Legal

Which legal structure can I choose?

For entrepreneurs in Romania, there are the following forms of companies:

General Partnership (Societate in Nume Colectiv – SNC)
Limited Partnership (Societate in Comandita Simpla – SCS)
Limited Partnership by Shares (Societate in Comandita pe Actiuni – SCA)
Limited Liability Company (Societate cu Raspundere Limitata – SRL)
Joint Stock Company (Societate pe Actiuni - SA)
Joint ventures
Branches and subsidiaries of foreign company

Among others, Limited Liability Companies (SRL) and Joint Stock Companies (SA) are the most common types of companies set up in Romania.

The common forms of companies are here below explained in more detail:

General Partnership (Societate in Nume Colectiv – SNC)

Consists of two or more partners
Each partner is responsible for the consequences of the actions of the other partner(s)
All partners manage the business jointly
Partners should sign a partnership agreement and each partner is liable for their own taxes
Closing business goes on terms of the partnership agreement signed by the partners

Limited Partnership (Societate in Comandita Simpla – SCS)

Owned and run by two or more persons
It has two kinds of partners: general and limited
limited partner tends to be the financial backer for the company
limited partner tends to allow the general partner to make the day-to-day decisions and is only at legally at risk of losing their financial investment if they are not involved in managing the company in any way
General partner is fully liable for all liabilities of the partnership
General partners are liable to third parties and personal assets (including those of a spouse) are not protected from creditors (though a marriage contract can protect spousal assets)

Limited Partnership by Shares (Societate in Comandita pe Actiuni – SCA)

Consists of one or more jointly and severally liable partners
Comprising one or more limited partners who are only liable up to the amount they contributed
Minimum of 2 shareholders, one managing partner and one limited partner
Shares are freely transferable

Limited Liability Company (Societate cu Raspundere Limitata – SRL)

Separate legal existence from its owners
Minimum required share capital of RON 200 divided into shares
Minimum nominal value of share of RON 10
At least two shareholder and maximum of 50 shareholders
Shares are offered to the public and are freely transferrable
Companies issuing share to the public need to issue a prospectus that complies with the rules contained in the Corportions law.
Shareholders are only liable up to the amount they contributed (value of the share)

Joint Stock Company (Societate pe Actiuni - SA)

Minimum required share capital of RON 90.000 divided among a minimum of 2 shareholders
(Value minimum required share capital changes every 2 years according to the exchange rate, to keep the amount in RON equal to EUR 25.000 which will be announced by the government)
Minimum nominal value of share of RON 0,1
At least 2 shareholders
Shareholders are only liable up to the amount they contributed (value of the share)
Shareholders need to pay 35% of the subscribed capital before submitting the documents of incorporation
Remaining has to be paid within 12 months after the incorporation date
Ordinary shareholder’s meeting needs to take place at least once a year and within 5 months after the company’s fiscal year.
Those which are subject to mandatory financial audit must set up an Audit Committee within the Supervisory Board

For more information on the various forms of businesses and their establishment, please refer to the Company Law (Law No. 31/1990)

How do I set up a company in Romania?

General and Limited Partnerships (SNC and SNS) are governed by a contract of association. Joint Stock Companies (SA), Limited Partnerships by shares (SCA) and limited liability companies (SRL) need to set up a “Constitutive Deed’ or ‘Articles of Association’ which need to be signed by the shareholders. The Constitutive Deed needs to contain the following:

Identification data of the shareholders
Type, name and registered office of the company
Scope of activity
Subscribed and paid share capital and where the company has an authorized share capital, its value
Identification data of the Board of Directors and Supervisory Board member
Identification data of the first financial auditor
Each shareholder’s participation quote to the company’s profits etc.

For a SRL the subscribed capital must be paid before submitting the documents of incorporation. For a SA, the shareholders need to pay 35% of the subscribed capital before submitting the documents of incorporation. Remaining has to be paid within 12 months after the incorporation date.

After that, the company needs to register with the Romanian Trade Office. All companies in Romania, despite their legal type, need to register with the Romanian Trade Office. The Trade Register provides a registration certificate and a unique registration code which is issued by the Ministry of Public Finance and the authorizations. By obtaining this, the company is permitted to start business activities. Next to this, a separate VAT registration is required.

All types of companies must register their financial statements with the Trade Registry Office within maximum 15 days after the General Meeting which has to be sent to the Ministry of Public Finance. Listed companies must also file their financial statements, the director’s, the censor’s and the financial auditor’s reports with the National Securities Commission.

The name of the company must be in the Romanian language. A corporate name needs to be unique and distinctive from other companies. According to the law, the name is not allowed to contain the following words and their derivatives: scientific, academy, academic, university, school. An approval of the General Secretary of the Government has to be obtained to use the words ‘national’, ‘Romania’ and ‘Institute’ in the corporate name.

Below is a quick summary of steps of setting up a company in Romania, provided by Doing Business of World Bank:

Evidence of verification of company name availability and reservation thereof with the Trade Registry Office
Deposit funds in a bank and obtain a document confirming bank deposit of sufficient funds (Please click here for a list of banks in Romania)
Company registration at the Trade Registry Office
Register for VAT with the Ministry of Public Finance
Register the employees contracts with the Territorial Labor Inspectorate (TLI) online

Starting or running a business?