Romania provides investors with a modern and flexible legal framework for carrying out economic activities, in accordance with EU legislation and adapted to the local business environment. The “Forms of Business Organisation” chapter from the KPMG report on investment in Romania in 2024 highlights the main legal forms through which a business can be organised. One of the other main highlights are the recent legislative evolutions which greatly simplified procedures for establishing and operating companies.
The general legal framework
The activity of companies is primarily regulated by the Company Law No. 31/1990 which is being constantly republished and modified. According to this law, natural and legal persons can establish commercial companies that acquire legal personality by signing up at the Trade Register Office. The recent reforms, more specifically Law No. 265/2022 and Law No. 222/2023 reduced necessary documentation, eliminated excessive formalities and facilitated the mobility of companies in the EU.
Forms of commercial companies
Romanian law provides for five main forms of companies, the most common form being the Limited Liability Company (SRL). Preferred by small and medium sized businesses and investors, the liability of the partners is limited to their contribution to the share capital, and the company can be established by one to fifty associates, including a sole associate. Unlimited liability of partners is only incurred in exceptional situations, such as fraud or abuse of legal personality. As a result, increased flexibility and cut back capital requirements make the SRL the dominant business form in Romania.
On the other hand, the Joint Stock Company (SA) is mainly destined for large businesses and complex investment projects. This form requires a social capital of at least 90 000 RON and at least two shareholders. The capital is split into shares that are openly negotiable. This form is subject to stricter corporate governance and financial audit roles.
The lesser used forms are the General Partnerships (SNC), in which associates are jointly and individually liable for the company’s obligations, the Limited Partnerships (SCS), which combines associates with limited and unlimited liability and the Limited Partnerships by Sales (SCA), a hybrid between a joint stock company and a partnership.
Company formation and administration
Companies are established by articles of association, and the notarial certification is mandatory only in specific situations, such as the contribution of real estate to the social capital or the formation of other companies through public subscription. The recent reforms eliminated the obligation of a notarial certifications for numerous declarations, allowing them to be signed under private signature, which substantially reduces the costs and duration of the establishment process.
Every company is administered by one or more directors, which can be natural or legal persons. Restrictions regarding citizenship do not exist, yet the legislation prohibits the holding of these positions by persons with a criminal history or negative entries on their tax record. The general meeting of shareholders and associates represents the main decision-making body, with powers such as approving financial statements, distributing profits, appointing and dismissing administrators, and amending the articles of the association.
Other forms of activity
In addition to commercial companies, economic activity in Romania can also be conducted by authorised individuals, as well as through sole proprietorships or family businesses, all of which are characterised by unlimited liability. Foreign investors can operate through branch offices (without legal personality) or subsidiaries (distinct Romanian entities). There are also representative offices which are limited to promotional activities, as well as joint ventures or economic interest groups designed to facilitate economic cooperation.
Conclusions
The diversity of business organisation forms, the flexibility of the legal framework and alignment with European standards make Romania an attractive jurisdiction for investments. Simplifying incorporation procedures, investor protection and the possibilities of cross-border reorganisation further strengthen Romania’s position as a favourable business environment in Central and Eastern Europe.
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