Setting up a company in Romania - Overview:
1. The main steps for establishing a company in Romania
2. Minimum share capital amount
1. The main steps for establishing a company in Romania:
a) Establishment of the company profile, mentioning the field and the main activity;
b) Choosing the company form (joint stock companies, business partnerships, limited partnerships, and limited liability companies);
c) Choosing the company name and company logo;
d) The memorandum of association;
e) Choosing the registered address;
f) Choosing the share capital, legal fees;
g) Record at theTrade Register Office
2. Minimum share capital amount
There is a minimum amount for the share capital stipulated by law no 31/1990 for commercial enterprises, republished and amended, namely:
- 200 RON - for limited liability companies;
- 90,000 RON - for joint stock companies.
Definition of a Joint Stock Company
A joint stock company is set up by the association of several people, all of whom bring their contribution to the share capital to certain extents, in the form of titles called shares, for the carrying out of a commercial activity, with the purpose of dividing the benefits. The associates are only liable for their social responsibilities to the extent of their participation.
The joint stock company is constituted by the full and simultaneous registration of the social capital by the signatories of the memorandum of association or by public subscription.
The joint stock company must have at least 2 (two) associates, referred to as shareholders.
The share capital of the joint stock company must be at least 90,000 lei, and the nominal value of one share must not be lower than 0.1 lei.
In the case of full and simultaneous registration of the share capital by all the signatories of the memorandum of association, the share capital paid at the time when the company is set up must not be less than 30% of the registered capital.
The remaining amount up to the registered capital shall be paid:
• for shares issued for contribution in cash, within 12 months following the registration the company;
• for shares issued for contribution in kind, within 2 years following the registration date.
- Allows an important capital in terms of volume
- The shares are transmissibile
- The company can exist even if some shareholders sell their own shares
- Difficulties in managing the company when there is no important shareholder
Definition of a Limited Liability Company
A limited liability company has its share capital divided into shares according to the memorandum of association, and the company property serves as security for its liabilities.
The limited liability company has the advantage of being set up by a sole trader. There are, however, some disadvantages as well regarding this form of association:
• a natural or legal person can only be a sole trader in one limited liability company; [Law no. 31/1990, art. 14 alin (1)]
• a limited liability company cannot have as a sole trader another limited liability company made up of one person; [Law no. 31/1990, art. 14 alin (2)]
• the sole trader can be the employee of the limited liability company being the sole trader of the company [Law 31/1990, art. 196^1].
The share capital of a limited liability company cannot be less than 200 lei and shall be divided into equal shares, no less than 10 lei each. [Law 31/1990, art.11]
1. THE PARTNERS
Natural and legal persons with Romanian or foreign citizenship can associate to form a limited liability company.
2. NUMBER OF PARTNERS - at least 2 partners, at most 50
- The partners are responsible only in the limit of their social contribution
- The company exists even when there is a missing partner
- Reduced credibility to partners
- It is not appropiate for big companies
Definition of Representation (Branch)
According to the law, foreign companies and business organisations can have representations in Romania, based on an authorisation issued with this purpose in compliance with the provisions of art. 5 and 6 from Decree no 122 of 24.04.1990, published in the Official Gazette of Romania, Part I, issue 54 of 25.04.1990.
Foreign companies or business organisations can also be represented in Romania, based on a contract, by Romanian offices, including offices set up by own initiative.
Preliminary steps for document file-in:
1. Paying the representation fee of 1200 USD - in lei, at the exchange rate published by the National Bank of Romania (the fee for the one-year operation approval) into the treasury account in the sector (or county) where the representation office is to be based.
2. Official petition sent to the Representation Service within the Finance Department (DGFP - Direcţia Generală a Finanţelor Publice), requesting the confirmation for the receipt of the payment; the application must be handed in at the registration office along with a copy of the payment order.
3. The Finance Department issues a notice to the treasury department in the sector (or the county), which the petitioner must take to the treasury department to receive the confirmation of the receipt of the representation fee.
4. The Finance Department - the Service for Convention Application and Double Taxation Avoidance and Foreign Representation (or the County Financial Administration) issues a payment certificate attesting the payment of the operation fee.
5. In the final stage, the following documents are gathered for the file needed to obtain the approval for the operation of a representation:
• an application for the approval of the representation fee, where the foreign company or business organisation applying for an authorisation shall mention: the registered address, line of activity of the representation, time of operation, number and positions of the people who are to be hired in the representation; this application shall be accompanied by several documents:
• payment certificate;
• the power of attorney regarding the representatives appointed to provide the valid engagement of the company, in an original copy and a legalised translation;
• memorandum of association of the parent company in an original copy (legalised copy);
• a certificate from the Chamber of Commerce and Industry in the place where the parent company resides, certifying the name, share capital, representatives, line of activity (original copy + legalised copy);
• letter of solvency from the bank through which the parent company carries out its main operations;
• the lease contract for the space where the Romanian representation is to be based.
Any foreign legal entity, who owns a branch in Romania must pay an annual fee, according to Law No. 571/2003 on Fiscal Code, art. 122. The fee for one fiscal year is 4000 euro - to be paid in ROL at the exchange rate published by the National Bank of Romania valid in the day of payment.
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