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Legal News
OCTOBER 2006
• Banking Law:
The National Bank has restricted consumer loans to 30% of disposable income and tightened the definition of disposable income
• Company Law
Tighter requirements for business visas for non EU citizens
Deadline expires for increasing share capital of joint stock companies to 25,000 euros
Criminal liability of legal entities introduced from 11 October 2006.
Commercial Registry fees reduced
• Energy Law
Electric energy to be sold through the energy bourse, OPCOM
• Accountancy Law
Period for retaining corporate records reduced from 50 to 10 years
Company representatives to assume responsibility for financial statements
Banking Law
More Restrictive Conditions For Consumer Loans
Romania’s central bank BNR has amended Regulation 10/2005 on Limiting the Credit Risk for the Credits taken by Natural Persons by establishing tighter conditions for consumer loans. The principal change is that, in calculating a client’s solvency ceiling, credit institutions must consider all payment obligations, which a client has, before granting a new loan. As such, the banks must consider all expenses related to the client’s other loans, including financial leasing contracts, which were previously excluded.
The monthly payment obligations of a client, such as interest and any other costs related to consumer credits, including the loan, for which the client has applied, must not exceed 30% of the client’s net income and, if applicable, of his/her family. The ceiling for mortgage credits remains at 35%.
Company Law
Tighter requirements for business visas for non EU citizens
Currently foreigners are not restricted in relation to establishing Romanian companies. However, in order to be able to run their businesses effectively, they will normally need to be present in Romania. For these purposes the law stipulates that a long-stay visa is available to foreigners who are, or who will become, shareholders or associates in commercial companies in Romania and who have management positions. This means that a long term business visa should be obtained. In addition, the applicant must prove, through a business plan, that they have funds of at least EUR70,000 if they are to work as shareholders in a joint stock company, or at least EUR50,000 if they are associates with a limited liability company. As from 1 January 2007, these figures will rise to 100,000 euros and 70,000 euros respectively.
Investors must also prove their business plan would create at least 15 jobs in the case of joint stock companies and at least 10 jobs for limited liability companies.
Source: Law for the amendment and completion of Government Emergency Ordinance 194/2002 on the legal status of foreigners in Romania.
Deadline expires for increasing share capital of joint stock companies
Law 302/2005 required that joint stock companies and commandite companies are to increase their share capital to an equivalent in RON of EUR25,000. The law became effective starting October 29, 2005, and imposed a deadline of October 27, 2006 by which to increase their share capital.
Joint stock companies, which have not raised their share capital are allowed to continue activity only if they turn into limited liability companies, collective companies or simple commandite companies. Failing this, procedures will begin to dissolve the companies.
Companies may, however, still increase their share capital even after the legal deadline is exceeded, provided the increase is completed before an irreversible dissolution decision is taken in court.
Criminal liability of Legal Entities introduced from 11 October 2006
According to Law no. 278/2006 on amending the Criminal Code, a legal entity, which commits a crime, can now have criminal liability for crimes committed during its activity, or on its behalf and can be subject to the following sanctions:
(i) a fine as main punishment;
(ii) one or more additional punishments, including company dissolution, suspension of activity or of one of the activities related to the crime for a period between three months and one year, closing down some working units for a period between three months to three years; and
(iii) exclusion from taking part in the public procurement procedures for one to three years.
However, exceptions from liability exist for the State, the public authorities and the public institutions, which do not operate in the private field.
The legal entity’s criminal liability does not exclude the criminal liability of the individual that contributed to the respective crime.
Reduction in Trade Registry tariffs
Prices for the on-line provision of the Trade Registrar Office data will be reduced to a half of the cost of printed information. Registration certificates and mention subscription will be issued without any other taxes. For other on-line data regarding a company’s declared functioning period, main activity, secondary activities and share capital, the price will be RON0.5 per piece of information for the on-line transmission, compared with the current price of RON0.85.
Any information extracted regarding associates/shareholders, administrators /representatives/censors and branches/sub-unities/other secondary offices will be taxed at RON0.5, compared with the current RON0.85. Other data regarding a company’s identification will be taxed RON1.6, unlike the current RON3, and RON0.5 will be added for other information regarding the status of associates/representatives/censors.
The additional tax of 30% currently required for an “express” 6-day issuing of the registration certificate and for the mentions inscription certificate is also abolished.
Source: Government Decision no. 1,422 on amending Government Decision no. 913/2004 on enacting the taxes and the tariffs on the operations made by the Trade Registry offices within courthouses.
Accountancy Law
Companies’ Annual Situations Must Be Kept For 10 Years, Instead Of 50
Companies will be obliged to keep the annual financial situations for 10 years, instead of 50, as stipulated now, and will have to submit an annual report on the issues established by the order of minister of Finances, according to a law draft on changing the Law on accountancy.
The commercial companies, national companies, autonomous regies and national research-development institutes must draw up annual financial situation within 150 days of the end of the financial year. The other entities have 120 days’ deadline.
The annual reports must be submitted at the headquarters of the territorial units of the Ministry of Finances.
The companies with joint bookkeeping must publish the annual financial reports, respectively the administrators’ report and the audit report or the report made by the censors’ committee. They will also keep their financial situations for 10 years.
The same provisions are applied for the Romania-registered subsidiaries of the legal entities with headquarters abroad and for the mother-companies that draw up consolidated financial reports.
A mother-company must draw up annual financial reports for its activity and consolidated financial reports.
The law draft on changing the Law on accountancy includes an exception, so that the Ministry of Finances may establish, by an order, the bookkeeping registries and the justifying documents that must be kept for only 5 years.
Company Representatives To Assume Responsibility For Financial Statements
Company representatives in charge with accountancy affairs will have to register at the Romanian Trade Register Office and will have to submit consolidated financial statuses alongside statements through which the company’s management board assumes responsibility over the figures reported.
Administrators and managers of companies and mother-companies are obliged to make sure that annual financial statuses and reports are established and published compliant with national legislation.
Source: normative draft of amendments to Law 82/1991 on Accountancy on the official website of the Ministry of Public Finances (www.mfinante.ro).
Energy
Romania Electric Power Producers To Sell On Energy Bourse
According to an order of the ministry, available energy producers of electric power will renegotiate supply contracts and the power will only be sold on the Centralized Market of Bilateral Contracts, administered by OPCOM, which operates the electricity market in Romania under subordination to Romania’s state-owned power grid, Transelectrica.
 
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