Now It’s Easier Doing Business in Romania – Practical Guide

July 4th, 2020

If you have ever considered opening a business in Romania, but you found it difficult to comply with different local regulations, now it’s time to reconsider it. The Romanian legislator adopted the Law no. 102/2020 amending the Companies Law no. 31/1990 whereby the process of setting-up and conducting a Romanian company was substantially eased.

Starting July 5th, 2020, various burdening requirements shall be eliminated. Practically, the incorporation of a limited liability company (LLC or, in Romanian, societate cu raspundere limitata/ SRL) is the most advantageous business path for the majority of entrepreneurs. In contrast to the joint stock company possibility (JSC or, in Romanian, societate pe actiuni/ SA), the LLC allows you to launch your company without burdensome costs and formalities, and to expand your company on the market at a higher pace.

What Are the Updates?

  1. you could be sole shareholder in several LLCs

  2. Although many countries do not have the prohibition that a sole shareholder to be sole shareholder in more than one company, in Romania such requirement discouraged in the past entrepreneurs who had sole proprietorship companies in other countries to set up a business in Romania (i.e. a sole shareholder LLC). Now, you could be sole shareholder in more LLCs, be they foreign or local legal entities.

  3. your LLC could have another sole shareholder LLC as sole shareholder

  4. For example, you are an ambitious solo entrepreneur desiring to grow on the market as a competitive IT specialist. You already have or you plan to incorporate a sole shareholder LLC for one type of activity, such as software development. At the same time, due to the current unemployment rate affecting both individuals and companies, you also find opportunities on the employment market, as an employment agency. So, another sole shareholder LLC would need to be registered. Now your second company could hold the position as shareholder in your first company.

  5. establishing the company’s headquarters at an address where other companies are also registered

  6. Until July 5th, 2020, there was the requirement that for each company registered at an address a separate room to be allocated thereto. Now, irrespective of whether you are setting-up or changing your company’s headquarters or secondary offices, other companies’ presence at an address (be it business center or residential apartment) will not be an impediment anymore.

  7. if your company does not carry out activity at its headquarters

  8. Particularly in case you conduct business in the field of provision of services, you will most likely not carry out activities at the company’s headquarters. In this respect, the consent of the neighbors will no longer be required.

    Last but not least, for more information, within 60 days as of the date of entry into force of Law no. 102/2020, the methodological norms for the application of this law will be adopted.

Practical Guide for Starting A Business in Romania

Considering the above good news for entrepreneurs, from now on the main steps to be followed are:

  1. determining your legal structure

  2. As mentioned above, the two most important options are LLC and JSC. The choice depends on your intended business needs. Nevertheless, if you are a small business or a start-up, the most suitable legal structure will be a LLC.

  3. registering your new company

  4. In order to become an officially recognized legal entity in Romania, you must register with the Trade Registry where the company will have its headquarters. The registration process entails the submission of relevant documents, such as company’s articles of incorporation, documents related to shareholders, headquarters, and other aspects, on a case-by-case basis.

    These are the main steps for the registration procedure:

    • choosing the name of your company

    • Firstly, your company’s name must be original, differentiating itself from other brands. It’s important to keep in mind that there are certain aspects as regards the company’s name you should consider – a specialized lawyer will help you comply with trademark and corporate law requirements. After thinking of one original name, you should also pick up another two. The three company names are required for verification purposes at the Trade Registry, in order to have room in case the first or the second would not be available.

    • company’s shareholders

    • In case you choose LLC, your company could be a sole shareholder LLC, you could choose to conclude a partnership agreement with other entrepreneur/s or, if you own other companies, the latter could become shareholders in your new company.

    • payment of the subscribed share capital

    • As one of the LLCs’ advantages, the minimum share capital is RON 200 (roughly EUR 40), unlike JSC, which requires RON 90.000 (about EUR 18.500).

    • headquarters

    • Even if you do not intend to physically carry out activities, your business must have a registered office. As mentioned above, you could choose a space where other companies are also registered, either bought, inherited or rented property.

      ! Important: Your lawyer could register your company’s headquarters at the lawyer’s professional office for one year. Hosting your company’s headquarters at a lawyer offers you plenty of time to find a suitable space.

    • field of activity

    • Depending on your business needs, you will choose one main activity for your company. Additionally, you should consider secondary activities - it is highly recommended to choose several domains of activity, even if in the beginning you will not carry out most of them. This strategy will allow you to avoid having to register future changes, as well as additional costs, when you will decide to expand yourself or simply to make some changes.

  5. launching your business

  6. Each feature of your business model could entail specific pieces of advice, so there is no universal recipe for success. The only omnipresent ingredients are ambition and legal compliance.

It is important keeping in mind that, although the process of setting-up new companies in Romania has been eased, and the above guidelines could be used, you should not rely solely on the above and you should always seek a lawyer’s advice, in order to ensure your successful start on the market.

For questions on our services and free initial assessment of the legal aspects... may contact us using the form below and we will swiftly answer:

Copyright © Andreea Rainer - Law Office. All rights reserved. || Terms and Conditions || Privacy Policy