Economic Promotion

Attracting foreign investment

Romania Trade and Invest (CRPCIS) is a public institution of national interest, aimed to promote the Romanian trade relationships and to attract foreign direct investment in Romania. CRPCIS offers a one stop shop for investors.

In order to achieve its goals, Romania Trade and Invest is deeply involved in the national export program developed by Ministry of Economy, Commerce and Business Environment, through which the Romanian companies are supported in their efforts for attending international fairs and economic missions.

At the same time, Romania Trade and Invest is in charge in organizing seminars, forums, business meetings, etc for the Romanian companies, increasing therefore their export capacity, giving them the opportunity to meet potential partners.

 

 

Why ROMANIA

 

When considering Romania as a possible location for developing their businesses, foreign investors take a close look to the advantages provided by our country:

Market & Location Advantage

  • One of the largest markets in Central and Eastern Europe (ranking 7th in EU , with over 21 million inhabitants);
  • EU unique market gateway (access to approximately 500 million consumers);
  • Attractive location: situated at the turning point between EU, the Balkans and CIS countries, Romania is crossed by three important pan-European transportation corridors: corridor no. IV linking Western and Eastern Europe, corridor no. IX connecting Northern and Southern Europe and no. VII – Danube River, facilitating inland water transportation, at the same time connecting the Romanian Port of Constanta (the biggest Port to the Black Sea) to Northern Europe, through the Rhine.

Resource Advantage

  • Highly skilled labor force at competitive prices (solid knowledge in foreign languages, technology, IT, engineering, etc);
  • Rich natural resources, including surface and underground waters, fertile agricultural land, oil and gas;
  • High potential for tourism.

Political Advantage

  • Stability factor in the Area - NATO membership;
  • Stability Guarantee in South Eastern Europe;
  • EU membership.

IR Advantage

  • Bilateral agreements between Romania and other countries on investments  promotion and protection;
  • Bilateral diplomatic relations with 177 out of the 191 UN member states, plus the Holy See, the Sovereign Military Order of Malta and the Palestinian National Authority;
  • Member of the UN and other international organizations, like: OSCE, Council of Europe and International Organization of La Francophonie;
  • Free trade agreements with EU, EFTA countries, CEFTA countries;
  • WTO member since January 1995.

 

Economical Advantage

  • State aid schemes for encouraging investors to take upon Romania;
  • Major interest of Foreign Investors – leader destination for FDI in the region;
  • Sound fiscal policy (16% flat tax).

Social Advantage

  • Agreement between Government and major unions;
  • No major union movements;
  • Labor relations regulated by the Romanian Labor Code.

Legislative Advantage

  • Similar legal provisions as in EU  (Acquis Communautaire implementation);
  • Fiscal policy regulated by the Fiscal Code.

Other Advantages

  • Continuously improving infrastructure (Executive’s commitment to improve the highway infrastructure to EU standards);
  • Well-developed networks of mobile telecommunications in GSM systems;
  • Highly developed industrial infrastructure, including oil and petrochemicals;
  • Presence of branch offices and representatives of various well-known international banks;
  • Extensive maritime and river navigation facilities.

Types of Business

For a foreign investor coming to Romania to set up business, choosing a form of company, as provided by Romanian legislation, represents the first step of the investment. The most frequently used forms of companies are:

A) Limited liability company (SRL) – the shareholders’ liability is limited to the amount subscribed as participation to the company’s share capital. The share capital of an SRL must be at least RON 200, approximately EUR 46.5 (calculated at the exchange rate of RON 4.3/EUR), divided into shares with a par value of at least RON 10 each. A limited liability company may be formed by a minimum of one shareholder and a maximum of 50 (fifty). These shareholders may include individuals and/or legal entities. A person, either natural or legal, cannot be the sole shareholder of more than one SRL. If a person intends to form several companies, it would be necessary for a minimum of one share to be held by another person or entity. Moreover, a limited liability company cannot have, as sole shareholder, another limited liability company that is also owned by a sole shareholder.

B) Joint-stock company (SA)– the shareholders’ liability is limited to the amount subscribed in the company’s share capital. Further to the amendments introduced by Law 441/2006 to the Romanian Companies Law, the minimum statutory capital for a joint-stock company shall be RON 90,000, approximately EUR 21,428 (calculated at the exchange rate of RON 4.2/EUR). Shares must be held by a minimum of 2 (two) shareholders, individuals and/or legal entities (there is no maximum limit), and can be open to either public or private participation. The par value of 1 (one) share shall not be less than RON 0.10.

The shareholders may empower the administrators to increase the share capital of the company with a specified amount (the Authorized Capital). Such Authorized Capital may not exceed half of the value of the share capital.

For the administration of joint-stock companies two alternative systems may be elected: the unitary and the dualist system.

  • The unitary system - the company shall be managed by one or several administrators, always in an odd number, organized as a Board. The Board may assign the management of the company to one or several directors. For those companies whose financial statements are subject to auditing, such an assignment is compulsory and the minimum number of administrators is three.
  • The dualist system – the management of the company is ensured by a Directorate and a Supervisory Board:

− The Directorate carries out exclusively the activity and management of the company and reports to the Supervisory Board;

− The Supervisory Board exerts permanent control over the Directorate of the company and reports to the General Meeting of the Shareholders.

The administrators and the directors, in case of the unitary system, and the members of the Directorate or of the Supervisory Board, in case of the dualist system, may not conclude a labour agreement with the company. A services provision agreement (management agreement) is required instead.

c) Representative office – usually set up by foreign companies in Romania in order to carry out non-commercial activities, such as advertising and market research on behalf of the parent company. Representative offices cannot conduct commercial activities in Romania. In order to register a representative office, company officials should apply to the Ministry Economy, Commerce and Business Environment and pay an annual fee of the RON equivalent of USD 1,200 for the license. Upon the authorization, the representative office must be also registered with the Ministry of Public Finances and with the Romanian Chamber of Commerce. An annual income tax of the RON equivalent of EUR 4,000 must be paid.

d) Branch of foreign company– does not have its own legal personality or share capital. Being a unit of the parent company, branch activities cannot exceed the scope of activity of the parent company.

e) Consortium– domestic legislation allows for the conclusion of a joint venture agreement (in Romanian “contract de asociere in participatie). Under this agreement, parties act together for the accomplishment of a common business goal. This form of doing business in Romania does not create a legal entity. Generally, one party is in charge of the bookkeeping of the joint venture.

f) Societas Europaea (SE)– A SE may be created on registration in any of the EU member states in accordance with the EC Regulation 2157/2001. European law requires member states to treat an SE as if it were a public limited company, formed in accordance with the law of the member state in which it has its registered office. By using the SE, businesses operating in several member states can establish themselves as a single company, rather than following different rules for each country in which they have subsidiaries. SEs are only suitable for large companies.

Limited liability companies are the most popular vehicles among local and foreign investors for carrying out business activities in Romania, because they have fewer administrative requirements and greater flexibility in operations than other types of companies. They also have a low initial capital requirement. However, the number of joint-stock companies in Romania is increasing, because of their attractiveness to investors interested in equity investing. A joint-stock company must be set up whenever:

a)         the company wants to carry out certain types of activities (e.g. insurance, banking activities  etc.);

b)         the entrepreneurs foresee any advantage or necessity with respect to the acquisition of its own shares by the company (for instance, offering them to the managers);

c)         the entrepreneurs plan to list the company on a stock exchange or on the OTC market;

d)         the entrepreneurs contemplate financing the company through issue of bonds or other financial instruments;

The other forms of doing business are not common among foreign investors in Romania. However, foreign investors still use representative offices if their activity only involves promoting one of their group companies in Romania. Branches are mainly used in cases where foreign investors plan for a short presence in Romania or if the investors decide, for capitalisation (in the case of banks) or commercial reasons, not to legally separate the Romanian entity from the parent company.

Romanian legislation in force specifically stipulates that all investors implementing and developing their investment projects in Romania enjoy the same rights and incur the same obligations, irrespectively of their being Romanian or foreign citizens, residents or non-residents.

Following its accession to the European Union (January 1st, 2007), Romania enjoys EU financial assistance under the form of structural and cohesion funds allocated for a five consecutive year period, i.e. 2007-2013.

Romania’s general legal framework in the field of investment stimulation was adopted by means of Government Emergency Ordinance no. 85/2008, subsequently amended and completed, regulating principles of investment stimulation, investment fields, types of support available, general eligibility conditions etc.

According to provisions in Government Emergency Ordinance no 85/2008, incentives supporting investment in Romania are available under the form of grants awarded for tangible and/or intangible assets acquisition; financial support from the state budget for newly created job positions; interest bonuses for credit contracting, and other incentives regulated by special laws in force.

Romanian Government adopted a large number of state aid schemes supporting investment and thus stimulating the economic growth.

State aid can be granted to large, small and medium-sized enterprises (including microenterprises), depending on the type of investment, the field in which the investment is to be implemented and the provisions of the state aid scheme applied for.

 

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