respectively the Mayor of the locality where the land is located or the President of the County Council, if the land on which construction works are going to be performed exceeds the boundaries of a single territorialadministrative unit. The urbanism certificate does not grant its holder the right to perform construction works. The sole document allowing construction works is the building permit. Urbanism certificates are also issued for granting concession rights on lands, for adjudication of projects referring to public works, and for certain legal transactions.
The building permit

Depending on the type of land (intramuros or extramuros), as well as on the use to which the land is put (agricultural or industrial), certain steps have to be taken before applying for a building permit. If the relevant plot is classified as farming (agricultural) land, one of the prerequisites to obtaining a building permit is to change the category of use of the land, a process that requires a certain administrative procedure (including drawingup of cadastral documentation and obtaining approvals from various governmental agencies) be followed and fees be paid. The building permit may only be issued after the fulfillment of the following steps: (i) obtaining the urbanism certificate, which describes, inter alia, the town planning requirements for the relevant area, (ii) obtaining the relevant endorsements and approvals by the authorities indicated in the urbanism certificate and (iii) submitting the technical documentation of the future construction. Building permits may be issued to the holder of a real right on the estate (land and/or construction), such as: ownership, usage right, usufruct right, or superficies. However, a building permit may be issued on the basis of a free lease or lease agreement only in the case of temporary buildings, and provided that the owner of the real estate expressly consents to such constructions being built on its land. Building permits are issued by the same authorities empowered to issue urbanism certificates. If the beneficiary is changed before
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completion of the works, the building permit remains valid and is automatically transferred to the new beneficiary, which is bound to observe its provisions.
The building permit is issued subject to the payment of a tax of (i) 0.5% of the estimated value of the construction works referring to dwellings, (ii) 3% of the estimated value of the works referring to site organization, provided that such works are authorized individually, and not together with the main construction works to which they refer, (iii) 2% of the estimated value of the construction works for the camping, cottages, camps or caravans or (iv) 1% of the estimated value of the construction works (such tax is further adjusted at the end of the project based on the final construction price). Should the extension of the building permit be required, an additional tax amounting to 30% of the initial authorization tax has to be paid. The completion of the construction works and their compliance with the requirements laid down in the building permit are ascertained by means of reception minutesa deed prepared by the representatives of the local authorities, of the constructor and of the beneficiary of the respective construction works. Such reception minute represents also the deed ascertaining the completion of the construction works, being one of the documents based on which the new building may be registered with the Land Book. Consequently, based on the legal provisions in force, (Government Emergency Ordinance No. 64/2010 regarding the amendment and completion of Law No. 7/1996 on cadastre and real estate publicity) the registration of constructions with the Land Book is grounded cumulatively on the building permit, the reception minutes upon the completion of works, as well as on a cadastral documentation. As an exception, the ownership right over constructions may also be registered within the Land Book by execution phases (pe stadii de execuie), on the grounds of: (i) the building permit, (ii) the minutes on the physical stage of the construction works, endorsed by the representative of the public administrative authority which issued the building permit, as well as of (iii) the cadastral documentation. As already detailed above, the constitutive effect of the registration of the ownership right with the Land Book shall be applicable only after the finalization of the national general cadastre of Romania, the registration having only an opposability effect until such time.
Creditor & Debtor Disputes

Overview
Economic instability in the last year has continued to exert significant pressure on the budgets of companies in debt, with amiable payment of outstanding receivables still usually challenged and subject to delay. This, in turn, has increased the number and complexity of disputes issued in courts and in arbitration, calling forth new developments in the dispute resolution system. With a new Civil Procedure Code underway, tentatively set to enter into force by July 2012alongside an already enacted New Civil Code, and future New Criminal and Criminal Procedure CodesRomania looks at a major reform of its judiciary system in the immediate future. For the time being, the Civil Procedure Code (the CPC) still in force, and amended at the end of 2010 by Law No. 202/2010 which implemented in advance certain measures envisaged by the New Civil Procedure Code, provides the procedural rules for civil disputes arisen under the New Civil Code; from this point of view, civil procedure law undergoes a legislative transition period. An expansion of alternative dispute resolution mechanisms has already begun, with courts being held to recommend mediation to litigating parties since the entry into force of substantial amendments to the Mediation Law on the 3rd of March 2010. Against this background, urgent and costeffective court applications have been made available to creditors in recent years for the recovery of their certain, liquid and exigible debts. These special urgent procedures are currently regulated by laws external to the CPC but the New Civil Procedure Code includes them in the main body of civil procedure rules. In answer to urgent debt recovery procedures made available in courts, the Court of International Commercial Arbitration attached to the Romanian Chamber of Commerce and Industry, which hosts most of the arbitrations in Romania, has approved a set of rules for expedited arbitrations, including an online procedure, with awards to be passed in approximately one month as of request.
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Resolution of Debt Recovery Disputes by the Courts

Structure of the courts and competency rules
The Romanian judiciary system consists of four levels of courts: local courts, tribunals, courts of appeal and the High Court of Cassation and Justice, Romania`s supreme court. As a general rule, a debt recovery claim will be issued in the court holding jurisdiction over the respondents business headquarters or domicile6 . In terms of the material jurisdiction, claims may be issued in first instance in the local courts or tribunals, depending on the value of the claim. The current threshold is set at approx. EUR 115,000, with no distinction being made between civil and commercial matters7.
Proof of having carried out the pre-action procedure (minutes of the meeting where the attempt to reconcile failed or proof that the debtor refused or failed to attend even though formally invited or, as the case may be, minutes of mediation result) is required in court. For debts deriving from matters other than between professionals, even though the CPC does not require a preliminary procedure, the creditor is expected to notify the debtor of delay before issuing claim, if not otherwise provided by way of exception in the law or agreed by the parties. The notice of delay will have to include a reasonable deadline for the payment of debt. If such prior notice is omitted, the debtor will benefit from a reasonable time-frame inside which payment of debt will lead to the dismissal of the claim, with legal fees to be borne by the creditor.
Claim formalities Preaction protocols

In matters between professionals only, should the dispute arise from contract, the CPC requires the creditor to carry out (i) a direct conciliation procedure, or (ii) a mediation procedure as a preaction protocol, lacking which the claim may be denied in court as inadmissible.
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The mandatory prior conciliation consists in an invitation sent by the creditor to the debtor for a meeting during which the parties attempt private amicable settlement of the dispute. The timeframe set by law permits this mandatory preaction phase to be completed in approximately 30 days. Provided alternatively to conciliation, mediation procedures are regulated by Law No. 192/2006 on mediation, and involve the assistance of a third party mediator in the negotiation of a settlement. Agreements reached by the parties by conciliation or mediation are private instruments, but the parties may opt to have them authenticated by the notary public, with the advantage that authenticated instruments ascertaining payment obligations are deemed writs of enforcement.
Unlike other jurisdictions, no claim forms are made available or required by the courts in Romania, even though the law requires minimal contents for the application. The CPC provides a minimal content of the claim but certain formalities may be fulfilled after the registration of the claim, within the term set by the judge. Any claim issued in court must have attached evidence that legal stamp in the required amount has been paid. The amount of the legal stamp depends generally on the value of the litigation.
Evidence
Romania is a jurisdiction where the types of evidence admissible in courts are limitedly provided by law. They include documents (privately made, authenticated and, since 2001, electronic documents provided with electronic signature), witnesses, interrogatory, expert reports and on site assessments. All evidence must be approved and is taken by the court. The court may permit requests for production of documents in the possession of the adversary or a third party to the trial provided the evidence proposed is legal (including legally obtained), credible, relevant and conclusive and the requested documents do not contain privileged information.
Interim and urgent measures

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Alternative criteria to determine the court having territorial competence as first instance are provided for certain cases, such as the place where the agreement is performed. Other exceptions are provided for claims bearing on immoveable assets, where the competency is determined by locus rei sitae. The distinction between civil and commercial claims, a pinnacle of former civil proceedings legislation, has been repealed with the entry intro force of the New Civil Code, on the 1st of October 2011. All matters covered in the New Civil Code, which also contains regulations in matters formely included in the Commercial Code, are henceforth deemed civil. New rules of procedure included in the New Civil Procedure Code are meant to implement this reunification; the law implementing the New Civil Code already put in place certain reorganizational measures at the courts level to reflect this change.
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The CPC makes available interim applications for creditordebtor disputes such as injunctions to seize tangible assets or place liens on bank accounts in order to preserve the rights of the creditor. The applications are adjudicated in urgent procedure. In assistance of creditors seeking to preserve rights that may be jeopardized by delay, or prevent, mitigate or remedy damages, or remove impediments that may forestall enforcement, the CPC provides the urgent application for an injunction, an urgent procedure available prior to or after issuing claims.
Professionals, as defined under the New Civil Code, are persons operating an enterprise.
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Rights of appeal
Judgments passed in first instance are usually challengeable by first appeal, in 15 days as of service. The first appeal is an ordinary application seeking to obtain revision of the judgment on its merits and the court may take new evidence. Decisions passed in first appeal are challengeable by final appeal, which is an extraordinary appeal that may only be grounded on limitedly provided reasons. In final appeal, no new evidence is accepted except for documents. The current rules, however, render enforceability to first court judgments in matters between professionals, if the dispute derived from contract. Such judgments are, nevertheless, challengeable by first appeal. The distinction between commercial and civil matters having been removed, the New Civil Procedure Code includes rules set to accommodate the change, among which, it unifies provisions with regard to available challenges, instituting a single means of ordinary challenge (the appeal) and three exceptional means of challenge (the final appeal, the contestation for annulment, and the revision). In all cases, the appeal will constitute the only means of challenge of devolutive character, seeking to verify the judgment on the merits. Final appeals are to be largely retained within the jurisdiction of the High Court of Cassation and Justice, their scope being limited to examining the legality of judgments. Other extraordinary challenges, available only for limitedly provided reasons, are the revision (mainly for discovery of new evidence or contradictory decisions or minus or plus petita) and the motion to annul (for breach of competency rules or failure to fulfill the summoning procedure).
The injunction to pay represents an available means of action only in the case of debts flowing from agreements concluded between professionals, or between professionals and authorities. Debts already registered within an insolvency procedure, as well as debt deriving from providerconsumer relations are not recoverable by injunction. On the other hand, the motion to pay has a larger scope of regulation: it includes all debts flowing from contracts that have been concluded in written form, or from statutes, regulations or other manuscripts that are signed by the parties, and attest to rights and obligation deriving from the execution of works, services or other undertakings. In case of both procedures, should legal conditions be met, the court will pass a court order directing the debtor to pay, with a grace period between 10 and 30 days, if the parties do not otherwise agree. The court order is only challengeable by way of action in annulment, to be filed in 10 days time from the serving of the award. Where legal conditions are not met, the application is denied as inadmissible by irrevocable order and the creditor may resort to the general procedure to file claim for the recovery of his debt. Both the motion to pay and the injunction to pay provide significant advantages to the creditors: expedited and simplified procedures, reduced legal fees (a fixed legal stamp fee is requiredcurrently set at the equivalent of approximately EUR 10, rather than a pro rata fee from the value of the claim). However, in practice, debtors generally contest the debts claimed by urgent application in order to obtain denial of the application as inadmissible, and provoke a settlement on the merits under the general rules, which require prior dispute resolution procedures, a pro rata legal stamp fee, ample evidence and a broader range of available appeals.
Special urgent applications

Two urgent procedures of debt recovery have been made available to creditors owed certain, liquid and exigible debts: the motion to pay (somaia de plat) introduced by Government Ordinance No. 5/2001, and the injunction to pay (ordonana de plat), made available by Government Emergency Ordinance No. 119/2007. In order to be capable of seeking recovery by way of either urgent procedures, the creditor must be owed a debt that is certain (there is no dispute on its existence), liquid (accurately determined or determinable), exigible (matured and enforceable) and payable in money. In both procedures, to satisfy the urgency, the creditor must be capable of evidencing the debt by documents (agreements, invoices) as other evidentiary means, such as witnesses or expert reports, are not admissible. Differences between the two procedures mainly relate to field of application.
Alternative Dispute Resolution Procedures Available for Debt Recovery

Arbitration, conciliation and mediation are available in Romania as alternative methods of adjudicating claims to the courts. Among them, arbitration is the most common, and we will outline the framework of arbitrations in Romania below.
Conciliation
Conciliation is made available at the Chamber of Commerce and Industry but is rarely resorted to, especially with the CPC providing a mandatory direct conciliation as preaction protocol in all commercial cases bearing on patrimonial claims. Creditors prefer to carry out the conciliation under the CPC and thus complete a required step before issuing claim, if settlement fails, rather than resort to private conciliation.
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Mediation
The Chamber of Commerce and Industry has been offering the service of mediation since 2003, but this alternative dispute resolution method caught the attention of the general public only after 2006, when a law to regulate it was passed. Mediation is expected to develop a significant practice after the March 2010 legal amendment requiring all judges and arbitrators, as well as any other jurisdictional authorities, to explain and recommend mediation to disputing parties. With the law permitting the parties to request their agreement reached by mediation be embodied in a court judgment, confidentiality of proceedings and privilege to the parties submissions during mediation (which may not be used in court), the constant efforts of the business and legal community to promote and popularize mediation are expected to bring forth developments in the next few years. The New Civil Procedure Code also includes a specific provision requesting judging panels to explain and recommend mediation to litigating parties.
Domestic arbitration awards (passed in Romania and which do not present prevailing ties with another jurisdiction) are final and binding for the parties. Such awards are enforceable in Romania under the same procedures as a court judgment and challengeable only by motion to annul, for limitedly provided reasons, to the court ranking superior to the one that would have had jurisdiction on the claim lacking the arbitral clause. Decisions passed on motions to annul an award may challenged by final appeal on limitedly provided grounds. In practice, the occurrence of award nullifications is very scarce, significantly due to the professional excellence of the arbitrators made available at the Court of International Commercial Arbitration. Further incentive for adjudication of claims in arbitration, enforcement abroad of arbitration awards is facilitated by Romanias recognition of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The costs of arbitration, however, are generally perceived as higher than the costs of court proceedings.
Arbitration
Any commercial or civil matter which bears on rights on which the parties are by law permitted to compromise (pecuniary) is capable of settlement by arbitration under Romanian law. The CPC provides the main body of rules regarding arbitration, which may be adhoc or institutionalized. Institutionalized arbitrations are preferred by the parties and most claims are issued at the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry, established in 1953 in Bucharest, which handles civil and commercial, domestic and international arbitrations under its own rules, compliant with the CPC. New courts of arbitration have been established more recently at county chambers of commerce and in Bucharest. The parties are permitted to establish the rules to govern the arbitration in terms of constituting the tribunal, appointment and revocation of arbitrators, procedural rules, the place of the arbitration etc., either directly or by reference to an existing set of norms, provided they do not depart from public policy rules in the CPC. In the case of institutionalized arbitrations, the applicable rules are usually the rules of the permanent court under the auspices of which the tribunal is constituted. Disputes may be settled by one arbitrator or by a tribunal formed of two or more arbitrators, if the parties so decide. Failing to do so, the tribunal is formed of three arbitrators, which is also the rule under the Arbitration Rules of the Court of International Commercial Arbitration. Adjudicating claims by arbitration rather than in courts provides a series of incentives to the parties. Arbitrations are governed by the rule of confidentiality, contrary to court proceedings, which are public as a rule. Arbitral awards must be passed, as rule, in 5 months from the constitution of the tribunal, with permitted extensions of up to 2 months.
Enforcement of Domestic Judgments and Arbitral Awards

Writs of execution
Enforceability is, in Romanias jurisdiction, specific in principle to domestic judgments (issued upon first or second appeal, depending on the matter) and domestic arbitral awards, which are recognized enforceability ipso jure on the territory of Romania. There are other instruments to which law recognizes enforceability, such as certain agreements (such as loan contracts concluded with banks, the legal assistance contract concluded with a lawyer), or documents authenticated by the notary public in certain conditions. Creditors wanting to enforce the writs of execution have to submit them to the local court to be vested with executory power. This is a formal procedure, by which the court verifies the existence of the enforceable judgment or award and applies a stamp and signature (commonly referred to as vesting formula). There are exemptions from the vesting requirement, such as in the case of judgments issued in first court in matters between professionals, stemming from contract. Subsequently, writs of execution are handed over to a court bailiff, who will have to obtain approval of the request for enforcement from the competent court. Once such approval is obtained, the bailiff can proceed to enforcement.
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Writs of execution may be enforced within 3 years as of the moment the debtor is allowed to request enforcement, with the exception of writs bearing on immoveable property, for which the prescription term is of 10 years.
Subsequently, writs of execution are handed over to a court bailiff, who will have to obtain approval of the request for enforcement from the competent court. Once such approval is obtained, the bailiff can proceed to enforcement. Writs of execution may be enforced within 3 years as of the moment the debtor is allowed to request enforcement, with the exception of writs bearing on immoveable property, for which the prescription term is of 10 years.
Recognition and enforcement of judgments issued in EU Member States The procedure for the recognition and enforcement in Romania of judgments issued in Member States is governed by Council Regulation No. 44/2001 of 22nd of December 2000 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters. The Regulation establishes a simplified procedure. Essentially, a judgment passed in a Member State is deemed recognized enforceability in Romania pursuant to an application filed by the interested party, attaching a formal certificate issued by the court that passed the decision. Recognition of enforceability of a foreign judgment issued in a EU Member State may only be denied in the following cases: If the respondent was not summoned by the court in compliance with the applicable law, except for the case when the respondent was however given the possibility to challenge such judgment but failed to do so; If the judgment is irreconcilable with a judgment issued in Romania in a dispute between the same parties; If the judgment is irreconcilable with an earlier judgment passed in another Member State or in a third State involving the same object, cause of action and parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in Romania; If the judgment breaches jurisdiction rules provided in the Regulation (with regard to exclusive jurisdiction of certain courts on certain matters, jurisdiction on consumer protection or insurance) or if the recognition of enforceability would interfere with obligations Member States undertook previously to the entry in force of the regulation under Article 59 of the Brussels Convention. As to the enforcement, the admission of such an application is conditional upon the applicants proving that the foreign judgment is authentic (based on a formal certificate issued by the court that passed the decision) and enforceable (recognition has been obtained, the right to enforce was not extinguished by prescription, the judgment is susceptible of being enforced). Decisions on the enforcement may be appealed against. Recognition and enforcement of judgments issued in NonMember States The procedure for the recognition and enforcement in Romania of judgments issued in NonMember States is regulated by Law No. 105/1992 on private international law relations. In order to obtain recognition, the creditor must prove that the foreign judgment is final, that the foreign court had jurisdiction to rule on the case and that reciprocity exists with respect to the acknowledgement of the effects of foreign judgments between Romania and the State of the issuing court. The enforcement of nonEU foreign judgments in Romania is conditional upon the petitioner proving the enforceability of the judgment (recognition has been obtained, the right to enforce was
Enforcement procedures
Enforcement, governed by the CPC, may be indirect, when the debt is satisfied from amounts the creditor obtains from enforcement (either from selling the debtors assets, or directly from the debtors accounts or from third parties owing money to the debtor) or direct, whenever the creditor seeks to satisfy his right by a performance in kind (for instance, when the debtor owes the creditor an asset and the creditor pursues the debtor for that asset). Enforcement is carried out by bailiffs, a professional body organized under the supervision and control of the Ministry of Justice. There are available methods for the debtor to forestall, stay, or even cancel the enforcement procedure. The procedure may be forestalled by way of a preliminary request for a stay, which is filed by urgent application in advance to the adjudication of a main request for a stay. The main request for a stay is filed concomitantly with the opposition to enforcement, and requires the debtor to deposit a bail, usually established prorata from the amount of the debt under enforcement. Oppositions to enforcement seek to cancel the enforcement, wholly or partially, usually for formal miscarriages, such as invalidity of the enforcement formal papers, which are prepared by the bailiff, or the absence of a valid writ of execution.
Recognition and Enforcement of Foreign Judgments and Arbitral Awards

Recognition and enforcement of foreign judgments
Foreign judgments may be recognized enforceability and enforced in Romania by procedures which differ depending on the place of issue being inside or outside the EU. In both procedures, the application for recognition and the application for enforcement may be submitted simultaneously and be adjudicated by the court in the same decision. Neither procedure allows the courts competent to adjudicate applications for recognition and enforcement to review the judgment on its merits.
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not extinguished by prescription, the judgment is susceptible of being enforced). The New Civil Procedure Code will bring about only minor adjustments to the requirements for recognition, among which: In order to obtain recognition, the creditor will also have to prove that the foreign court jurisdiction was not exclusively based on the presence of the defendant or assets belonging to him in the State of the said jurisdiction, if this presence held no direct relation to the dispute; Two new situations in which recognition may be refused are regulated: (i) the case of a foreign judgment incompatible with any previous foreign judgment, likely to be recognized in Romania, or (ii) the case of a foreign judgment given in breach of the right to defense; By the judgment approving the enforcement of the foreign award, the Romanian court shall also establish the conversion into the local currency of the sum of money established by the foreign award. The exchange rate shall be the one established for the day when the judgment was rendered enforceable in the State where it was rendered, and not the exchange rate established for the day when the judgment granting the enforcement was given.
former enactment (Law No. 64/1995), establishing a new, simplified and expedited insolvency procedure in certain cases, discharging the syndic of his administrative duties, increasing the duties of the judicial administrator and of the liquidator as well as the role of the representative bodies of the creditors, and aiming to improve the service of process by establishing the Insolvency Proceedings Bulletin. Special provisions exist under Romanian law for the insolvency of banks (Government Ordinance No. 10/2004) and private international law matters regarding insolvency, having to do with states outside the EU (Law No. 637/2002). As of 1st of January 2007, the Council Regulation No. 1346/2000 of the 29th of May 2000 on insolvency proceedings regulates the private international law relations in the field of insolvency applicable to EU Member States.
General conditions
According to Romanian law, insolvency means the debtors manifest incapacity to pay its matured debts out of the available liquidity. Within the meaning of Romanian law, debtor in the matter of insolvency may be: commercial companies, regional associations, agricultural companies, private legal entities carrying out commercial activities, economic interest groups, as well as the individuals who carry out commercial activities either individually or in family associations. The insolvency procedure may be initiated at the request of the debtor itself, of any of its creditors, or at the request of certain especially enabled institutions, such as the National Securities Commission for debtorslisted companies. The following conditions must be cumulatively met to ground and application: The debtor owes amounts in excess of RON 45,000 (approximately EUR 10,500) or in excess of 6 national average salaries for debts arising from labour or civil relations (approximately EUR 2,800); The debtor is unable to pay its matured debts with cash for more than 90 days; The debtor may declare itself insolvent and place itself under the protection of a judicial reorganization procedure should its insolvency be imminent.
Recognition and enforcement of arbitral awards

Foreign arbitral awards are recognized and enforced in Romania under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and under Law No. 105/1992 on private international law relations. In case of inconsistencies, the New York Convention prevails. The above presented conditions in relation to the recognition and enforcement of foreign judgments issued in NonMember States will apply, in principle, to the recognition and enforcement of foreign arbitral awards. The New Civil Procedure Codes provisions on the subject are also principally bound to ensure full compliance with the New York Convention.
Insolvency
Insolvency framework
Insolvency in Romania is governed by the Insolvency Law (Law No. 85/2006) passed in the process of harmonizing domestic laws with the legal principles applied in the European Community. The Insolvency Law develops around two basic principles ensuring celerity to insolvency proceedings and a better protection of the creditors interests through instruments made available to their representative bodies in the proceedings (the creditors assembly and the creditors committee). In an effort to transpose such principles, the Insolvency Law brought certain amendments to the
Insolvency procedures and participants

All applications under the Insolvency Law are, in first instance, within the jurisdiction of the insolvency division of the tribunal where the debtor is headquartered. The participants to the insolvency procedure are: the court, the syndic judge appointed by the president of the court, the creditors collegial bodies (the assembly and the committee), the judicial administrator (appointed by the syndic for reorganization), the special administrator of the debtor (appointed by the debtors shareholders) and the liquidator (appointed by the syndic for liquidation /bankruptcy).
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The Insolvency Law makes available two types of procedures for debtors unable to pay their outstanding debts: the general insolvency procedure and the simplified procedure.
The general procedure is formed of two phases: The judicial reorganization procedure, aimed at allowing the debtor to pursue its activity and pay its debts under a reorganization plan. If the debtor does not comply with the plan or the continuance of its activities causes losses to its assets, the official receiver, the creditors committee or any of the creditors, as well as the special administrator may request, at any time, to the syndic judge to approve bankruptcy procedure be opened; The bankruptcy procedure, wherein the debtors assets are liquidated and the amounts obtained are distributed to satisfy the creditors. The liquidation of a debtors assets is carried out by the liquidator under the control of the syndic judge. In order to maximize the value of the debtors assets, the liquidator will take all measures necessary to publicize the sale, in whatever manner deemed adequate. The liquidation costs are borne from the debtor`s assets. After a period of observation, insolvency under the general procedure allows for reorganization. The legal text highlights that assistance provided to the debtor in view of surviving financial distress, reorganizing its activity on an efficient basis and satisfying its creditors claims best satisfies the goal of insolvency procedures, which is not limited to the paying of creditors, but also includes debtors economic redress. The simplified procedure, applicable in certain cases (such as the debtor having been already placed under judicial reorganization within the previous 5 years from application), permits the bankruptcy procedure be opened without the preliminary phase of the judicial reorganization. Under the general procedure, the syndicjudge may order the debtor into bankruptcy if (i) the debtor departs from the provisions of the reorganization plan concerning opportunities to pay its debts or (ii) a reorganization plan is not submitted, or not confirmed by the creditors assembly, or by the syndicjudge. Should these conditions be met, the bankruptcy procedure is opened by way of court order, to the immediate effect that all claims, judiciary or extrajudiciary, bearing on the debtors assets are suspended. Due to a 2009 amendment to the Insolvency Law, banks cannot discontinue credit financing to the debtor on insolvency grounds. The same rationale is applicable to all pending contracts at the moment of opening the proceduresuch contracts cannot be terminated due to the opening of insolvency procedures against the party in debt.
Agreements concluded by the debtor within the 3 years prior to opening the procedure, except for transfers made during the normal course of operations, are subject to verification by the administrator/liquidator and may be annulled by the court if concluded in bad faith to the detriment of creditors. Should liability for causing the debtor to become insolvent be established on the part of a person (for instance, on the part of the managers), the syndic may order such person to bear some/all of the debtors dues. The bankruptcy procedure may be closed by decision of the syndic at any stage if established that the debtor has no assets, or that the existing assets cannot satisfy the administrative expenses and no creditor offers to advance the necessary amounts. By the same decision, the syndic orders the debtors deregistration from the register in which it was recorded (the Trade Registry usually, for commercial companies).
Preventive Arrangement
January 2010 has seen the entry into force of a new legal procedure designed to protect overburdened companies from ending in insolvency: the preventive arrangement (concordatul preventiv). The preventive arrangement is a procedure meant to solve temporary financial difficulties of a company in order to ensure continuance of its commercial activity and it consists of an agreement between the debtor and the creditors holding at least two thirds of the existing uncontested receivables. The preventive agreement must include a plan of redress for the future of the debtor, which may comprise, inter alia, measures aiming to restructuring personnel and/or management staff, the closing down of branches and/or working points etc. The debtor is bound to pay at least 50% of its dues during the implementation of the redress plan. The procedure provides the debtor notable advantages. For instance, once an offer of arrangement is made, the syndic judge can provisionally suspend legal enforcement procedures initiated by the creditors in question. Also, if an arrangement is reached with creditors holding at least 80% of existing receivables against the debtor, and provided the receivables disputed by the debtor amount to less than 20% of the debt total, the judge will suspend all enforcement procedures against the company, for the period of the arrangement. Due to its essentially amiable character, and to its less radical effect on the commercial image and credibility of a company, the use of preventive arrangements is expected to become a growing trend in creditordebt or dispute settlement methods.
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Duration
As a general rule, individual employment agreements are deemed concluded for an unlimited duration. This rule triggers important constraints for employers, dismissing employees being possible only in exceptional circumstances, strictly regulated in the Labour Code. Employers are allowed to conclude timelimited individual employment agreements with their employees only in the cases expressly mentioned by the Labour Code, such as temporary increases in the employers activity, replacing employees whose employment is suspended or in the case of seasonal activities. Using temporary work is permitted in order to perform certain precise and temporary tasks by employees provided by temporary labour agents, entities rendering the socalled leasing of personnel services. The maximum term of the temporary work or the fixed-term employment agreements is of 36 months.
Employment
Overview
During the past years, Romanias attractiveness for foreign investors came, among others, from the highly skilled and relatively cheap labour force it offered in the context of economic growth and macro stability. Authorities tried to adapt the labour legal framework as the transition from the state planned economy was complete and the employment environment had to respond to the demands entailed by Romanias target to join the European Union in 2007. Now, Romania is still facing the challenges of the economic and financial crisis which also impacted employment, as crises usually do. Flexible public policies and an adequate legal framework have more than ever a vital role in alleviating unemployment. Recently, Romania took a significant step forward in freeing up the labour market in the spirit of EU legislation and competitive labour market. The latest changes of the main regulations in the field of employment are very much welcomed by the investors and are deemed to bring more flexibility in the labour relations.
Minimal level of rights

Employees cannot be given rights and benefits which are below the level established in the labour legislation and the collective bargaining agreements. Any derogations from or waivers of such rights shall not be considered valid, even if accepted by the employees or expressly provided in the individual employment agreements.
Working time
Regular working time is 8 hours a day and 40 hours a week. Employees` consent is required for overtime work. The working time duration can not exceed 48 hours a week, including overtime. Additional overtime is exceptionally accepted, provided that the average working time computed on a fourmonth basis does not exceed however 48 hours. Overtime shall be extra paid, unless paid time off is offered in lieu within 60 days after the date it was performed.
Leaves and days off

Employees benefit from daily and weekly rest. Saturdays and Sundays are days off but changing the days of weekly rest is possible provided that the employees are additionally paid. The following days are declared public holidays under the law: 1st and 2nd of January; First and second Easter days; 1st of May; First and second Pentecost days; 15th of August; 1st of December; First and second Christmas days.
Individual Employment Agreements

Conclusion
Employers have the obligation to conclude written employment agreements with each of their employees. Concluding individual employment agreements in writing is mandatory and is a condition for the agreement to be valid. Failure to comply with such obligation may result in a penalty for the employer if the number of employees for which the employer has not concluded a written employment agreement is under 5. In case such number is bigger, the act of the employer shall be deemed as an offence under the criminal law.
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Employees are entitled to a paid annual leave of minimum 20 working days. Additional leave may be regulated under the collective bargaining agreements. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. In these cases, holiday entitlement is calculated on a pro rata basis proportionate to the time he/she has worked in that same enterprise during the respective year. In addition to the annual paid leave, employees can be granted paid or unpaid leave in certain specific circumstances.
The same sanction shall apply if the employers cannot prove that the reasons for dismissal are real and fall within the categories recognized by the Labour Code as entitling employers to perform dismissals. In case the number of redundancies throughout periods of 30 calendar days exceeds certain thresholds, the collective dismissal procedure shall be activated. Specific steps shall have to be observed and consultations with trade unions need to be conducted. Employers are obliged to observe a 20day prior notice term, except when the dismissal is done for disciplinary reasons. Special provisions regarding dismissals of personnel (including as regards severance payments) are commonly provided under collective bargaining agreements.
Bonuses
In addition to the base salary, there are certain mandatory bonuses that are paid to the employees, such as: Overtime bonusminimum 75% of the base salary; Nighttime working bonus25% of the base salary. Other bonuses may be provided under the collective bargaining agreements.
Collective Bargaining Agreements

Collective Bargaining Agreements (the CBA) may be concluded at different levels: company, group of companies and industry sector level. CBAs concluded at lower levels cannot provide for rights inferior to those set forth by CBAs concluded at higher levels. The Labour Code obliges companies with more than 21 employees to conduct collective negotiations in view of concluding a CBA. The obligation is to carry out negotiations only, and not to actually conclude the CBA. The provisions of CBAs are compulsory for the parties and apply to all employees, irrespective of whether they are members of a trade union or not. CBAs have to be concluded for minimum 12 months and maximum 24 months.
Noncompete obligation
Under the Labour Code, employees have a general obligation of loyalty towards their employer, preventing them from performing similar activities for other employers throughout the duration of the individual employment agreement. The parties may agree to turn this into a noncompete obligation applicable also after the termination of the individual employment agreement, for a period of maximum 2 years. A monthly indemnification shall be granted by the employer for the entire noncompete period following the termination of the employment, which can not be less than 50% of the employees average gross salary in the last 6 months of employment.
Dismissal
Both dismissal for cause (restructuring) and dismissal without cause (the legal terminology used by the Labour Code is dismissal for reasons relating to the employee as opposed to dismissal for reasons not relating to the employee) are recognised by Romanian employment legislation, but employers may resort to them only in a limited number of situations. Dismissal for cause can be done if economic or operational reasons prevent employers from maintaining the current number of jobs. Dismissals for bad performance and for disciplinary reasons are among the most commonly met types of dismissal for cause. In each case, specific procedures must be followed. Employers failure to comply with such procedures may trigger the anullement of the dismissal decisions in court.
Trade Unions
The right to establish trade union organisations and to become member of such organisations are guaranteed. Employers cannot ban access of the employees to trade unions. Trade union representatives have the right to be communicated the decisions taken by the board of directors or by other management board of the employer regarding issues of professional, economic or social interest. For the purpose of defending the rights and promoting the interests of their members, trade unions must be served with necessary information for the negotiation of the CBAs and other agreements relating to employment relations. Employers have the obligation to recognise the trade unions as social partner and conduct collective negotiations with the trade unions that are representatives
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at unit level. Also, employers are bound to consult the trade unions for specific aspects of labour such as labour norms, reducing the working days from 5 to 4 days/week in case of temporary reduction of employers activity for periods longer than 30 days, participating in the labour safety and health committees etc. The trade unions may open labour conflicts (strikes or law suits) in case their claims are not satisfied or the employers fail to observe the rights of the employees deriving from the law or from CBAs.
This category of conflicts may entitle strikes. However, strikes cannot be declared during the existence of a collective bargaining agreement at the unit level. As a matter of principle, strikes may be declared only in order to protect professional, economic and social interests of employees and cannot have political goals. During strike, hiring employees to replace those on strike, or dismissing employees on strike, are strictly forbidden. Unlike other legal systems, Romanian labour legislation does not recognize lockout as strike countermeasure. The individual labour conflicts are settled directly by the courts of law.
Transfer of Business
Romanian labour legislation provides for several protection rules in the event a business or parts thereof are transferred from one employer to another. Such rules shall apply, in principle, when the transfer of business is accompanied by an asset transfer. Both the transferor and the transferee shall be under the obligation to consult their employees about the transfer and to inform them of: Proposed transfer date; Reasons for transfer; Legal, economical and social consequences of transfer on the employees; Measures to be taken with respect to the employees; Working conditions after the transfer. However, no consent from the employees is required. The employees shall have to be given the possibility to be transferred with the transferee. In case they refuse the transfer, the transferor may dismiss them as a result of cutting their job positions. The transferee is liable to observe the rights which the transferred employees had with the transferor under their individual employment agreements and the CBA.
Labour Conflicts
Labour conflicts may regard collective or individual rights of the employees. Collective labour conflicts may occur when: The employer refuses to proceed with the negotiation of the CBA; when there is no CBA signed, or the previous CBA has expired; The company refuses to accept the employees claims; The parties do not reach an agreement until the date set up for completing the collective negotiations.
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There are also specific provisions concerning procurement contracts in the utilities sectors and framework agreements.
Public Procurement & Concessions

Overview
Public procurement, concessions and publicprivate partnerships in Romania are regulated by a set of enactments which set forth the legal framework within which cooperation between the public sector and the private sector may be established with a view to developing public projects with the involvement of the private sector. Public procurement and concessions are governed mainly by Government Emergency Ordinance No. 34/2006 on the award of public procurement contracts, public works concession contracts and services concession contracts, as approved, with amendments and completions, by Law No. 337/2006, subsequently amended and supplemented (the Procurement Law), while publicprivate partnerships are regulated by the recently adopted Law No. 178/2010 on public private partnership, subsequently amended and supplemented (the PPP Law). The Procurement Law and the PPP Law aimed at harmonizing the Romanian legislation with EU Directives in this field and transposed the provisions of Directive 2004/18/EC of the European Parliament and of the Council of 31st of March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, Directive 2004/17/EC of the European Parliament and of the Council of 31st of March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors and of Directive 2007/66/EC of the European Parliament and of the Council of 11th of December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts. The main legal structures regulated by the Procurement Law are the public procurement contract and the public works/services concession contract.
Public procurement contracts relate to the acquisition of works, goods or services, in exchange for the price to be paid by the contracting authority, while by public works/services concession contracts private entities are granted, in consideration of their performing the works/services, the right to exploit the public works/services with or without the payment of additional amounts of money. This distinction is further reflected in the allocation of risks, e.g. when most part of the risks are borne by the private sector, the contract is to be qualified as a public works/services concession contract. Otherwise the contract has the nature of a regular public works/services contract. Besides the Procurement Law, a special enactment is currently in place, regulating the concession of public assetsi.e. Government Emergency Ordinance No. 54/2006 on the regime of public assets concession contracts, as approved, with amendments and completions, by Law No. 22/2007. As regards public-private partnerships, the PPP Law regulates the concept of public-private partnership contracts and the procedures to be carried out by the public partners to award such contracts. The publicprivate partnership contract is concluded between the public partner and the private partner, it covers one or several activities related to the design, financing, construction, rehabilitation, modernization, operation, maintenance, development and transfer of a public asset or public service and the specific activities which are the object of the contract are financed by the private partner. In addition to the Procurement Law, Government Emergency Ordinance No. 54/2006 and the PPP Law, there are also other enactments which govern the regime of certain specific concessions. For instance, Law No. 51/2006 on public utility community services, subsequently amended and supplemented, is the general enactment regulating the regime of public utility community services (i.e., services regarding the supply of water, residual water and sewage, supply of thermo power, waste collection, public lighting, management of public and private property, public local transport), which may be provided to the local communities either under a direct management structure, by the local authorities or public bodies subordinated to the local authorities, or under delegated management, by commercial companies, further to the conclusion of a management delegation contract, which is a specific type of concession, between the local municipality and the commercial company providing the service.
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Principles
Both the Procurement Law and the PPP Law provide for the main principles contracting authorities should observe in awarding public procurement contracts, public works/services concession contracts and publicprivate partnership contracts, such as (i) nondiscrimination, (ii) equal treatment, (iii) transparency, (iv) proportionality, (v) efficient use of funds and (vi) assuming responsibility.
Also, the Procurement Law provides a partly special legal regime for the sector contractsi.e. the procurement contracts in the public utilities sectors (i.e. water, energy, transport and postal services and other activities qualified as relevant activities) although they are included in the category of public procurement contracts.
Award procedures
The Procurement Law regulates the following award procedures9: (i) open tender, (ii) restricted tender, (iii) competitive dialogue, (iv) negotiation with or without the publication of a procurement notice, (v) request for offers and (vi) contest of solutions. The open tender is in principle a onephase procedure, but the contracting authority may organize a supplementary phase of electronic tender. Any interested undertaking may submit tender in this award procedure. The restricted tender is carried out in two stages: (i) the selection of the applicants in accordance to the established selection criteria, and (ii) the subsequent evaluation of the tenders submitted by the selected applicants. The competitive dialogue is carried out in three stages: (i) the preselection of applicants, (ii) the dialogue between the contracting authority and the pre selected applicants, with a view to identifying the solutions based on which final tenders are prepared and submitted, and (iii) the evaluation of final tenders. The competitive dialogue procedure may be applied when the following conditions are cumulatively met: (i) the contract is deemed to be of great complexity and (ii) the award of the contract could not be achieved by open or restricted tender. The competitive dialogue procedure has only been recently applied in complex infrastructure projects where the involvement of experienced private undertakings in establishing the structure of the projects is a real necessity. The negotiation with publication of a procurement notice is applicable in cases such as when, following an open tender, a restricted tender or a competitive dialogue procedure, the submitted tenders are found unsatisfactory or unacceptable, or if the services in question do not allow for a proper description in the tender book as the open or restricted tender procedures expressly require. The Procurement Law also regulates cases when the negotiation may be carried out without the prior publication of a procurement notice, among which, when due to the technical or artistic aspects of the project, or in order to protect exclusivity rights, the public
The contracting authority is entitled to directly acquire products, services or works without carrying out one of the specific procedures provided for by the Procurement Law, if the value of the acquisition is below EUR 15,000.
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Public Procurement Contracts

Types of public procurement contracts
The Procurement Law regulates (i) works contracts, (ii) supply contracts and (iii) service contracts. The works contract may refer to one of the following activities: Construction or constructionrelated works as expressly listed in the Procurement Law; or Design and execution of a construction or of constructionrelated works as expressly listed in the Procurement Law; or The execution by any method of a construction according to the conditions set forth by the contracting authority. The object of the supply contract is the supply of one or more products, through salepurchase, lease or leasing, with or without a purchase option. The service contract regulates the provision of one or more services expressly referred to in the Procurement Law (e.g. transport, telecommunications, research and development, accounting, auditing, consultancy for business and management). While several types of service contracts are expressly defined as public procurement service contracts (e.g. the accommodation services, the railway and waterway transport services, the legal services), they are nevertheless exempted from the otherwise mandatory procedures regulated in the Procurement Law and made subject only to the general principles governing the award of public procurement contracts and to a few other specific provisions of the Procurement Law. The Procurement Law does not apply to certain cases, such as national security related services, or whenever special exemptions derive from the nature of the contracted services, or from the application of international treaties. If contracts are financed by international funds, the award procedures may derogate from the Procurement Law and follow the rules and regulations imposed by the respective financing institutions.
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procurement contract can only be granted to a certain entity. However, such instances are rather exceptional and subject to strict interpretation. The request for offers is a simplified procedure by which the contracting authority requests offers from several participants. It may only be applied when the value of the contract does not exceed certain thresholds set forth by the Procurement Law, namely EUR 125,000 for supply contracts and services contracts and EUR 4,845,000 for works contracts. The contest of solutions may be organised when the contracting authority develops projects in urban planning, cityscape and landscape design, architecture and data processing. All award procedures must observe the general rules applicable with respect to (i) the procurement notice, (ii) informing the participants about the legal, financial and technical requirements, (iii) the evaluation and award criteria, (iv) the forms required for submitting the offer, (v) the communication procedure between the authority and the participants, (vi) the deadlines applicable for submitting the offer and the other documents with the contracting authority, (vii) as well as other requirements having general applicability. The request for offers is a simplified procedure by which the contracting authority requests offers from several participants. It may only be applied when the value of the contract does not exceed certain thresholds set forth by the Procurement Law, namely EUR 100,000 for supply contracts and services contracts and EUR 750,000 for works contracts. The contest of solutions may be organised when the contracting authority develops projects in urban planning, cityscape and landscape design, architecture and data processing. All award procedures must observe the general rules applicable with respect to (i) the procurement notice, (ii) informing the participants about the legal, financial and technical requirements, (iii) the evaluation and award criteria, (iv) the forms required for submitting the offer, (v) the communication procedure between the authority and the participants, (vi) the deadlines applicable for submitting the offer and the other documents with the contracting authority, (vii) as well as other requirements that have general applicability. Besides the award procedures mentioned above, other methods may apply in special cases, such as the framework agreement, the dynamic acquisition and the electronic tender. Upon completion of any award procedure, the contracting authority establishes, based on the award criterion and after applying the evaluation factors, the winning tender, and concludes the public procurement contract with the respective tenderer.
Concession Contracts
Types of concession contracts
The Procurement Law regulates two types of concession contracts: (i) public works concession contracts and (ii) services concession contracts. The general principles guiding the award of the public procurement contracts apply also for awarding concession contracts. One of the main issues raised in practice in the case of complex contracts is determining the nature of the public contract, whether it should be qualified as a public procurement contract, or a concession contract. Such distinction is not always easy to make, as analyzing whether it is the private sector or the public sector that takes over most risks often requires highly specialized financial and technical expertise. Where concessions have public assets as their object, the special rules provided by Government Emergency Ordinance No. 54/2006 on public assets concession contracts become applicable. However, the distinctions between public works concession contracts, services concession contracts and public assets concession contracts are not always clearcut, with the practical consequence of possible uncertainty as to the nature, and therefore applicable legislation to particular contracts. The application of Government Emergency Ordinance No. 54/2006 is seen as rather exceptional, the rule being that the Procurement Law applies. Also, further to the entry into force of the PPP Law, the nature of the contract should be established from the outset, as depending on whether the contract is a public works/services concession contract, a public asset concession contract or a publicprivate partnership contract the relevant provisions and award procedures of either of the Procurement Law, Government Emergency Ordinance no. 54/2006 or the PPP Law shall apply. Given the various types and purposes to which public property assets are put to use, and based on the administration practice, several general criteria for distinguishing between the three types of concession may be used: Where the use of public property assets involves the performance of construction works aimed at creating a new public asset to be further operated, the contract may qualify as a public works concession contract. For instance, in the case of constructing and operating a motorway, or a parking facility, although such structure may involve the use of a public property site, the contract is to be considered as a public works concession contract because its main object is the performance of construction works;
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Where the use of public property assets involves the performance of various activities qualified as services by the Procurement Law, and/or such activities may be performed by a contracting authority itself given its legal status, roles and responsibilities, the contract may qualify as services concession contract. For instance, where a public hospital intends to grant a private operator the right to use a specific location in order to provide health assistance services, this may be achieved under a services concession contract, given that the hospital could provide the services itself, and granting the right to use its facilities to a private entity is merely a means to provide the services. Likewise, in the case of most of the public utility community services, which are under the power and responsibility of local authorities, an operator provides them under a services concession contract (management delegation contract), the use of assets being incidental to the provision of services; Where the use of public property assets involves the performance of construction works and/or the provision of services but they are merely incidental to the use of the assets, and/or the results of the works/services are used and operated for a purely private purpose, the contract may qualify as a public assets concession contract. For instance, where a public administration intends to allow a private entity to use a public property plot of land in order to install a wind farm and produce electricity, the contract may be considered as a public assets concession contract. It should also be mentioned that, as a general rule, the very nature of the public assets concession contract always requires the payment of a royalty by the concessionaire to the concession grantor, as, under the applicable law, those cases where the concession grantor allows the concessionaire to use the public asset without receiving a royalty, or where the grantor pays a certain amount of money to the concessionaire may not qualify as public assets concession contract.
As regards public utility community services, the abovementioned awarding procedures regulated in the Procurement Law also apply to public works/services concession contracts regarding waste collection, public lighting and management of public and private property. Services regarding water supply, residual water and sewage and thermo power supply are awarded through two specific procedures: (i) public open tender and (ii) direct negotiation. Similarly to the public assets concession contracts, the management of such services is as a rule delegated further to a public open tender procedure, and in exceptional circumstances only (i.e., if a tender procedure was twice carried out and neither time have three valid offers been submitted), may it be awarded further to a direct negotiation procedure. The management of the local public transport service is also delegated further to specific procedures provided for in the relevant enactments.
Public-Private Partnership Contracts

Distinction between Public-Private Partnership Contracts and Public Works/Services Concession Contracts
The PPP Law regulates the publicprivate partnership as a type of contract, rather than as a legal concept, as it describes the object and the main features of publicprivate partnership contracts and the related award procedures. As expressly specified therein, the PPP Law applies to publicprivate partnership contracts and does not apply to public works/services concession contracts and to public assets concession contracts. Therefore, in order to properly identify the applicable law to the type of contract which is intended to be awarded, it should be determined from the outset whether the contract qualifies as public works/services concession contract or as a publicprivate partnership contract, although, as a matter of principle, the two concepts should not be regarded as substantially different. The differences between public works/services concession contracts and public private partnership contracts may be derived from the provisions of the PPP Law, which sets out certain requirements for a contract to qualify as a public private partnership contract, such as: A publicprivate partnership contract requires the setting up of a project company to perform the project by the private partner and the public partner. If no project company is set up, or the project company is set up by the private entity only, the contract may not be qualified as publicprivate partnership, but, if all other conditions are met, as a public works/services concession contract;
Award procedures
According to the Procurement Law, public works/services concession contracts are awarded further to carrying out a tender (open or restricted) or a competitive dialogue procedure. Such contracts may be awarded further to a negotiation procedure with publication of a prior procurement notice only in the exceptional circumstances set forth in the Procurement Law. Public assets concession contracts are awarded further to carrying out the specific procedures set out by Government Emergency Ordinance No. 54/2006, namely (i) tender or (ii) direct negotiation. As a rule, public assets concession contracts are awarded by way of tender, while the direct negotiation procedure may only be employed in exceptional circumstances (i.e., if a tender procedure was twice carried out and neither time have three valid offers been submitted).
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The project company should be set up as a jointstock company wherein the contribution of the public authority is an inkind contribution. Lacking compliance with such requirements, the contract would not qualify as a publicprivate partnership contract (but it may qualify as a public works /services concession contract); The PPP Law does not cover the case where the public partner grants the private partner with the right to exploit the results of the works/services and also pays the private partner an amount of money, as provided by the Procurement Law in the case of public works/services concession contracts. Therefore, the public private partnership contract appears closer to the classical concept of concession, where the financing of the project is ensured by the private entity, which further recovers the investment from the revenues received from the third parties using the result of the works/services and pays a royalty to the public partner.
in a rapid manner, as a 20day (or, in exceptional circumstances, 30day) period for settling the complaints is imposed to the National Appeal Council. However, in practice, the need to rapidly solve the complaints may have adverse effects on the manner the claimants are allowed to substantiate and document their case, as the complaints in this field usually involve technical issues, which may only be determined based on expert reports whose preparation within this reduced timeline seems rather unrealistic10 . As regards the effects of submitting a complaint, filing such a complaint in connection with the procedure does not, under the current rules, trigger its automatic suspension, but instead prohibits the contracting authority from concluding the public procurement contract when the procedure is completed and until a decision of the National Appeal Council is issued.
Award procedures
The PPP Law regulates two procedures for awarding publicprivate partnership contracts: (i) open procedure and (ii) competitive dialogue. The award procedures in the PPP Law are rather similar to those of the Procurement Law, respectively, the open procedure set out in the PPP Law is similar to the open tender regulated by the Procurement Law, while the regulation of the competitive dialogue under the PPP Law follows the same lines as the regulation of the same procedure under the Procurement Law.
Prospects
The Romanian legislation is generally in line with the EU Directives on public procurement and concessions. Also, recent initiatives on publicprivate partnership introduced another legal structure which may be used to develop public projects with the involvement of the private sector. Although regulations on the two general categories of contracts (concessions and publicprivate partnerships) are rather similar (despite being included in different enactments) and do not ensure a clear conceptual distinction between the two, the Romanian legislation seems comprehensive with respect to the legal means and structures available to public entities for carrying out public projects. Public authorities have various options available so as to choose the legal structures which are best tailored to the nature of the projects they intend to develop. In the current global economic context, public funds are seen as an important source of investment. The rehabilitation and the modernization of the infrastructure remain goals that still have to be achieved as most of the local infrastructure requires urgent investments in order to reach European standards. Major investments in infrastructure are announced, as the Government and local authorities seem to rely on concession and publicprivate partnership structures to continue or to initiate infrastructure projects. In doing so, the public authorities will resort to the legal structures offered by the public procurements, concessions and publicprivate partnership regulations, which allow and call for private sector participation. Public procedures aimed at awarding complex public procurement/concession/publicprivate partnership contracts will probably be often used and, consequently, private investors will encounter many opportunities of becoming involved in such complex projects in the future.
We also note that these new rules are surrounded by a legal controversy as to their alleged unconstitutionality, as they may be construed to prevent the interested parties from addressing the courts in the first stage of their complaint, while, under the previous rules, this right was ensured, as the interested party could opt between addressing the court or the National Appeal Council. The controversy arises from alleged breaches to the constitutional principles of free access to justice and of the optional nature of administrative jurisdictions.
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Protests Against Award Procedures

One of the major debates ensuing from the application of the Procurement Law concerned the protests interested undertakings were entitled to file against acts issued by the contracting authorities during an award procedure. Until January 2011, such protests were settled by either the National Appeal Council (an administrative jurisdictional body competent to settle complaints in connection with acts issued in public procurement procedures) or the courts of law. However, further to the most recent amendments brought to the Procurement Law in January 2011, the twotier system which allowed interested parties to bring their case before either the National Appeal Council or the courts of law was replaced by a onetier system, wherein acts issued in public procurement procedures are to be challenged before the National Appeal Council only, while it is only the decisions issued by the National Appeal Council that may be contested in courts, namely by way of appeal, filed with the competent court of appeal. The lawmakers new approach to the mechanisms of solving complaints in this area of practice focuses on the purposes of creating a uniform practice in this field and solving the complaints
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Practices Prohibited under the Antitrust Rules

Cartels and vertical agreements
Competition
Overview
The market behavior or strategies adopted by businesses present in Romania may fall under the domestic and/or European Community competition rules to the extent they restrict competition on the market. While the national Competition Law is concerned with the domestic market, the EC legislation sets forth the policy imperative of market integration and also aims at ensuring endusers and resellers are able to source products anywhere in the European single market. Some of the highest fines have been imposed by the European Commission on companies seeking to frustrate this aim, even if their actions had little effect on competition. Between August 2010 and July 2011, the Romanian Competition Law11 has been subject to a second substantial review in its 15year enforcement record following its adoption in 1996. The main changes followed the general trends in antitrust field at the European level, the Competition Council being provided with reinforced rights of investigation. Highlights include (i) a rebuttable positive presumption of dominance set in the case of undertakings holding a share above 40% on the relevant market; (ii) the enforcement of the Competition Councils sanctioning decisions may only be stayed in court should the concerned undertaking pay a surety in accordance to the principles set under Fiscal Procedural Code in force; (iii) procedures related to enforcement of unfair competition practices were transferred in the competence of the Competition Council.
Agreements between competitors aimed at distorting market competition are top targets and severely sanctioned by the competition authorities, both at domestic and EU level. Both article 5(1) of the Competition Law and article 101(1) of the TFEU prohibit any explicit or tacit agreements between undertakings or associations of undertakings, any decisions of association or any concerted practices between them, pursuing among others price fixing, customers or markets allocation or bid rigging. Cartels are illegal secret agreements concluded between competitors as to fix prices, restrict supply and/or divide up markets. The agreements may take a wide variety of forms but often relate to sale prices or increases in such prices, restrictions on sales or production capacities, sharing out of product or geographic markets or customers, and collusion on the other commercial conditions for the sale of products or services. Although generally considered less restrictive than cartels, the agreements between noncompetitors, be they customers or suppliers (e.g. distribution agreements, supply agreements, outsourcing or specialization agreements) also require particular awareness. Several types of agreements are qualified as hardcore restrictions and consequently banned irrespective of the parties market share. Such agreements mainly consist in resale price fixing, market allocation and bid rigging. Some examples in this respect are provided herein below: Resale price maintenancethe restriction of the buyers ability to determine its sale price; Passive sales ban in an exclusive distribution network limiting the distributor to respond to unsolicited orders coming from customers located in territories exclusively reserved by the supplier or allocated to another distributor; Active and passive sales ban to territories which are not exclusively reserved by the supplier or allocated to another distributor, in a nonexclusive or mixed distribution network; Restriction of sales to endusers in a selective distribution by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorized place of establishment; Restriction of crosssupplies between distributors within a selective distribution system operating at different levels of trade; Spare parts restrictions consisting in the restriction agreed between a supplier of components and a buyer who incorporates those components, which limits the supplier to selling the components as spare parts to endusers or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods.
Competition Law No. 21/1996, republished in the Official Gazette of Romania No. 742 of 16 th of August 2005 and further modified by Law No. 149/2011 approving GEO No. 75/2010, published in the Official Gazette of Romania No. 490 of 11th of July 2011.
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As the Competition Council increased its focus on false bidding and market sharing in public procurement procedures, it established a special division entrusted with complaints from authorities or bidders affected by the anticompetitive bidding practices. Other restrictions included in vertical agreements may be exempted, either by the application of specific block exemptions, or following an individual examination undertaken on a case by case basis. The individual exemption requires a balance between the negative effects of the vertical agreements (e.g. raising the artificial market entry barriers, restriction on interbrand and intrabrand competition etc.) and the expected positive effects (e.g. products quality improvement, investments for entering new markets, better distribution services etc). The enforcement record of the Competition Council on cartel cases covers various industries such as pharmaceutical distribution, cable TV services, fast moving consumers goods, grey cement markets etc. As shown below, some of the cartel cases built by the Competition Council were overturned in court: 2010 market allocation between the 14 administrators of mandatory private pensions funds (total fine of EUR 1,220,000): the alleged infringement related to the sharing among pension funds administrators, based on a 5050% principle, of participants having subscribed for two different funds (doubles) within the initial sales window. Although the agreement has dealt only a marginal part of consumers, i.e. the doubles, the Competition Council qualified this arrangement as a client sharing agreement between competitors, infringing both article 5(1) letter c) of Competition Law and article 101(1) TFEU. The case is currently under review before the Romanian courts; 2010 minimum price fixing by the members of the Romanian Body of Expert and Authorised Accountants (RBEAA) (total fine of EUR 950,000): the sanction was applied for the price fixing practices employed by RBEAA members under the organizations Internal Regulation on the criteria and procedures in setting the fees, consideration and compensation due to RBEAA members by their clients, and for continuing applying such practice subsequent to receiving indications from the authority that the price fixing behaviour is anticompetitive. This case sets a record for the Competition Council in terms of fine percentages, namely 9.2% of RBEAAs previous years income; 2010 bid rigging cartel on the market of hydrotherapy treatment services in Bile Olneti (total fine of EUR 980,750): in this case, the members of the cartel set the level of tariffs and number of available places for treatment that each undertaking was bidding for. Moreover, the cartel members created a system whereby they monitored the offers being submitted to the tender;
2008 market allocation on the insulin market case (total amount of fines applied EUR 22,600,000)12: Eli Lilly (producer) and three distributors were sanctioned for an alleged allocation of the portfolio of diabetes products produced by Eli Lilly in the context of the national tenders organized for the centralized acquisition by the Ministry of Public Health of such products13. In court, some parties to the alleged infrigement succeeded in reducing the fine initially uphold by the Competition Council; 2008 bid rigging between distributors on the dialysis market (total fine EUR 1,600,000): three distributors participated in a bid rigging in the context of the national tender organized by the Ministry of Health in 200314; 2006 market sharing on the TV cable services market in Timioara city (total fine EUR 2,350,000): the case was overturned in court on procedural grounds, since the Competition Councils right to apply fines had been time bared; 2005 price fixing between Wrigley26 distributors (total fine of EUR 5,480,000); 2005 price fixing on oral and personal care products (total fine EUR 4,200,000): the Council charged Colgate Palmolive and four of its distributors and imposed aggregate fines of EUR 4,200,000, for indirectly fixing the minimum resale prices, both as vertical price fixing involving Colgate and as horizontal agreement between the distributors15. The decision has been overturned on procedural grounds by the High Court of Cassation and Justice16, which found that the Competition Council`s right to review the case had been time bared; 2005 grey cement cartel: the highest fine (amounting in aggregate to EUR 26,000,000) concerned the three Romanian cement producers, Lafarge, Holcim and Carpatcement (part of the HeidelbergerCement group), which were found liable for a price fixing cartel17. Carpatcement succeeded to win the appeal against the Councils decision before the Romanian High Court of Justice, which ordered the annulment of fines imposed to this company18. At EC level, the European Commissions recent enforcement record is notable by the level of the fines imposed to cartel members. In some cases, the sanctions were significantly raised by the EC watchdog as a result of repeated anticompetitive behaviour of the defendants, as shown in the following recent examples: Consumer Detergents: the Commission applied fines amounting to EUR 315,200,000 in a price fixing cartel case against household laundry powder detergents producers Procter & Gamble, Unilever and Henkel (the latter being
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The EUR equivalents are approximated. Competition Councils Decision No. 15 of 12th of March 2008. Competition Councils Decision No. 12 of 3rd of March 2008. Competition Councils Decision No. 124 of 11th of July 2005. High Court of Cassation and Justice, Decision No. 2720 of 25 th of May 2007. Competition Councils Decision No. 94 of 26 th of May 2005. High Court of Cassation and Justice, Decision No. 1358 of 5th of March 2007.
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granted immunity under leniency procedures). The cartel was implemented in eight European Union countries; LCD panels: the European Commission sanctioned six LCD panel producers (Samsung Electronics and LG Display of Korea and Taiwanese firms AU Optronics, Chimei InnoLux Corporation, Chunghwa Picture Tubes and HannStar Display Corporation), a total fine of EUR 648,925,000 being applied for operating a cartel which harmed European buyers of television sets, computers and other products that use the key Liquid Crystal Display component; Airfreight: the Commission fined 11 air cargo carriers (for instance, Air Canada, Air FranceKLM, British Airways, Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, Martinair, SAS, Singapore Airlines and Qantas), the total fine amounting to EUR 799,445,000 for operating a worldwide cartel which affected cargo services within the European Economic Area. The carriers coordinated their action on surcharges for fuel and security without discounts over a six year period; Animal feed phosphates: the Commission imposed fines totaling EUR 175,647,000 on five companies for operating a cartel that lasted over three decades and covered a large part of EEA. All but one company settled the case with the Commission and therefore received a 10% reduction on each of their fines. This is the first settlement of a cartel case in a hybrid scenario, where both the settlement and ordinary procedures were followed; Bathroom equipment cartel: the Commission fined 17 bathroom equipment manufacturers a total of EUR 622,250,783 for a price fixing cartel covering six EU countries. The Commission decision shows that between 1992 and 2004, 17 companies coordinated the sales price for bathroom fixtures and fittings in Germany, Austria, Italy, Belgium, France and the Netherlands. The coordination took place during meetings of 13 national trade associations in Germany (over 100 meetings), Austria (over 80), Italy (65), and also Belgium, France and The Netherlands, and in bilateral contacts. It consisted of fixing price increases, minimum prices, and rebates, and exchanging sensitive business information; Car glass cartel: the Commission imposed fines totaling EUR 1,383,896,000 on Asahi, Pilkington, SaintGobain and Soliver for illegal market sharing, and exchange of commercially sensitive information regarding deliveries of car glass in the EEA, in violation of TFEU. Between early 1998 and early 2003, these major players, discussed target prices, market sharing and customer allocation in a series of meetings and other illicit contacts. The Commission started the cartel investigation on its own initiative following a tipoff from an anonymous source. The Commission increased the fines on SaintGobain by 60% because it was a repeat offender. Asahi provided additional information to help expose the infringement and its fine was reduced by 50% under the leniency procedure; Wax producers cartel: the Commission imposed on the wax producers fines amounting to EUR 676,000,000 for price fixing and market sharing cartel. From 1992 to 2005, the producers of paraffin waxes and slack wax operated a cartel in which they fixed prices for paraffin waxes. ExxonMobil, MOL,
Repsol, Sasol, Shell and Total also engaged in market allocation for this product and ExxonMobil, Sasol, Shell RWE and Total also fixed prices for slack wax sold to endconsumers on the German market. The companies held regular meetings to discuss prices, allocate markets and/or customers and to exchange sensitive commercial information. The Commissions investigation started with down raids prompted by Shells application for immunity whereby it revealed the existence of the cartel to the Commission; Lifts and escalators cartel: the European Commission applied a EUR 992,000,000 fine to Otis, KONE, Schindler and ThyssenKrupp groups for operating cartels for the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands, found to be in violation of Article 101 TFEU that outlaws restrictive business practices. Between at least 1995 and 2004, these companies rigged bids for procurement contracts, fixed prices and allocated projects to each other, shared markets and exchanged commercially important and confidential information. The Commission found that the effects of this cartel may continue for twenty to fifty years as maintenance is often done by the companies that installed the equipment in the first place; by cartelising the installation, the companies distorted the markets for years to come. KONE subsidiaries received full immunity from fines under the Commissions leniency programme in respect of the cartels in Belgium and Luxembourg, as they first provided information about these cartels. Similarly, Otis received full immunity in respect of the Netherlands cartel. The fines imposed on the ThyssenKrupp companies were increased by 50%, as it was a repeat offender.
Leniency policy
Both national and European Union legal framework provide for different types of incentives for companies that voluntarily disclose the existence of a cartel and bring evidence to prove the infringement or cooperate during the procedure. The immunity or reduction of the fine varies widely depending on the timing and significant added value of the information and evidence provided by the cartel members. At national level, although the leniency policy is available from 2004, no major cartel case has so far been discovered and sanctioned by the Competition Council following a leniency application. The first leniency case finalised before the Competition Council (2010) was a local cartel formed by the taxi drivers in Timis County. Since then, no other anticompetitive practices were identified and sanctioned further to leniency application. However, the President of the Competition Council declared on several occasions that the authority is assessing various disclosures under the leniency procedure. Similarly to the leniency model applicable at European Commission level, the leniency guidelines previously in force, only applied to cartels, i.e. collusive behaviour between competitors targeting price fixing, market sharing, exports or imports restrictions.
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With the new guidelines adopted on the 7th of September 2009, the Competition Council broadens the leniency scope and opens up the possibility for distributors or suppliers to also report vertical anticompetitive agreements, such as price fixing, market allocation, imports or exports restrictions concluded with their downstream or upstream partners. As such, from now on, the distributors or resellers may seek leniency by disclosing the anticompetitive provisions or practices agreed with or imposed upon by their suppliers. To the same extent, the suppliers may be awarded full immunity from fines if they are first to provide insider information on anticompetitive practices agreed downstream and they have not initiated the infringement. This is a major development of the leniency policy in Romania, proving the Competition Councils full interest in vertical restraints and potentially putting the spotlight on the distribution / reselling markets, if the distributors or producers will feel tempted to break the ice and disclose the anticompetitive practices they agreed upon with their clients or suppliers. In order to obtain total immunity under the leniency policy, a company which participated in a cartel or a vertical anticompetitive practice must be the first to inform the Competition Council of the undetected illegal activity by providing sufficient information to allow the authority to open an investigation and launch an inspection at the premises of the companies allegedly involved in the anticompetitive practice. If the Competition Council is already in possession of enough information to launch an investigation, or has already opened one, the company must provide evidence that enables the Competition Council to prove the infringement. In all cases, the company must also fully cooperate with the Competition Council throughout its procedure, provide it with all evidence in its possession and put an end to the infringement immediately. Companies which do not qualify for total immunity may benefit from a reduction of fines if they provide evidence that represents significant added value to that already in the Competition Councils possession and if they have ceased involvement in the anticompetitive practice. Evidence is considered to be of a significant added value for the Competition Council when it reinforces its ability to prove the infringement. The first company to meet these conditions may receive 30% to 50% reduction, the second 20% to 30% and subsequent companies up to 20%. Moreover, according to the Competition Law recently revised, companies may also benefit of 10% to 30% fine reduction if they choose to cooperate with the Competition Council and expressly recognize the infringement after the communication of the statement of objections or during the hearings before the Councils Plenum.
Such form of cooperation is deemed as special mitigating circumstance which may even trigger a reduction of the fine below its minimum threshold set at 0.5% of the turnover obtained in the year preceding the sanctioning decision.
Abuse of dominant position

Dominant players on the market could also infringe the antitrust rules, both at national and European Union level by adopting unilateral market strategies which could harm consumers and/ or competitors. Domination is defined as the ability of a company, to act, to a large extent independently from its competitors (actual and potential) and its clients in that particular market. The recently revised Competition Law provides for a relative presumption of dominance: firms which hold more than 40% of the relevant market in question and presumed to be dominant, should other factors not prove the contrary. The market share is however just one factor in assessing dominance. The structure of the relevant market, position of the main competitors, entry barriers or specific advantages enjoyed by a company may also influence the dominance assessment. Holding a dominant position is not prohibited, it is abuse which can be caught under the antitrust rules. The abusive behaviour may consist in: (i) exploitative practices, i.e. abusing market power in trading relationships with customers or suppliers (e.g. unfair purchase or selling prices, tying arrangements, price discrimination) and (ii) exclusionary practices, i.e. abusing market power with an aim to harm competitors (e.g. refusal to deal, predatory pricing etc). Article 6 of the Competition Law provides only an exemplificative list of behaviours that are deemed as abuse of the dominant position: Imposing, directly or indirectly, of selling and buying prices, price lists or other inequitable contractual clauses and the refuse to negotiate with certain suppliers or beneficiaries; Limitation of production, distribution, technological development in the disadvantage of the consumers; Application, regarding the commercial partners, of dissimilar conditions for equivalent performances, causing to some of them a disadvantage in the competitive position; Conditioning of concluding certain contracts by the partners acceptation of clauses stipulating supplementary performances which, neither by their nature nor according to commercial practices, have any connection with the object of such contracts; Imposing excessive or ruinous undercost prices, to eliminate competitors, or exporting under production costs and covering the difference through higher domestic prices; Exploitation of the economical dependence status of a client or supplier.
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The Competition Council has recently applied significant fines in two abuse cases, namely (i) one case against the national postoffice operator for discriminatory prices applying a fine of approximately EUR 24,060,000 (ii) the other, against the two main telecom operators (i.e. Orange and Vodafone) applying fines of approximately EUR 34,800,000 and EUR 28,300,000, respectively for actions related to restriction of access to essential facilities. Such cases are currently on the top of the fine record applied by the authority in its practice. According to the recently revised Competition Law, companies may now offer commitments during the investigation procedure that they will comply with a certain conduct as to end the alleged infringement.
Independently from the sanctions applied under the Competition Law, the natural and legal persons are reserved the right to claim for the recovery in full of the damages resulting from the anticompetitive practice prohibited by the Competition Law. The recently revised law provides that the status of limitation of the damages action is 2 years and starts to elapse from the date the Competition Councils decision remains definitive and irrevocable. This provision may lead to the interpretation that the applicant may necessarily submit a complaint to the Competition Council and obtain an administrative decision on the infringement prior to seeking damages in court. Although the burden of proof on the claimant is definitely more severe in the absence of the Competition Councils prior investigation of the case, we do not exclude however direct damages actions in court, as the national judges have extensive powers to directly apply both national and European Union antitrust rules. Companies having blown the whistle in cartel cases or hardcore vertical agreements which benefit of leniency are also exonerated from the joint liability resulting from a damages action, which bears on all participants to the infringement. As regards the quantum of the damages, the Romanian law system acknowledges the full compensation principle in case of tort liability. Thus, the author of the anticompetitive practice could be compelled to reimburse both the actual prejudice (damnum emergens) and the loss of benefit (lucrum cessans).
Competence: The European Commission or the Competition Council?

A system of parallel competences of the European Commission and the national competition authorities is instituted at the level of the Community. While the European Commission usually intervenes to investigate anticompetitive practices affecting more than three Member States or justifying a Community interest (i.e. the respective practice affects the internal markets freedoms or the case has a novelty character at Community level), the Competition Council remains competent to examine practices affecting mainly the Romanian market.
Fines. Public and Private enforcement

The sanctions for violations of the Competition Law are serious and they may reach between 0.5% and 10% of the involved partys turnover on the year prior to the sanctioning decision. Other sanctions include invalidity of contract terms, damages claims requested in court by the damaged competitors and other restrictions imposed by the Competition Council or the courts on the business activity. The Competition Law can also lead to criminal liability of those individuals responsible for the violation. So far, the Competition Council has only once remitted the case to criminal prosecution. Throughout more than 14years, the Romanian Competition Council applied fines amounting in excess of EUR 110,000,000 for the infringements of domestic antitrust rules. However, the largest part of this amount has been applied during the last few years, when the Competition Council accelerated the investigation process and also raised the fines level imposed on the players found guilty of anticompetitive practices. Private enforcement relates to legal actions that can be brought before a national court by one private party against an undertaking that infringed the competition regulations. Private enforcement of competition rules can take different forms, including actions for damages, actions for injunctive relief (to stop the behaviour contrary to the competition rules), actions for nullity, etc.
Mergers
The merger of two or more previously independent parties, or the direct or indirect control brought about by share capital/ assets acquisition, by contract or by other means qualifies as an economic concentration and may trigger a notification obligation in the competent jurisdiction. In merger cases, a division of competence between the European Commission and the national authorities applies. The Commission has exclusive power to examine concentrations with a Community dimension determined on the basis of certain turnover thresholds, while the Competition Council assess concentrations with national dimension.
Community notification thresholds

Two alternative sets of thresholds must be taken into account in order to determine if a concentration between undertakings has a Community dimension and thus must be notified to the Commission.
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First set of thresholds The combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5,000 million; and The aggregate Communitywide turnover of each of at least two of the undertakings concerned is more than EUR 250,000,000; Unless each of the undertakings concerned achieves more than 2/3 of its aggregate Communitywide turnover within one and the same Member State; The worldwide turnover threshold is intended to measure the overall dimension of the undertakings concerned; the Community turnover threshold seek to determine whether the concentration involves a minimum level of activities in the Community; and the 2/3 rule aims to exclude purely domestic transactions from Community jurisdiction. Second set of thresholds The combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 2,500 million; In each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100,000,000; In each of at least three Member States included for the purpose of the point above, the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25,000,000; The aggregate Communitywide turnover of each of at least two of the undertakings concerned is more than EUR 100,000,000; Unless each of the undertakings concerned achieves more than 2/3 of its aggregate Communitywide turnover within one and the same Member State; A concentration that does not meet the first set of thresholds, but meets the ones mentioned above has a Community dimension and thus must be notified to the Commission.
However, the buyer may close the transaction pending clearance provided that it does not take any measures deemed as irreversible with regard to the targets operations. For justified cases, the buyer may also require for a derogation from the above rule. Within a 5year statute of limitation period, the Competition Council can impose a fine of up to 10% of the Romanian turnover achieved by the buyer for completing a notified merger before clearance.
Review periods
The Competition Council shall issue a decision to either authorize the merger, or open an indepth investigation within 45 days after the submission is effective (upon registration at the Competition Council or, upon submission of additional required information). In practice, the review period (phase I) is likely to take up to 6090 days, since the authority usually takes 1525 days before it declares the submission complete and the statutory time starts to run. In certain cases, a simplified procedure is available. If an investigation is opened (phase II), the Competition Council shall issue a decision of refusal/ authorization/ conditional authorization within a 5month term after the notification is effective.
Authorization fee
If the authorization of the economic concentration is granted, an authorization fee ranging from EUR 10,000 up to EUR 25,000 shall be paid.
State Aid Regulations

Considering that state aid may distort or threaten to distort competition by favouring certain undertakings to the detriment of others, the European Union rules provide for a strict control of state aid measures granted by Member States.
National notification threshold

Should the merger not fall in the jurisdiction of the European Commission, it would require clearance by the Competition Council if the following thresholds19 are cumulatively met in the fiscal year preceding the transaction: The parties combined worldwide turnover exceeds EUR 10,000,000; and At least two of the parties involved in the transaction have a turnover in Romania exceeding EUR 4,000,000.
Measures qualifying as state aid

Measures granted by Member States should qualify as state aid if the following criteria are met: Transfer of state resourcesgranted by central or local authorities, public banks, foundations, private/public intermediate bodies appointed by the State; Economic advantagewhich would not be obtained in the ordinary course of business; Selectivityonly selected undertakings have access to the measure. As such, measures applying without distinction to all undertakings in all economic sectors in a Member State (e.g. a nationwide fiscal measure) are not selective and therefore should not fall under the state aid principles; Effect on competition and tradethe undertaking benefiting from the measure must be engaged in economic activities.
Implementation prior to clearance

Romania is considered to be a suspensive jurisdiction, i.e. a transaction may not be implemented prior to clearance issued by the Competition Council.
For the purpose of the threshold test, the group that each involved party belongs to shall also be taken into consideration.
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Subject to the criteria described above, measures qualifying as state aid may take various forms, such as grants, capital injections, debt writeoff, exemptions, reductions or deferrals of fees and/or tax payments, accelerated depreciation allowances, preferential interest rate loans, interest rate rebates, loan guarantees, price reductions in connection to goods supplied and services provided by public, central and local authorities or other bodies managing central or local state resources, including sale or rent of land owned by public central or local authorities or other bodies managing central or local state resources below market price. State aid measures may be granted under a specific state aid scheme made available to a larger number of undertakings or in the form of individual aid. Individual aid may take the following two forms: (i) ad hoc aid and (ii) individual awards of aid on the basis of an aid scheme (the individual award requiring the performance of a notification procedure under state aid rules).
State aid which is not subject to prior notification procedures

As an exception, certain state aid measures do not fall under the notification requirement. Such measures are either falling under the (i) de minimis aid rules or (ii) are block exempted under a specific Commission regulation. Transparent incentives not exceeding the minimum threshold (EUR 200,000 over any period of 3 fiscal years) are deemed to be authorized and are not subject to notification requirement. The European Commission has issued a General Block Exemption Regulation (EC) No. 800 of 6th of August 2008 declaring certain categories of aid compatible with the common market in application of Articles 107 and 108 TFEU codifying previous block exemption regulations and regarding: Regional aid; Small and medium size enterprises investment and employment aid; Aid for creation of enterprises by female entrepreneurs; Aid for environmental protection; Aid for consultancy in favor of small and medium size enterprises and small and medium size enterprises participation in fairs; Aid in the form of risk capital, aid for research, development and innovation; Training aid; and Aid for disadvantaged or disabled workers. In order to benefit from the notification exemption, a state aid measure must observe inter alia the following criteria: The aid measure is transparentaid in respect of which it is possible to calculate precisely the gross grant equivalent ex ante without need to undertake a risk assessment; The aid measure does not exceed the aid intensity thresholds provided in the GBER (i.e. the gross aid amount expressed as a percentage of the eligible costs); The aid measure does not exceed the individual notification thresholds provided in the GBER; The aid measure is targeted at activities or investments that prove an incentive effectunder the European Union principles on less and better targeted aid any state aid measure must be targeted to an activity or investment that would have not been performed in the absence of aid; The aid measure complies with the specific requirements under the GBER for each category of aid contemplated above;
State aid control by the European Commission

The Commission is competent to keep under constant review all systems of aid existing in the Member States. The supervision of the Commission in connection with state aid is based on a system of ex ante authorization. Consequently, each Member State is required to inform the Commission, based on a notification procedure, of any plan to grant or modify any previously authorized state aid measure. Member States are not allowed to put such aid into effect before it has been authorized by the Commission (i.e. the Standstill principle). Aid granted in absence of authorization by the Commission is automatically deemed as unlawful aid and is subject to recovery. Based on its examination of the notified aid, the Commission may (i) issue a decision attesting that the notified measure does not constitute aid; (ii) issue a decision not to raise objections if it finds, after a preliminary examination, that no doubts are raised as to the compatibility with the common market of a notified measure; (iii) issue a decision to initiate a formal investigation procedure if, after a preliminary examination, it finds that doubts are raised as to the compatibility of the notified measure with the common market. Moreover, if the Commission finds that aid granted by a Member State or through that Member States resources is not compatible with the common market, or such aid is being misused, the Commission is competent to decide that the Member State concerned must abolish or alter such aid within a period determined by the Commission. If the State concerned does not comply with such decision within the prescribed time the Commission or any other interested Member State may refer the matter directly to the European Court of Justice.
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The measure must not be targeted at (i) aid to exportrelated activities, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current costs linked to the export activity; or (ii) aid contingent upon the use of domestic over imported goods; The measure must not be targeted to certain sectors20; The measure is not targeted at (i) aid schemes which do not explicitly exclude the payment of individual aid in favor of an undertaking which is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the common market; (ii) ad hoc aid in favor of an undertaking which is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the common market; (iii) aid to undertakings in difficulty.
Intellectual Property
Overview
Intellectual property rights are protected in Romania by various legal enactments applying specifically to each category of IP rights: patents, utility models, trademarks, industrial designs, integrated circuits, copyrights. The Romanian legal framework on IP rights has been gradually harmonised with the corresponding European legislation and, generally, with the principles provided in international treaties and conventions21. The public authorities invested with competence in the protection of intellectual property rights are the State Office for Inventions and Trademarks (OSIM) (in relation to industrial property i.e. inventions, trademarks, geographic indications, industrial designs, integrated circuits) and the Romanian Office for Copyright (ORDA) (relevant for copyright protected works).
Patents
The Patent Law No. 64/1991 (the Patent Law) sets forth the specific patentability conditions. The patent ensuring protection on the territory of Romania is valid for 20 years from the date the regular national application is filed, and is subject to yearly fees for maintenance.
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Such sectors are the following: (i) aid favoring activities in the fishery and aquaculture sectors, except for training aid, aid in the form of risk capital, aid for research and development and innovation and aid for disadvantaged and disabled workers; (ii) aid favoring activities in the primary production of agricultural products, except for training aid, aid in the form of risk capital, aid for research and development, environmental aid, and aid for disadvantaged and disabled workers to the extent that these categories of aid are not covered by Commission Regulation (EC) No. 1857/2006; (iii) aid favoring activities in the processing and marketing of agricultural products when the amount of the aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned or when the aid is conditional on being partly or entirely passed on to primary producers; (iv) aid favoring activities in the coal sector with the exception of training aid, research and development and innovation aid and environmental aid; (v) regional aid favoring activities in the steel sector; (vi) regional aid favoring activities in the shipbuilding sector; (vii) regional aid favoring activities in the synthetic fibres sector.
Romania is a party to the main international treaties and conventions on intellectual property, among which: the Paris Convention for the Protection of Industrial Property (1883), including its subsequent revisions; the Convention establishing the World Intellectual Property Organization (1967); the Marrakech Agreement establishing the World Trade Organization (1994); the Madrid Arrangement (1967) and the Protocol related to the Madrid Arrangement (1989); the Trademarks Treaty (Geneva, 1994); the Nice Arrangement on trademarks classification (1957); the Treaty on Trademarks Law (Singapore, 2006); the Patent Cooperation Treaty (Washington, 1970); European Patent Convention (Munich, 1973); the Strasbourg Agreement concerning the International Patent Classification (1971); the Locarno Agreement on the classification of industrial designs (1968); the Hague Arrangement on the international deposit for industrial designs (1925); the Berne Convention on the protection of literary and artistic works (1886).
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The right to patent belongs to the inventor or to his/her rightful successor. For employeeinventors, the right to patent belongs either to the inventor (for inventions made in the exercise of the employees specific duties, using the employers technologies or data, or his knowledge about such, or with support from the employer, if not otherwise provided in the labour agreement) or to the employer (for inventions made by the employee under a labour agreement that expressly provides that inventions are within the employees specific duties). Patentability conditions are harmonised with international regulations. An invention22 (for a product or a procedure in any technological field) is patentable in Romania if it is new worldwide, involves an inventive step (i.e. it does not follow evidently for a trained individual from the knowledge incorporated in the existing technical development stage) and is susceptible of industrial application. Applications for patent are submitted to the OSIM. The invention shall be disclosed in the description, drawings and claims in a manner which is clear and complete as well as scientifically and technically correct. The applicant may invoke priority rights. The information comprised in the patent application will be kept confidential until the application is published by OSIM. The patent applications are published immediately after the expiry of a 18month term from the date of the regular national filing or from the claimed date of priority. Published patent applications benefit from provisional protection until the patent is issued. The patent is subject to public opposition for 6 months from the publication of the decision granting it.
Failure to open the national phase renders the application ineffective in Romania. The requests for international registration may also be filed with the OSIM, as receiving office. The duration of the protection of the utility model is of 6 years, available for extension for two 2year each successive periods, and may not, extensions included, exceed the maximum of 10 years. Applicants at the OSIM may requalify their request from patent to utility model and, conversely, from utility model to patent, without thereby causing the examination procedure be automatically closed. Requalifications are only admitted once and are not available for international requests where the national phase has already commenced. The right to the utility model may be transferred, wholly or partially, by assignment or by exclusive/nonexclusive licensing. Utility models can be encumbered and pursued in enforcement procedures.
Trademarks
According to the Trademark Law No. 84/1998 (the Trademark Law), exclusive rights to use a trademark in Romania are granted by registration with the OSIM, either directly or by way of an international (WIPO) application. In order to be registered, a trademark must not be identical or confusingly similar to a previous trademark belonging to a different owner and registered for identical or similar products or services. Whenever the previous trademarks are notorious (either in Romania or in the European Union), the risk of confusion is analyzed even if the new trademark is for products or services that are not identical or similar, if registration risks to cause damage to the notorious trademark. The applicant may invoke priority rights. According to the rules applicable following Romanias accession to the European Union, Community trademarks shall automatically enjoy protection on the Romanian territory. This mechanism operates ipso jure, without the need for the holder to fulfill any formalities or procedures at the OSIM. A potential conflict with a domestic trademark shall be solved based on the priority rules. The holder of a national trademark previously registered in good faith is allowed to oppose the use of the Community trademark only on Romanian territory. Oppositions may be raised to the competent Romanian courts in compliance with Regulation No. 207/2009 on the Community trademark. However, since the automatic extension of protection is not reciprocal (i.e. national
Utility Models
The protection of utility models is mainly regulated in Romania by Law No. 350/2007, concerned with such technical inventions that cannot be protected by patent according to the Patent Law as they do not involve inventive activity. Utility models refer to any technical inventions provided that they are new (they are not already included in the current development stage of the technique), that they exceed the level of mere professional skill, and that they are applicable in the industrial field. The right to the utility model belongs to the inventor or his/her rightful successor. The utility model acquires protection by registration with the OSIM. The law permits international registration of utility models. International applications may be filed with foreign receiving offices and may indicate Romania as a designated country.
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Scientific discoveries, theories and mathematical methods; esthetical works; plans, principles and methods for the development of mental activities in entertainment, business, computer programs; methods to present information are not deemed inventions.
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(i.e. national trademarks do not automatically benefit from protection in the Member States) holders of national trademarks cannot substantiate, at the European Union level, a motion to annul or to obtain withdrawal of rights for lack of use against the owner of a subsequently registered Community trademark. The holder of a previously registered Community trademark or of previously acquired rights may ask the competent court to cancel the national trademark or to withdraw the rights such a trademark has. Claims of counterfeit may not be submitted if the owner of the previous Community trademark tolerated, for a period of 5 years, the use of the subsequent national trademark which was registered in good faith. Within 7 days as of filing, the application is published by OSIM, so that any interested person may oppose to registration of the trademark. OSIM takes a decision on the registration of the trademark within 6 months from as of publication of the application. Pursuant to the OSIM issuing a final decision for registration, the trademark will be registered with the National Register for Trademarks. The trademark certificate issued by the OSIM grants exclusive rights to the owner to use the trademark in Romania for a period of 10 years starting retroactively from the date of submitting the application. Upon payment of legal fees, the protection period can be extended by subsequent 10year periods. Further to the latest amendment to the Trademark Law, the concept of Community exhaustion of trademarks was statutorily recognized. According to this concept, the first sale of a trademarkprotected product within the European Economic Space by the owner, or with the owners consent, exhausts the trademark rights over these given products not only domestically, but also within the whole European Economic Space. The direct consequence is that resellers within this region cannot be prevented from undertaking parallel imports, unless a legitimate interest related to the alteration of the respective products could be raised.
An industrial design is deemed to be distinctive (have an individual character) if the overall impression it has on the experienced user differs from the impression made by any industrial design made publicly available before the date of filing the application for registration, or before the priority date if priority was claimed. The industrial design the appearance of which is determined by a technical function cannot be registered. Several industrial designs may be submitted for registration in the same application, in a multiple deposit comprising industrial designs intended to be incorporated in articles of the same category of goods as per the Locarno Agreement classification. Industrial designs subject to a multiple deposit should meet the condition of unity of design, unity of production or unity of use, or should belong to the same set or composition of items. The application for the registration of industrial designs is required to provide a graphic representation of the design and a maximum 100 words description of the design to explain the novelty. The date of the application meeting the minimal legal requirements constitutes the date of the national deposit. The applicant may invoke priority rights. Within 4 months from the national deposit, the application is published. Third parties have the right to oppose the registration within 2 months. The OSIM will decide to grant or deny registration of an industrial design within 12 months from publication, subject to potential oppositions being rejected. The registration certificate grants exclusive rights to its owner for the use of the industrial design on the Romanian territory starting retroactively from the date of the national deposit. The registration certificate of an industrial design is valid for 10 years from constituting the national deposit and may be renewed for three successive 5year periods upon payment of the legal fees. According to the rules applicable following accession, EU designs automatically enjoy protection on the Romanian territory. This mechanism operates ipso jure, without the need for the holder to fulfill any formalities or procedures with OSIM. A potential conflict with a domestic design shall be solved based on the priority rules, the holder/applicant of an earlier local design registered/applied for in good faith being entitled to oppose the use of a Community design on Romanian territory.
Industrial Designs
Based on the provisions of the Industrial Design Law No. 129/1992 (the Industrial Design Law), the new external appearance of a product in two or three dimensions having a practical function may be registered as industrial design. Novelty and distinctive character are the registration conditions for an industrial design. A form is novel if it is practically unknown in the territory of Romania, and has not been disclosed for the same category of goods in Romania or abroad.
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Copyright
The Copyright Law No. 8/1996 (the Copyright Law) provides protection to all literary, artistic or scientific works, as well as to other intellectual creation works, provided that they are original, take a concrete form of expression, and are susceptible of being made known to the public. The protection granted under the Copyright Law applies to the following works: Authored by Romanian citizens, even if they have not yet been made known to the public; Authored by natural or legal persons domiciled or headquartered in Romania, even if they have not yet been made known to the public; Architectural works located on the Romanian territory; Artists interpretations or performances taking place on the Romanian territory; Artists interpretations or performances which are fixed in sound recordings protected by the Copyright Law; Artists interpretations or performances which are not fixed in sound recordings, but are transmitted by television or radio broadcastings protected under the Copyright Law; Sound or video recordings produced by natural or legal persons residing in Romania; Sound or video recordings fixed on any material for the first time in Romania; Radio/television programs broadcast by entities headquartered in Romania; Radio/television programs transmitted by entities headquartered in Romania. Such works benefit from protection under the Copyright Law without registration or any other formality being required. Nonresidents, individuals or legal entities, benefit form copyright protection as per the terms of the international treaties Romania is a party to or, absent such treaties, under the same terms as Romanian residents, on a reciprocity basis. Authors of such work have the moral right to retract it, indemnifying, if the case, the holders of the right to use the work should they incur damage by retraction. The Romanian copyrights last for the lifetime of the author plus other subsequent 70 years after their death, being transmitted to lawful successors, irrespective of the date when the work was brought to public knowledge. The same applies to software works. The person who, after the death of the author, lawfully brings to public knowledge, for the first time, a previously unknown work, benefits from protection similar to that offered to authors for a period of 25 years from the date the work was first made public.
Protection for artists interpretations or performances is valid 50 years from the date of such interpretation or performance. However, if such were fixed on a material during this period of time, and were legally published or communicated to the public, the 50year protection period starts from the date of such fixing or publication or communication. The same applies to the rights of sound or video recordings producers. Copyrights are classified in moral rights and economic or patrimonial rights. While moral rights (e.g. the right to decide whether and how the work is going to be published; the right to decide the name under which the work shall be published etc) may not be transferred by the author, economic rights may be assigned to third parties by way of copyright licensing. The author, or, as the case may be, the holder of the economic copyright, may license the patrimonial copyrights, in whole or in part, as well as restrict the use of the work by the licensees to certain territories and/or to certain time limits. The licensing agreement must identify the patrimonial rights that are transferred thereby and must provide, for each right, the permitted methods of use, the term and scope of the licensing, as well as the payments due to the holder of the copyright. If any of these provisions is missing, the interested party may request the termination of the agreement. The licensing agreement concerning all the future works of the author, whether or not such works are named, is null and void. If the licensor is also the author of the work, and the licensee uses the work in a manner that may be found insufficient and conflicting with the licensors legitimate interests, the author has the possibility to claim invalidity of the copyright license agreement after 2 years from the entry into force of the license. The term is of 3 months in case the work was to be published in a daily publication and of 1 year if the work was supposed to be published in periodicals. The author may not waive in advance such right to seek termination. In the case of agreements for creation of future works, in the absence of a clause to the contrary, the economic rights belong to the author. The person contracting the creation of a future work is entitled to terminate the agreement if the work fails to comply with the agreed conditions. In case of termination, the author keeps the amount which he/she has already received. In the absence of a contractual clause to the contrary, for the works created by employees while fulfilling their professional duties under an individual labour agreement, the patrimonial rights belong to the author. In this case, the author may authorize third parties to use the work only with the employers consent and subject to compensation for the employers contribution to covering the costs of creation. The employer may utilize the work in its business without authorization from the authoremployee.
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Conversely, contractual clauses may provide that, for works created for the fulfillment of professional duties stipulated in the individual labour agreement, the patrimonial rights do not belong to the author of the work. If such clauses do not set forth the duration of the assignment of patrimonial rights, the term shall be of three years as of the work delivery date. Upon expiry, the patrimonial rights are transferred to the author and, absent a clause to the contrary, the employer is entitled to request the author to pay a reasonable quota from the income obtained from utilization, in order to compensate costs borne by the employer for the creation. The economic rights on photographic work performed under an individual labour agreement, or further to an order, are presumed to belong, for a period of 3 years, to the employer or the person that placed the order, if not otherwise provided in the agreement. The photograph of a person, when it is made further to an order, may be published, reproduced by the photographed person or its successors, without the consent of the author, if not otherwise agreed. The holders of copyrights and related rights may exercise their legal rights individually or, based on a mandate, through collective management bodies. Collective management is mandatory for certain rights (i.e. the right to compensatory remuneration for the private copy; the right to a fair remuneration for public loan in certain cases; the right of resaledroit de suite; the right of broadcasting for musical works; the right of public release of musical works, except for the public screening of cinematographic works; the right to fair remuneration acknowledged to performing artists and producers of phonograms for public communication and broadcasting of trade phonograms or the reproduction thereof; the right to cable retransmission), for which the collective management bodies also represent holders of rights that did not grant them a mandate, and is optional for other rights (i.e. the right to reproduce musical works on phonograms or videograms; the right to publicly communicate works, except for musical works and artistic performances in the audiovideo sector; the right of loan, except for certain cases provided by law; the right to radio broadcast the works and artistic performances in the audiovisual sector; the right to fair remuneration resulting from the assignment of lease rights; the right to fair remuneration acknowledged to performing artists and producers of phonograms for public communication and radio broadcasting of phonograms published for commercial purposes or the reproduction thereof).
Customs Action against Goods Suspected of Infriging Intellectual Property Rights

The fight against the import of goods suspected of infringing intellectual property rights is carried by the customs authorities, enabled to retain the goods and to verify their authenticity. The customs authorities collaborate closely with holders of intellectual property rights in order to facilitate a quick authenticity check on suspect products imported in Romania. Goods that are found to breach intellectual property rights are in most cases destroyed, orif the holder of the breached intellectual property right so accepts offered free of charge for humanitarian purposes. In practice, the customs authorities are active in retaining goods that are suspect of infringing intellectual property rights, being especially focused on excisable goods (e.g. cigarettes). However, destroying the goods proven to be counterfeited is a lengthy and cumbersome process.
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Product Liability
Nongovernmental organizations in the field of consumers protection have flourished over the past years and they have several prerogatives, subject to compliance with the criteria provided by law, such as the right to participate to consultative councils (organized based on territorial criteria and in charge of enforcing the consumer protection policy and coordinating the activity of public institutions and nongovernmental organizations in the field of consumer policy) and to run consumer information and consulting centers subsidized with public funds.
Content of Contracts Concluded between Consumers and Sellers Overview

Over the last years, product liability legislation consolidated and developed, generating an increasing level of public awareness regarding consumer rights following the expansion of the retail activities and the activity of the consumer watchdog authorities and nongovernmental organizations. Currently, the Consumer Code represents the framework enactment in the field of product liability and consumer rights, regulating inter alia the consumers access to goods and services, their rights, the producers obligations, as well as the general rules applicable to nongovernmental organizations and the general framework on product security. Contractual formalism in Romania has not yet reached the status currently existing in most of the EU member states. Romanian consumers protection legislation does not provide for framework contracts with a predefined content, but only for specific rules regarding the drafting and the application of certain clauses to the contractual relationship between the parties23. Such being the situation, a distinction should be made between: Statutory provisions which establish general rules applicable to all the contracts in this field; and Statutory provisions which set out special rules applicable only to specific contracts. Consumers protection legislation focuses on establishing rules designed to ensure that contractual clauses are drafted in an accurate and clear manner allowing the consumer to understand their content. In case of ambiguous clauses, these will be interpreted in favor of the consumer. Abusive clauses are considered an important threat to consumer protection, as they are frequently inserted in the contracts concluded between sellers and consumers, where many agreements are standard and not subject to negotiation. Contractual clauses which are not subject to negotiation may be considered abusive if they lead to a significant misbalance between the parties rights and obligations.
Consumer Watchdog Authorities and NonGovernmental Organizations

The Governments policy in the field of consumer protection is coordinated by the National Authority for Consumer Protection (ANPC). The ANPC is responsible for the constant harmonization of the Romanian legislation with the EC laws, as well as for supervising compliance with specific legislation applicable to the sale of consumer goods. Under the ANPC direction, the effective supervision of the compliance with the law is performed by twelve territorial offices for consumers protection, by the InterMinisterial Committee for the Supervision of the Products and Services Market and for Consumer Protection and by the National Center for Products Testing and AppraisementLAREX.
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Unlike the previous Civil Code, the New Civil Code, in force as of 1st of October 2011, includes a general legal framework for standard clauses (which are to be superseded by negotiated clauses) and unusual clauses (defined as standard clauses whereby the party who proposes them retains, among others, only a limited liability, or a right to unilaterally denunciate the contract; in order to be valid, such unusual clauses must be accepted expressly, in writing, by the other party). These provisions constitute the general rules on standard clauses, while the rules provided in the legislation specifically governing consumer protection are deemed special rules, which will apply with priority and will only be complemented, wherever necessary, with the general rules.
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Romanian legislation provides for a nonexhaustive list of clauses de jure deemed abusive, among which: Clauses providing for the unilateral right of the seller to amend the contract; Clauses whereby the consumer is not entitled to obtain remedies in case the seller does not fulfill its contractual obligations; Clauses whereby the indemnifications the consumer has to pay in case of of noncompliance with the contractual clauses are disproportionately bigger than the effective damage incurred by the seller; or Clauses providing for the right of the seller to unilaterally terminate the contract without a similar right being granted to the consumer. Abusive clauses, although included in agreements already concluded with consumers, are deemed as null and void under the law. Besides the general consumers protection legislation applicable to all the contracts concluded between sellers and consumers, there are special legal enactments setting rules applicable to specific types of contracts. Four types of such contracts should be mentioned: Distance contracts; Contracts concluded away from business premises; Credit contracts; Real estate intermediation contracts. Distance contracts special rules shall not apply to contracts relating to financial services, to contracts concluded by means of automatic vending machines or automated commercial premises, to contracts concluded with telecommunications operators for the use of public payphones, to contracts concluded within tender procedures, to contracts concluded for the construction and sale of immovable property or relating to other immovable property rights, except for rental, to contracts concluded upon auction sale. In case of distance contracts, consumers shall have a period of 10 working days to withdraw from the contract without penalty and without providing any justification. The only charge that may be imposed on the consumer for the exercise of such right of withdrawal is the direct cost of returning the goods. Similarly to the case of distance contracts, the regulations on contracts concluded away from the business premises do not apply to contracts relating to certain financial services or to the construction and sale of immovable property. Regulations on contracts concluded away from the business premises shall apply to the contracts under which a seller supplies goods or services to consumers under any of the following circumstances: During trips organized by the trader away from the business premises; During a visit by a trader (i) to the consumers home or to that of another consumer; or (ii) to the consumers place of work, where the visit does not take place at the express request of the consumer; or
In other public places where the trader offers the products or the services to consumers. In addition, the consumer shall have the right to unilaterally terminate the contract within 7 working days from either (i) the date of concluding the agreement if this is the date when the product has been delivered or (ii) the products delivery date or (iii) the date of concluding the services agreement. The boom in crediting activity on the Romanian market triggered the need for establishing of a set of legal requirements designed to ensure a minimum standard of protection for consumers. Thus, the rules applicable to the credit contracts lay down a number of express obligations to be fulfilled by the providers of financial services. The specific norms regard the information which needs to be provided to customers in the precontractual phase, upon marketing and advertising credit products, as well as the rules to be observed upon conclusion of credit contracts. Financial services providers must inform the consumers, in an accurate and exhaustive manner, on all the costs and risks that are related to the credit contract. Also, the interest, commissions, fees or other banking expenses need to be directly inserted in the credit agreement rather than merely indicated by reference to other documents such as general terms of the provider, list of tariffs, etc. Furthermore, amendments brought to the legal framework during year 2010, implementing the provisions of the Directive 2008/48/EC on consumer credit contracts, provided a broad array of protective measures for consumers (such as prohibition to impose new or the increase of the existing commissions, fees, taxes or banking costs, other than those provided by the law, during the execution of the credit agreement; the prohibition to impose a series of contractual clauses detrimental to the consumers, etc). Such new rules apply, as a matter of principle, only to credit contracts concluded after the enactment of aforesaid new (except if the consumers and the banks expressly agreed to amend the ongoing credit contracts). Notably, consumers have two procedural means for challenging clauses included in credit contracts which infringe aforesaid statutory standards. Thus, the consumers may either (i) file a complaint in front of ANPC for the public authority to investigate the complaint and, in case of abusive clauses, they may file a court claim for assessing administrative sanction and amending/annulling abusive clauses; or (ii) directly file a court claim challenging the default contractual clauses. The legislation on consumers protection has also set particular focus on real estate intermediation contracts (legally defined as the intermediation activity regarding salepurchase or rental of immoveable assets). Such contracts need to include, besides the regular clauses (i.e. object of the contract, validity period,
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termination cases), a minimum set of compulsory clauses such as the maximum commission owed to the real estate agency, the exclusivity clause (if the case), as well as the clear determination of cases when the customer owes the agency a commission. Statutory obligations have been imposed on real estate agents in the precontractual phase, such as the obligation to inform the interested customer on any deficiencies or inconveniences of the asset (if the agent is aware of such defects), e.g. sources of noise, humidity, pollution, legal issues etc.
Contractual Relations between Prejudiced Consumers and Sellers

Sellers shall be held liable for the prejudices caused by deficiencies in the quality of the products or services occurring during the guarantee term, provided that such deficiencies were not caused by the consumers themselves and for any prejudice caused by hidden defects during the average utilization period, provided that the products or services become improper for the use envisaged by the consumers or potentially harmful to consumers life, health or security. In such cases, consumers are entitled, free of charge, to product repair or replacement and to compensations. The consumers should file a claim against the responsible seller within three years from the date when the consumer has acknowledged or should have acknowledged the existence of the damage, the deficiency or the identity of the seller, but not later than 10 years from the date when the product has been introduced on the market provided that the damage has occurred during the 10year period. In addition, consumers may claim compensation based on contractual civil liability rules. In the event the consumers are compensated by an insurer, such insurer shall have the right of redress against the responsible seller.
Liability for Lack of Conformity

Starting with 1st of January 2007, Romania has implemented the provisions of Directive No. 1999/44/EC on certain aspects of the sale of consumer goods and associate guarantees. Under this legislation, the seller shall be liable to the consumer for any lack of conformity which exists at the time when the goods were delivered. In the case of a lack of conformity, the consumer will be entitled to have the goods brought into conformity free of charge by repair or replacement, or to have an appropriate discount in the price or to have the contract rescinded with regard to those goods. The price discount or the rescission of the contract may be applied only (i) if the defect good has not been repaired or replaced; (ii) if the seller has not provided complete remedy within a reasonable time; (iii) if the seller has not provided complete remedy without significant inconvenience to the consumer. The consumer is not entitled to have the contract rescinded in case of minor lack of conformity. The seller will be held liable if the lack of conformity becomes apparent within 2 years from delivery of the goods. The consumer shall inform the seller on the occurrence within 2 months from the date the lack of conformity was detected. Unless proved otherwise, any lack of conformity which becomes apparent within 6 months as of the delivery of the goods shall be presumed to have existed at the time of delivery unless this presumption is incompatible with the nature of the goods or the nature of the lack of conformity. Where the final seller is held liable to the consumer because of a lack of conformity resulting from an act or omission by the producer, by a previous seller in the same chain of contracts or by any other intermediary, the final seller disposes of the right of redress against the producer or the previous seller for the damages it incurred.
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Pharmaceuticals
Overview
In line with European regulations and practice, the regime of medicinal products in Romania is highly regulated. Law No. 95/2006 on the healthcare system reformTitle XVII (the Health Law) is the main regulation in this field while detailed material provisions are included in secondary legislation issued by the Government or competent public authorities. Essentially, the Romanian legislation in the pharmaceutical area observes the European regulations, to which it has been properly harmonized during the last five years. There are however specific requirements set forth by the Romanian regulatory authorities in certain domains, such as reimbursement and pricing of prescription medicinal products or, recently, the special taxation of the marketing authorization holders; n0tably, these special regulations may be subject to unpredictable changes, depending on the relevant economic policies and the budgetary constraints.
The National Medicines and Medical Devices Agency (the Agency) is the specialized public institution subordinated to the Ministry of Health which issues relevant regulations concerning authorization, marketing, manufacturing, import and distribution of the medicinal products, oversees the activities of the wholesale distributors and monitors compliance with the pharmacovigilance related requirements. The Agency authorizes and regulates the performance of the clinical trials and endorses the advertising materials used for promotion of medicinal products.
Authorization
In order to be marketed in Romania, medicinal products must have in place a valid marketing authorization. The Agency may not grant marketing authorization to applicants not headquartered in Romania or in another EU member state. Companies headquartered outside of the EU interested in obtaining marketing authorization should use a Romanian or European vehicle for applying. The marketing authorization is issued by the Agency for medicines to be authorized for marketing in Romania only (the national procedure) or in several EU Member States, including Romania simultaneously (the decentralized procedure). A valid authorization for marketing medicines in one or more EU Member States, may be acknowledged by the Agency for marketing in Romania (the mutual recognition procedure). Finally, a valid marketing authorization may also be issued directly by the European Medicines Agency in accordance with Regulation (EC) No. 726/2004 (the centralized procedure). The marketing authorization procedure in Romania is generally in line with the one set forth under the European regulations. Thus, the marketing authorization application form to be filed with the Agency is similar to the application form required by the European Medicines Agency in the centralized procedure, while the procedures carried out before the Agency entirely transpose the requirements laid down under Directive 2001/83/EC. The initial validity period of the marketing authorization issued by the Agency is of five years. The authorization may not be denied, suspended or withdrawn for reasons other than the ones set forth under the Health Law. As regards the exclusivity data period set forth under Directive 2001/83/EC, Romania decided to grant a tenyear period of protection to the reference medicinal product.
Competent Public Authorities

The Ministry of Health is the public authority which establishes and monitors the implementation of the general policies, strategies and regulations in the healthcare system, including the pharmaceutical area. Among other important attributions, the Ministry of Health endorses the prices of the prescription medicinal products and coordinates the national health programs whereby the treatment of certain diseases with relevant products. The National Health Insurance House (the NHIH) is the public institution that regulates the secondary legislation within the social health insurance system, monitors allocations made from the National Sole Fund of the Social Health Insurances, and oversees the release and payment of the reimbursed medicinal products. The NHIH also has important responsibilities in respect of establishing the amount of the recently introduced clawback contribution to be paid by the marketing authorization holders.
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Pricing
The Ministry of Health establishes and approves, by order of the Minister, the maximum prices for prescription medicines to be marketed in Romania. Nonprescription medicines (OTCs) pricing is not subject to specific endorsement and needs to be notified only to the Ministry of Health within 30 days as of placing the medicines on the market. The legal regime of prescription medicines pricing is set forth in Minister of Health Order No. 75/2009, as further amended and completed (the Pricing Order). According to it, the decision to endorse the manufacturer price proposed by the marketing authorization holder or its local representative is to be issued by the Ministry of Health within 90 days as of the date of filing the complete application. In order to obtain endorsement, the proposed manufacturer price must be lower or at most equal with the lowest price of the same product available in twelve countries provided for comparison in the Pricing Order. Another special rule aimed at reducing the allowed manufacturer price threshold states that the maximum manufacturer reference price for generic medicines cannot exceed 65% of the manufacturer price of the correspondent innovative product. Likewise, should generic reference price be lower than the 65% aforementioned threshold, the manufacturer price of the correspondent innovative product may not exceed such generic reference price by more than 35%. The maximum wholesale and retail distribution prices of medicines are computed in accordance with a specific formula that takes into account the endorsed manufacturer price and the maximum wholesale and pharmacy margins also regulated through the Pricing Order. Once determined, the manufacturer prices as well as the wholesale and pharmacy prices are included in the National Catalogue of Medicine Prices (CANAMED), which is quarterly approved by order of the Minister of Health, and may not be exceeded.
The wholesale distribution authorization is issued by the Agency within maximum 90 days as of the date when the applicant files a complete and valid documentation, subject to a favorable result of the inspection carried out by the Agencys representatives to the warehouses and headquarter of the applicant. The authorization is valid for an undetermined period and may be revoked by the Agency should the holder fail to comply with authorization or functioning related requirements. The applicant should not necessarily be the owner of the warehouse but may not use such an authorized warehouse other than based on a contract concluded with the authorized owner of the warehouse. The secondary legislation permits certain activities such as handling, transportation or delivery to also be contracted. In line with European regulations and practice, the Romanian legislation imposes on wholesale distributors a public service obligation to promptly and continuously supply the Romanian market with adequate quantities of medicines in order for the needs of patients to be covered.
Reimbursement
The Government approves by decision the reimbursed DCIs List, which provides for the international nonproprietary name (DCI) of the medicines which are subject to reimbursement by the State in the social health insurance system or within national health programs. The DCIs List should be yearly updated, but this rule and the transparency required for the actual update is not strictly observed by the Government. In order to be included in the DCIs List, new medicinal products must be previously assessed and accepted by specific commissions of experts within the Ministry of Health in accordance with criteria required for granting the reimbursement right. The DCI List includes three main sublists (A, B and C), and sublist C includes three sections (C1, C2 and C3). The percentage of reimbursement of medicines related to the DCIs is 90% for the Sublist A, 50% for Sublist B and 100% for Sublist C (sections C1 and C3), and applies to the reference price. Medicines on Sublist C, section C2, are covered at the value of the reimbursement price. The NHIH and the county health insurance houses reimburse the value of the medicines on the DCI List (save for medicines within Sublist C, section C2) in accordance with the rules set forth in the Biannual framework contract regarding the conditions for granting medical assistance in the social health insurance system (approved by Government decision) and the secondary legislation further issued by the NHIH President and the Minister of Health.
Distribution
The provisions of the Health Law and secondary legislation issued by the Ministry of Health in this area also comply with European requirements. A wholesale distributor involved in sale, purchase, warehousing, handling, transportation, delivery or export of medicines activities must hold a wholesale distribution authorization. Authorized manufacturers of medicines are deemed authorized as wholesale distributors of the manufactured products.
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With regard to the determination of the reference price used in the social health insurance system for medicines included on Sublists A and B, the secondary legislation issued by the NHIH provides for a formula based on the split of DCIs in therapeutic clusters as per relevant ATC codes and the defined daily dosage. By applying this system, the reimbursement reference price will be determined at the value of the medicinal product with the lowest price in the relevant cluster. Determining the reference price of medicines included on Sublist C, sections C1 and C3 takes into account the ATC classification per each DCI, assimilated pharmaceutical form, and strength. The reference price will be computed as per said elements, by applying a specific percentage to the lowest price per therapeutic unit. The regulations issued by the NHIH also require costvolumeresult contracts to be concluded in relation to the reimbursement of certain expensive medicines that may be approved for administration in accordance with therapeutic protocols. As regards medicines on Sublist C, section C2, which are used in the national health programs, the secondary legislation issued by the Ministry of Health states that the reimbursement price is determined by a applying a specific percentage (120%) to the lowest retail price per therapeutic unit, per each DCI, assimilated pharmaceutical form and strength.
Sponsorship of scientific congresses attended by persons qualified to prescribe or distribute medicines, especially by way of paying for travelling and accommodation costs. Advertising addressed to the wide public is allowed only for medicines that may be used without a prescription from the physician, a pharmacists advice being sufficient, as the case may be. Advertising to the wide pubic is forbidden as regards prescriptiononly medicines, medicines reimbursed in the health insurance system, and medicines containing psychotropic or narcotic substances. Advertising addressed to persons qualified to prescribe or distribute medicines has to provide at least the essential information compatible with the summary of product characteristics and its classification for release. The law expressly states that, when carrying out advertising activities to persons qualified to prescribe or release medicines, no gifts and pecuniary or in kind advantages may be offered, promised or granted, except where such advantages are inexpensive and relevant for medical or pharmaceutical practice. Hospitality within promotion events is allowed should it be strictly limited to its main scope and be not extended to persons other than healthcare professionals. The competent authority to oversee the advertising of medicines is the Agency, which issues regulations detailing the Health Law provisions, endorses the advertising materials and applies sanctions for failure to observe the relevant legal requirements. The Agencys Guidance on the assessment of advertising applies not only to pharmaceutical companies, their subsidiaries and representation offices, but also to any other partners (agents, agencies, representatives of marketing authorization holders) contracted in connection with the performance of any form of advertising for medicines. Pharmaceutical companies are held liable to observe the obligations set forth under the Guidance even if they assigned certain promotion or advertising activities to specialized third parties.
Advertising
Advertising of medicines must be performed with strict observance of the rules laid down by the Health Law and the Guidance on the assessment of advertising to medicines for human use issued by the Agency in 2011. According to these regulations, advertising includes any form of information through direct contact (doortodoor system) and any form of promotion aimed at stimulating prescription, distribution, sale or consumption of medicines. The Health Law expressly indicates the following forms of advertising: Advertising of medicines addressed to the wide public; Advertising of medicines addressed to persons qualified to prescribe or distribute them; Visits of medical sales representatives to persons qualified to prescribe medicines; Supply of medicine samples; Stimulation of prescription or distribution of medicines, by offering, promising or granting pecuniary advantages, unless such have a symbolic value; Sponsorship of promotional meetings attended by persons qualified to prescribe or distribute medicines;
Taxation
In order to control medicine consumption and to ensure financing for increased consumption, the Romanian Government imposed a special tax to be paid by marketing authorization holders or their local representatives in connection with medicines subject to reimbursement from public funds.
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This new tax, which applies starting with October 2011, is computed by applying a specific percentage, quarterly determined by the NHIH depending on the increase of consumption of reimbursed medicines, to the value of the quarterly consumption of reimbursed medicines that belong to each marketing authorization holder. Payers must determine the amount of tax owed, declare it to the competent fiscal bodies and pay it by the 25th of the second month following the end of the relevant quarter. The tax is collected by the fiscal bodies under the rules set forth in the Fiscal Procedure Code. The Government emergency ordinance which sets forth this tax repealed and replaced previous legislation regulating a similar tax, according to which a variable percentage set forth by the law has applied to the quarterly encashments registered by the subject payers. Notably, the NHIH remained responsible for determining the value of the said tax pursuant to the legislation in force as of the date of the medicines sale. The collection of the old tax has been however entrusted to the fiscal bodies starting with the 1st of October 2011.
Financial Institutions & Security Interests
Financial Market
The financial market was among the first subjected to new regulation immediately after 1989 within the process of replacing the centralized state economy with free market institutions. Between 2002 and 2010, both primary and secondary legislation regulating the financial sector have undergone major changes in order to implement the relevant European Union (EU) Directives and secondary enactments and to adjust the Romanian financial system to the EU requirements, post accession (Romanias accession to the EU took place on the 1st of January 2007).
Regulatory authority
National Bank of Romania The National Bank of Romania (the NBR) acts as central state bank, having mainly supervisory and control powers over financial entities within its jurisdiction, irrespective of whether they are credit institutions or nonbanking financial institutions. The NBRs powers do not extend to the capital market and its institutions (e.g. the financial investment services companies), which are placed under the supervision and control of the National Securities Commission (the NSC). The NBR has exclusive powers in authorizing and supervising the credit institutions, the nonbanking financial institutions, the payment institutions and the institutions issuers of electronic currency, Romanian entities, which are set up and operate in Romania. In this respect, the NBR issues mandatory regulations, applies sanctions and is entitled to controlling and reviewing the books of accounts and any other documents of the mentioned entities.
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To the extent that they are authorized and operating under the supervision of financial regulatory authorities in an EU or European Economic Area (EEA) country, foreign entities may directly operate on Romanias financial market, without being required to follow a local authorization procedure and observe the capital requirements applicable to Romanian entities. Payment Incident Bureau The Payment Incident Bureau is created and operating within the National Bank of Romania as a centre for intermediation and management of information specific to payment incidents, in connection with paper and electronic payment instruments (e.g. cheques, bills of exchange and promissory notes). Information to the Bureau is conveyed by computerized system through the Interbank Communication Network, which links the head office of the NBR to the head offices of all credit institutions. Credit Information Bureau The Credit Information Bureau is established as a private structure, operating as an intermediation centre that manages credit risk information and card fraud information. The system collects from, and provides to financial and credit institutions as well as other participants to the system (such as the utilities companies) positive and negative information on the individuals, debtors of the participants which register payment arrears exceeding 30 days, on the frauds related to the participants (ascertained by definitive or irrevocable court decisions or uncontested administrative acts) and on the statements of individuals containing inconsistencies. Banking Risks Central The Banking Risks Central is a structure created and operating within the NBR specialized in collecting, storing and centralizing information on crediting operations performed by the declaring entities (in principle, institutions supervised by the NBR) towards their debtors. The system collects, stores and centralizes information (i) on the exposure of every credit institution in the Romanian banking system to debtors that were granted loans and/or have commitments totaling more than the reporting threshold, (ii) on payments overdue in excess of 30 days, regardless of the amount, owed by individuals against whom credit institutions exposure is less than RON 20,000, as well as (iii) information on card frauds committed by cardholders.
Authorization of credit institutions by the NBR involves a twostep procedure: (i) preliminary authorization, whereby the NBR approves the setting up of credit institutions, and (ii) the banking license, whereby the NBR authorizes operation of credit institutions. As regards the credit institutions headquartered in EU member states, they may operate in Romania either directly, by passporting their services based on the freedom to provide services within the EU, or through branches, in both cases upon a notification to the NBR. No authorization is necessary in this case. Corporate form Under the Banking Law, credit institutions, as well as housing banks and mortgage banks may be incorporated only as joint stock companies. Capital requirements Specific capital requirements are applicable to each category of credit institutions. The initial share capital has to be of at least RON 25,000,000 (approx. EUR 5,500,000) in the case of housing banks and of mortgage banks and RON 37,000,000 (approx. EUR 8,400,000), in the case of regular credit institutions. Preliminary authorization The application for a preliminary authorization should be joined by a series of documents providing details on the share capital, the shareholders and managing bodies of the credit institution etc., and also a business plan including inter alia a description of the targets, policies and strategies of the future credit institution, including information regarding the clients and the segment of market that the credit institution envisages, the products and services, price policies, capitalization policies, the financing sources and asset structure, personnel policies, a description of the internal control system to be employed, as well as references to adjustment of the IT system. The NBR is bound to decide on the application for a preliminary authorization within 4 months as of submission. The issue of the preliminary authorization by the NBR is not a guarantee that the subsequent banking license shall be also granted. Banking license After the NBR grants the preliminary authorization, the shareholders proceed with incorporating the credit institution or registering the branch of a credit institution from a nonEU member state with the Trade Registry, as the case may be. After the credit institution/branch was duly incorporated and registered, a number of additional documents should be filed with the NBR, within 2 months from the issuance of the preliminary authorization. The NBR shall issue the banking license within 4 months as of receipt of the application and complete joining documentation. The relevant credit institution is subsequently registered with the banking register hold by the NBR.
Procedure and prerequisites for authorization of credit institutions

General Under the Government Emergency Ordinance No. 99/2006 (the Banking Law), both credit institutions and branches of foreign credit institutions headquartered in nonEU member states may be set up and operate in Romania only upon their authorization by the NBR.
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Banking license
After the NBR grants the preliminary authorization, the shareholders proceed with incorporating the credit institution or registering the branch of a credit institution from a nonEU member state with the Trade Registry, as the case may be. After the credit institution/branch was duly incorporated and registered, a number of additional documents should be filed with the NBR, within 2 months from the issuance of the preliminary authorization. The NBR shall issue the banking license within 4 months as of receipt of the application and complete joining documentation. The relevant credit institution is subsequently registered with the banking register held by the NBR.
Capital adequacy
The provisions of the Banking Law are essentially compliant with the principles of the Basel II Accord. Thus, as per the NBR/NSC Regulation No. 22/27/2006, credit institutions must comply with capital requirements inter alia for risk covering, on individual and consolidated bases, and for monitoring and control of large exposures.
Minimum mandatory reserves

As per the NBR Regulation No. 6/2002, all categories of Romanian credit institutions are compelled to create and maintain with the NBR minimum mandatory reserves, in national and in foreign currencies, receiving interest at such rates as periodically determined by the NBR norms. Currently, in the case of credit institutions, the minimum mandatory reserves rate for RON liabilities is of 15%, while for foreign currency liabilities the respective rate is of 20%, in both cases for liabilities having a residual maturity limited to 2 years as of the expiry of the observation period or, if it exceeds 2 years, the liabilities have attached a reimbursement, transfer or an anticipated withdrawal clause. In any other cases, the minimum mandatory reserves rate is zero. The minimum mandatory reserves applicable to mortgage banks are zero.
Business purpose and forbidden transactions

Under the Banking Law, credit institutions may perform various financial activities, such as: taking deposits and performing lending operations (including consumer loans, mortgage loans etc.), financial leasing, payment operations, issue and management of payment instruments, issue of guarantees and undertaking of commitments, transactions with money market instruments, intermediation on the interbank market, financial investment services and financial consulting, etc. Credit institutions may also perform, within the limits of their authorization and subject to compatibility with the requirement of banking business, the following operations: Nonfinancial mandate or commission operations, especially on behalf of other entities within their group; Asset management operations in respect of the movable and/or immovable assets owned by the credit institution, but not for the purpose of performing financial operations; Services for their own clients which, although not connected with the performed business, are an extension of the banking operations; Except for those referred above, transactions by credit institutions with movable assets and real estate property are only allowedunder the following circumstances: (i) when such transactions are necessary for the authorized operations of the credit institution, for the employees training, or for organizing resorts or housing for employees and their families; (ii) when the transactions involve movable assets and real estate property acquired following foreclosure proceedings. The following transactions are entirely forbidden to credit institutions: Pledging of own shares against the credit institutions debts; Granting loans secured with shares, other equity securities or bonds issued by the credit institution itself or by other credit institution within the same group; Receipt of deposits or other reimbursable funds, equity securities or other valuables when the credit institution is in insolvency.
Prudential obligations
As per the Banking Law, the NBR is empowered to set forth prudential requirements applicable to Romanian credit institutions, inter alia referring to related parties agreements, liquidity, provisioning, corporate changes etc, by way of NBR norms (regulations, instructions and circulars).
Reporting obligations
Pursuant to the Banking Law and the NBR subsequent enactments, Romanian credit institutions are compelled to periodically file specific reports with the NBR, containing inter alia information in respect of: Tier I and Tier II capital levels and other capital adequacy compliance indices; Net assets; Individual and aggregate levels of the large exposures; Solvency indices, on individual and consolidated basis; Yearly financial statements and certain biannual financial data; Classification of the loan portfolio and related credit risk provisions; Banking fees for cashing in and payment operations etc.
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Mortgage banks
Mortgage banks, deemed credit institutions under the Banking Law, are established as joint stock companies operating under the authorization issued by the NBR. The main business object of mortgage banks consists of (i) providing mortgage loans for real estate investments (dwellings, industrial/commercial constructions) and (ii) issuing mortgage bonds. Mortgage banks are not allowed to take deposits.
Payment institutions
Payment institutions are in particular regulated by Government Emergency Ordinance No. 113/2009 on payment services (GEO 113/2009) and the subsequent Regulation No. 21/2009 passed by the NBR. General Payment institutions can be incorporated only as Romanian legal entities and are subject to an authorization procedure before starting their operations. The payment institutions from EUmember states may operate in Romania based on a notification sent to the NBR by the competent authority in their home member state. Business purpose As per GEO 113/2009, payment institutions are allowed to carry out various payment operations, to take deposits, to perform specific transfers, withdrawals of funds, issuing and accepting to payment instruments, cash remittance or electronic payments. Payment institutions are also able to grant credits, but only in connection with certain of their operations and subject to specific conditions. They can also perform operational and other connected services, management of payment systems and other commercial activities, subject to the applicable laws. Capital requirements Payment institutions are required to have a share capital which may vary in consideration of their business object, i.e. amounting to the RON equivalent of EUR 20,000 (for cash remittance operations only), EUR 50,000 (for electronic payment operations only) or respectively EUR 125,000 (for all the payment services provided by GEO 113/2009). Authorization As per GEO 113/2009, payment institutions are allowed to start payment operations only after obtaining the approval from the NBR, which should be issued within 3 months as of the submission of the complete documentation. The authorization documentation includes inter alia information on the initial capital, business object, significant shareholders, managers of the payment operations, business and activity plans, etc. Within 5 days as of the initiation of the authorized operations, the payment institutions must submit to the NBR a notification in this respect, together with the internal regulations and a statement of the management in respect of the IT system.
Nonbanking financial institutions

Nonbanking financial institutions are mainly regulated by Law No. 93/2009 on nonbanking financial institutions (the Law 93/2009) and the subsequent NBR norms. Business purpose As per Law 93/2009, nonbanking financial institutions are allowed to carry out various lending activities, among which financial leasing activities and consumer credits are most commonly met in practice. Nonbanking financial institutions are entitled to grant mortgage loans as well. In addition, they can also undertake financing and guarantee commitments, issue and manage credit cards, perform payment services and perform any connected or ancillary activities to the credit operations as well as mandate and consultancy activities. Nevertheless, they cannot receive money under deposit and cannot, as a rule, issue bonds, nor perform other activities unless in relation to their lending activities. Capital requirements Nonbanking financial institutions are required to have a share capital amounting to the RON equivalent of EUR 200,000, except for those acting as mortgage loan companies, to which a minimum EUR 3,000,000 threshold applies. Procedure and prerequisites for authorization As per Law 93/2009, nonbanking financial institutions have to apply for license with the NBR within 30 days as of their incorporation. They are allowed to start lending activities only after being registered in the registry held by the NBR for nonbanking financial institutions. The NBR should issue the license within 60 days as of receipt of the application and joining documentation. Prudential and reporting obligations As per Law 93/2009 and the subsequent NBR norms, nonbanking financial institutions must comply with specific prudential and reporting requirements, inter alia concerning the Tier I and Tier II capital, exposures, credit portfolio structure and corporate changes.
Prudential and reporting obligations

As per GEO 113/2009 and the subsequent NBR Regulation No. 21/2009, payment institutions must comply with specific prudential and reporting requirements, inter alia concerning their agents, the Tier I and Tier II capital requirements, measures to protect the received funds.
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The changes in the status of the payment institutions are subject to either authorization or notification to the NBR, depending on the degree of risk entailed by such changes. The payment institutions are subject to specific regulatory requirements, aimed to protecting consumers and their funds deposited with the payment institutions.
Security Interests
Under the New Civil Code, the legal regime of personal and real security interests has received a uniform regulation and certain new categories of security interests.
ensuring a priority order among creditors holding moveable hypothecs on the same assets, as well as publicity towards third parties. The Electronic Archive can be easily accessed through a taxfree Internet database, ensuring rapid verification of the records. The general rule is that the priority rank is given by the date of the registration of the moveable hypothec with the Electronic Archive. The creditor is bound to request the moveable hypothec be removed from the Electronic Archive within 10 days following the fulfillment of the secured obligation. Moveable hypothec agreements The moveable hypothec agreement must provide for a determinable value of the secured obligation, as threshold limiting the amounts that may be recovered by the secured creditor in case of enforcement. The agreement must describe the secured assets in sufficient detail as to reasonably allow identification of the secured assets, general descriptions for category of assets being no longer permitted (e.g. all the debtors present and future moveable assets does not represent a sufficient description anymore). Generally, although the security provider continues to use the secured assets during the security period; it is possible that the secured creditor takes possession of the secured asset (although the security provider remains owner); in such case particular rules apply. Still, the security provider is allowed to sell or otherwise dispose of the asset throughout the entire duration of the moveable hypothec agreement. As a general rule, a moveable hypothec agreement cannot prevent the security provider from disposing of the hypothecated asset. Also, the New Civil Code pohibits negative pledges clauses in moveable hypothec agreements. Enforcement of moveable hypothec The moveable hypothec agreements are deemed enforceable titles, which provide a procedural advantage in case of enforcement, as the secured creditor would not be required to file claim on the merits of the case. Throughout the enforcement procedure, before the sale of the secured assets, the debtor or any other interested person is entitled by law to pay the outstanding debt and to thus put an end to the enforcement procedure. The parties to a moveable hypothec agreement may agree on methods of sale to be used in case of enforcement. If the moveable hypothec agreement is silent in this regard, the creditor may capitalize on the hypothecated assets through reasonable commercial conditions. Under a certain procedure, the secured creditor may appropriate the hypothecated assets for settling its claim.
Moveable hypothecs
The moveable hypothecs, formerly known as security interests on moveable property, are regulated by the New Civil Code as of its entry into force on the 1st of October 2011 (Title VI of Law No. 99/1999 on the legal regime of security interests has been abrogated). The New Civil Code provides a flexible and uniform framework, more efficient and adequate to the current economic reality, as well as additional security enforcement procedures, as an alternative to the classical procedures provided by the Civil Procedure Code, such as allowing the creditor to undertake privateenforcement measures. Creating and perfecting the moveable hypothecs Moveable hypothecs are created by way of written agreement between the secured creditor and the security provider (either the debtor or a third party providing security to the benefit of the debtor). There is no special form requirement for such moveable hypothec agreements and, unlike immoveable hypothec agreements, notarization is not necessary. The perfection of the moveable hypothecs, which is relevant for establishing the priority ranking of the hypothec, is obtained as of the moment when the secured obligation is born, the security provider gains rights on the secured asset, the moveable hypothec agreement is signed and the registration formalities of the moveable hypothec have been duly performed. The New Civil Code provides the categories of moveable assets which can be charged by moveable hypothec, such as intangible assets, universalities of moveable assets (including goodwill)but only to the extent they are assigned to the operations of a company, moveable assets attached to real estate, products of the secured asset (e.g. proceeds of the sale or any moveable asset replacing the secured asset), future moveable assets. Publicity The New Civil Code requires the registration of moveable hypothecs with the Electronic Archive for Security Interests (the Electronic Archive) for
Pledge
The pledge is now regulated by the New Civil Code as a security where the secured creditor takes over the pledged assets. Only tangible moveable assets or materialized commercial titles may be subject to pledge. The publicity of pledges is ensured by the mere fact of possession over the pledged assets. If no specific rules are provided under the New Civil Code on pledges, those applicable to moveable hypothecs shall apply.
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Immoveable hypothecs (mortgages)

Immoveable hypothecs continue to be preferred among the security instruments and are frequently used in various types of commercial and retail transactions. Under the New Civil Code, mortgages can be created on existing property such as land and buildings, but also (differently from the previous regulation) on future immoveable assets. Following the creation of an immoveable hypothec, the security provider will continue to own and use the hypothecated asset. The immoveable hypothec will be preserved despite any ownership transfer, following the hypothecated asset into the hands of any subsequent acquirer, so that the secured creditor is able to enforce the immoveable hypothec irrespective of who owns the property at the date of the enforcement. If the debtor failed to discharge the debt on the due date, the secured creditor is entitled to enforce the immoveable hypothec and satisfy its receivable against the debtor by selling the hypothecated real estate following the procedure under the Civil Procedure Code (which procedure in many cases proves to be lengthy and bureaucratic). Immovable hypothec agreements An immoveable hypothec is created by agreement of the parties and by registration thereof with the relevant land book (under the New Civil Code, the registration has become a validity condition). The immoveable hypothec agreement must be notarized as a condition for its validity. Under the sanction of nullity, the immoveable hypothec agreement must provide a proper description of the mortgaged property and details of the secured obligations. The security provider is allowed to sell or otherwise dispose of the hypothecated asset throughout the entire duration of the immoveable hypothec agreement and as a general principle, an immoveable hypothec agreement cannot prevent the security provider from disposing of the hypothecated asset. The New Civil Code explicitly prohibits the negative pledges clauses in immoveable hypothec agreements. Publicity The Cadastre Law No. 7/1996 sets out the legal framework for the registration of immovable hypothecs with the land books kept by the offices for cadastre and real estate publicity. The immoveable hypothec registration system is aimed at ensuring the validity thereof and also the priority rank among secured creditors and the publicity against third parties. Thus, by reviewing the registrations in a land book, a third party would be informed about the existence of any immoveable hypothecs encumbering the property. The land books can be relatively easy accessed. An internet database is not available yet for the verification of the real estate records.
Enforcement of the immovable hypothec A properly notarized immoveable hypothec agreement is an enforceable title on the basis of which the secured creditor can submit a formal request to the court, within a noncontentious procedure, in order to obtain approval to start the enforcement procedure.
Suretyship (Fidejussio)
The suretyship (fidejussio) is a personal guarantee, on the basis of which the secured creditor is granted the right to pursue the assets of the guarantor in case the debtor fails to perform the secured obligation. The suretyship is not subject to any registration procedure and does not give a priority ranking to the secured creditor. When pursued by the creditor, the guarantor may use the following defenses: The benefit of discussion (beneficiul de discuiune), whereby the guarantor asks the secured creditor to first exhaust its remedies against the debtor before pursuing the guarantor; and The benefit of division (beneficiul de diviziune), available where there are multiple guarantors for the same debt; should one guarantor uphold the benefit of division, the creditor would be obligated to pursue each of the guarantors prorata with their undertakings. Either of these types of defense may be contractually waived by the guarantors.
Independent guarantees
For the first time under Romanian law, the New Civil Code regulates the letter of guarantee and the comfort letter as categories of independent guarantees. Letters of guarantee The letter of guarantee is a category of personal guarantee whereby the issuer irrevocably undertakes to pay an amount of money to a beneficiary on its first demand and such obligation to pay is independent from the underlying obligation in relation to which the letter of guarantee was issued. As a rule, the letters of guarantee are payable on first demand. Comfort letters The comfort letter is regulated by the New Civil Code as an irrevocable undertaking of the issuer to perform or abstain from performing an action, for the purpose of supporting the debtor in the performance of its obligations towards its creditor (such creditor being the beneficiary of the letter of comfort). The issuer of a comfort letter may only be held liable for damages caused to the creditor, upon the latter providing evidence of the issuers breach of the obligations undertaken by the comfort letter and only to the extent the principal debtor defaults towards the creditor. The issuer has a right of recourse against the principal debtor if it has paid damages to the creditor.
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Capital Market
Overview
During the past 6 years, since the enactment of the Capital Markets Law No. 297/2004 (the Capital Markets Law), the Romanian capital market has undergone a process of transformation from an incipient market to a highly regulated and complex market, in the effort to mirror and implement the principles at work in the relevant EU Directives and the international market practices. The development process is still underway and, although the regulatory authorities in the field are quite active, some of the operational aspects settled years ago in the more developed markets are not fully implemented on the Romanian capital market. However, the regulations currently applicable on the local capital market are, in principle, in line with the EU Directives.
However, REM is a completely different tier than BSE and, although it is a system for securities spot trading, it is neither an authorised regulated market nor a multilateral trading facility26; Sibiu MonetaryFinancial and Commodities Exchange (Sibex)27 operated by Bursa Monetar Financiar i de Mrfuri SA, operational since January 2010. The main institutions on the Romanian capital market are: The regulatory authority (NSC); The market operators (BSE and Sibex); The central depository, ensuring depository activities for securities, clearing and settlement of securities transactions (Depozitarul Central SA28 for the transactions on BSE and Depozitarul Sibex SA29 for the transactions on Sibex); Clearing houses, ensuring the clearing and settlement of transactions with derivatives (Casa de Compensare Bucureti SA30 for derivatives traded on BSE and Casa Romn de Compensaie SA Sibiu for derivatives traded on Sibex); Investors Indemnification Fund31, ensuring investors indemnification, up to a certain threshold in case of a default of an investment firm/asset management company to reimburse investors money and/or financial instruments. The main entities activating on the local capital market are: Issuers of financial instruments consisting mainly of local commercial companies and undertakings for collective investments, local authorities (municipalities, city halls, county councils) and the State (Tbills); Intermediaries/investment firms which may be either specialized financial investment services companies or credit institutions duly authorised in this respect; Investment management companies. Investment firms/investment management companies authorised in an EU Member State may provide financial services in Romania, directly or through local branches.
Relevant Institutions
Romanian capital market regulation and operation are placed under the authority and supervision of one sole entity, the National Securities Commission (NSC)24. Currently, Romania has two regulated markets, where both securities and derivatives are effectively traded namely: The Bucharest Stock Exchange (BSE)25 operated by Bursa de Valori Bucureti SA (BVB), in place since 1995. BVB also manages the RASDAQ Electronic Market (REM), whose initial operator has legally merged with BVB in 2005.
24 25
Transactions with Listed Securities

As a general rule, admission of securities to trading on a regulated market is made based on a prospectus that requires approval by the NSC before publication. In cases strictly provided by law, a simplified prospectus is accepted.
26 27 28 29
Currently, BVB tries to reorganize REM as a multilateral trading facility. The official website of Sibex is www.sibex.ro. The official website of Depozitarul Central SA is www.depozitarulcentral.ro. The official website of Depozitarul Sibex SA is www.depozitarulsibex.ro. The official website of Casa de Compensare Bucureti SA is www.casadecompensare.ro. The official website of the Investors Indemnification Fund is www.fondfci.ro.
The official website of NSC is www.cnvmr.ro. The official website of BSE is www.bvb.ro.
30 31
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There are certain minimum requirements set forth by the Capital Markets Law for admission to trading which are listed herein below.
Requirements referring to the issuer

To be incorporated and carry out operations in compliance with the law; To have a preliminary level of capitalization of at least EUR 1,000,000 or, if capitalization cannot be assessed, the value of the capital and the reserves (including the profit or the loss of the last financial year) to be of at least EUR 1,000,000; The company must have operated for at least 3 years before submitting the application for listing.
to the pre-validation mechanism33; in this respect, NSC has a decision (to become effective as of the 14th of November 2011) whereby it has extended the use of the global accounts also to the shares of the companies included in the BET index of BSE. The settlement of securities transactions involves, in principle, cash delivery. Also, the enforcement of pledge over traded securities generally involves a sale on the market, at the market price. The price of a transfer on the market needs to observe certain preestablished fluctuation margin applied to the daily reference market price. For financial instruments issued in the national currency (RON) all market operations (e.g. price denomination, settlement, quotations) have to be made in RON. Financial instruments issued in foreign currency may be traded either in RON or in the currency of issue, in accordance with the terms of the listing prospectus endorsed by the relevant authorities. Securities lending is permitted mainly as a safeguard for the settlement of securities transactions or for the physical settlement of derivatives, for the purpose of short sales or for keeping the market maker position. Generally, short sales are allowed only if preceded by the sellers borrowing the respective securities; however, short sales are allowed to be made without such prior securities lending if needed for keeping the market maker position, but only for the shares for which the global accounts without pre-validation system is allowed.
Requirements referring to shares

To be freely negotiable and fully paid; To have sufficient spread to the public (in principle, 25% of the subscribed share capital; special exemptions may be granted by NSC under certain conditions). In addition, each market operator may set its own requirements to be met by issuers when applying for listing their securities on their tiers (e.g. depending on the value of companys capitalization, the BSE has established three listing categories, the EUR 1,000,000 threshold being required for listing on the 3rd category, while a capitalization of EUR 2,000,000 is required for the 2nd category and one of EUR 30,000,000 for the 1st category). As a principle, all transactions made through the stock exchange entail an automatic prevalidation procedure aimed at ensuring that the shares exist into sellers account both on the trade date and on the settlement date. Such prevalidation mechanism is not applicable to trades with Tbills or with shares also listed on another EU regulated market, to crossborder share settlements, or to cross border public offers; also, to be effective as of the 14th of November 2011, such mechanism is no longer applicable to the trades with shares of the companies included in the BET index of BSE32. Currently, the securities are mainly held in and traded from individual accounts opened by the intermediary on the clients name in the system of the central depository. Based on a March 2010 NSC regulation, the use of global accounts is generally allowed to all the local issuers provided that the trades with their shares are subject to the pre-validation mechanism. Also, the said NSC Regulation provides for a series of limited cases where the global accounts shall be used for shares not subject
Takeover Bids
Any public offer is allowed upon the NSCs approval of the offering announcement and documentation. Any advertisement of the tender offering before obtaining the NSCs approval of the offering documents is forbidden.
Mandatory takeover offering

According to the Capital Markets Law, once a person has reached (either alone or jointly with persons acting in concert) more than 33% of the voting rights over the issuer company, the respective person is bound to launch a public offering addressed to all the other shareholders for all the remaining shares, the socalled mandatory takeover offering (MTO).
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The BET index of BSE includes the top 10 most liquid companies.
Such situations would inter alia include, issuers whose shares are listed both on the Romanian capital market and on an EU Member State capital market, issuers of T-bills, issuers whose shares are registered with a Romanian central depository and which make object of a cross-border public offering, issuers whose shares are registered with both a Romanian central depository and a central depository located in a EU Member State with whom the Romanian central depository cooperates with for the purpose of ensuring the transfer and the settlement of the shares, as well as in other cases specifically regulated by the NSC.
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provided by law, including privatization, foreclosure proceedings conducted by the Ministry of Public Finance or other authorized entities, share transfer between the mothercompany and its subsidiaries or between subsidiaries of the same mothercompany, voluntary purchase offering addressed to all shareholders for all their shares. The MTO has to be launched within 2 months from reaching the qualified position, save for the case when the threshold was reached involuntarily (e.g. pursuant to subscribing pro rata under a share capital increase or as a result of merger/spinoff operations) when the deadline is of 3 months. The price under an MTO must meet or exceed the highest price paid by the offer or, or the persons acting in concert with it, within the last 12 months before the MTO. Lacking this index, the MTO price shall be the highest of the following (i) the weighted average shares trade price for the 12 months prior to the MTO, (ii) the price resulting from dividing the companys net assets value (as per the latest financial statements) to the number of publicly traded shares and (iii) the shares value as valuated by an expert in accordance with international valuation standards.
Protection of the offeror against material adverse effect actions by the target company is ensured by the targets BoD being banned to take any measure or act in a manner that may influence on the status of the company or the takeover objectives, save for the current management operations and operations deriving from previous undertakings of the company or subsequently endorsed by the Extraordinary GAS. Prohibited operations include share capital increases or issues of securities granting subscription rights, or shares swaps, as well as charging or transferring the companys assets representing at least 1/3 of its net assets as per the last yearly financial statements. On the other hand, the offeror is held liable for damages incurred by the issuer company if it is proved that the VTO has been launched exclusively for the purpose of determining the company not to proceed with certain operations. The offeror and the parties that the latter acts in concert with may not launch another VTO targeting the same company within one year after the closing of a previous VTO.
Voluntary takeover offering

A public offering addressed to all shareholders for all their shares for the purpose of acquiring more than 33% of the voting rights, when the offer or is not bound to conduct a tender offering, is called voluntary takeover offering (VTO). The price of the VTO should be at least the highest of the following: (i) the highest price paid by the offer or/the persons it acts in concert with for the shares in the target company, (ii) the weighted average shares trade price for the 12 months prior to the VTO and (iii) the price resulting from dividing the companys net assets value (as per the latest financial statements) to the number of publicly traded shares. VTO proceedings require a preliminary procedure to be conducted by the offeror with the issuing companys management. The offeror`s takeover intention, included in a preliminary announcement approved by the NSC, is communicated to the target company. The employees are also notified on such intention. Within 5 days as of receiving the preliminary announcement, the target companys Board of Directors (BoD) has to provide the NSC, the relevant market operator and the offeror with a document ascertaining its position with respect to the takeover through the announced VTO, including, if any, the opinion expressed by the employees representatives. On the other hand, the BoD may convene a meeting of the general assembly of the shareholders (GAS) following the receipt of the preliminary VTO announcement, in order to inform the shareholders on its position with regard to the takeover.
Counter bids
Launching counter bids is allowed with regard to any purchasing tender offering, with the counter bid envisaging at least the same quantity of securities or the same participation level and the counter bid price being at least 5% higher than the initial bid (the first announced purchase offer). The counter bids may be launched within 10 business days as of the publication of the announcement of the initial bid. A contest is conducted by the NSC in order to select one bid. All the competing bids are meanwhile suspended. The price contest process takes place in several rounds until no other price increase is submitted. The offerors have to increase the price by at least 5% of the highest price bided in the previous round. After the final price is determined following the price contest process, an amendment to the winning bid is published (reflecting the respective increased price) and all the other bids previously authorized are cancelled.
Exit of Minority Shareholders/DeListing

Minority shareholders may be forced by the majority shareholder to exit the company (squeezeout) or may ask the majority shareholder to buyout their holdings (sellout), once the latter has reached 95% of the shares having attached voting rights in the listed company, or has acquired 90% of the shares targeted in a public purchase offering addressed to all the shareholders for all their shares. Both operations are to be made at a fair price for the minority shareholders, determined according to the law or by an independent expert. Following the squeezeout/sellout procedure, the company is delisted.
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In case of company merger or spinoff that would result in shareholders receiving shares not admitted to public trade (e.g. that would lead to companys withdrawal from public trade), the minority shareholders that dissent to the GAS decision on the process are entitled to withdraw from the company and receive the value of their shares as valuated by an expert. The same withdrawal right is granted to minority shareholders if the companys GAS decides the companys withdrawal from public trade. However, such delisting procedure can only be conducted under very restrictive circumstances and requirements.
Reporting Obligations
Any issuer of securities admitted to the official listing has to submit periodical reports to the market and the NSC, mainly including financial data for the reporting period or informing the market on certain special events (general meeting of shareholders decisions/convening, etc). Each issuer has to submit the regulatory authority, the market operator and the public with quarterly, biannual and annual financial reports. Announcements are to be published in at least one national newspaper informing the public on the locations where such reports may be reviewed and the way they can be obtained. All the periodical reports have to be maintained available to the public for at least five years. Also, certain events or circumstances must be immediately reported to the market and the NSC. Reporting obligations are applicable both to Romanian issuers and to foreign issuers admitted to trading on a Romanian regulated market. Issuers listed on REM have lower reporting standards.
Protection of Minority Shareholders

One of the main concerns of the capital market regulations is offering protection to minority shareholders. To this end, two main principles are clearly stated by the Capital Markets Law: equality of investors and transparency of the market. Protection of minority shareholders is ensured under the capital market laws and regulationsin turn based on the relevant EU Directives (i.e. the Prospectus Directive and the Transparency Directive, together with the relevant Level II enactments)through specific obligations imposed on issuers to make available to investors information on a periodical or adhoc basis, or through special rights of the shareholders in relation to the decisionmaking process in the listed company, or special rules with regard to inside information/insider trading and market manipulation. Minority shareholders with a higher quota have some additional rights, such as the right to request the GAS be convened, or reports of the financial auditor on specific company operations be made, or the election of the BoD members be made via the cumulative voting procedure. Transparency of the market, the main tool for protecting the shareholders, is ensured in the first instance through the shareholders right to information, which is regulated around the following major rules: Admission to the official listing on a regulated market is conditional upon the issuer providing investors with true and complete information regarding the securities and the issuer, through the publication of an offering prospectus; Publicly traded issuers are required to periodically inform investors on their activity and financial standing; Publicly traded issuers are required to immediately inform investors on any major event concerning issuers activity and their securities; Market manipulation and market abuse are strictly forbidden (and are also punished as criminal offences); Specific rules are designed with regard to the concept and use of inside information and inside persons; securities trade based on privileged information being strictly prohibited.
Information on Qualified Positions

A shareholder that has reached or lost a qualified position (5%, 10%, 15%, 20%, 25%, 33%, 50%, 75% or 90%) has to inform the target company, the NSC and the market operator on the operation within 3 working days. The company thus informed is also obligated to release the information to the public, the NSC and the market operator within 3 working days as of being informed.
Cumulative Voting Procedure for Appointing the Directors

Members of the BoD of companies listed on a regulated market may be appointed under a special procedure, the socalled cumulative voting method. Any shareholder may request to appoint BoD members by using this special method (which implies appointment of BoD members by the shareholders on individual basis, proportional with their voting rights), but the application of the method becomes mandatory following the request of a significant shareholder (holding at least 10% of the share capital or voting rights or a position giving a significant influence on the decisionmaking process of the company). The articles of incorporation of the issuer may not cancel, amend or hinder the right of the shareholders to request and obtain the use of the cumulative vote procedure. The application of this special procedure shall regard all the members of the BoD.
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The cumulative voting method does not have t0 be observed by foreign issuers admitted on the local market, which shall be bound by the corporate requirements of their national law.
Super Majorities in the General Assembly of the Shareholders

In order to protect minority shareholders against dilution by the majority shareholders, there are certain special majorities provided by the Capital Markets Law for share capital increase. Thus, a quorum of of the number of all shareholders and vote of 75% of the share capital is required for a valid decision in the GAS in the case of: Increasing the share capital by contribution in cash with the cancellation of the preference rights of the existing shareholders (which would allow them to preserve their equity quota following the share capital increase); Increasing the share capital by contribution in kind. Such majorities are not applicable to the foreign issuers admitted to trading on a Romanian regulated market, which shall apply the rules regarding corporate issues that are provided by their national law.
Energy
Power and Heat
Overview on the reorganization of the Romanian power and heat sector
In the early 90s, an extensive reorganization process has been initiated in the power and heat sector aimed at preparing the State-owned players for privatization. As a first step in this direction, the Regie Autonome for Power (Renel) was organized by taking over all the assets and liabilities of 100 State-owned companies, research and educational institutes and one training centre operating in the power sector. Renels main business was in generation, transport and distribution of power, heat generation and transport, maintenance and repairing of energy equipments and installations, development of the national energy system, import and export of power. In 1997, as a major new step in the reorganization process, a legal framework was created for regies autonomes to be transformed into commercial companies, owned solely by the State in the initial phase, but legally eligible for privatization. Under the new legislation, Renel was split into 2 companies and 1 regie autonome: The Power National Company (Conel) having three subsidiaries: Hidroelectrica (subsidiary for power generation in hydropower plants), Termoelectrica (subsidiary for power and heat generation in thermalpower plants) and Electrica (subsidiary for power distribution); The National Company Nuclearelectrica; and The Regie Autonome for Nuclear Activities. Conels reorganization continued in 2000 with the following entities being formed: The Power Transportation National Company Transelectrica (Transelectrica), the national power transporter and dispatcher responsible for operating and upgrading the transmission grid, as well as for organizing and managing the power market;
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The Power Generation Company Hidroelectrica (Hidroelectrica), hydro power producer and supplier; The Power and Heat Generation Company Termoelectrica (Termoelectrica), acting on the power generation and supply, as well as heat generation, transmission, distribution and supply markets; and The Power Distribution and Supply Company Electrica (Electrica), the national power distributor and supplier, mainly responsible for operating and developing the distribution grid. Further, Electrica was reorganized by setting up 8 distribution and supply subsidiaries, each having exclusivity over the power distribution service and related infrastructure within a certain area, i.e. Electrica Oltenia, Electrica Muntenia Nord, Electrica Muntenia Sud, Electrica Banat, Electrica Dobrogea, Electrica Moldova, Electrica Transilvania Nord and Electrica Transilvania Sud. Although only the monopoly activities in the power sector have been opened for privatization so far (i.e. the distribution companies), while most of the competitive segment of the market continues to be State-owned, privatizations in the power sector saw key players in the European power sector entering the domestic market. Five of the former subsidiaries of Electrica (power distributors and suppliers) have been privatized through a simultaneous share sale and share capital increase. As a result, CEZ a.s. has acquired the majority stake of Electrica Oltenia, Enel S.p.A. became the majority shareholder of Electrica Dobrogea, Electrica Banat and Electrica Muntenia Sud while E.ON. Energie AG has acquired 51% of the share capital of Electrica Moldova. In the heat sector, Termoelectrica is currently in process of establishing several joint venture companies to be controlled by private investors, which would act as independent heat producers. Termoelectricas participation in such joint venture companies would consist in thermalpower plants or parts of them which appear to be attractive for the investors due to a relative constant heat market but which need significant investments for efficiency increasing purposes. An extensive reorganization process was initiated in the power and heat generation sector at the beginning of 2010, consisting in concomitant mergers and spinoffs of the main Stateowned power and heat producers so as to result into two giant companies, i.e. the National Company Electra (Electra) and the National Company Hidroenergetica (Hidroenergetica). Although important steps were made along the lines of this restructuring plan, the process has been abandoned and currently a new form of reorganization is envisaged in the sector, but at a much smaller scale. The new process consists in two mergers, namely, on the one hand the merger among CE Turceni, CE Rovinari, CE Craiova
(power and heat producers resulted from the reorganisation of Termoelectrica in 2004) and the National Company of Lignite Oltenia, thus resulting CE Oltenia; and, on the other hand, the merger between Electrocentrale Deva and Electrocentrale Paroseni (subsidiaries of Termoelectrica) into CE Hundedoara.
Power
Authority regulating the power sector The power sector is regulated by the Romanian Energy Regulatory Authority (ANRE), an independent public body of national interest, coordinated by the Vice Prime Minister, which operates on the basis of its own organization and operation regulation. ANRE is entirely financed from the State budget, through the budget of the Government General Secretariat. ANREs main competences in the power sector include: Issuing mandatory regulations for operators in the power sector; Granting, amending, suspending and withdrawing power authorizations and licenses; Approving methodologies for establishing prices and tariffs and the tariffs for system, transmission and distribution services; Drafting framework supply agreements and framework agreements to be concluded between undertakings in the power sector regarding the sale, purchase, transmission, system service and distribution of power; Monitoring the power market and how the operators on this market comply with the relevant regulations; and Settling disputes related to the conclusion of supply agreements, interconnection agreements or agreements concluded between undertakings on the power market. The power sector is regulated mainly by Power Law No. 13/2007 (the Power Law34). 1 Activities and participants in the power sector The power sector includes all the activities of power generation, transmission, distribution and supply, system services, import and export of power, as well as the establishment and operation of the related capacities. The generation is carried out by legal entities licensed by ANRE, through the operation of the generation capacities also authorized by ANRE. The producers are entitled to trade the power they generate on the wholesale market, as well as to supply it to final consumers based on a power supply license. The main power producers on the Romanian market are Hidroelectrica, Nuclearelectrica and CE Turceni. Transmission is a natural monopoly activity carried out by Transelectrica, the Romanian Transmission and System Operator.
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Published in the Official Gazette of Romania, Part I, No. 51 dated 23 rd of January 2007, as further amended and supplemented.
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Transelectrica operates, based on the concession granted by the Ministry of Economy, Commerce and Business Environment over the entire power transmission grid (i.e. the grid having a voltage exceeding 110 kv) belonging to the public property of the State. Power distribution entails the transportation of the power through the high, medium and low voltage grid having a voltage of up to 110 kv. Similarly to the transmission, the distribution is a natural monopoly activity carried out by 8 entities holding (i) the concession awarded by the Ministry of Economy, Commerce and Business Environment over the distribution service in a certain area and (ii) the distribution license issued by ANRE. The supply can be carried out by entities holding the power supply license issued by ANRE. As a result of the full liberalization of the Romanian power market since the 1st of July 2007, three categories of suppliers are recognized by the regulations in force, namely (i) competitive suppliers, (ii) default suppliers and (iii) last resort suppliers. As a general rule, as of the 1st of July 2007, the suppliers can sell the power on the competitive market at negotiated prices. The default suppliers (i.e. the supply companies resulted further to the unbundling of the former distribution and supply operators, namely CEZ Vnzare, Enel Energie, E.ON. Energie Romania, Electrica Furnizare Transilvania Nord, Electrica Furnizare Transilvania Sud, Electrica Furnizare Muntenia Nord and Enel Energie Muntenia) are obligated to supply power, under terms and prices regulated by ANRE, to the following consumers located in the area covered by the distribution license: Household and nonhousehold consumers which have not exercised the right to elect the supplier on the competitive market; Nonhousehold consumers having a maximum capacity of 100 kVA and household consumers which have participated on the competitive market and decided to return to the regulated market; and New household consumers which elect the default supplier and new non household consumers having a maximum approved capacity of 100 kVA which do not exercise the right to elect the supplier on the competitive market. At the same time, ANRE nominates several last resort suppliers for supplying power, under regulated terms and prices, in case of suspension/withdrawal of the supply license of one or several suppliers. For the period between the 1st of July 2011 and the 30th of June 2012, ANRE appointed as last resort suppliers the default suppliers indicated above.
Unbundling of power distribution and supply activities In line with the principles laid down by the Directive 54/2003/EC concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (the Power Directive35), the Power Law imposed unbundling of the distribution and supply activities by the 30th of June 2007. Unbundling was required of vertically integrated undertakings carrying out both distribution and supply activities, except for vertically integrated undertakings serving less than 100,000 connected customers, or small isolated systems. Distribution operators part of vertically integrated undertakings were required to become independent from activities not connected to power distribution, at least in terms of legal form (legal unbundling), organization and decision making process (functional unbundling). All eight distribution and supply operators (former and current subsidiaries of Electrica) have completed the unbundling of distribution and supply activities through spinoff into two separate entities, one for each activity.
Power market
In line with the principles laid down by the Power Directive, the Romanian power market was fully liberalized as of 1st of July 2007, further to a gradual liberalization which started in 2000. However, even after the 1st of July 2007, ANRE continues to regulate several segments of the market, i.e. the natural monopoly activities, the supply by the default suppliers and last resort suppliers, as well as the transactions between the producers and the default suppliers and last resort suppliers for the power supplied on the regulated market. On the competitive market, transactions are performed (i) under a wholesale system (for suppliers acquisitions of power from producers or from other suppliers for reselling purposes) or (ii) under a retail system (for acquisitions of power by final consumers for their own consumption). On the wholesale market, transactions are concluded in the following forms: Bilateral agreements concluded through direct negotiations (including import/export agreements); Bilateral agreements executed on the centralized market of the bilateral agreements operated by the Power Market Operator Opcom; Transactions closed on the Day Ahead Market operated by the Power Market Operator Opcom; Transactions concluded on the centralized balancing market operated by Transelectrica; and Transactions for technological system services.
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Published in the EU Official Journal L 176 of 15th of July 2003.
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Prices and tariffs

Further to the full liberalization of the market, transaction prices can be negotiated by the parties, except for tariffs and prices which continue to be regulated by ANRE, namely: Regulated tariffs for the monopoly activities (i.e. power transmission, system and distribution); Regulated prices/tariffs applied by last resort suppliers and by default suppliers; Regulated prices for transactions between the power producers and the suppliers, for power sold to consumers on the regulated market; Regulated tariffs for the acquisition of system technological services (until a competitive market of technological system services will be created); Regulated tariffs for the measurement activity; Regulated tariffs for grid connection; and Regulated tariffs applied by centralized markets operators. Authorizations and licenses Activities in the power sector being of public interest, they may be carried out only provided specific authorizations and licenses are obtained from ANRE: developing and upgrading generation capacities having an installed power exceeding 1 MW are subject to obtaining the setting up authorization; power generation and supply activities, as well as power distribution, transmission and system services are conditional upon obtaining the corresponding licenses. Rights of the holders of authorizations/licenses over the lands and other immovable assets owned by third parties Considering the public interest power sector activities entail, holders of authorizations and licenses benefit, by virtue of law, of certain rights over the lands and other assets belonging to either the public domain or to private individuals or legal entities, such as (i) a right of use of such assets in the event works are necessary for the development, upgrading, operation or repairing energetic capacities, (ii) easement rights (underground and aboveground) for installing power grids and other equipments related to energetic capacities and for accessing the location place thereof and (iii) a right to request the limitation or cessation of the activities carried out near energetic capacities which may endanger assets or humans. If the immoveable assets are owned by the state or by the local authorities, the right of use and the easement rights are exercised free of charge; if owned by individuals or legal entities, the owners are entitled to compensation for all damages incurred further to exercising these rights, the value of the compensation being agreed by the parties or, failing which, by court decision. The terms and conditions to exercise these rights are established by convention concluded between the two parties, at the owners request, which should observe the framework convention recently approved by Government decision.
Access and connection to the power grid Permitting access to the power transmission and distribution grids is a mandatory service to be provided by the TSO and the relevant distribution operator. Access to the grid can be restricted only provided that the connection affects the safety of the national energy system through the breach of the relevant technical norms and performance standards. Considering the limited capacity of the Romanian power grids, access thereto proved to be one of the crucial steps in the development of a new power generation project in Romania. Connection to the power grid is done based on a grid connection permit followed by the execution of the grid connection agreement (if the connection requires works to the grid), and the payment of the connection tariff. Applications for a grid connection permit should be filed either with (i) the TSO, for power generation/consumption units having a capacity exceeding 50MVA or (ii) the power distribution operator holding the concession of the power distribution service in the respective area, for power generation/consumption units having a capacity up to 50MVA. Promoting the power from renewable energy sources In line with the then in force Directive 2001/77/CE on the promotion of power generation from renewable energy sources on the domestic market, starting with 2003, the Romanian legislation has been constantly supplemented in order to create a legislative framework for the promotion of power from renewable sources of energy. In the first regulatory stage (i.e. 2004November 2008), the lawmaker opted for the system of mandatory quotas combined with green certificates trading, under which for each MWh of power generated from renewable sources of energy, the producers were entitled to one green certificate. In the second regulatory stage, Law No. 220/2008 establishing the system for promoting the power produced from renewable sources of energy has been enacted (the Renewable Energy Law)36. The Renewable Energy Law established initially two alternative systems for stimulating the generation of energy from renewable sources of energy: (i) the system of mandatory quotas combined with green certificates trading and (ii) the feedin tariff system. Only one of these systems was to be selected for application by way of Government decision and, consistently, at the end of 2009, the Government Decision No. 1479/200937 was passed opting for mandatory quotas combined with green certificates trading. However, this decision provided that the support scheme shall apply only subject to being authorized by the European Commission.
36
The Renewable Energy Law was published in the Official Gazette, Part I, No. of 743 of 3rd of November 2008.
37
Government Decision No. 1479/2009 on the establishment of the system for promoting generation of power from renewable sources of energy was published in the Official Gazette, Part I, No. 843 of 7th of December 2009.
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Furthermore, with a view to adapting local legislation to the changes brought in April 2009 by Directive 2009/28/CE on the promotion of the use of energy from renewable sources38, which repealed Directive 2001/77/CE, a law for the amendment of the Renewable Energy Law was passed in 201039. Finally, the support scheme for power generated from renewable sources of energy has been recently approved by the European Commission. During the authorization process of the support scheme, the Romanian authorities undertook to bring some amendments to the existing legal framework with the purpose of aligning it with the clearance subsequently obtained from the European Commission. As such, a Government Emergency Ordinance40 has been recently passed for amending and supplementing the Renewable Energy Law (the Amended Renewable Energy Law). The main principles of the system of mandatory quotas combined with green certificates trading, as regulated by the Amended Renewable Energy Law, are as follows: The national targets regarding the percentage of power generated from renewable energy sources (including the power generated in hydropower plants having installed capacities exceeding 10 MW) out of the total final consumption will be 33% in 2010, 35% in 2015 and 38% in 2020; The annual mandatory quotas of power generated from renewable energy sources (excluding the power generated in hydropower plants having installed capacities exceeding 10 MW) out of the total final consumption shall be gradually increased from 10% in 2011 to 20% in 2020; The number of green certificates to be distributed by the TSO for each MWh of power generated by power plants using renewable sources of energy (with the exception of the power used for own technological consumption) shall vary depending on the renewable energy source, as follows: (i) 3 green certificates for each MWh of power generated in the new hydropower units having an installed capacity of maximum 10 MW, 2 green certificates for each MWh of power generated in the refurbished hydropower units having an installed capacity up to maximum 10 MW and 1 green certificate for each 2MWh of power generated in other hydropower units than the new and refurbished units mentioned above, having an installed capacity of maximum 10MW; (ii) 2 green certificates up to 2017 and one green certificate as of 2018 for each MWh of wind power; (iii) 2 green certificates for each MWh of power generated from geothermal energy, biomass, liquid biofuel, biogas, (iv) 1 green certificate for each MWh of power generated from landfill gas and sewage treatment plant gas; and (v) 6 green certificates for each MWh of solar power;
38
Directive 2009/28/CE on the promotion of the use of energy from renewable sources was published in the Official Journal of the European Union No. L 140 of 5th of June 2009.
39
Law No. 139/2010 on amending and supplementing Law No. 220/2008 establishing the system for promoting the power produced from renewable sources of energy has been published in the Official Gazette, Part I, No. 474 of 9th of July 2010.
40
For the period 20082025, the trading value of the green certificates both on the centralized market and on the bilateral agreements market varies from EUR 27 (minimum value) and EUR 55 (maximum value) per green certificate; starting from 2011, such values are indexed with the average inflation rate of the Euro zone within the European Union calculated for the previous year and communicated by Eurostat; The quota of green certificates acquisition shall be estimated by ANRE each December for the following year and by the 1st of March of each year ANRE shall establish the mandatory quota of green certificates acquisition for the previous year, based on the achieved production of renewable energy and the gross final consumption registered in the previous year; The suppliers have the obligation to purchase a number of green certificates which equals to the annual quantity of power purchased for final consumers and for own consumption purposes multiplied by the mandatory quota of green certificates acquisition determined by ANRE for the respective year; The producers have the obligation to purchase a number of green certificates which equals to the quantity of power used for own consumption purposes (other the technological consumption) and for supplying consumers connected directly to the power plant, multiplied by the mandatory quota of green certificates acquisition determined by ANRE for the respective year; The amount to be paid by the power suppliers and producers failing to observe the annual mandatory quota of green certificates acquisition shall amount to EUR 110 for each green certificate that was not acquired; such amount shall be also indexed with the average inflation rate of the Euro zone within the European Union calculated for the previous year and communicated by Eurostat; The amounts resulting from the sanctions applied to suppliers and producers for failing to observe the mandatory quotas of green certificates acquisition shall be collected by the Environmental Fund Administration41. Such amounts shall be further allocated, to the natural persons for investments in renewable power generation units having an installed capacity up to 100 kW; The power generated from renewable energy sources shall be traded on the wholesale power market at market price. However, the power generated from renewable energy sources in power plants having an installed capacity below 1MW can be sold to the default suppliers in the licensed areas where the power plants are located at regulated prices to be further established by ANRE. The trading conditions and the regulated prices shall be notified to the European Commission. The quantity of power sold against regulated prices shall not benefit from the promotion system; Power plants using renewable sources of energy shall be connected to the power grid to the extent that the safety of the National Energy System is not affected.
41
Government Emergency Ordinance No. 88/2011 for amending and supplementing Law No. 220/2008 establishing the system for promoting the power produced from renewable sources of energy, published in the Official Gazette, Part I, No. 736 of 19th of October 2011.
The Environmental Fund is an economical-financial instrument targeted at supporting and performing environmental protection projects and programs, in accordance with the applicable laws in the environmental field.
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The power generated from renewable sources of energy which benefits from the support scheme and is sold on the market benefits of guaranteed access to the grid, while the power sold against regulated prices benefits of priority access to the grid, based on technical and commercial rules to be further established by ANRE; The support scheme shall apply for a period of (i) 15 years for energy generated by new units (i.e. commissioned after the 1st of January 2004 and composed entirely of new equipments), (ii) 10 years for power generated by refurbished hydropower plants, with an installed capacity of no more than 10 MW, (iii) 7 years for wind power generated by units previously used on the territory of other states, if such units are used in the isolated energy systems or have been commissioned prior to application of the support scheme regulated by the Amended Renewable Energy Law, (iv) 3 years for power generated by non-refurbished hydropower plants with a maximum installed capacity of no more than 10 MW. Such periods shall be diminished accordingly in case of power producers which received green certificates prior to the application of the support scheme regulated by the Amended Renewable Energy Law; The support scheme shall apply to all producers accredited by ANRE provided that the commissioning, the refurbishment respectively, of the generation units occurs by the end of 2016; Developers of power plants generating renewable energy which have an installed capacity of more than 125MW shall be subject to a detailed assessment to be performed by the European Commission and shall be entitled to benefit from the support scheme only after the completion of such assessment. In this case, ANRE may modify the number of green certificates to be awarded to the developer of the respective power plant, in accordance with the provisions of the authorization decision of the European Commission. However, producers which as at the entry into force of the Amended Renewable Energy Law operate power plants generating renewable energy that have an installed capacity of more than 125MW shall be accredited by ANRE, and be entitled to receive the number of green certificates provided by the Amended Renewable Energy Law for a period of 24 months. Such producers have the obligation to notify the European Commission within three months as of accreditation, and any positive differences between the number of green certificates received during the 24 month period and that provided by the authorization decision of the European Commission shall be settled within 24 months as of such decision; ANRE has the authority to monitor the producers benefiting from the support scheme. If further to the monitoring and assessment of ANRE, it follows that there might be an overcompensation (defined by the Amended Renewable Energy Law as an increase of the internal rate of return by more than 10% as compared to the value thereof considered during the authorization process of the promotion system by the European Commission) deriving from the application of the support scheme, then ANRE proposes measures for reducing
the number of green certificates provided by the Amended Renewable Energy Law. These measures shall be approved by means of a Government decision and shall apply to producers which will start generating power from renewable sources of energy after the entry into force of such decision; In case of power plants benefiting of one or more State aid(s) (including EU grants), ANRE may reduce the number of green certificates to be awarded to such producers by decreasing the reference value of the investment/MW with the value of the aid received/MW and maintaining the internal rate of return considered during the authorization process of the promotion system by the European Commission; Until the fulfilment of the national targets regarding the percentage of power from renewable energy sources out of the total final consumption, the power produced from renewable sources which benefits from the promotion system may be traded only with a view to covering the gross final consumption of power in Romania. With a view to promoting the generation of power from renewable energy sources, the Romanian authorities have adopted two State aid schemes mainly aimed at financing the development and upgrading of installations for generating power from renewable energy sources, as well as the development of installations using clean technologies in all industrial sectors. The financial support granted under these State aid schemes is financed from the European Regional Development Fund42 limitedly applicable by 2013. Currently, there are no calls for projects opened by the management authority of the two financing programmes, but, unless the funds allocated for each year are disbursed, it is more likely that other calls shall be opened for the investors. Promoting the production of highy efficiency cogeneration power The system for promoting high efficiency cogeneration of power and heat, regulated at European level by Directive 2004/8/EC43 has been implemented in Romania starting with 2007 by Government Decision No. 219/200744. After the high efficiency cogeneration support scheme has been authorized by the European Commission, ANRE has adopted, during the course of 2010 and 2011, extensive secondary legislation for the implementation thereof. The support scheme for high efficiency cogeneration is administered by Transelectrica and entails the award of bonuses to qualified power producers, on a monthly basis, for each MWh of power
42
The European Regional Development Fund is a structural European Fund which aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions.
43
Directive 2004/8/EC on the promotion of cogeneration based on an useful heat demand in the internal energy market and amending Directive 92/42/EEC has been published in the Official Journal of the European Union No. L 52 of 21 st of February 2004.
44
Government Decision No. 219/2007 on the promotion of cogeneration based on the demand of useful heat, published in the Official Gazette, Part I, No. 200 of 23 rd of March 2007.
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produced from high efficiency cogeneration and delivered into the grid, irrespective of whether the power is sold on the competitive or on the regulated market.
ANRE is the authority establishing on an annual basis the producers who benefit from the support scheme, the amount of the bonus to which each is entitled, and the quantities of high efficiency power benefiting from the support scheme. The bonus to be awarded to each producer may not exceed the annual reference bonus which has been approved by the regulatory authority for the entire applicability period of the scheme depending on the type of fuel used in the cogeneration process (i.e. solid fuels, gas fuel taken over from the transmission system and gas fuel taken over from the distribution system). The bonuses are granted from the contributions collected by Transelectrica mainly from power consumers (through their suppliers) and from suppliers which export power generated in Romania. The contributions are determined on a monthly basis by multiplying the annual value set by ANRE in RON/kWh with the quantity of the power invoiced to the consumers and/or exported during the respective month. Payment of the contributions is made by the aforementioned suppliers on a monthly basis. Suppliers which import power produced in high efficiency cogeneration, certified as such through guarantees of origin, and deliver it directly to consumers in Romania are entitled to the reimbursement of the contributions they paid. ANRE analyses the costs and revenues corresponding to the high efficiency cogeneration activity estimated for the next year by the producers benefiting from the support scheme. Should the analysis reveal overcompensation, ANRE may diminish the value of the bonus to be granted for the respective period and, should the analysis prove that the cogeneration unit has been fully depreciated, no bonus shall be granted. Additionally, ANRE will assess in respect of each beneficiary whether the bonus granted in the previous year gave rise to overcompensation and, if so, the concerned beneficiary shall have to pay the amounts indicated by ANRE. The first period for which ANRE will assess the overcompensation is of three years, after which overcompensation will be analyzed on an annual basis. The support scheme is applicable for the period 2010-2023, provided that no producer can benefit from it for more than 11 consecutive years. Should the aggregate capacity of combined heat and power units benefiting from the scheme reach 4000 MW, then only high efficiency cogeneration units replacing the existing ones shall be eligible for the support scheme.
In view of benefiting from the bonus, the producers have the obligation to trade the high efficiency power on the competitive power market. The remaining quantity which was not sold on the competitive market may be traded on the regulated market for regulated prices set yearly by ANRE at the level of 90% of the average power trading price on the Day Ahead Market, during the previous year. For 20102012, the regulated price may not be lower than EUR 40/MWh, VAT exclusive. As a side note, producers of power and heat from cogeneration which use renewable energy sources have the obligation to choose one of the support schemes, i.e. either the system of mandatory quotas combined with green certificates trading, or the bonus support scheme for high efficiency cogeneration.
Heat
Overview on the heat provision service The heat provision service covers all activities of theat generation, transmission, distribution and supply carried out at the level of a territorialadministrative unit, under the management of the local public administration authorities or of the community development associations45, with a view to ensuring the necessary heat used to prepare warm water for general consumption. The heat provision service is carried out by a centralized system (SACET) consisting in constructions, installations, equipments and metering devices corresponding to heat generation, transmission, distribution and supply. Authority regulating the heat sector The main authority with competences in the heat sector is the National Authority for Regulating the Community Services of Public Utilities (ANRSC), a public body of national interest, subordinated to the Ministry of Administration and Interior, empowered to: Regulate activities entailed by the heat provision service; Monitor and control the compliance of the SACET operators with the legal requirements; Grant licenses for the performance of activities part of the heat power provision service; Elaborate the framework regulations applicable to the service; and Draft and approve the framework tender book for the performance of the heat provision service and the framework documentation for the delegation of management.
45
The community development associations are associations established by two or several administrative territorial units for the purpose of jointly providing the community services of public utilities.
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In addition, limited competences in the heat sector have been grated to ANRE, in respect of the production of heat from cogeneration, such as: Granting, modifying, suspending or withdrawing licenses for the production of heat from cogeneration; Approving prices and tariffs for the production of heat from cogeneration for the population; and Elaborating specific provisions to be inserted in the framework agreements and in the documentation issued by ANRSC. Management of the heat provision service The management of heat provision service (including all the responsibilities regarding the organization, management, operation and financing this service) falls under the competence of the local public administration authorities or of the community development associations, which can decide to carry out the management either directly (through their internal structures) or by delegation (transferring all or part of the rights and obligations related to the service and granting concessions over the corresponding infrastructure belonging to their public or private ownership based on a delegated management agreement). The delegated management agreement is awarded based on public tender requiring the participation of at least 3 bidders. If further to organizing two public tenders, the minimum number of bidders is not met, a new procedure is launched (direct negotiation) which must observe the same publicity requirements as the public tender; negotiations are conducted with all eligible bidders, irrespective their number, and the winner is selected based on the results of the negotiations. Operators of the heat provision service All activities part of the public service of heat provision within an administrative unit (i.e. heat generation, distribution, transmission and supply) must be carried out by a single licensed operator. Exceptionally, based on the decision of the local public administration authorities or the community development associations, heat generation activities may be carried out by one or several operators. Licenses All activities in the heat sector (heat generation, transmission, distribution and supply) may be performed based on the license issued by ANRSC only. By way of exception, the license for producing heat from cogeneration falls under the exclusive competence of ANRE. As a general rule, only one license is issued for all these activities but, if there are more operators for heat generation within the same territorial unit, or if production is carried out as cogeneration, a single license is issued by ANRSC for heat transmission, distribution and supply, while generation licenses are issued by ANRSC or by ANRE, as the case may be.
ANRSC issues licenses based on a twostage procedure, as follows: The first license grants the beneficiary thereof only the right to participate within an unlimited number of procedures for being awarded the management delegation agreement; such license is issued for a 1year period; and Within 60 days as of the entering into force of the management delegation agreement, the beneficiary thereof must request ANRSC to issue a new license allowing the actual performance of the services object of the agreement. This license is issued for the duration of the management delegation agreement, without exceeding a 5year period. 60 days before the license expiration date, the beneficiary thereof must request ANRSC to issue a new license. Prices and tariffs The following categories of prices are applicable in the heat sector: (i) local reference prices and (ii) local prices for the population. The local reference prices are established for each locality by ANRSC, with the exception of the price for the heat produced from cogeneration, which falls under the competence of ANRE. The local prices for the population (representing the prices at the value whereof the heat is invoiced to the population) are established by the local public administration authorities or the community development associations. At the level of the same territorial administrative unit, the local price for the population is unique, irrespective of the type of heat generation, transmission and distribution technology or of the types of fuels used. The local public administration authorities or the community development associations can negotiate different formulas and rules for establishing/ adjusting the local prices for the population through the management delegation agreements, with the prior endorsement of ANRSC/ANRE.
Gas
Overview of the gas sector
In the context of radical reforms that characterized the Romanian economy after 1989 aiming at liberalizing the national economy and supporting the free movement of goods and services, the gas sector has undergone a major reorganization process which entailed, inter alia, a clear separation of the generation, storage, transmission and distribution activities, an increase of the competition in the gas generation and a nondiscriminatory access to the transmission system. The main steps made in this respect consisted in the establishment and subsequent reorganization of the Regie Autonome for Gas Romgaz Medias (Romgaz) and of the Regie Autonome for Oil Petrom Bucureti (Petrom).
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Romgaz was established at the beginning of 1991, by taking over all the assets and liabilities of several Stateowned companies, research institutes and educational legal entities operating in the gas sector. Romgazs main object of activity included geological research for identifying gas reserves, gas extraction, transmission, distribution and supply, maintenance and repairing of related equipments and installations. Following subsequent reorganizations, Romgaz ceased to exist in 2000, being split into five new companies: Transgaz, the national operator of gas transmission, transit and dispatch; Distrigaz Nord and Distrigaz Sud, national gas distributors and suppliers; Exprogaz, empowered to carry out geological research and gas generation, supply and storage; and Depogaz, performing geological research and gas generation and storage. The reorganization process continued in 2001, through the merger between Exprogaz and Depogaz, as result whereof a new company was established under the former name of Romgaz. Similarly to Romgaz, Petrom was set up also at the beginning of 1991, further to the reorganization of numerous State owned companies, research institutes and educational legal entities operating in the oil and gas sector. Petrom was responsible for exploring, administering and identifying oil and gas deposits (except for gas deposits under the administration and operation of Romgaz), selling the products resulted therefrom, ensuring the maintenance and repairing of related equipments and installations, importing and exporting related products, equipments and technologies. Currently, Romgaz and Petrom are the main gas producers on the Romanian market. During the last years, the legislation governing the gas has been substantially amended in order to reflect the principles laid down by the European legislation, in particular Directive 2003/55/EC concerning common rules for the internal market in gas and repealing Directive 98/30/EC46 (the Gas Directive), as well as to speed up the privatization in the gas sector. The main amendments envisaged to eliminate the gas distribution grids from the public domain of the local authorities, thus stimulating the privatization of the Stateowned gas distribution companies and the investments by the consumers in the development of new gas distribution pipelines.
During 20042005, the gas sector has undergone a large privatization process whereby the Romanian state sold its majority stakes in Distrigaz Nord and Distrigaz Sud, as well as in Petrom. As a result, E.ON. Rurhrgas AG became the majority shareholder in Distrigaz Nord, Gaz de France acquired the majority shareholding in Distrigaz Sud while OMV Aktiengesellschaft Austria became the majority shareholder in Petrom. Another major breakthrough on the Romanian market was the admission of Transgaz to trading on the Bucharest Stock Exchange, further to an IPO process which took place in 2007 and which represented the greatest share demand in the history of Romania, the offering being oversubscribed by more than 28 times. Moreover, this was the first IPO on the Bucharest Stock Exchange that had a new financial instrument attached thereto i.e. allocation rights. In the following years, the development of the gas market is targeted on promoting exploitation of gas resources with a view to encouraging the internal production, diversifying the import sources and increasing competition among the suppliers. The gas sector is regulated mainly by Gas Law No. 351/2004 (the Gas Law)47.
Authority regulating the gas sector

The main authority regulating the gas sector is ANRE, which merged in 2007 with the former National Regulatory Authority for Gas Sector by taking over from the latter all the competences, budget, financing sources, personnel, rights and obligations thereof. The main competences of ANRE in the gas sector are as follows: Establishing the validity conditions of granted authorizations and licenses; Drafting, approving and applying regulations for the organization and functioning of the gas market; Drafting and approving frame agreements for gas supply and for the provision of storage, transmission and distribution services and related activities carried out against regulated tariffs; Drafting, approving and applying criteria and methods for the approval of prices and for the establishment of regulated tariffs in the gas sector; and Endorsing the terms and conditions of the concession agreements concluded in respect of the assets, activities and services in this sector.
47 46
Published in the EU Official Journal L-176, dated 15th of July 2003.

Published in the Official Gazette of Romania, Part I, No. 679 dated 28 th of July 2004, as further amended and supplemented.
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Limited competences in the gas sector have also been granted to the National Agency for Mineral Resources (ANRM) consisting in the awarding and execution of the following oil concession agreements: Oil concession agreements for exploration, development and exploitation activities; Oil concession agreements for development and exploitation activities; Oil concession agreements for exploitation activities; Oil agreements for the concession of underground storage facilities of gas; and Oil agreements for the concession of the gas national transmission system. ANRM is also the competent authority to establish the reference price for gas which is taken into account for the calculation of the concession royalty.
from a different state and destined to a third state) are also natural monopoly activities carried out by Transgaz. Based on the concession agreement concluded with ANRM, Transgaz operates the national transmission system and related assets belonging to the public domain of the state. Distribution entails the transportation of gas through the grid operating at a pressure lower or equal to 6 bars. Gas distribution is a monopoly of entities holding (i) the exclusive concession over the distribution service in a certain area based on a concession agreement awarded by and concluded with the Ministry of Economy, Commerce and Business Environment and (ii) a distribution license issued by ANRE. The main operators of the distribution service are Distrigaz Sud Reele and E.ON. Gaz Distribuie, entities resulted from the unbundling of Distrigaz Sud and Distrigaz Nord. The performance of supply is conditional upon obtaining the ANRE supply license. Although further to the full liberalization of the Romanian gas market as of the 1st of July 2007 the suppliers have the right to carry out transactions on the competitive market under negotiated terms and conditions, part of the gas supply continues to be regulated by ANRE. Thus, the suppliers resulted from the unbundling of the vertically integrated undertaking which fell under the unbundling requirements and the suppliers part of a vertically integrated undertaking which did not fell under the unbundling requirements, have the obligation to supply gas to the consumers having the consumption places located in the area covered by the license, in case such consumers choose to benefit from regulated supply. The regulated supply is carried out at the prices and based on the framework agreements regulated by ANRE. In view of protecting the consumers in case of withdrawing the gas supply license of the suppliers thereof, a special category of suppliers has been established: the last resort suppliers. Such suppliers are either nominated by ANRE (in case of the mandatory last resort supply) or selected by ANRE based on the bids submitted by the interested suppliers (in case of voluntary last resort supply). The last resort suppliers nominated by ANRE are the same operators having the obligation to supply gas to the consumers having the consumption places located in the area covered by the license. Such suppliers are bound to supply gas, at prices regulated by ANRE, to the household consumers, hospitals, schools, kindergartens, public institutions and non household consumers whose consumption does not exceed 12,400 m3/year/consumption point. The voluntary last resort supply is carried out by suppliers selected by ANRE for the benefit of the non household
Activities and participants in the gas sector

The gas sector comprises all the activities performed by undertakings for the generation, transmission, transit, storage, distribution, supply and consumption of gas, as well as all the related installations and equipments. The generation can be carried out by legal entities (i) having concluded with ANRM a concession oil agreement in respect of a defined perimeter, (ii) holding a setting up and an operation authorization for the surface technological installations related to the generation activity and (iii) holding a gas supply license. The main producers of gas on the Romanian market are Romgaz and Petrom which ensured more than 97% of the internal gas production of 2010, the rest being covered by other 6 local producers. During 2010, the internal production of gas covered around 83% of the gas consumption, the remaining 17% having been ensured from the imports contracted mainly by GDF Suez Energy Romania, Wiee Romania and E.ON. Energie Romania (the company resulting from the unbundling of Distrigaz Nord). The storage entails all activities and operations performed for the reservation of storage capacities in the underground storages and for the injection, storage and extraction of gas from these capacities. The gas storage is a natural monopoly activity which may be carried out subject to concluding a concession agreement for the underground storage facilities with ANRM, and to obtaining the corresponding license from ANRE. Currently, there are three operators of the gas storage service, namely Romgaz, Depomure and Amgaz. Gas transmission (i.e. transportation of gas through the grid operating at a pressure exceeding 6 bars) and transit (i.e. transportation through the national transmission system and/or through special transit lines of gas originating
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consumers the consumption whereof exceeds 12,400 m3/year/consumption point. The selected suppliers supply the gas at the prices offered in the bids.
Regulated tariffs for interconnection to the transmission/distribution grid. ANRM establishes the gas reference price based on which the concession royalty is calculated.
Unbundling of gas distribution and supply activities

In line with the principles laid down by the Gas Directive, the Gas Law imposed the unbundling of gas distribution and supply activities by the 30th of June 2007. The unbundling requirements applied to the vertically integrated undertaking carrying out both distribution and supply activities, except for the gas distributors serving less than 100,000 connected customers. Vertically integrated undertakings were placed under the obligation to become independent from activities not connected to gas distribution, at least in terms of legal form (legal unbundling) and of the organization and decision making process (functional unbundling). As a result of unbundling, each of the main distribution and supply companies Distrigaz Nord and Distrigaz Sud was divided into two separate companies, one of which carrying out gas distribution and the other carrying out gas supply, namely Distrigaz Sud Reele and GDF Suez Energy Romania, in the case of Distrigaz Sud, and E.ON. Gaz Distribuie and E.ON. Energie Romnia, in the case of Distrigaz Nord.
Authorizations and licenses

The performance of activities in the gas sector is conditional upon obtaining the authorizations and licenses issued by ANRE, as follows: Authorizations for setting up capacities for gas generation, transmission, storage, dispatching, transit and distribution and for the functioning and revision of the capacities for gas generation, transmission, storage, transit and distribution; and Licenses for performing gas transmission, transit, storage, distribution and supply. The licenses are issued for a maximum period of 30 years (in case of the gas supply and storage), 15 years (in case of the gas transmission and distribution) and a period equal to the duration of the transit agreement (in case of the gas transit).
Gas market
In line with the principles laid down by the Gas Directive, the Romanian power market was fully liberalized as of 1st of July 2007, further to a gradual liberalization which started in 2001. However, even after the full liberalization, ANRE continues to regulate several segments of the gas market, as follows: (i) the natural monopoly activities (i.e. transit, transmission, storage and distribution of gas), (ii) the gas supply to consumers who opted for regulated supply and (iii) the gas supply provided by the nominated last resort suppliers. The activities falling under the regulated segment may be carried out based on framework agreements approved by ANRE.
Rights of the holders of concessions over lands and other immoveable assets owned by third parties
Considering the public interest activities carried out in the gas sector entail, the holders of concessions in the gas sector benefit, by virtue of law, from certain rights over lands and other assets whether they belong to the public domain or to the private ownership of individuals or legal entities, such as: (i) the right to use such assets with a view to performing works as necessary for the development, upgrading or repairing of gas capacities, (ii) easement rights at underground, surface and aerial level for installing gas grids and other related equipments and for accessing the location place thereof and (iii) the right to request the limitation or cessation of activities that may endanger assets and humans. The owners of the assets affected by the exercise of the use and easement rights are entitled to compensation as established by the parties agreement or, otherwise, by court decision.
Prices and tariffs

Further to the full liberalization of the market, the prices corresponding to transactions carried out in the gas sector can be negotiated by the parties, with the exception of the following tariffs and prices which continue to be regulated by ANRE: Regulated tariffs for natural monopole activities, namely gas transmission, storage, distribution and transit, with the exception of the transit through special transit pipelines having been developed under international agreements; Regulated prices for gas supply to consumers who have opted for regulated supply; Regulated prices for gas supply by nominated last resort suppliers; and
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EU Community Law
The Romanian Pollution Tax Versus the European Union Law
Background
The first special tax for motor vehicles and cars was provided at articles 2141 to 2143 of the Fiscal Code and became effective on the 1st of January 2007, when Romania joined the European Union. It was known under the name of first registration tax. The application of this tax to secondhand cars was widely contested as contrary to article 90 TEC (currently article 110 TFEU), even resulting in the opening of infringement procedures against Romania by the European Commission48. Moreover, most of the Romanian courts admitted the claims for the restitution of the first registration tax, precisely on the ground that the national regulation is incompatible with EU law. Under these circumstances, the Government issued Emergency Ordinance No. 50 of the 21st of April 2008 on the establishment of the car pollution tax (published in the Official Gazette No. 327 of 25th of April 2008), effective as of the 1st of July 2008 and subsequently amended by a series of enactments (GEO No. 50/2008).
The plaintiff claimed that GEO No. 50/2008 is incompatible with EU law, because it is applied to secondhand cars brought in Romania from another Member State and registered for the first time in Romania, although no such tax was applied to the similar cars already registered in Romania. Therefore, in the plaintiffs opinion, the Romanian legislation encourages the Romanian buyers to purchase cars which are already registered in Romania, to the detriment of those from other Member States. Under these circumstances, the Sibiu Tribunal decided to stay the proceedings and refer the case to the Court for a preliminary ruling on the following point of law: Are the provisions of GEO No. 50/2008, as subsequently amended, contrary to the provisions of Article 90 EC, and do they in fact constitute a measure which is manifestly discriminatory?. The Court found that the pollution tax established by GEO No. 50/2008 does not meet the conditions of a direct discrimination, because the regulation does not distinguish between motor vehicles according to their origin or between the owners of those vehicles according to their nationality. However, even if the conditions for direct discrimination are not met, internal taxation may be indirectly discriminatory as a result of its effects, as it was also upheld in Case C290/05 (Nadasdi and Nemeth). From this perspective, the Court analyzed whether the pollution tax creates any indirect discrimination between imported secondhand motor vehicles and similar secondhand motor vehicles which are already on national territory, approaching the two different situations as follows: Further to comparing the status of imported secondhand vehicles with the status of similar vehicles already registered in Romania and subject, at that time, to the same tax, the Court concluded that there is no indirect discrimination, because the respective tax is calculated by reference to the actual depreciation of the vehicles, in addition to the pollution caused by such vehicle and its cylinder capacity. Therefore, a system such as that established by GEO No. 50/2008 which takes account, in calculating the tax on registration, of the depreciation of the motor vehicle by using fixed, detailed and statistically based scales relating to the age and actual annual average kilometrage of the vehicle, which may, at the request and at the expense of the taxpayer, be supplemented by an inspection of the general condition of the vehicle and its equipment, ensures that when that tax is charged on imported secondhand vehicles it does not exceed the residual tax incorporated in the value of similar secondhand vehicles which were previously registered on national territory and were subjected on that registration to the tax laid down by GEO No. 50/2008.
Case C402/09 Tatu

The European Court of Justice was seized by the Sibiu Tribunal, which in its turn was adjudicating an action whereby the plaintiff requested the restitution of the amount paid as pollution tax for the car he bought in July 2008 from Germany. The car ranged in the M1 category, it complied with EURO 2 pollution standard and was made in 1997. The pollution tax had been levied by the Sibiu Public Finance Authority under a decision dated the 27th of October 2008, and the plaintiff filed legal action on the 17th of December 2008.
48
See the Commissions letters of formal notice of the 21st of March 2007 (RO, EN) and the 28th of November 2007 (RO, EN)
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Further to comparing the status of imported secondhand vehicles and similar vehicles registered in Romania before the establishment of the pollution tax, the Court first recalled that, although the Member States are not prevented from introducing new taxes or from changing the rate or basis of assessment of existing taxes, this does not mean that their powers to make new tax arrangements are unlimited. Moreover, the Court pointed out that [o]n the contrary, it is settled caselaw that the prohibition laid down in article 110 TFEU must apply whenever a fiscal charge is liable to discourage imports of goods originating in other Member States in favour of domestic goods (para. 52). In this respect, an important issue is that motor vehicles present on the market in a Member State are domestic products of that State within the meaning of article 110 TFEU. Therefore, secondhand vehicles purchased on the market of that Member State and those purchased in other Member States in order to be imported and placed in circulation in the former State are competing products. Since favoring the sale of domestic secondhand vehicles is not allowed in the light of article 110 TFEU and the provisions of GEO No. 50/2008 have such an effect, also proved by the statistics, the Court concluded that, in the case at issue, the Romanian regulation is contrary to EU law (more precisely, it is contrary to article 110 TFEU). Therefore, the Court stipulated that the answer to the question is that article 110 TFEU must be interpreted as precluding a Member State from introducing a pollution tax levied on motor vehicles on their first registration in that Member State if that tax is arranged in such a way that it discourages the placing in circulation in that Member State of secondhand vehicles purchased in other Member States without discouraging the purchase of second hand vehicles of the same age and condition on the domestic market.
Therefore, the Court found, for the second time in 2011, that the mechanism of the pollution tax established by GEO No. 50/2008 is contrary to EU law.
Consequences on the domestic lawbrief comments

Even if the aforementioned judgments are given on different versions of GEO No. 50/2008, mention should be made that the subsequent amendments to GEO No. 50/2008 mainly referred to the method for the calculation of the tax and brought no changes to its scope of enforcement (art. 4 letter (a) of GEO No. 50/2008). Therefore, the Courts analysis on the incompatibility of a domestic provision discouraging the marketing of secondhand vehicles purchased in other Member States with article 110 TFEU remains fully applicable to any of the versions of GEO No. 50/2008. Moreover, in the latest versions GEO No. 50/2008 no longer took into account, in the calculation of the pollution tax, the annual mileage or the depreciation of the vehicle subject to registration. Therefore, the domestic courts could find an incompatibility between the provisions of GEO No. 50/2008 and article 110 TFEU even where the Court did not find so under the initial version of the domestic regulation (i.e. neutrality of the pollution tax as regards imported secondhand vehicles and similar secondhand vehicles previously registered on national territory and subjected on registration to the same tax). Nevertheless, the procedural methods by which the pollution tax may be reimbursed were and probably will continue to be a matter of controversy and dissenting legal practice. Briefly, some of the Romanian courts granted the restitution claims only when the decision to calculate the pollution tax was challenged within 30 days (a term which, especially considering the initial version of GEO No. 50/2008, expired a long time ago), while other courts granted the restitution claims if filed within the general period of prescription of 5 years applicable to fiscal matters, as provided by article 135 of the Fiscal Procedure Code, on the ground that the regulation of the pollution tax is incompatible with EU law, as also confirmed by the Court. However, as the Court already ascertained taxpayers right to the reimbursement of the taxes charged by another Member State in breach of EU law (C199/82 San Giorgio, C62/93 BP Soupergaz, C441/98 and C442/98 Michailidis), it follows that all taxpayers who paid the pollution tax must be allowed to recover the amounts they paid. The method of reimbursing the tax charged under GEO No. 50/2008 in breach of EU law is currently object of an appeal in the interest of law49, filed by the general prosecutor of the Prosecutor Office attached to the High Court of Cassation and Justice on the 12th of May 2011. The respective appeal in the interest of the law asks the High Court judges to decide whether an administrative claim on the reimbursement of the tax charged by the fiscal authorities under
49
Case C263/10 Nisipeanu

On the 7th of July 2011, in case C263/10 Nisipeanu, the Court ruled again on the compatibility of EU law with the provisions of the Romanian law on the pollution tax applied upon the first registration of vehicles. Since this case is almost similar to C402/09 Tatu, the Court gave the same solution. Thus, the Court showed that the pollution tax established by GEO No. 50/2008 does not meet the conditions for direct discrimination, because the regulation does not distinguish between motor vehicles according to their origin or between the owners of those vehicles according to their nationality. However, even if the conditions for direct discrimination are not met, internal taxation may be indirectly discriminatory as a result of its effects. The Court again pointed out that favoring the sale of domestic vehicles is not allowed in the light of article 110 TFEU, and the mechanism provided in GEO No. 50/2008 leads to such favoring by exempting the cars already registered in Romania from the payment of the tax.
http://www.mpublic.ro/recursuri/2011_civil/rc_12_05_2011.htm.
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GEO No. 50/2008 is admissible when the decision on the calculation of this tax has not been challenged (under art. 205 et seq. of the Fiscal Procedure Code). The appeal also asks whether an administrative claim filed against the institution in charge with the registration of vehicles is admissible, if the latter refuses to register the vehicle unless the pollution tax is paid beforehand. Moreover, currently a new draft enactment meant to replace GEO No. 50/2008 is being discussed in the Romanian Parliament. The draft enactment was even approved by the Senate, as the first chamber seized, on the 31st of October 201150. The final vote is to be cast by the Chamber of Deputies. If the draft GEO is approved, the tax on polluting emissions of vehicles will be owed only once, both for new and for secondhand cars registered for the first time in Romania, no matter if the vehicle is manufactured in Romania or abroad.
50
http://www.senat.ro/Legis/Lista.aspx?cod=16234.
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Better Business in Romania Tuca Zbarcea Asociatii

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Contents

Romania-A Country Profile 10

Together For Your Business 18

24 33 40 51 64 70 80 95 104 110 117 128 137 158

Better Business in Romania

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2012 SCA uca Zbrcea & Asociaii. All Rights Reserved.

Better Business in Romania

Teodor Baconschi Minister of Foreign Affairs

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Better Business in Romania

Romania A Country Profile

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Better Business in Romania

A Reliable NATO Ally

Developing Partnerships and Participation on the International Stage

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Better Business in Romania

A Brief Look into Romanias Economic Evolution after 1990

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Better Business in Romania

A Cultural and Generational Revival

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Better Business in Romania

Together For Your Business

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Better Business in Romania

Registration and authorisation of companies and activities

Consultancy services to foreign companies and entrepreneurs

Consultancy and assistance for business development

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Better Business in Romania

Events and debates organisation

Promotion of company products/services

Entrepreneurial training and vocational programmes

The place where culture and business meet

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Better Business in Romania

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Better Business in Romania

Joint Stock Companies

The Joint Stock Companys management

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Better Business in Romania

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Better Business in Romania

Limited Liability Companies

The limited liability companys management

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Better Business in Romania

General. Main Regulations. Regulatory Authorities

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