Romania: New legal framework for foreign direct investments

Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for screening foreign direct investments into the Union (the “Regulation”) has been implemented into Romanian legislation in the form of Government Emergency Ordinance no. 46/2022 on foreign direct investments (“GEO no. 46/2022”). 

GEO no. 46/2022 establishes the conditions under which certain foreign direct investments are subject to screening for the approval of the Commission for the Examination of Foreign Direct Investments (“CEFDI”) before being implemented in Romanian territory. The screening is for the purpose of preventing such investments from disturbing the essential interests of national security and public order, as well as the interests of the European Union. 

The new ordinance provides the procedure and conditions to be fulfilled by certain investors that are considered to be “foreign” under the definitions provided by GEO no. 46/2022 and the Regulation prior to implementing a foreign direct investment in order to avoid potential penalties due to violations or criminal actions. 

The main conditions to be fulfilled by the foreign direct investor have to do with:

(i) certain targeted domains, and 
(ii) the value of the envisaged transaction. 

GEO no. 46/2022 targets a variety of fields, such as the security of citizens, borders and the energy, the security of industrial and critical infrastructure, as well as protection of the environment, agriculture or processes of privatisation of state companies. 

As regards the minimum value of the investments, the main rule provides that investments exceeding €2 million (the RON equivalent calculated at the relevant exchange rate of the Romanian National Bank) are concerned, with certain exceptions. 

The obligation to file for screening by the CEFDI and later the Competition Council or the Romanian government, as the case may be, is applicable (among others) to investors whose citizenship/place of incorporation is in a state outside the European Union, as well as to EU entities that are under the control of non-EU persons or entities.

Failure to comply with certain requirements of GEO no. 46/2022, such as the obligation to obtain the aforementioned approval prior to implementing a foreign direct investment in Romania, constitutes a violation (if it does not qualify as a criminal offence) which may result in civil fines of up to 10% of the investor’s worldwide turnover.  

The provisions of GEO no. 46/2022 entered into force on 18 April 2022, with the exception of those concerning civil penalties and their legal regime, which are to enter into force 30 days as of the publication date of GEO no. 46/2022. 

Our legal team will gladly assist you in any matters related to this new regulation and its many implications for investments in Romania.