COMPANY FORMATION IN ROMANIA

---

 The most two common companies that the client incorporate in Romania are:

1.  limited liability company "societate cu raspundere limitata" (SRL);
2.  joint stock company "societate pe actiuni" (SA);

A foreign person with no residency in Romania can be Sole Member and Sole Manager in a Romanian Company  or a Foreign  corporation can be a Sole  Member  (in the case of the SRL) in a Romanian Company. A foreign corporation can be a Shareholder together with at least one other shareholder, which can be a legal entity or private persons (if the case of  the SA). 

The most frequent types of company incorporated in Romania  are limited liability companies  SRL.

Any business entity must be incorporated with the National Trade Register Office organized by the Romanian Chamber of Commerce and Industry. The date of incorporation is considered the starting moment of its legal existence. The National Trade Register Office is a public institution mandated to maintain statistical information on business activities in Romania.

Our team highlights the main requirements for registering a limited liability company, the SRL. This is the most commonly used business form in the country as it offers a number of clear advantages: simple incorporation with low capital contributions, as well as complete separation from its founders. What’s more, a qualifying SRL can be subject to a very advantageous taxation regime, as detailed below in this article by our experts.
 

The main steps for open a SRL in Romania are the following:
 

1. Check the name availability: this is a key pre-registration requirement as any company in the country needs to have a unique name; the application for the name check includes 3 desired names, in the order of preference;
2. Prepare the documents: the company’s constitutive documents, the Articles of Association, which will include the approved name, the type of company, the number of shareholders and their identification details, the main object of activity and the secondary objects of activity and other details;
3. Proof of payment: this is the fee for the publication in the Romanian Gazette and the fee is 122 lei/manuscript page;
4. Register: once all of the documents are complete the founders fill in the application form and submit the application for registration with the National Trade Register Office.

Investors should also know that they are required to submit a statement attesting to the real beneficiary of the company. The company representatives will also provide their specimen signatures and a sworn statement that they comply with the legal requirements for fulfilling their role (having no criminal record and other requirements). When one of the shareholders is a legal entity the respective company’s articles of association will also need to be submitted.
 

You can read below more about each of the mandatory requirements when opening a company in Romania. When there are differences between the SRL and the SA company, our team highlights these.
 

Talking to one of our agents before commending the Romania company formation process is advisable in order to make sure that you have a complete list of documents for submission. You can thus rest assured that your application will be processed and not rejected due to incomplete documentation.
 

The Romania company incorporation process implies that each business organization should have at least one shareholder for the SRL and two shareholders for SA. One person cannot have more than one company in which he/she holds 100% of the shares. Furthermore, one company-owned 100% by one person cannot have together with its sole shareholder 100% in another company. The shareholders can be all non-Romanians. The shareholders can be individuals or companies.

The customer decides the name of the company, the form of organization (S.A., S.R.L.) and the main field of activity in order to reserve the name with the Trade Register Office. It is also important to know that the name reservation is done with the Trade Register Office and this procedure is usually completed within one working day. The appellation must not include certain words or geographical suggestions. Some words are also subject to approval from the Government or local councils.

In order to start company Romania, individuals should know that for including the word "Romania" in your company name you need to get permission from the Government; this procedure takes about 30 days. The main condition to obtain this name is the following: the major shareholder of the Romanian company has to be a company with the same name like the Romanian company.

But the title of the company which contains the term Romania in its name can be used only together with the entitled shareholder. Obtaining the corporation's name is the first step necessary to acquire subsequent documents.

In order to set up business Romania the company needs a registered address which must be the official postal address of the company and the place where the authorities can send official letters and claims, serving as well for tax control procedures. All financial and fiscal documents, registers, company papers etc. must be archived at the registered office of the business. The registered address used for the Romania company incorporation procedures must be an up-dated address, no P.O. BOX address is permitted.

Among other services that we provide we included also the registered office facility intended to offer an official address for clients who don't have a company office.

The registered address is proven with a renting contract, property, or a free-lease contract. To the contract there shall be added the copy of the property title of the landlord (contract, court decision or other ownership title). For all clients who intend to start a company in Romania it is important to know that if the property is situated in a block of flats, duplex, etc the approval of all owners or owner's association is required.

The inscription process necessary to set up business in Romania is almost identical for limited liability companies (S.R.L.) and joint stock companies (S.A.). First of all, some extremely important documents must be prepared, agreed and signed by the investors.We mention here the incorporation contract and/or company By-laws, as applicable, or the articles of incorporation which is a sole document containing all details required by law.

Furthermore, the subscribed capital must be paid upon registration of the company. In the case of a joint stock company (SA), each shareholder must pay at least 30% of its subscribed capital. The registered capital may be subscribed and rewarded by the shareholders by payment in cash, in kind or in receivables;

The initial capital must be subscribed and paid in cash. The law allows in-kind contribution, but cash contribution is compulsory for any type of business organization. The minimum share capital was 200 RON, however, this was abolished starting with November 2020, and how the requirement is that this type of company needs to have a share capital of at least 1 leu. The minimum share capital for the joint stock company (the SA company) is at least 90.000 RON, adjusted as to represent the equivalent in lei of approximately 25.000 euros.  If this minimum capital payment for the SA is not submitted in its entirety upon registration, the founders have 12 months from the registration date to submit the rest of the capital value in cash. The period can be longer if the rest of the amount is paid in kind.
 

If you wish to know more about the requirements for the share capital of the SA, as these are subject to more complex rules compared to the ones for the SRL, our Romanian company formation specialists can give you more information.

In the end, the corporation is registered with the Trade Register by issuance of a Registration Certificate. This provides a registration Code valid for both the Trade Register and the tax authorities.

The Registration Certificate also contains a license of acknowledgement mentioning that all requirements for commercial activities are accomplished. The corporation comes into existence and it is entitled to conduct its activities from the date of its registration with the Trade Register.

The SRL and the SA companies need to fully observe the provision regarding taxation in Romania, imposed by the National Agency for Tax Administration, under the Ministry of Finance.
 

The corporate income tax rate has a standard value of 16% and small qualifying companies can be subject to the micro company regime, under which they are taxed on their revenue at rates of 3% or 1% (if they meet the criteria to have at least one employee). Corporate income tax returns and payments are due on a quarterly basis and the annual corporate income tax is payable by the 25th day of the third month in the next tax year.
 

An advantage for foreign investors interested in Romania company formation is that their newly formed SRL company can, for example, initially qualify as a small company and be taxed as a micro company because of the fact that the criterion for eligibility is for the company to have a turnover below EUR 1 million. If you need to know more about the micro company regime, our tax specialists can provide more information.