Why Romania

When the managing director walks into your office and says to you, as the General Counsel, we are going to work in Romania often the first reaction of the GC, is why Romania and where is it.

Sensible questions and ones that we will now try and give an initial answer to. As a commercial law firm with many years of experience in advising incoming foreign investors and their subsidiary companies when set up, we are well versed in the issues that will immediately come to mind.

The first thing that needs to be identified is where is Romania. It never ceases to amaze us as commercial lawyers how little incoming clients know about Romania and its business and culture. A short introduction is always necessary even in these days of the internet.

Once the orientation process is completed we can then start the next phase of why Romania. Romanian law is a code-based Civil law system. Companies who invest from Western Europe and the US are used to a Common law system. It is not the purpose of these articles to explain the differences in the legal thinking and application of law of the two legal systems but suffice it to say that Romania is different. To understand the effect of Romanian law as a good advisor we try and explain as simply as possible the major differences in the two major legal systems.

If the General Counsel is open-minded about the problems and issues that will arise then we will be able to advise them quickly and effectively so that the investing company can move on to its important function which is opening an office in Romania.

The first matter that needs to be resolved is the legal structure to be adopted. As in all legal systems, Romania has a number of types of companies that provide limited liability protection for the shareholders. The two major form of companies in Romania are the simple limited liability company and the joint stock company.

For ease of operation most clients choose initially a limited liability company (SRL). This can be formed with one or more shareholders; no minimum capital; one administrator; no restriction on nationality or identity of the shareholders for administrators. We are often involved in the formation of Romanian companies and the process can be completed quickly provided the client supplies all the documentation we require. The time for registering a company is three days from the date the papers are lodged with the Romanian Trade Registry.

A Romanian company needs a registered address from the moment it is incorporated. As Romanian lawyers, we can supply a registered address for registration purposes, but only for a period not exceeding 12 months. It surprises me how many clients wish to form a company in Romania but have not given any thought as to a registered address. They can initially use our offices as the registered address or we can assist them with this, using our contacts. Such addresses are useful especially if the client is in the service industry and only needs a registered address. However, if they wish to hire staff who will work in the office and carry out other activities then they will need to have their own physical office.