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Types of Corporate Business Entities

Limited Liability Company (Romanian: societate cu raspundere limitata ,

S.R.L.)

Stock Company (Romanian: socieate pe actiuni, S.A.);

General Partnership (Romanian: societate in nume colectiv, S.N.C.);

Limited Partnership (Romanian: societate in comandita simpla, S.C.S.); Partnership limited by shares (Romanian: societate in comandita pe

actiuni, S.C.A.).

Most of the companies incorporated in Romania are limited liability

companies and stock companies, because of the fact that the

partners/shareholders are held liable within the limits of their subscribedequity.

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Types of Companies:

Person companies (Romanian: societati de persoane): general

partnership, limited partnership, partnership limited by shares, limited

liability companies. These companies are established in consideration of

the persons that set up the company. There are stricter rules when it

comes to transferring the shares and taking decisions in the company.

Capital companies (Romanian: societati de capitaluri): limited liability

companies, stock companies.

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Incorporation of a company:

Can last up to five working days from the submitting of the documents at

the trade registry;

It is prolonged with 15 days when the word Romanian or national is

included in the company s name;

Certain approvals are necessary, depending on the object of activity of the

company.

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Headquarters of the company:

It is not allowed for more companies to have their headquarters in the

same location, except for some specific situations (for example if they

establish their headquarters temporarily at the headquarters of a law firm

and they do not unfold any activities there);

It is allowed for more companies to have their headquarters in the same

building, apartment, provided that the location enables the independent

functioning of more companies and that each company has at least one

room that it uses solely (the room must be identified on the sketch/ plan of

the building attached to the application that is submitted at the trade

registry);

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CAEN code and object of activity

CAEN code of the object of activity (Romanian: CAEN Clasificarea

activitatilor din economia nationala, classification of the activities from the

national economy);

Activity field, main activity field (only one can be chosen), auxiliary

activity fields (there is no limit to how many can be chosen, but it is notrecommended to choose all CAEN codes because some require

authorizations);

The main activity field, as well as the auxiliary activity fields must be

included in the incorporation documents of the company;

The main activity field may be changed by decision of the associates; The auxiliary activities may be extended or restricted anytime, by filling an

application at the trade registry, without a decision of the associates.

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List of the documents that should be submitted at the trade

registry for the incorporation of a company:

Applications (they can be found on the website of the traderegistry);

Reservation of the name of the company (the name can be reservedat the trade registry, except for names that include certain wordsRomanian, national; these require a special approval );

Proof that the share capital has been payed by the shareholders to abank account opened on the name of the company (the capital has tobe paid at least partially, depending on the type of company; for thelimited liability company it has to be paid fully);

Declaration of the administrator that it fulfills the conditionsrequired by Romanian law to be administrator and that it accepts theposition in the company;

Declarations of the shareholders that they fulfill the conditionsrequired by Romanian law to be shareholders;

Signature sample of the administrator;

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List of the documents that should be submitted at the trade

registry for the incorporation of a company:

Proof of the right to have the headquarters established in a certain location

from Romania (for example property title of the building, rental

agreement);

Power of attorneys from the shareholders if they do not submit the

documents themselves; Incorporation documents (articles of incorporation, constitutive act); they

should be signed either by the shareholders or by the persons empowered

to represent them based on a special power of attorney. The substantially

and formal requirements of these documents are included in Company Law

31/1990.

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Particularities of S.R.L.

The minimum social capital is of: 200 RON; the value of a

social part cannot be lower than 10 RON;

It can be established even only with a sole associate, either

natural or legal person; a natural or a legal person (Romanian

or foreigner) can act as sole associate only for one limited

liability company;

Particularity: A limited liability company cannot have as sole

associate a company which is held by a sole person;

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Particularities of S.R.L

Is managed by one or more administrators, natural or legal persons, that areempowered to represent the company before third parties.

Every share gives the right to a vote. The decisions need in principle theabsolute majority of the shareholders, as well as the absolute majority ofshare capital. Still, it can be stipulated expressly in the incorporationdocument of the company that the absolute majority of the share capital is

enough for taking a decision. Transfer of the shares in the company can be done unlimitedly among the

shareholders of the company; to third parties only provided thatshareholders holding at least 75% of the share capital agree to the transfer.

The convening of the general meeting of the associates can be done by theadministrator/ shareholders holding at least 25% of the share capital.

The convening must be done 10 days before the actual meeting and theagenda of the meeting has to be transmitted to all participants.

In case there is only one shareholder, all the prerogatives of the generalmeeting of the shareholders shall be exercised by the sole shareholder.

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Particularities of S.A.

The minimum social capital: 25.000 EURO; the nominal share value

cannot be lower than 0,1RON; the minimum number of shareholders

cannot be less than 5;

All shares have the same nominal value and they can either be bearer stock

(Romanian: actiuni la purtator) or registered stock (Romanian: actiuni

nominative). Stocks are divided between ordinary stocks and preference

stocks (they are entitled to dividends before ordinary shares but lack the

right to vote in the general meeting);

If the constitutive act does not provide otherwise, the transmission of the

shares does not require the approval of the other shareholders;

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Particularities of S.A.

The convening of the general meeting of the shareholders is done at least

once a year and whenever else it is considered necessary. General meetings

can be ordinary (for the approving of the annual financial situations) or

extraordinary (for the increase of the share capital, for taking decisions on

the division or merging of the company), depending on the importance of

the agenda. The quorum of the general meeting varies, depending on the

type of general meeting and on whether it is the first convening with the

same agenda or not;

Special rules regarding the shares transactions, the increase of the social

capital, other important amendments of the constitutive acts are applicable

to the public listed stock companies (open companies).

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Duration, Expenses, other related Information

Generally, the total cost of establishment of a limited liability company

amounts to Euro 300-2,000 (all registration and honoraria fees included);

Standby companies: if a company justifies no interest in running its

activity on a limited basis, it has the possibility to file an application withthe trade registry office for the suspension of its activity (for a max. of 3

years); as a consequence, the company is not required, within the

suspension period, to submit all the financial reports as in the case of the

companies who activate effectively.

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Options

In the registration file at the Trade Registry Office, the company can

choose the special regime in order not to pay V.A.T, if the company

estimates a turnover lower than Euro 35,000 annually.

If the amount of Euro 35.000 is exceeded, the V.A.T regime isautomatically applicable.

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Options

A company can choose in the registration with the trade registry office themicro-company regime, if the following requirements are fulfilled (art. 112of the Fiscal Code):

It has as object of activity the production of goods, services supply and/ortrade;

It has between 1 9 employees (this condition needs to be fulfilled within60 days from the registration date at the Trade Register Office);

Maximum annual turnover is Euro 100,000 (or RON equivalent);

The share capital is not owned by the state or local authorities.

The company that does not fulfill one of above-mentioned

conditions shall be automatically subject to corporate income tax inthe following business year (the profit tax represents 16 %).;

The company can chose the micro-company regime from itsincorporation.

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Thank you!

Daniela Chiriac

0722 513 890

av.daniela.chiriac@gmail.com