Are you looking to enter the Romanian market and are seeking for advice on establishing a business presence in Romania for your company? Need to understand what are the alternatives that best fit your current business model?
In this article we explain the main available legal alternatives for establishing a business presence in Romania, describing the conditions and the main procedural steps you must comply with for registering your business presence from a legal perspective.
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The subsidiary alternative (for registering a business presence in Romania)
The types of legal entities mostly used in Romania are:
Limited liability companies are the most common type of company used in Romania and are preferred by the foreign investors. By comparison with joint stock companies, solely the limited liability companies allow a shareholder structure with a sole shareholder, and the management system in a limited liability company is rather simple and scarcely regulated.
For more details on the limited liability company, you can also check our guide: How to register a new company in Romania.
Joint stock companies are generally appropriate for larger enterprises with a large number of shareholders (a limited liability company may have maximum 50 shareholders, while there is no maximum limit of shareholders for joint stock companies) and where there is a need of a more complex management and decisional system.
Both the limited liability type and the joint stock type of companies must be registered to the relevant Romanian Trade Registry office (i.e. to the one where the registered office of the subsidiary shall be located), upon a similar procedure based on a bank account opened and on a lease agreement for the premises where the headquarters are to be located.
For this purpose, the following main steps must be undertaken:
1. Obtaining the name reservation for the subsidiary’s name:
The name reservation must be obtained from the Romanian Trade Registry. If the name contains the word “România”, “Național” an approval from the General Secretariat of the Government on the use of such words in the subsidiary’s name. In this situation the duration of the incorporation operation shall be extended with approximately 10 working days.
2. Preparation and signing/obtaining of the following documents:
- the corporate decisions/resolutions of the board of directors/shareholders of the new companies’ shareholders approving the incorporation and the main characteristics of the subsidiary;
- the articles of association of the subsidiary;
- the statements of the subsidiary’s shareholder(s) and director(s);
- the signature specimen of the subsidiary’s director(s);
- the letters of good standing for the subsidiary’s foreign shareholder(s);
- recent (i.e. not older than 30 days) Trade registry excerpts in respect to the subsidiary’s shareholders;
- copy of the documents attesting the right of use of the premises where the subsidiary’s registered office shall be located;
- copy of the identification documents of the shareholder(s) and director(s) – individuals and registration certificate of the shareholder(s) and director(s) – legal entities;
- fiscal registration form;
- statement on the activities that will be effectively carried out by the subsidiary;
- statement on the foreign investment; and
- statement on the ultimate beneficiary owner of the subsidiary.
3. Submission of the documents indicated above with the local Trade Register office.
The incorporation of the subsidiary is generally done by the Trade Register in approximately 3 business days as of the moment when the complete documentation is submitted.
The branch alternative
An alternative to the incorporation of a subsidiary is the incorporation of a local branch.
The branch must also be registered with the relevant Romanian Trade Registry office (i.e. the one where the registered office of the branch shall be located). In this respect, the following main steps have to be carried out:
1. Establishing the name of the branch
The branch’s name shall consist in the name of the parent company, followed by the name of the locality where the registered office of the parent company is located, the word “sucursală” (Romanian for “branch”), and the name of the Romanian locality where the registered office of the Romanian branch shall be located. Thus, there is no obligation to obtain a name reservation like in the subsidiary’s case, as the branches have standard rules for being named.
2. Preparation and signing/obtaining of the following documents:
- the corporate decision/resolution of the board of directors/shareholders of the parent company, approving the incorporation and the main characteristics of the branch;
- the power of attorney for the branch’s representative, if not included in the above decision/resolution;
- the articles of association and, if the case, the statute of the branch’s parent company;
- the statement of the subsidiary’s legal representative(s);
- the signature specimen of the branch’s legal representative(s);
- recent (i.e. not older than 30 days) home country Trade registry excerpts in respect to the branch’s parent company;
- copy of the documents attesting the right of use of the premises where the branch’s registered office shall be located;
- copy of the identification documents of the branch legal representative(s) and registration certificate of the parent company;
- copy of the audited and published financial statements of the parent company; and
- tax registration form.
3. Submission of the documents indicated above with the relevant Romanian Trade Registry office
The incorporation of the branch is registered by the Trade Registry in 3 business days as of the moment when the complete documentation is submitted.
In addition to the corporate registration with the Romanian Trade Registry office, for the actual performance of certain types of activities, the Romanian entity may need to obtain specific authorizations from different authorities, as the case both for the company and for specific personnel.
Therefore, depending on the actual activities intended to be performed and their specificities, we recommend assessing this requirement on a case by case basis.
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