Romania: Legal updates to Romanian companies and money laundering laws

Law no. 102/2020 for the amendment and completion of Romanian Companies Law no. 31/1990 (the “Companies Law”) was adopted by the Romanian Parliament and published in the Official Gazette on 2 July 2020. The new normative act (the “Law”), in force as of 5 July 2020, and Law no. 108/2020 for the amendment and completion of Law no. 129/2019 for combating money laundering and terrorism financing prevention, as well as for the modification and completion of other legislative acts (“Law no. 108/2020”) have led to a new legal framework for Romanian companies, as detailed below. 

I. Shareholding restrictions regarding limited liability companies

The first significant change that the Law makes is to eliminate the legal restrictions provided by article 14 of the Companies Law, prohibiting (i) a natural or legal person from becoming the sole shareholder of more than one limited liability company (“LLC”) registered under Romanian law, and (ii) an LLC from having another LLC consisting of a single person as its sole shareholder. 

Because these restrictions are no longer in force as of 5 July 2020, companies established under the abovementioned conditions are no longer at risk of being judicially dissolved at the request of the state or any interested person.

As a consequence, the affidavit stating that the sole shareholder owns only one LLC will no longer be required for the authentication of an LLC’s articles of association.

II. Simplified office registration procedure

The documentation that must be submitted to the Trade Registry to register a new company or to relocate a company’s headquarters has been simplified. The procedure no longer requires (i) a National Agency for Fiscal Administration (“NAFA”) certificate to attest that no right to use the same premises has been assigned to another natural or legal person, or (ii) an affidavit attesting to the fact that there is no other office registered on the same premises, in case another right of use has been identified in the NAFA certificate. 

Given the previous limitation providing that more than one office could be registered in the same building only if its structure allows them to operate in different rooms or distinctly shared spaces, companies operating in the same building could not exceed the number of separated rooms or spaces; hence, the aforementioned documentation had the role of ensuring companies’ compliance with this rule. 

Starting with the enforcement of the Law, this restriction has been lifted and the related documents are no longer required for legal operations such as registering a company or relocating its headquarters.

III. Offices in residential buildings 

The last change provided by the Law is related to the conditions under which space located in a residential building can become a company’s registered office. Before these amendments, approval from the neighbours or the owners’ association was mandatory in order to obtain a change of designated use from a residential space to a company’s registered office. This approval is no longer required under the conditions that no activity is carried out at these premises and an affidavit signed by the director(s) in which this fact is clearly stated is provided. 

IV. Exemptions regarding the real beneficiary affidavit 

Law no. 108/2020, published in the Official Gazette on 6 July 2020, eliminates the obligation to declare the  beneficiary of (i) autonomous administrations, national companies and companies wholly or mostly owned by the state; and (ii) legal entities having only natural persons as shareholders.

When all of a company’s shareholders are natural persons, and there is no legal entity between the company and the real beneficiaries, the real beneficiary affidavit is no longer mandatory. Consequently, given the fact that in such cases, authorities already have the relevant information in their database, they can complete the corresponding entry into the beneficial owner register in accordance with the rules laid down by Law no. 129/2019 for preventing and combating money laundering and terrorist financing (“Law no. 129/2019”). Therefore, the new act provides ex officio registration of real beneficiaries in the aforementioned case. 

Nevertheless, according to Law no. 108/2020, if a new company is registered, respectively if a company loses and/or gains a beneficial owner, an affidavit disclosing this must be submitted to the Trade Register by 15 days after such change occurs.

The legal representatives of any other companies that are not expressly exempted from this legal obligation must submit real beneficiary affidavits to the Trade Registry by twelve months after Law no. 108/2020 enters into force (under the condition of having been registered by this date). 

In conclusion, significant amendments have been made to both the Companies Law and Law no. 129/2019, all of which are meant to simplify corporate operations and reduce legal restrictions. According to the Law, within 60 days from its entry into force, the Romanian Government will review the methodological norms concerning the amendments and possibly provide more clarifications regarding their application.