Less bureaucracy for Company Incorporation in Romania
Many articles have been written in Romania for Romanians about the changes in Romanian law regarding Romanian companies but not so many articles for foreign investors. These articles have been written to advise about the changes in the…
Many articles have been written in Romania for Romanians about the changes in Romanian law regarding Romanian companies but not so many articles for foreign investors. These articles have been written to advise about the changes in the formalities required for the incorporation of limited liability companies (“S.R.L.”) in Romania.
It has taken the Covid 19 pandemic for the Romanian authorities to realize that to stimulate businesses you need to relax the formalities that are needed to be completed to incorporate a Romanian company.
There is still room for improvement in this regard, but if the current changes yield good results in terms of more companies being incorporated, then, perhaps, the authorities will finally find a solution to reduce further the cumbersome bureaucratic formalities to incorporate a company.
I outline below some of these changes to highlight the position now. Firstly, although not directly related to the actual company incorporation formalities, the Romanian companies’ law has been amended to allow for individuals/legal entities to be a sole shareholder in more than one S.R.L.
The companies’ law previously stated that a person/entity irrespective of their nationality can only be a sole shareholder in one legal entity. This legal provision led to situations where for the purpose of a foreign company’s acquisition of a Romanian S.R.L. a circumvention of the provision was required. This situation occurred when the foreign company interested in purchasing a Romanian company was itself a sole shareholder company of another company. For the transaction to take place in such a situation another subsidiary of the buyer was incorporated to be an additional shareholder of the Romanian company to enable the purchase to take place. Thus, circumventing the one shareholder rule.
Another formality which was not abolished but significantly simplified is the requirement to open a bank account for the purpose of depositing the share capital prior to the incorporation of the company.
Another two changes have been made in respect of the share capital. The first one reduces the minimum amount of share capital which a S.R.L. must have at incorporation. Previously the minimum amount required for incorporation was two hundred (200) Ron. Approximately, forty-one (41) euro. The law now provides that there is no minimum share capital required for a company to have, meaning that in the case of a sole shareholder company the share capital can be as low as one (1) Ron.
The second change abolishes the requirement for proof that the share capital is deposit in a bank is to be submitted at the time of incorporation. Therefore, when submitting the file for the company registration now the Deed of Incorporation must state what is the amount of share capital in cash, but the Trade Registry does not require proof of that amount being deposited in a bank account.
