The Limited Liability Company (LLC) is the most common model for carrying out an economic activity in Romania, due to the ease with which it is registered but also to the low monthly administration costs. Practically, out of the total number of companies registered in Romania, 99% have this form of organization.
Legal requirements for the founders of an LLC
The law that regulates the organization of the activity of Romanian companies is Law 31/1990 on commercial companies. It establishes a series of obligations that the founders of this type of company (at LLC are called associates) must fulfill:
- full capacity to exercise – refers to the ability of persons to become founders of a company, to have discernment and the necessary legal age of 18 years;
- the right to engage in economic activity – it must not be prohibited by a final court decision, for crimes against property, breach of trust, corruption, embezzlement, forgery, tax evasion, money laundering and other offenses under applicable law;
- minimum 1 associate, maximum 50;
- the minimum share capital is 1 lei, there is no maximum limit and it can be deposited after the registration of the company. The share capital shows the upper limit of personal liability of the partners to third parties, its size being an important element in the relationship with suppliers and banks;
- the administration is done by one or more directors, who can be chosen from associates or people from outside the company.
Organizing an LLC
The limited liability company has 2 management and control bodies: the General Assembly of the Associates, which represents the management body, being composed of all the associates and the Administrator or auditors, which represents the control body. The appointment of auditors becomes mandatory only for companies with more than 15 associates.
Dividing the responsibility into an LLC
The personal liability of the associates is made within the limits of the share capital, and the administrators are unlimitedly responsible for the correctness of the fulfillment of the attributions set by the associates and for the good management of the activity in front of the third parties. There are certain cases in which, in court, the limit of liability of the partners may be changed, if it is shown that they have fraudulently assigned assets of the company, or, through the actions they have carried out aimed at fraudulating creditors.
Establishing an LLC – necessary steps
a) Reservation of the name
The first step in creating a business is to choose the name that the company will bear. This can be done depending on various factors, related to the personal choices of the founders or legal obligations.
Most entrepreneurs have the problem that the name of the company also represents the brand they want to sell or with which they want to appear in the market. It is a commendable desideratum, which cannot be put into practice most of the time. It must therefore be established from the outset that, if this is not possible, it is not a problem. There are countless examples in the market where the trademark or trademarks have a name and the company that comes to them has another name, in addition there is no mandatory market condition.
The reservation of the name is obtained from the National Office of the Trade Register (ONRC) from the locality where the future company will have its registered office. We recommend that, before making such an approach, you make a list with as many names as possible (minimum three), so that if the first option you want will not be available you have a choice.
The name of a company must meet several conditions in order to be accepted by ONRC:
- be written in Latin characters;
- not to cause confusion with other companies or previously reserved names;
- not to contain obscene or trivial words or expressions.
The differentiation between the names of some companies is made respecting certain conditions stipulated by law in order to respect the uniqueness of the name of the economic operators. Certain “fireworks” that some people choose to use to try to force this condition (articulation of words in the name, reversing the order of words, adding or removing adverbs, prepositions or signs (gender @) are not allowed and are usually censored by ONRC inspectors who analyze these issues.
The availability check and the reservation of the name can be done as follows: online on the ONRC website, by sending online forms on the ONRC website, requiring an authorized digital certificate (electronic signature), by email, fax or post, or at the ONRC counters.
Particular attention should be paid to the addition of words such as “national”, “Romania” or “Romania”, because this can only be done with special approvals by the General Secretariat of the Government or other state institutions.
Checking the availability of the name and reserving it are available in the Start-up service package offered by our company. For details about the services included and the price of this package, please send us a message using the contact form on the site.
b) Preliminary statements of associates and administrators
The declaration of commercial honor is one of the documents required for the registration of an LLC in the Trade Register. Future associates and administrators of a company must go to a notary office, or directly to the Trade Register Office, to sign a declaration on their own responsibility showing that they meet the legal conditions for holding these qualities. One of the conditions they must meet is that of commercial honor.This is expressly defined by Law 31/1990, art. art. 6 paragraph (2) which establishes that the persons who have been convicted for:
- fraudulent management;
- tax evasion;
- abuse of trust;
- false / use of false;
- false testimony;
- giving or taking bribes;
- other crimes punishable by Law 31/1990.
The founders and administrators of the future company must ensure, before submitting the application for registration with the Trade Register, that they do not have facts recorded in the tax record, debts to state budgets, are not prosecuted for budget debts or are not in enforcement proceedings .
At the same time, another document necessary for the registration of an LLC is the signature specimen, which will be presented only by future administrators and will be registered at the Trade Register Office as a valid signature in relations with third parties.
c) The choice of the registered office
A very important element that must be taken into account when registering a company is the registered office.This is a key element of identification because official correspondence will be communicated to the company.
For the choice of the registered office there are the following options:
- dwelling – house or apartment. As a rule, if it is desired to carry out the activity at the registered office located in a block of flats, the consent of the neighbors and the approval of the owners’ association must be obtained;
- a rented commercial space;
- at the headquarters of a law firm, without carrying out a commercial activity;
- in a coworking space or a hub with office space.
Proof of ownership of the space for registered office is made by presenting a lease / sublease or loan agreement, concluded between the owner and the legal representative of the company being registered. The duration of the seat will be stipulated in the contract and may be set for a fixed period or for an indefinite period.
If the lease (loan, etc.) provides for a certain period, companies have the obligation to extend the validity of the registered office before expiration, otherwise risking tax inactivation or dissolution.
Our recommendation is to choose a commercial, office or coworking space, where correspondence can be received between 08.00 and 16.00. The state institutions send written information by registered letters with acknowledgment of receipt delivered by the Romanian Post, which the postal factors deliver between the hours mentioned above. If people are not found, mailers leave notifications in mailboxes, which are often lost.
One of the elements pursued by ANAF in the analysis of the activity of a company is the development of the activity at the declared headquarters, this aspect being even one of the risk criteria assessed when granting the VAT code. Failure to receive correspondence may be construed as failure to meet this criterion and may lead to tax inactivation and loss of the VAT code (details here).
d) Preparation of the constitutive act – choice of CANE codes
Another important aspect that an entrepreneur must take into account is establishing the main object of activity and the secondary ones, for the future company.
CANE (or NACE in European legislation), is an abbreviation for “Classification of Activities in the National Economy” and is a unique system of classification at European level of economic activities carried out by companies.
As a general rule, any company has only one main object of activity, which describes the preponderant economic activity it carries out. If, in addition to the main activity, the contractor decides that the future company will carry out other activities, they will have to be among the authorized secondary objects in the articles of association.
Beware, at the term used, “authorized secondary activities”, because the simple mention of them in the articles of association does not represent the legal basis on which companies can carry them out. The authorization of a secondary activity is also done at ONRC, either at registration or later.
The procedure for authorizing business objects may become more complex when certain CANE codes are subject to additional restrictions or requirements in order to be carried out, requiring prior approval or approval.
e) Submission of the application for registration at the National Office of the Trade Register
The registration of the company will be done through the Trade Register Office in whose territorial area the future limited liability company will have its registered office.
The operations necessary for the registration of a company at the Trade Register will be performed by the associates / administrators appointed by the articles of association, or by a proxy.
The following documents must be submitted with the registration application:
- Proof of booking the company name;
- Constitutive Act;
- The lease / loan agreement, which results in the registered office;
- Declaration of commercial honor;
- Signature specimen;
- Identity documents of the associates and administrators of the company;
- Declaration on Real Beneficiaries;
- Declaration form 2 (authorization of Caen codes) and Annex 1 (fiscal registration);
- Proof of prior approvals or authorizations provided by law;
- Special power of attorney authenticated at the notary – based on which, the designated person will make all the necessary steps for setting up the company (if it is performed by a third party);
- The fee for publishing the establishment resolution in the Official Gazette. Publicity of the registration or mentions in the Official Gazette is necessary for the opposability of third parties.
The application and the documents listed above will be numbered and filed and an outline will be drawn up in the introductory part. All documents will be written in Romanian. If one of the founders or administrators of the company is a foreign citizen, unfamiliar with the Romanian language, there must be a visa of an authorized translator on the documents drawn up by him.
If certain conditions have not been met, the delegated judge may request clarification by requesting additional documents, granting a new settlement term for the file. If the applicant does not remedy the problems found or does not present the requested documents, the judge-delegate will reject the application for registration.
The decision of the judge-delegate can be appealed, which can be filed, within 15 days, at the Tribunal within the locality where the application for registration was filed.
The acquisition of legal personality will be made from the date of registration of the company in the Trade Register.
Cont Consulting offers complete consulting services before the registration of a company and handles all the formalities necessary for registration, on behalf of its clients. Details about these services can be found here.
In order to facilitate the registration process of a company, we have provided our customers with a form to which they can attach all the necessary documents. The form can be accessed here.
Note: The text is valid on the date of its publication, is for guidance purposes and is an interpretation of the specialists of the company Cont Consulting, without intending to replace the legal provisions in force. We are not liable for any damages caused by the use of this material for legal purposes or as evidence in any dispute.