PLC Doing Business in Romania 2014

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Published on the “Doing Business in… 2014” website by Practical Law Company (PLC) and Lex Mundi.

Overview

1. What are the key recent developments affecting doing business in your jurisdiction?

The new Civil Procedure Code of Romania became effective on 15 February 2013.

The new Civil Code of Romania entered into force on 1 October 2011, but there is a lack of consistent case law relating to this. The new Civil Code introduced many new concepts (for example, trust companies, specific regulation of standard clauses, special protection of legal entities under adherence contracts, freedom to agree contractually on prescription terms, and so on). In addition, other concepts that already existed through doctrine and jurisprudence are now expressly regulated (for example, sale of movable assets belonging to third parties, hardship, the unilateral termination of a contract for no-cause, regulation of specific types of contracts, and so on).

There was an attempt to enact a new Insolvency Code through Emergency Government Ordinance No. 91/2003. This was declared unconstitutional by the Constitutional Court and there is uncertainty about how this enactment should be handled, that is, whether the law should be entirely changed or just the provisions that breached the constitutional law.

Presidential elections are due to take place in 2014.

Legal system

2. What is the legal system based on (for example, civil law, common law or a mixture of both)?

Romania has a civil law system.

Foreign investment

3. Are there any restrictions on foreign investment (including authorisations required by central or local government)?

There are no longer any major restrictions, regarding foreign investment. A major restriction existed for foreign nationals to acquire agricultural land in Romania (as agreed under the Accession Treaty in 2005). On 1 January 2014, this restriction will be lifted and citizens of the EU or states belonging to the European Economic Area Agreement (EEAA) will be able to freely acquire agricultural lands in Romania. However, they will need to comply with the conditions of a pre-emption right, specifically that the acquisition of land must initially be refused by certain categories of people as defined by law.

4. Are there any restrictions on doing business with certain countries or jurisdictions?

Romania must observe:

  • Mandatory EU trading or monetary restrictions, or other restrictive measures adopted at EU level.
  • United Nations Security Council international trading or monetary restrictions and sanctions.
  • Trading or monetary restrictions and sanctions adopted by other international organisations or by unilateral decisions of other states, provided they are adopted or ratified by Romania by law.

The following web pages contain particular information on certain of these restrictions:

  • Foreign Affairs Ministry: www.mae.ro.
  • Department for Export Controls (ANCEX) (that is, the Romanian authority responsible for the control of dual use exports, and the control of military exports, imports, transits and transshipments): www.ancex.ro.

5. Are there any exchange control or currency regulations?

There are certain limited exchange control and currency regulations to deter money laundering. In addition, certain reporting requirements apply to foreign currency money market transactions and to loans from foreign lenders to Romanian private borrowers.

6. What grants or incentives are available to investors?

Generally, there is no difference in the legal treatment of local and foreign investors. Financial and/or tax incentives are provided for small- and medium-sized enterprises.

Holding legislation will be enacted as of 1 January 2014.

Business vehicles

7. What are the most common forms of business vehicle used in your jurisdiction?

The most common forms of business vehicle used by local and foreign companies are private limited liability companies and joint stock companies. This is due to the limitation of shareholders’ liability to the value of the share capital. Listed companies can only take the form of joint stock companies and are also subject to specific capital market rules.

Certain business activities can only be carried out by entities organised in a particular legal form (for example, asset management, insurance and banking entities and non-banking financial institutions can only operate as joint stock companies).

8. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, what are the main registration and reporting requirements?

Registration formalities

The shareholders must prepare the company’s bye-laws (in a notarised form in very limited cases) to be submitted together with a completed registration application form and various other incorporation documents, to the local Trade Registry Office. Registration takes about three to five working days from the submission of all required documents.

VAT registration is made through a procedure determined by the tax authorities.

Reporting requirements

From an accounting perspective, Limited Liability Companies registered in Romania are required to keep accounting records in specific registers and to prepare financial statements in accordance with Romanian Accounting Standards. For example, documents must be prepared in Romanian and amounts stated in RON (except for the accounting records of foreign operations that must be submitted in both Romanian and foreign currency). In Romania, the financial year is the same as the calendar year. However certain companies and branches of foreign entities can opt for a financial year that is different to the calendar year, in order to reflect the financial year used by the parent company. Starting 2014, those who opted to use a financial year that is different from the calendar year, can opt to choose the same financial year as the tax year. Entities that record a net turnover in the previous financial year and have total assets below the RON equivalent of EUR35,000, may opt for the simplified accounting system.

Share capital

The minimum share capital for joint stock companies is RON90,000 and for limited liability companies is RON200.

There are no maximum share capital requirements.

Non-cash consideration

Cash consideration is mandatory when establishing any type of company. Shares can be issued for contributions in kind, which are evaluated by authorised experts. Prohibited or restricted contributions include contributions of services or labour, and contributions of accounts receivables.

Rights attaching to shares

Restrictions on rights attaching to shares. Voting and dividend and distribution rights (under insolvency and tax laws) can be restricted, and agreements under which a shareholder undertakes to exercise voting rights in accordance with the instructions or proposals of the company, or of the persons representing the company, can be void.

For joint stock companies, there is a special category of shares that have priority dividend rights but no voting rights (such shares cannot exceed 25% of the company’s share capital).

Automatic rights attaching to shares. Shareholders have the right to:

  • Participate in the general meeting of shareholders and vote on aspects of the corporate life of the company (for example, the object of activity, headquarters, working units, share capital, mergers, acquisitions and divisions, dissolution, issuance of bonds, amendment of the company bye-laws and changes of nominal shares into bearer shares).
  • Appoint and dismiss the directors and auditors of the company.
  • Vote on the budget of the company and approve the financial reports.
  • Cash the dividends.

Shareholders must exercise their rights within the limits of the company bye-laws, including the shareholders’ agreement.

9. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, outline the management structure and key liability issues.

Management structure

Joint stock companies can adopt a one-tier (that is, board of directors) or a two-tier (that is, directorate and supervisory board) management structure. Limited liability companies are managed under a one-tier structure.

Management restrictions

There are no restrictions on the appointment of foreign managers. In general, they must have the civil capacity to exercise such a position and must not have a conviction for financial crimes (including financing terrorism and money laundering).

Directors’ and officers’ liability

With certain exceptions, directors are jointly liable to the company for any mismanagement. They can be held criminally liable for embezzlement, forgery, use of forgery, bribery and fraudulent management.

Shareholders’ liability in joint stock and limited liability companies is limited to their contribution to share capital. However, in certain limited circumstances, a shareholder can be held jointly liable for the financial obligations of an insolvent company. For example, a shareholder taking advantage of the limited character of the company’s liability and of its distinct legal personality.

Parent company liability

A parent company is generally liable for actions undertaken by its branch, but not for the actions undertaken by its subsidiary (unless the subsidiary is insolvent and the conditions of Article 27 of the Fiscal Procedure Code’s conditions are met), where the branch does not enjoy legal personality and the subsidiary does.

From a competition perspective, a parent company may be liable for the infringement of its subsidiary, in case the former has the ability to exercise decisive influence over the conduct of the latter. A 100% shareholding in a subsidiary creates a presumption of such decisive influence. This is rebuttable if the parent company can prove that the subsidiary acted independently and determined its own commercial behaviour. If liability is assigned to the parent company, the competition authority can hold both the parent company and the subsidiary jointly and severally liable for the fine (which will be applied to the consolidated turnover of the parent company).

Employment

Laws, contracts and permits

10. What are the main laws regulating employment relationships?

The main laws regulating the employment relationship are:

  • Labour Code (Law No. 53/2003), as amended and republished.
  • Law No. 319/2006 on safety and health at work.
  • Emergency Governmental Ordinance No. 56/2007 regarding the employment and secondment of foreign persons in Romania, as amended.
  • Law No. 62/2011 concerning the social dialogue, as republished.

Employment agreements with an international element (for example, where the employer is a foreign company or the employee is a foreign citizen) can be governed by the law chosen by the parties, if the choice of law does not give less protection than Romanian law (as the law of the country in which the employee habitually carries out his work, the employer’s place of business is situated, or the contract is most closely connected). Foreign nationals working in Romania are subject to Romanian employment laws, provided they are more favourable.

11. Is a written contract of employment required? If so, what main terms must be included in it? Do any implied terms and/or collective agreements apply to the employment relationship?

An employment contract must be concluded in writing, or will otherwise be null and void (also, failure to conclude a written employment contract could represent an administrative or criminal offence). An employment contract should also contain mandatory clauses imposed by the labour legislation, including the:

  • Identity of the parties.
  • Workplace.
  • Job position and description.
  • Evaluation criteria for the employee’s workplace performance, including:
    • salary;
    • payment date;
    • regular working timetable.

In addition, the employment contract must be registered in the electronic registry of employees which must be transmitted to the competent territorial labour authority. This is the employer’s responsibility and failure to register a contract represents a minor offence, triggering fines.

The relationship between employer and employee is governed by:

  • Employment legislation.
  • Collective labour agreements.
  • The internal regulations of the company.

In an employment contract, certain terms will always be implied by law or through the applicable collective labour contract, including:

  • Right to minimum national wage.
  • Limits on working hours.
  • Right to minimum pay for overtime or night work.
  • Minimum annual leave entitlement.
  • Bank holiday entitlement.

12. Do foreign employees require work permits and/or residency permits?

Foreign employees (that is, non-EU, non-EEA (European Economic Area) and non-Swiss Confederation third country nationals) require work visas, work authorisations and residence permits to enter, work and stay in Romania. The fees are the RON equivalent of the following:

  • Work authorisation: EUR200.
  • Residence permit: EUR150.
  • Work visa: EUR120.

These government fees apply per visa or per permit, and do not include related costs required by the supporting procedures, such as certified translations, public notary legalisation and other miscellaneous governmental costs. Depending on the volume of documentation required on a case by case basis, the total costs in each case (work visa, work permit and one residence permit) can exceed EUR600.

The adjudication deadline for a work authorisation, long-term D/DT visa (that is, a special type of visa granted by Romanian consular posts abroad for secondment arrangements which is valid for 90 days in a given six month term) and residence permit is 30 calendar days’ from the registration date of the local employer’s application. The residence permit must be issued to the foreign employees under the work authorisation within the same deadline.

European citizens, EEA and Swiss Confederation citizens only require the certificate of registration, which can be issued within a day

Termination and redundancy

13. Are employees entitled to management representation and/or to be consulted in relation to corporate transactions (such as redundancies and disposals)?

Employees cannot participate as members of the company’s management bodies (there are no works councils). They are entitled, however, to representation in relation to the management of the company where they are employed, by trade unions or employees’ elected representatives. Employees’ representatives are usually elected in companies with more than 20 employees where none of the company’s employees is a member of a trade union.

Employers must inform and consult trade unions or employees’ representatives in relation to:

  • Any decision that could materially affect employees’ rights and interests.
  • Collective redundancies.
  • Transfers of undertakings.
  • The company’s financial and economic condition.

14. How is the termination of individual employment contracts regulated?

An employment contract can be terminated by:

  • The effect of the law.
  • Resignation of the employee.
  • The parties’ agreement.
  • Dismissal.

The termination of the employment relationship by the effect of the law occurs only in some cases expressly set out in the Labour Code, independently of the will of the parties. Termination by mutual agreement and employee resignation are governed by very few rules.

Dismissal is very strictly regulated and can occur only in some specific situations expressly provided by the Labour Code, and must comply with particular procedural rules. Dismissals made without satisfying the legal requirements are void. Following a successful claim in court, an unfairly dismissed employee is entitled to an indemnity equal to the indexed, increased or updated salary or other entitlements the employee would have received for the period between the dismissal and the ruling of the court, and, at the employee’s express request, reinstatement in the position he was dismissed from.

The following are considered fair grounds for dismissal:

  • Gross or repeated misconduct.
  • Professional or medical inadequacy.
  • Detention in preventative custody for more than 30 days.
  • Re-organisation of the company, affecting the employee’s position (redundancy).

A minimum notice period of 20 business days must be granted in the case of dismissal for professional or medical inadequacy or redundancy. This is provided that a longer notice period has not been established by the individual or applicable collective labour contract or through other internal policies of the employer.

A severance payment is mandatory on dismissal for medical inadequacy or redundancy. This only applies if regulated by the individual, or applicable collective labour contract or any other internal policies of the employer.

In addition, prior to the dismissal for professional or medical inadequacy, the employer has an obligation to offer another vacant position that is on par with the employee’s professional qualifications/working capacity. If such a position is not available, the employer must contact the workforce agency to request its support for the dismissed employee.

15. Are redundancies and mass layoffs regulated?

Collective redundancies can only occur if the employer has more than 20 employees. A collective redundancy is the dismissal over 30 days, for one or more reasons not related to the employee’s person (that is, redundancy), of:

  • At least ten employees where the employer has more than 20 and fewer than 100 employees.
  • At least 10% of employees where the employer has at least 100 but fewer than 300 employees.
  • At least 30 employees where the employer has 300 employees or more.

In the case of collective redundancies, employers must:

  • Notify the trade unions or employees’ representatives and perform consultations.
  • Notify the local employment authority and workforce agency.
  • Implement fair selection criteria.
  • Observe notice periods.
  • Make redundancy severance payments (if applicable).
  • Give employees reasonable time off from work to search for a new job.
  • Not hire any new employees to fill the positions of the dismissed employees for 45 calendar days following the dismissal without offering re-employment to the dismissed employees first.

Tax

Taxes on employment

16. In what circumstances is an employee taxed in your jurisdiction and what criteria are used?

Irrespective of an individual’s employment status, an individual is considered to be a Romanian tax resident if at least one of the following criteria is met:

  • The individual is domiciled in Romania.
  • The centre of his vital interests is in Romania.
  • He is present in Romania for more than 183 days, in any 12 consecutive months, ending in the calendar year concerned.
  • He is a Romanian citizen working abroad as an official or employee of the Romanian state.

Individuals meeting the second or third tax residency criteria above are subject to taxation in Romania for their worldwide income, starting with 1 January of the calendar year following the one in which they became Romanian tax residents.

17. What income tax and social security contributions must be paid by the employee and the employer during the employment relationship?

Tax resident employees

In general, the tax rates for tax resident employees are as follows:

  • Healthcare contribution: 5.5%.
  • Social security contribution (pension contribution): 10.5%.
  • Unemployment contribution: 0.5%.
  • Income tax: 16%.

Non-tax resident employees

Foreign nationals employed by a Romanian employer generally pay the same taxes and contributions as tax resident employees (see above, Tax resident employees). There are certain contribution exemptions available for EU citizens, providing certain conditions are met.

Employers

Employers are liable to pay the following contributions:

  • Social security contribution: 20.8%, 25.8% or 30.8% depending on the working conditions (for example, 20.8% for normal working conditions).
  • Healthcare contribution: 5.2%.
  • Contribution for indemnities and sick leave allowance: 0.85%.
  • Contribution to the fund for guaranteeing salary liabilities: 0.25%.
  • Unemployment contribution: 0.5%.
  • Contribution for diseases and work-related accidents: 0.15% to 0.85% (depending on the employer’s main object of activity).

Business vehicles

18. When is a business vehicle subject to tax in your jurisdiction?

Tax resident business

The following are deemed tax resident:

  • Any Romanian legal person (any legal person incorporated in Romania).
  • Any foreign legal person having their place of effective management in Romania.
  • Any legal person incorporated in accordance with the European legislation and having its headquarters in Romania.

Non-tax resident business

Non-tax residents deriving certain income from Romania are generally subject to a 16% withholding tax on incomes (such as interests, dividends, royalties, commissions, services) irrespective of the place where they are rendered. The domestic tax rate of 16% can be reduced or even eliminated by claiming either the provisions of a treaty for the avoidance of double taxation, or the provisions of EU Directives transposed into Romanian tax legislation (for example, the Parent Subsidiary Directive, Interest and Royalties Directive) subject to observing certain compliance requirements.

However, a withholding tax rate of 50% applies on the income obtained from Romania by non-residents, that is paid to states that Romania has not entered into a legal instrument where the exchange of information can be carried out, to the extent the underlying transactions are artificial.

19. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction (including tax rates)?

Tax resident business vehicles are generally liable to pay the following main taxes:

  • Corporate income tax: 16% of the taxable profits (that is, accounting profits adjusted by non-deductible expenses and non-taxable incomes). This payment is typically due on a quarterly basis.
  • VAT: 24% (however, reduced rates of 9% or 5% apply for certain supplies). The payment is typically due on a monthly basis (certain factors may also permit quarterly payments).
  • Salary-related taxes and contributions (see Question 17, Employers). This payment is on a monthly basis (or quarterly, for a limited category of taxpayers).
  • Local taxes (for example, tax on land and buildings, or vehicle tax). This is payable on a quarterly basis.
  • A new tax on special constructions (1.5% of the book value) will be enacted on 1 January, 2014. It will be payable every half a year.
  • Excises.

Dividends, interest and IP royalties

20. How are the following taxed:

  • Dividends paid to foreign corporate shareholders?
  • Dividends received from foreign companies?
  • Interest paid to foreign corporate shareholders?
  • Intellectual property (IP) royalties paid to foreign corporate shareholders?

Dividends paid

Dividend income is taxed as follows:

  • 0% for corporate shareholders residing in the EEA (that is, the EU plus Iceland, Liechtenstein and Norway) if certain conditions are met. However, as of 1 January 2014, citizens of Iceland, Liechtenstein and Norway will no longer benefit from this exemption.
  • 16% in all other cases. This can be reduced or even eliminated by a treaty for the avoidance of double taxation.

Dividends received

Dividend income received from an EU subsidiary will be exempt from corporate income tax if the Romanian company has held at least 10% of the share capital of the distributing company for an uninterrupted period of at least two years, ending at the dividend distribution date. Starting on 1 January 2014, the exemption will apply to dividends received from Romania and foreign corporate income taxpayers located in jurisdictions that have a treaty with Romania for the avoidance of double taxation. This is on the condition that there is 10% holding for at least a year prior to the dividend distribution date.

Other dividend income is included in the general taxable basis and is subject to 16% corporate income tax. Under certain circumstances a tax credit can be obtained in Romania.

Interest paid

Interest income is taxed as follows:

  • 0% for corporate shareholders residing in the EEA, if the beneficiary of interest income has held a minimum of 25% of the share capital of the Romanian company paying the interest income for an uninterrupted period of at least two years, ending at the date of interest payment. Starting on 1 January 2014, citizens of Iceland, Liechtenstein and Norway will no longer benefit from this exemption. Whilst EU beneficiaries will be required to have a minimum holding of 25% for at least one year prior to the payment.
  • 16% in all other cases. This can be reduced or eliminated by claiming the provisions of the treaty for the avoidance of double taxation.

IP royalties paid

This is taxed in a similar way to interest paid to foreign shareholders (see above, Interest paid).

Groups, affiliates and related parties

21. Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)?

Debt/equity ratio

Interest expenses related to long-term loans are deductible only if the debt-to-equity ratio is a maximum of 3:1. For a higher or negative ratio, interest expenses are non-deductible for corporate income tax purposes and can be carried forward until they are fully deductible under the same conditions. The net foreign exchange loss is treated as an interest expense and is subject to the debt-to-equity ratio limitation.

Interest rate cap

Interest expenses are deductible within a specific cap (6% starting from 2010 for foreign currency loans). The interest rate cap adjustment is to be made before the debt-to-equity limitation.

Romanian thin capitalisation rules apply only to loans obtained from entities other than banks and financial institutions.

22. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction (controlled foreign company rules)?

There are no controlled foreign company rules.

23. Are there any transfer pricing rules?

The transfer pricing rules are largely similar to the regulations applied by developed countries, making specific references to the Organisation for Economic Co-operation and Development (OECD) doctrine and following the EU code of conduct on transfer pricing documentation.

Transactions between related parties should observe the arm’s-length principle. Generally, parties are affiliated if one entity, either directly or indirectly, holds or controls a minimum of 25% of another entity’s shares or voting rights.

Methods used to fairly determine the market value for transactions between related parties include:

  • Traditional transfer pricing methods (such as comparable uncontrolled price, cost plus and resale price).
  • Any other methods in line with the OECD Transfer Pricing Guidelines (such as transactional net margin and profit split methods).

Customs duties

24. How are imports and exports taxed?

Imports and exports are taxed in line with EU customs regulations.

Double tax treaties

25. Is there a wide network of double tax treaties?

Romania has an extensive network of double tax treaties (currently more than 80). For foreign investment purposes, the most favourable treaties are those concluded with The Netherlands and Cyprus, but there are also several other treaties providing for certain favourable provisions. However, the double tax treaty provisions can be claimed only if a formal condition is met, namely, if the non-resident (generally, the beneficial owner of the income received from Romania) makes a valid tax residency certificate available.

Competition

26. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law?

Competition authority

The Competition Council is the Romanian competition authority. It is an autonomous administrative authority aimed at protecting and stimulating competition, to ensure a normal competitive environment.

Restrictive agreements and practices

Competition Law No. 21/1996, last amended in July 2011, prohibits:

  • Agreements, decisions or concerted practices having as their object or effect the prevention, restriction or distortion of competition in the Romanian market or a part of it (especially those aimed at price fixing, output limitation or control of distribution, market sharing and bid rigging).
  • Abuses of a dominant position on the Romanian market or a substantial part of it (such as by imposing unfair prices, limiting output, applying dissimilar conditions to equivalent transactions, predatory and excessive pricing and exploiting economic dependency) (see Question 26, Unilateral conduct).

Certain restrictive practices are allowed if they fall within the scope of block exemptions or if they fulfil the individual exemption conditions (which the respective parties self-assess).

As an EU member state, both the EU (through Articles 101 and 102 of the TFEU) and national regulatory regimes apply.

The competition law applies to foreign entities provided the anti-competitive effects of their behaviour occur on the Romanian market.

Individuals that participate with fraudulent intent and in a decisive way in the conception, organisation or performance of cartel behaviour or in agreements that restrict competition can be punished by:

  • Imprisonment from six months to three years; or
  • Criminal fine; and
  • Prohibition of certain rights.

The sanction for companies is administrative fines of up to 10% of its annual turnover.

Unilateral conduct

Unilateral behaviour of an undertaking in a dominant position can be caught by the competition law. While holding a dominant position is not prohibited, the abuse of such a position (such as imposing unfair prices, limiting output, applying dissimilar conditions to equivalent transactions, predatory and excessive pricing, and exploiting economic dependency) is prohibited.

In addition, business-to-business unfair competition practices (such as the infringement of business secrets or injury of reputation) are prohibited, irrespective of the market power of the undertakings involved.

27. Are mergers and acquisitions subject to merger control?

Mergers or acquisitions between undertakings whose turnover in the preceding year is above certain thresholds are subject to merger control, based on the SIEC (significant impediment of effective competition) test if both:

  • The combined aggregate worldwide turnover of all the undertakings concerned is more than EUR10 million.
  • The aggregate turnover in Romania of each of at least two undertakings concerned is more than EUR4 million.

These rules equally apply to foreign-to-foreign mergers or acquisitions provided the (foreign) undertakings concerned fulfil the turnover thresholds in Romania.

Intellectual property

28. Outline the main IP rights in your jurisdiction.

Patents

Definition and legal requirements. A patent can be granted for any invention with a product or a process as its object, in all technological fields, provided it:

  • Is new.
  • Involves an inventive step.
  • Is susceptible to industrial application.

The patent holder has an exclusive right to exploit an invention for the duration of the patent. Unauthorised production, use, marketing, sale or import of the patented product, the patented process or the product directly obtained through the patented process is prohibited.

Registration. Patent applications are filed with the State Office for Inventions and Trademarks (SOIT). The SOIT’s website (www.osim.ro) provides guidance on the application procedure.

Enforcement and remedies. In principle, titleholders and licensees can enforce a patent by filing administrative, civil and/or criminal actions. For example, they can request that the court orders, at the infringer’s expense, the seizure and destruction of both the:

  • Infringing goods.
  • Equipment, instruments and materials used for manufacture of the infringing goods.

In addition, the infringer may be compelled to disseminate information on the court’s decision, for example by displaying or publishing the decision. Additional publicity measures may be required depending on the circumstances of the case (for example, publishing a large advertisement).

Titleholders and licensees can also file an application with the National Customs Authority for a customs action. Based on this application, the customs authorities can retain the goods likely to infringe the relevant patents and/or suspend the clearance operations for these goods.

Length of protection. This is 20 years from the date of filing the patent application, provided the annuity fees are paid and it is not renewable. If supplementary protection certificates for plant and pharmaceutical products were granted by the SOIT, protection for basic patents is extended by up to five years.

Trade marks

Definition and legal requirements. The trade mark represents a sign capable of graphical representation serving to distinguish the goods or services of an entity from those of other entities. The trade mark holder has the right to:

  • Use the trade mark during the course of its business.
  • Prevent others from using the trade mark.
  • Prevent others from registering a similar or identical trade mark.
  • Sell or license the trade mark.

Protection. See above, Patents, Registration.

There is no protection for unregistered trade marks. Protection is granted through registration. There is an exception to this rule for notorious trade marks.

Enforcement and remedies. See above, Patents, Enforcement and remedies.

Length of protection and renewability. This is indefinite, subject to renewal every ten years and payment of fees.

Registered designs

Definition. Designs or models that are new and have individual character can be registered. The registered design/model holder has an exclusive right to use it and to prevent any third party from using it without its consent. These can also be eligible for protection by copyright, if the requirements of the Romanian copyright legislation are met (see below, Copyright).

Registration. See above, Patents, Registration.

Enforcement and remedies. See above, Patents, Enforcement and remedies.

Length of protection and renewability. This is a maximum of 25 years, if renewed.

Unregistered designs

Definition and legal requirements. Community designs that are new and have individual character are eligible. These can also be eligible for protection by copyright, if the requirements of the Romanian copyright legislation are met (see below, Copyright). The owner of an unregistered community design has the exclusive right to use it and to prevent any third party without his consent from using it, only if the contested use results from copying the protected design in certain conditions.

Enforcement and remedies. Titleholders and licensees can enforce designs, by filing civil and/or criminal actions.

Length of protection. Three years from the date it was first made available to the public within the Community.

Copyright

Definition and legal requirements. Original literary, artistic or scientific works, regardless of the manner of creation, manner or form of expression and independent of their value and destination are protected by copyright. The copyright holder has the right to authorise or prohibit the copyrighted work’s:

  • Reproduction.
  • Distribution.
  • Renting.
  • Import in order to market.
  • Lending.
  • Public communication.
  • Radio broadcasting.
  • Re-transmission through cable.
  • Making of derivative works.

Protection. The right is automatically protected on creation of the original work.

Enforcement and remedies. Infringing the rights triggers civil and/or criminal liability.

Length of protection and renewability. There is unlimited protection for moral rights. Economic-related rights benefit from protection during the lifetime of the author and for 70 years after death.

Other

Other IP rights include confidential information and geographical indications.

Confidential information is a contractual rights, with enforcement and length of protection being subject to contract.

A geographical indication is the name identifying a product that originates from a country, region or locality of a state, in those cases where a quality, reputation or other determining characteristics can be essentially attributed to this geographical indication. The geographical indication may be used only by the persons that manufacture or market the products for which the geographical indication has been registered. The right is protected by registration or through international conventions concluded by Romania. Infringing the rights triggers civil and/or criminal liability.

Protection is indefinite, subject to renewal every ten years and payment of fees.

Marketing agreements

29. Are marketing agreements regulated?

Agency

Agents can negotiate and conclude business arrangements for, or in the name of another, undertaking. Agents are entitled to minimum termination notice periods and compensation for termination of the agreement. Agency contracts are regulated by the Civil Code of Romania that entered into force on 1 October 2011.

Distribution

There are no specific rules on distribution, except for restrictions under competition regulations, where they represent vertical agreements.

Franchising

Franchise agreements are regulated under Government Ordinance No. 52/1997. The franchisor must provide potential franchisees with specific disclosures, while the franchisee must provide the franchisor with certain information regarding its financial situation.

E-commerce

30. Are there any laws regulating e-commerce (such as electronic signatures and distance selling)?

Law No. 365/2002 on e-commerce sets out the legal framework for e-commerce. The law applies to service providers with registered offices in Romania.

Electronic signatures

Law No. 455/2001 on electronic signatures sets out the legal framework for electronic signatures and documents in electronic format, and the conditions for the supply of electronic signature certification services. Documents with a certified extended electronic signature attached have the same legal force as signed-by-hand documents.

Distance selling

Government Ordinance No.130/2000 regarding consumers’ protection when concluding and executing distance contracts sets out the legal framework for the protection of consumers that conclude distance contracts, imposing a number of mandatory obligations on the suppliers. A further supplementary Government Ordinance No. 85/2004 has been issued relating to consumer protection when concluding and executing distance contracts relating to financial services.

There are several industries that are specifically regulated in relation to executing distance contracts (overriding Government Ordinance No.130/2000). For example, in the field of electronic communications, Government Emergency Ordinance No.111/2011 regarding electronic communications regulates distance contracts.

Advertising

31. Outline the regulation of advertising in your jurisdiction.

Advertising is regulated by:

  • Law no. 148/2000 on advertising.
  • Law no. 158/2008 on misleading and comparative advertising.

There are specific provisions regarding advertising in certain fields (for example, audiovisual and pharmaceutical).

Data protection

32. Are there specific statutory data protection laws? If not, are there laws providing equivalent protection?

Data protection is regulated by Law No. 677/2001 on the protection of individuals regarding the processing and free movement of personal data (implementing the Data Protection Directive 95/46/EC), as well as by secondary legislation, such as:

  • Decision No. 28/2007 on the transfers of personal data to other countries.
  • Decisions No. 90/2006 and 100/2007 on the determination of cases where the filing of a processing notification is not required.
  • Decision No. 11/2009 on the determination of the categories of processing operations that entail special risks for individuals’ rights and liberties.

This framework sets out various obligations about processing data, including information and confidentiality/security-related obligations. Individuals should be provided with information covering, among others, their legal right to:

  • Access.
  • Intervention.
  • Object to the processing.

A notification with the National Authority for the Supervision of Personal Data Processing is generally required for any processing and/or transfer of data abroad.

As a rule, processing data is conditional on obtaining the individuals’ express and unequivocal consent, although the law also recognises instances when this consent is not required or is implied. Individuals’ consent is not required:

  • When processing is needed to enter into a contract with the individual.
  • For observing a controller’s legal obligation.
  • For achieving a controller’s legitimate interest (provided the interests and fundamental rights and liberties of the individual whose data is being processed are not prejudiced).

Product liability

33. How is product liability and product safety regulated?

Product liability is mainly regulated by:

  • Government Emergency Ordinance No. 21/1992 regarding consumer protection.
  • Law No. 449/2003 regarding the sale of goods and associated guarantees.
  • Law No. 245/2004 regarding the general safety of products.
  • Law No. 240/2004 regarding liability for defective products.

Under this legislation, manufacturers, importers and, under certain circumstances, distributors and sellers, are liable for defective products or products that do not conform to the sale purchase agreement. Any contractual clause excluding or limiting consumers’ legal rights are null and void. Special rules apply for certain categories of products.

Main business organisations

National Trade Registry Office (Oficiul National al Registrului Comertului) (ONRC)

W www.onrc.ro

Main activities. This is organised in local Trade Registry Offices at county level. Each Trade Registry Office registers and publicises corporate changes regarding companies, including their establishment and winding-up, registers the balance sheets and financial statements of companies and records information on the corporate status of companies.

National Agency of Cadastre and Land Registration (Agentia Nationala de Cadastru si Publicitate Imobiliara) (ANCPI)

W www.ancpi.ro

Main activities. ANCPI is the sole authority in the field of cadastre, real estate advertising, geodesy and cartography. The Offices of Cadastre and Land Registration (OCPI) are subordinated to ANCPI.

Territorial Labour Inspectorates (Inspectorate Teritoriale de Munca)

W www.inspectmun.ro/site

Main activities. These are organised in each county and function under the authority of the Ministry of Labour, Family, Social Protection and the Elderly. They regulate the unified application of labour legislation, labour relations, safety and security at the work place, for all individuals and legal entities, in the public and private sectors.

Ministry of Public Finance (Ministerul Finantelor Publice)

W www.mfinante.ro/acasa.html?method=inceput&pagina=acasa

Main activities. This applies the strategy and governance programme in the public finance sector. It develops and implements fiscal and budgetary policies in accordance with the other socio-economic policies. It also handles the state’s incomes and the financial administration of EU funds, and ensures the compliance of fiscal legislation.

Online resources

National Supervisory Authority for Personal Data Processing (Autoritatea Nationala de Supraveghere a Prelucrarii Datelor cu Caracter Personal) (DPA)

W www.dataprotection.ro

Description. The English section of this official website (www.dataprotection.ro/index.jsp?page=home&lang=en) provides translated versions of the local and European normative acts. However, the information may not be up to date.

National Authority for Management and Regulation in Communications (Autoritatea Naţională pentru Administrare şi Reglementare în Comunicaţii) (ANCOM)

W www.ancom.org.ro

Description. The legislation section of this official website provides the Romanian version of the Government Emergency Ordinance No. 111/2011 regarding electronic communications. An English translation is not yet available in their English section.

State Office for Inventions and Trademarks (Oficiul de Stat pentru Inventii si Marci)

W www.osim.ro

Description. The English section of the State Office for Inventions and Trademarks’ website provides guidelines regarding the filing of patents, trade marks and designs. It also provides English translations of relevant national legal provisions in the field of patents, trade marks, designs, utility models, and topographies of semiconductor products. Some of the information may not be up to date and not all the information available on the Romanian language section of the website is available in English.

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