As a follow-up to the piece I previously published on CEELM – FDI Is 4.52x Cooler Than Merger Control – Romania’s latest guidelines on investments’ screening brings important clarifications to an already far-reaching regime.
The newly published Guidelines issued by the Romanian Competition Council fill several procedural and substantive gaps in the existing legislation, offering greater structure to a screening framework that had, until now, relied heavily on administrative practice and informal interpretation.
Key Clarifications Brought by the Guidelines
The new secondary legislation tackles several practical aspects that had previously left room for interpretation:
- how to calculate the EUR 2 million threshold: as a general rule, the threshold reflects the aggregate value of all components of the investment, considered across all phases of implementation, including multi-stage transactions. For example:
- in share deals: the relevant value includes the purchase price of the shares and any additional capital injected by the investor
- for share capital increases, share capital contributions or debt-to-capital conversions: the full value of the contribution is counted, respectively the nominal value of the subscription, foreseeable follow-on contributions, plus share premiums, if the case, but only if the transaction entails changes in shareholders, control or management
- in-kind (non-cash) investments: the Guidelines specify that the value may be established using, in this order: market value, book value, fiscal value, or, alternatively, a valuation report, if available. However, since Companies Law provisions require in-kind contributions to be based on valuation reports, experts should be advised to reflect the order of preference set out in the Guidelines when drafting such reports
- loans / financing: the full amount of principal and interest is counted – except where the financing is granted by an authorised financial institution (e.g. a bank) that does not acquire control or decision-making rights over the borrower.
- definition of control: while the core concept of “control” is aligned with the merger control framework, the additional test of “effective participation in management” remains imprecise
- filing formalities: Filing comes first, implementation comes later. To notify, you need to show the intention to proceed with the investment. A SPA, term sheet, MoU or any other binding agreement will generally suffice. Just make sure it spells out the parties involved, the price, the funding structure and what is actually being acquired.
More Than Just Share Deals: The Expanding Reach of the FDI Regime
Thinking routine corporate housekeeping or a real estate acquisition falls outside the scope of the FDI regime? Think again.
The Guidelines finally address some of the market’s favourite uncertainties and quietly put an end to a few wishful assumptions. They confirm the breadth of the regime, which captures a wide range of operations that had long raised questions in practice, including:
- capital increases or any other contributions to share capital,
- conversions of existing participations,
- real estate acquisitions for business purposes,
- loans or other forms of financing, unless granted by authorised financial institutions in the normal course of activity,
- indirect funding mechanisms such as debt forgiveness, set-offs, provision of services or in-kind contributions,
- greenfield investments,
- setting up non-full-function JVs.
In essence, the FDI regime is not / no longer confined to traditional M&A-style transactions. Even internal group restructurings, operational funding, and real estate deals may be subject to prior approval.
Ah, but I am not “foreign”! Sure, but you might still need to notify
Don’t be misled by the term „foreign”.
Despite the label “foreign direct investment”, the regime captures not only non-EU transactions, but also intra-EU and even purely domestic (Romanian-to-Romanian) operations.
Whether the investor is based in Bucharest, Brussels, or Beijing, the real test is whether the transaction falls within one of the sensitive areas listed in Romania’s FDI rules and is above the EUR 2 mio threshold.
Sanctions and Enforcement: The Stakes Remain High
The standstill obligation is now firmly embedded in both primary and secondary legislation. Operations carried out without prior clearance expose the parties to significant risks, including:
- fines of up to 10% of the global turnover
- annulment of the transaction.
And then there are the unofficial bonus risks, not mentioned in the Guidelines but equally disruptive in practice: red flags in due diligence, specific indemnities in SPAs, and the occasional escrow complication that no one particularly enjoys. These softer, off-the-record consequences may not carry formal sanctions, but they can derail timelines, add layers to negotiations, or prompt uncomfortable conversations with counterparties. They are not FDI fines per se, but they are real enough to matter and generate supplementary costs.
As procedural clarity increases, enforcement is expected to intensify, particularly regarding gun-jumping (i.e., implementing transactions before clearance).
What Is Still Unclear?
Despite the progress made, a number of issues remain unresolved, creating continuing uncertainty for dealmakers:
- the concept of “management” remains vague and subject to interpretation
- unclear treatment of operational expenditure: it is still not clear whether certain (recurring) operational costs count toward the EUR 2 million threshold
- strategic sectors remain (intentionally) vaguely defined
In practice, these ambiguities continue to complicate early-stage assessments, particularly in cross-border group structures, minority investments, and multi-stages transactions. The businesses now await the publication of all relevant FDI clearance opinions/decisions, which may offer further insight into the authority’s approach in concrete cases.
Until then, these outstanding points remain firmly pinned to the business sector’s Christmas list.
By Andrei Petre, Counsel, Act Legal