Romania’s Defense Industry: Authorization as the First Strategic Step

As public awareness increases regarding the urgent need for substantial investments in the defense sector—particularly following the launch of the EU-wide defense investment initiative, ReArm Europe / Readiness 2030—a clear direction is emerging: Romania is poised to play an active role in developing defense supply chains and manufacturing capacities.

In this context, ongoing national policy efforts are expected to align with and implement European strategic guidelines and commitments made within the NATO framework.

Revitalizing Romania’s national defense industry is shaping up to be a top government priority. This direction can benefit not only traditional players in the defense sector, but also adjacent industries affected by the global economic context — such as the automotive industry — through strategic conversion initiatives and adaptation of existing capacities for the production of defense-related equipment or components.

This trend may also drive legislative updates aimed at modernizing or harmonizing the legal framework with new security and defense policy directions—particularly in terms of industrial operations—while eliminating regulatory overlaps*. Until such legislative reform is enacted, Law No. 232/2016 remains the key piece of legislation governing this sector, defining the strategic national interest and establishing the main authorization regime applicable to economic operators involved in the manufacture, research, or commercialization of military, sensitive, and strategic products, regardless of whether the end-users are Romanian state institutions or foreign clients.

*Referring specifically to the Foreign Direct Investment Screening (FDIS) regime, which overlaps with the authorization regime established under Law No. 232/2016. Currently, the duplication of the authorization regime under Law 232/2016 with the one introduced through the FDIS framework not only results in increased administrative burdens and additional costs for investors but also creates the risk of inconsistent approaches among the competent authorities — which may undermine predictability and decision-making coherence in a sector already sensitive in terms of regulation and security. The absence of a clear coordination mechanism between the relevant authorities, such as the Ministry of National Defense and CEISD, can lead to divergent interpretations of the same investments, potentially causing blockages or unjustified delays in strategic projects.

For both domestic and international investors, a comprehensive understanding of the authorization framework is essential to the strategic planning of any defense-related business venture—whether it involves greenfield investments, mergers and acquisitions, or the consolidation of existing capacities.  In reality, this regime is only one part of a broader and fragmented legislative framework, which includes various other regulations — from export controls to rules concerning critical infrastructure or classified information. The legal environment is complex, often technical and open to interpretation, forming a true regulatory maze that cannot be navigated efficiently without specialized expertise and solid practical experience in the field.

Required Authorizations

The authorization regime under Law No. 232/2016 applies to all companies engaged in activities involving military, strategic, or sensitive products, regardless of whether their clients are domestic or foreign.

Military products include all equipment specifically designed or adapted for military use, intended to function as weapons, ammunition, or war matériel. This includes:

• Items listed in the EU Council Decision No. 255/58 of April 15, 1958, as interpreted in light of technological advancements.
• Dual-use goods originally designed for civilian purposes but subsequently adapted for military application.

Strategic products are designated via government decisions and are intended for major Romanian defense procurement programs.

Sensitive products encompass any goods, works, or services intended for security use that involve, require, or contain classified information.

Depending on the investment stage, two types of authorizations may be necessary:

1. Preliminary Authorization (Article 3, point a1 of Law No. 232/2016): Required for investors aiming to develop new production or service capabilities for defense purposes. This authorization is valid until the respective facility becomes operational, but for no longer than one year.
2. Operational Authorization (Article 3, point b of Law No. 232/2016): Required for actual activities involving military, sensitive, and strategic products. It is valid for three years, with the possibility of renewal following a full reauthorization process.

Authorization Procedure: Conditions and Required Information 

To obtain an operational authorization, companies must meet the following cumulative conditions, as stipulated by Law No. 232/2016 and its implementing regulations:

• Be registered as a Romanian legal entity.
• Include defense-related production or service activities in their articles of incorporation.
• Ensure that shareholders and directors meet eligibility criteria (e.g., no convictions for specified offenses, not listed under international sanctions).
• Possess the necessary facilities and capabilities (per Article 3, points c and d of Law No. 232/2016).
• Obtain mandatory prior clearance from relevant authorities (e.g., Ministry of National Defense, Ministry of Internal Affairs, Romanian Intelligence Service).

The application process requires submission of detailed documentation to government authorities, which may include commercially sensitive information such as plans, inventories, and technical specifications.

As for processing time, the law stipulates that the authorization must be issued within 30 days of receipt of all required institutional clearances.

Any subsequent changes to the conditions under which the authorization was granted must be reported to the competent ministry within 30 days of their occurrence (Article 7, para. 5 of Law No. 232/2016).

Acquiring Existing Capacities (Mergers & Acquisitions, Asset Transfers)

Neither Law No. 232/2016 nor its implementing regulations provide a specific procedure for evaluating the impact or need for reauthorization of production capacities for military, strategic, or sensitive products in the context of M&A transactions.

Thus, the following scenarios apply depending on the nature of the transaction:

• Asset Deal: The transfer of assets—such as facilities, equipment, or infrastructure—will invariably require a new authorization, since authorizations are granted in consideration of the current holder’s specific characteristics and are not transferable with the asset. The standard authorization process must be integrated into the transaction structure, likely as a condition precedent.
• Share Deal: Acquiring shares in an already authorized entity may constitute a material change, requiring notification to the competent ministry and possibly trigger reauthorization. Given the sector’s sensitivity, a buyer’s or the parties’ self-assessment regarding the need for notification or reauthorization is inherently complex and bears compliance risks.

Conclusion

Romania’s national defense industry offers compelling investment prospects, bolstered by access to NATO and EU procurement frameworks. However, strategic entry into this sector demands strict adherence to a specialized authorization regime—part of a broader compliance architecture. The legal framework is dense and fragmented, and effective management requires specialized expertise. Therefore, among others, investors must treat regulatory due diligence not as a formality, but as a strategic imperative essential to unlocking the full potential of their engagements in this vital and sensitive domain.

By George Trandafir, Managing Associate, Nestor Nestor Diculescu Kingston Petersen