Recent years have brought significant progress in terms of formalities for the incorporation of legal entities that carry out economic activities.
The trend is to streamline this process and reduce administrative tasks, both on the European level and in the local legislation of each EU Member State.
In Romania, this approach was transposed in the recent amendments to the Companies Law No. 31/1990 ("Companies Law") and to other normative acts regarding registrations in the Trade Register, through Law No. 265/2022. This law seeks to digitalise the process of setting up a new company or registering a branch, to simplify the process of registration in the Trade Register, and to provide online access to a companies' historical data (including companies registered in other EU Member States).
The main changes regarding the Companies Law are the following:
Completely electronic online incorporation procedure
articles of incorporation can be drawn up online by filling in a standard form, which will be available on the National Trade Register Office (ONRC) website; they can also be signed by using a qualified electronic signature;
even documents drafted by public notaries or lawyers can be transmitted online to the Trade Register, electronically signed by the applicant;
the procedure for registering branches of companies headquartered in another EU Member State has been simplified;
incorporation certificates and ascertaining certificates may also be issued in electronic format by using qualified electronic signature/seal.
Simplified registration procedure in the Trade Register
The new streamlined process allows for documents to be submitted in electronic format, fulfilment of legal conditions to be verified through communication between authorities, and information/documents already at their disposal to be used. To this end, several requirements and documents have been eliminated:
the contribution to the share capital of limited liability companies no longer needs to be paid at the time of incorporation; the law now foresees a phasing in period for the payment of the subscribed capital (in some cases of up to two years from the incorporation date);
founders, initial directors, board members (and, where applicable, auditors) no longer need to submit stand-alone affidavits; these are included, in a simplified form, in the articles of incorporation;
the company's legal representatives no longer need to submit signature specimens;
the obtaining of clearance from the General Secretariat of the Government and local authorities regarding the use of certain words in the company name is no longer required as a distinct step;
the need to submit proof of the company name reservation has been eliminated.
Online access to information on companies, including information on companies registered in other EU Member States
documents and information on registered legal entities are also archived in electronic format to allow faster provision of (certified) copies in electronic format, even if they were submitted as paper-based;
additional information can be obtained free of charge from the registers of the EU Member States, through the interconnection system of registers;
more data becomes available in the register, for example, regarding branches.
Other relevant amendments to the Companies Law include, for instance, the obligation to give details about a company's real beneficial owners in the articles of incorporation, sanctions for joint-stock companies who breach their obligation to properly keep a shareholder register, or cases when the Trade Register can decide to dissolve a company.
These amendments are welcome as they are expected to reduce red tape, while also introducing standardised, consistent registration procedures for all types of legal entities in the Trade Register.
But we are not there yet. Some of the recent changes can only be implemented after methodological norms regarding their application have been published. As these norms are expected in January 2023, the new year should bring promise for entrepreneurs interested in doing business in Romania.
By Mihaela Popescu, Senior Attorney at Law, and Alexandra Șmahon, Attorneys at Law, Schoenherr