Several types of companies may be used as corporate vehicles in Romania. Joint stock companies (societate pe actiuni or SA) and limited liability companies (societate cu raspundere limitata or SRL) are the most commonly used given their flexible incorporation procedure and limitation of the shareholders' liability.

Joint stock company (JSC)

It is a legal entity. A JSC may be managed by:

• One or more directors (always an odd number) (forming a board of directors), with the possibility of management delegation, in the 1-tier system; directors are appointed by the general meeting of shareholders, while managers are appointed by the board of directors; or
• An executive board and a supervisory board in the 2-tier system; members of the executive board are appointed by the supervisory board; members of the supervisory board are appointed by the general meeting of shareholders.

Generally, if a JSC is managed in the 1-tier system, the sole director/the president of the board of directors / the general manager represent(s) the company. Under the 2-tier system, representation power is exercised by members of the executive board.

Special provisions apply in case of public listed companies.

Limited liability company (LLC)

It is a legal entity.

An LLC may be managed by 1 or more directors, appointed by the general meeting of shareholders.

An LLC is represented by its directors.

Joint stock company (JSC)

• Unlimited number of shareholders; minimum number of shareholders is 2

• Personal liability of shareholders is limited to their contribution to the share capital; however, in certain situations, their liability may be extended (eg, piercing the corporate veil)

• A JSC is registered by default by the Trade Registry as a micro-enterprise and will automatically switch to the corporate income tax regime (ie, taxing the profits) after the level of taxable revenues reaches the threshold of EUR250,000

• A JSC may opt to apply the corporate income tax regime since incorporation provided that it fulfills certain conditions in terms of value of the share capital and number of employees

• A fiscal registration number is allocated by the Trade Registry at the moment JSC is incorporated; other types of fiscal registrations (eg, for VAT purposes, for social security contributions) should be considered depending on the economic activity to be performed

• The fiscal year is generally a calendar year with the possibility to change it with another period, but only if the JSC is subject to corporate income tax regime

• Typical charter documents:
  • Articles of association

  • Resolutions of the competent corporate body (eg, general meeting of shareholders / board of directors) of each founder legal entity approving the incorporation of the JSC

  • Shareholders' register
• Shares can be either common or preferred

Limited liability company (LLC)

• Up to 50 shareholders; may be also incorporated by a sole shareholder
• Personal liability of shareholders is limited to their contribution to the share capital; however, in certain situations, their liability may be extended (eg, piercing the corporate veil)

• An LLC is registered by default by the Trade Registry as micro enterprise and will automatically switch to the corporate income tax regime (ie, taxing the profits) after the level of taxable revenues reaches the threshold of EUR250,000.

• An LLC may opt to apply the corporate income tax regime since incorporation provided that it fulfills certain conditions in terms of value of share capital and number of employees.
• A fiscal registration number is allocated by the Trade Registry at the moment LLC is incorporated; other
• types of fiscal registrations (eg, for VAT purposes, social security contributions) should be considered depending on the economic activity to be performed
• The fiscal year is generally the calendar year with the possibility to change it with another period, but only if the LLC is subject to the corporate income tax regime
• Typical charter documents include:
  • Articles of association

  • Resolutions of the competent corporate body (eg, general meeting of shareholders / board of directors) of each founder legal entity approving the incorporation of the LLC

  • Shareholders' register

• Only 1 class of shares is allowed

Joint stock company (JSC)

• Minimum share capital of RON90,000
• Minimum nominal value per share of RON0.1

Limited liability company (LLC)

• Minimum share capital – no minimum value
• Minimum nominal value per share – no minimum value

Shareholders of a JSC or an LLC are generally not liable for the debts of the company; their liability is limited to their contribution to the share capital of the company; however, in certain situations, their liability may be extended (eg, piercing the corporate veil).

Similar tax and accounting reporting requirements are applicable for both JSCs and LLCs established in Romania. Further to the incorporation, both JSCs and LLCs are in principle subject to the following taxes:

• The micro-companies tax: JSCs and LLCs have the option to pay a micro-companies tax of 1 or 3 percent (subject to meeting specific criteria, including the obligation to have at least 1 employee, register a level of turnover below EUR0250,000 and no shareholder owning at least 25 percent of the shares in more than one company subject to the micro-companies tax – 1 percent is for entities that have an annual turnover of no more than EUR60,000, and 3 percent for entities that exceed this threshold or are engaged in activities under specific NACE codes, related to software development and the hospitality industry); if the annual turnover exceeds EUR250,000, JSCs and LLCs are subject to 16 percent profit tax, applied on the fiscal result determined starting from the accounting profits adjusted with fiscal items.

• Profit tax: the default tax regime for local entities. Under this regime,  JSCs and LLCs are subject to 16 percent profit tax, applied on the fiscal result determined starting from the accounting profits adjusted with fiscal items (non-taxable income and/or non-deductible expenses, as the case may be).

• Value added tax (VAT): the standard VAT rate in Romania is currently 19 percent. The reduced VAT rates are of 9 percent (eg, for medicines, food and beverages - except alcohol, restaurant and catering services, supplies of social housing including related land, in certain conditions, among others) or 5 percent (eg, for school manuals, books, newspapers and magazines, hotel accommodation and similar accommodation). Registration for VAT purposes is required if the turnover resulting from the economic activity exceeds the threshold of RON300,000 in a calendar year

• Local tax: due by companies for assets in their patrimony (ie, for buildings, land and vehicles owned) or taxes on publicity and advertising and outdoor advertising
• Withholding tax (WHT): WHT is due on cross-border payment of dividends, interest, royalties, commissions and services. As per the domestic tax legislation, income derived by non-residents from Romania is, as a general rule, subject to 16-percent WHT in Romania. However, such rates can be reduced (even to nil) under the provisions of the EU Directives or double tax treaties entered into by Romania with different countries.

• Salary and mandatory social security charges: the existence of employees at the level of the JSC and LLC triggers the obligation to pay salary tax and mandatory social security contributions. A flat income tax rate of 10 percent applies to the income obtained by employees. Moreover, both the employer and the employee are required to contribute to the social security system (ie, 35 percent cumulated contribution to pension and health funds due by employees working in normal conditions and labor insurance contribution of 2.25 percent due by the employer).

• Customs duties: applicable if JSC or LLC performs imports of goods from outside the EU to Romania (certain exemptions may apply though).
• Accounting requirements: both JSCs and LLCs are required to organize and manage its own accounts based on the Romanian accounting rules.

Certain documents, such as articles of association, incorporation resolution, statements of shareholder(s) and director(s), must be submitted with the competent Trade Registry.

JSCs and LLCs are widely used, as opposed to other types of companies.

JSCs and LLCs are required to hold annual meetings of shareholders to vote on the approval of annual financial statements. Other meetings of shareholders are held when required by law or the articles of association of the JSC / LLC or as deemed necessary by the directors. In the case of a JSC, general meeting of shareholders can either be ordinary or extraordinary depending on the matter on the agenda.

Joint stock company (JSC)

The board of directors or supervisory board is required to meet every 3 months.

Limited liability company (LLC)

Not specified by law. Directors are not required by law to form a board of directors.

The following tax returns are to be submitted both by JSC and LLC:

• If the company is subject to corporate income tax regime : (i) Quarterly profit tax returns (ie, for the quarters I, II and III) by the 25th of the first month following the quarter for which the profit tax liability is computed and (ii) annual profit tax return no later than March 25 of the year following the one for which the profits tax is computed if the company is liable for profit tax, provided that the fiscal year coincides with the calendar year. Other corporate income tax compliance regimes apply for companies activating in certain domains (eg, financial industry).

• If the company is subject to micro-enterprise tax regime:  quarterly micro-company returns by the 25th of the first month following the quarter for which the micro-company liability is computed.

• VAT returns (ie, form 300, EC-Sales and Acquisitions List – form 390, Local acquisition/supply of goods/services statement – form 394): By the 25th day of the month following the end of the fiscal period.

• Intrastate statements: On a monthly basis for intra-community movements of goods, starting with the month in which the aggregate value of goods acquired/sold from/to other EU member states reaches the thresholds provided by the Romanian legislation (RON900,000 for both acquisitions and supplies).

• Payroll statements: On a monthly basis, no later than 25th of the month following the one to which the liabilities are computed. Tax returns for salary tax and related social security contributions (form 112) should be submitted by electronic means.

• Financial statements: Annual and final financial statements within 150 days from the end of the financial year; on a bi-annual basis (if specific conditions are fulfilled) and on a quarterly basis (if and when interim distribution of dividends is performed during the year).

• Other tax statements (eg, for local taxes, environmental fund contributions), depending on the specificity of the activity performed by the JSC and LLC.

 Joint stock company (JSC) 

Initial registration is required, as well as annual filings. All resolutions of the general meetings of shareholders are required to be filed with the Trade Registry.

Limited liability company (LLC)

Initial registration is required, as well as annual filings. Only certain resolutions of the general meetings of shareholders are required to be filed with the Trade Registry.

Joint stock company (JSC) 

No need to change as business expands. However, secondary offices may need to be opened.

Limited liability company (LLC)

No need to change as business expands. However, secondary offices may need to be opened. If the number of shareholders becomes higher than 50, the LLC must convert to a JSC. Moreover, irrespective of which type of company we refer to, any business expansion which refers to the establishment of a new business unit, the increase of the production capacity of an existing business unit or the diversification of the production of an existing business unit may amount to a “new investment,” as such is defined in the FDI legislation and, if the relevant criteria are met, may require prior authorization from the Commission for the Assessment of Foreign Direct Investments.

File dissolution documents with the appropriate Trade Registry.

The annual financial statements of the company must be approved by the general meeting of shareholders.

Joint stock company (JSC) 

Directors and members of the supervisory board may be either legal entities or individuals. Managers and members of the executive board must be individuals.

Limited liability company (LLC)

Directors may be either legal entities or individuals.

Not applicable for this jurisdiction.

Not applicable for this jurisdiction.

The company must have registered headquarters. Relevant documents attesting the right to use the headquarters are required to be submitted with the Trade Registry.

Not applicable for this jurisdiction.

Not applicable for this jurisdiction.

In certain circumstances, company can use a third-party service provider for headquarters.

Not applicable for this jurisdiction.

Not applicable for this jurisdiction. Nevertheless, please note that the FDI authorization for the establishment of a new company in Romania, as well as for the investments in existing companies which allow the investor to effectively participate in the management or control of such companies, is required if the legal criteria (regarding the field of activity of the investment and the amount of the investment) are fulfilled.

Nominee shareholders or directors are not used.

Shareholders: The general meeting of shareholders has the competence to decide on a wide range of matters provided by law and / or by the articles of association. For example, it approves the annual financial statements, the annual budget, appoints the directors and the members of the supervisory board, approves changes to the articles of association or the dissolution of the company. Some of its competences may be delegated to the board of directors / executive board.

Directors: Directors' authority (eg, to manage the company, to represent the company towards third parties, to draft the annual report accompanying the annual/quarterly financial statements of the company and business plan) are designed in a broad manner in order to allow for a flexible management of the company. All such competences must be exercised within the limits set forth by the applicable legislation, the articles of association and the shareholders' resolutions.

Joint stock company (JSC)

Identities of shareholders and directors are publicly disclosed at the Trade Registry. Since there is no obligation for documents regarding transfer of shares to be submitted with the Trade Registry, the information available at the Trade Registry may not be entirely accurate with regards to the company's shareholding structure.

Limited liability company (LLC)

Identities of shareholders and directors are publicly disclosed at the Trade Registry.

Joint stock company (JSC)

Shareholders:

• Minimum 2; no maximum limit

Directors:

• If the company is managed in 1-tier system: minimum 1 (or minimum 3, if the annual financial statements of the JSC are mandatorily subject to statutory audit); no maximum limit, but it should always be an odd number
• If the company is managed in 2-tier system:
  • Executive board: minimum 1 (or minimum 3, if the annual financial statements of the JSC are mandatorily subject to statutory audit); no maximum limit, but it should always be an odd number
  • Supervisory board: minimum 3; maximum 11

Limited liability company (LLC)

Shareholders:

• Minimum 1; maximum 50

Directors:

• Minimum 1; no maximum limit

Joint stock company (JSC)

• Minimum 2

Limited liability company (LLC)

• Minimum 1

Joint stock company (JSC)

Members of the board of directors/supervisory board may be revoked by the general meeting of shareholders; managers may be revoked by the board of directors; members of the executive board may be revoked by the supervisory board.

Limited liability company (LLC)

Directors may be revoked by the general meeting of shareholders.

Joint stock company (JSC)

At least 3 censors and an alternate (odd number required).

If the JSC is mandatorily required by law to have its annual financial statements audited (upon the fulfillment of certain conditions or if the JSC is managed under the 2-tier system), the appointment of financial auditors becomes mandatory.

If the JSC has its annual financial statements audited (either as required by law or as opted for by its general meeting of shareholders), the JSC may decide not to appoint censors, but shall organize an internal audit. 

Limited liability company (LLC)

Appointment of 1 or more censors is mandatory if the LLC has more than 15 shareholders.

If the LLC is mandatorily required by law to have its annual financial statements audited (upon the fulfillment of certain conditions), the appointment of financial auditors becomes mandatory.

If the LLC has its annual financial statements audited (either as required by law or as opted for by its general meeting of shareholders), the LLC may decide not to appoint censors, but shall organize an internal audit.

Joint stock company (JSC)

Board of directors/supervisory board shall meet every 3 months.

Limited liability company (LLC)

Directors are not required by law to form a board of directors.

Joint stock company (JSC)

Quorum requirements for shareholders' meeting

• Ordinary general meeting of shareholders

• • Majority of the expressed votes, at the first convening. Higher majority requirements may be introduced in the articles of association.

  • Majority of the expressed votes, at the second convening. Higher majority requirements may not be introduced in the articles of association.

• Extraordinary general meeting of shareholders

• • Majority of votes of the present/represented shareholders, at both 1st and 2nd convening

  • Certain decisions require a higher voting threshold (eg, at least 2/3 of the voting rights held by the present/ represented shareholders in case of change of the main business object or legal form or the increase/decrease of the share capital, merger, spin-off or dissolution).

  • Higher majority requirements may be introduced in the articles of association.

Voting requirements of shareholders' meeting

• Ordinary general meeting of shareholders:
  • Majority of the expressed votes at both 1st and 2nd convening
• Extraordinary general meeting of shareholders
  • Majority of votes of present/represented shareholders at both 1st and 2nd convening
  • Certain decisions require a higher voting threshold (eg, at least 2/3 of the voting rights in case of change of the main business object or the increase/decrease of the share capital)

In certain cases, articles of association may deviate from quorum and voting legal requirements.

• Quorum requirements for the board of directors / executive board / supervisory board meeting
  
  • At least 1/2 of the total number of members, unless the articles of association provide for a higher number
• Voting requirements for the board of directors / executive board / supervisory board meeting
  
  • Majority of the present members, except for decisions regarding the appointment or the revocation of the president of such bodies for which the majority of the total members is required. 

Limited liability company (LLC)

Quorum and voting requirements of shareholders' meeting

As a rule, double absolute majority (ie, majority of the total number of shareholders and shares), unless otherwise provided for by the articles of association, at 1st convening.

No minimum number of shareholders and shares required as quorum, at the second convening, when decisions are made with majority. 

Quorum and voting requirements of the directors' meeting

The right to represent the company belongs to any director, unless otherwise provided for by the articles of association. If the articles of association provides that directors work together, the directors' decisions must be adopted unanimously. In case of disagreement between directors, shareholders representing the absolute majority of the share capital shall decide on the matter. A single director may decide upon urgent matters which may generate substantial losses to the company, if the other directors are missing or may not participate, even if temporarily, in the management of the company. 

From a practical perspective, yes.

Joint stock company (JSC)

A JSC managed in the 2-tier system is under the obligation of financial audit. Subject to meeting certain thresholds, financial audit may become mandatory to a JSC managed in the 1-tier system.

Limited liability company (LLC)

Subject to meeting certain thresholds, financial audit may become mandatory.

Joint stock company (JSC)

• Minimum nominal value per share amounts to RON0.1

Limited liability company (LLC)

• Minimum nominal value per share – no minimum value

The share capital may be increased by issue of new shares or increase of the share's nominal value. New shares may be issued in exchange for contribution in cash or in kind by incorporating the company's reserves (if possible) or by offsetting certain receivables.

Depending on the sector of the company activities, specific requirements may apply.

Joint stock company (JSC)

Nominal shares are generally transferred through a statement made in the shareholders' registry signed by the assignor and the assignee.

Limited liability company (LLC)

Shares may be transferred to third parties subject to approval by the shareholders representing at least 75 per cent of the share capital, unless the articles of association provide otherwise. 

Name reservation is required. A request is filed at the Trade Register to check the availability of the desired name.

It is prohibited to include attributes such as "national," "Romanian" or "institute" or derivatives thereof and/or words specific to central or local public authorities and institutions within the corporate name if likely to create confusion with the name of a central or local public authority or institution.

Depending on the sector of the company activities, specific requirements may apply.

Joint stock company (JSC)

Amendment of the articles of association is subject to approval by the extraordinary shareholders' meeting.

Limited liability company (LLC)

Amendment of the articles of association is subject to approval by the shareholders' meeting.

Various permits may be required depending on the specificities of activities to be performed by the company.

Not frequently used in practice. Same rules apply to transfer of shares.