better business in romania tuca zbarcea asociatii

Introduction 6

Romania-ACountryProfile8withcontributionfromtheRomanianMinistryofForeignAffairs

TogetherForYourBusiness16withcontributionfromtheBucharestChamberofCommerceandIndustry

Corporate 22

Environment 31

RealEstate 38

Creditor&DebtorDisputes 49

Employment 62

PublicProcurement&Concessions 68

Competition 78

IntellectualProperty 93

ProductLiability 102

Pharmaceuticals 108

FinancialInstitutions&SecurityInterests 115

CapitalMarket 126

Energy 135

EUCommunityLaw 156

Contents

©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.

PublishedbyŢucaZbârcea&AsociaţiiwithcontributionsfromtheRomanianMinistryofForeignAffairsandtheBucharestChamberofCommerceandIndustry.

©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.PrintedinRomania.

Theinformationcontainedhereinisvalidasof1stofDecember2011.Nopartofthispublicationmaybeusedorreproducedinanymannerwithoutpermissionfromthepublisher,exceptinthecontextofreviews.

BetterBusinessinRomania

7 ©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.

Introduction

Inpreviouseditionsofthisbooklet,wewerewelcomingyouwithenthusiasticpresentationsofthetransformationsRomania’seconomywentthroughafterthefallofCommunism,withlegitimatehopesflowingfromRomania’saccessiontotheEU,withtheoptimismofthefiguresmeasuringforeigninvestmentsonthelocalmarketand,generally,withthetrustthattheentirebusinessenvironmentinRomaniahasallchancesofbecomingbetter:asanyotheremergingmarket,ourscannot(couldnot)otherthangrow…

Weallknowthattoday’spremisesarenotthesameor,ifnotyetcompletelydifferent,areundergoinginevitablechanges.Romania’seconomyremainsemergent,butthecrisiswhichaffectstheworldtodayforcesadifferentperspectiveuponus.

Aftertheunprecedentedwarmingoftheglobaleconomy,wesuddenlyfindourselvesfacedwithanicycoldwind,causingcontraction.Global—thiscontraction,too,andexpressingitselfbyanaturaltendencyofrepositioning,reorganization,exorcism.

Thechaosonthefinancialmarkets,thefallofthespeculationsonthestockexchangeandontherealestatemarket,thechainofbankruptcies,theinfectionsspreadingfromtoxicbankingassets,thegrowingunemployment,thedramaticreductionoftradeareonlyafewofthesymptomsthevirusattackingtheworldeconomynowspreads.Symptomsthatwecanonlyexpecttoinevitablyhitoureconomytoo,causetroubleinwhatwesawastheElDoradoofforeigninvestment.

Thisdramaticchangeofperspectiveforcesustointrospection,beforeanythingelse,toaneffortofrealisticrepositioning.Toadaptingtonewrealitiesaswego.Toredefiningbetterbusiness.Itseemslikeonlyyesterdaythat,onthebackgroundoftheeconomygrowingen fanfare,“better”meant“more”(andmoreandmore),butnow,“better”means“moreefficient”and“moreeffective”.

Thisbookletisofferedasasupportforyouandyourcompany’sinvestmentsinaneconomyaffected,alongtheothers,byglobalcooling;inaneconomywhich,eventhoughconfrontedbybankruptciesandreorganizations,bythedeclineoftherealestatemarketandthesoaringunemployment,stilllooksforwardtrustfullytoinvestmentsininfrastructure,environmentprotection,healthandgreenenergy.

Thisyearagain,“BetterBusinessinRomania”featuresvaluablecontributionsfromtheMinistryofForeignAffairs,aswellastheBucharestChamberofCommerceandIndustry.

ThisbookletismadetoofferyousupportinmanagingtheinevitablecomplicationscreatedbytheeconomiccrisisbuttoalsogiveyousolidargumentsforabetterbusinessdevelopmentinRomania.

Thesunmayshineinwintertime,too.Wewouldbehappyifthisbookletwouldhelpyoufindandenjoyitswarmth.

FlorentinŢucaManagingPartner



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Romania—ACountryProfile

AnActiveEuropeanMember

Romaniapursuesaforeignpolicyofactiveinvolvementinthemajorpoliticalandeconomicprocessesatregional,Europeanandgloballevel.

RomaniaisamemberstateoftheNorth—AtlanticTreatyOrganization(NATO)since2004andoftheEuropeanUnionsince2007.Ithasdiplomaticrelationswith182statesandanextensivenetworkofdiplomaticmissionsallovertheworld(morethan100–bilateralandmultilateral,plusasignificantnumberofconsulatesgeneralandhonoraryconsulates),whichisanassetforitsforeignobjectives.Inrecentyears,Romaniahasfocusedonefficientlysubstantiatingitsrolewithinthesetwofundamentalstructures,promotingtheconsolidationoftheTransatlanticlink,buildingaprominentregionalprofileintheBalkansandattheBlackSea,expandingandintensifyingitsbilateralrelations,whilealsotakingpartactivelyintheUNandothermultilateralorganizationsorfora.

TheparticipationintheEU’sdecision—makingprocesseshasprovenRomania’scapacitytocontributetothecommonEuropeanobjectives,butalsotopromoteitsownnationalinterestsintheEUframework.

RomaniawasamongthefirstEUmemberstoratifytheLisbonTreatyandisactivelyengagedinitsimplementationbyensuringasolidnationalcontributionfortheEuropeanExternalActionService.TheCommissionerdesignatedbyRomaniainthenewEuropeanCommission(2010—2014)coversanareaofoutstandingimportanceattheEUlevel,withsignificantfinancialimplications—AgricultureandRuralDevelopment.

RomaniabringsanotedcontributiontotheEU’sCommonForeignandSecurityPolicy,andisamongtop10contributorsamongthememberstatestoEUmissions,mainlythroughitsparticipationintheEUmilitaryandpoliceoperationsintheWesternBalkansandGeorgia.RomaniahasalsobeeninvolvedintheEUdebatesandprocessesaimedattakingthebestpolicystepsinresponsetotheglobalfinancialandeconomiccrisis,andhasbenefitedfromstrongEUsupportinaddressingitsowndomesticchallenges.RomaniahastakenanactivepartinthecommonEuropeanefforttocombatfinancialinstabilityandboosteconomiccompetitiveness,beingassociatedtoenhancedcooperationmechanismssuchastheEuroPlusPact.Itisworthmentioning,inthecontext,thatrightafterbecomingafully—fledgedEUmember,Romania’sprofileasareliablerecipientofFDIincreaseddrastically.

AcommonEUenergysecuritypolicy,basedondiversificationandsolidarity,isoneofthekeyEUrelatedprioritiesforRomania.ThesigningoftheIntergovernmentalAgreementontheNabuccogaspipeline(July2009)andtheendorsementoftheprojectbytheEUasastrategiccomponentofthisdiversificationapproachisanotablesuccessforRomaniaanditspartners.AseriesofimportantinitiativeshavebeenlaunchedintheEUwithRomania’ssupport,suchastheBlackSeaSynergyand,mostrecently,theproposalofanEUStrategyfortheDanubeRegion.

Romaniafirmlybelievesinregionalcooperation,especiallyinDanubeStrategy.TheEUDanubeStrategyisstructuredintofourpillars,whichaddressthemajorissues.Theseareconnectivity(improvingmobilityandmultimodality,inlandwaterways,road,railandairlinks,encouragingmoresustainableenergy,promotingcultureandtourism,peopletopeoplecontacts),protectingtheenvironment(restoreandmaintainthequalityofwaters,managingenvironmentalrisks,preservingbiodiversity,landscapesandthequalityofairandsoils)buildingprosperityintheDanubeRegion(supportingthecompetitivenessofenterprises,includingclusterdevelopment,developingtheknowledgesocietythroughresearch,educationandinformationtechnologies),strengtheningtheDanubeRegion(steppingupinstitutionalcapacityandcooperation,promotingsecurityandtackleorganizedandseriouscrime).Thereare12priorityareasofaction,eachareacoordinatedbytwocountries.Romaniaiscoordinating,togetherwithourpartnersinAustria,HungaryandBulgaria,threeofthepriorityareas:inlandnavigation,riskmanagement,cultureandtourism.Romania’seffortsarenowfocusedontheimplementationoftheStrategy.Atnationallevel,themanagementmechanismoftheStrategyisfunctional.ItwaslaunchedaspecialframeworkfortheimplementationoftheEUDanubeStrategy:anannualForum,asteeringministerialCommittee(formedbytheministerswhohavetheresponsibilitiesforthepriorityareascoordinatedbyRomania),anAdvisoryCouncil(representativesofthelocalandcentralauthorities,academicandprivateenvironment),aninter—ministerialGroup,acoordinationOfficeintheMinistryofForeignAffairsandactiongroupsforthemainpriorityareas.Wehavecreatedaspecialactiongroupforthefinancialaspects.

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Romanian’sprioritiesinDanubeStrategyarerelatedtoinvestmentsforimprovingandupgradingnavigation,intermodaltransport,andenvironmentprotection,developingtourismandculturalprojects,transferofknowledge.AstrategicpriorityforRomaniaistoreturntoitstraditionalsignificantplaceintheDanubenavigationsystem.Anotherpriorityregardsprovidingamoderntransportsystemthroughupgradingtheportinfrastructureandbycreationofaninter—modallogisticscenters.TheadoptionoftheEUStrategyfortheDanuberegionanditsimplementationhelpdeepenthetransboundary,transregionalandtransnationalcooperationandcoordination,hence,alsofurtherintegrationandstabilizationwithintheCentralandSouthEastEurope.ThisparticularlyholdstrueforcountrieswhicharenotyetEUMemberStates.

AReliableNATOAlly

RomaniahasbroughtasubstantialinputtoNATO’stransformationprocess.Romaniahasbeenengagedintheinternaldebatesoftheorganizationonissuesofhighestrelevance:providingtheAlliancewithflexiblecapabilities,renewingNATO’sStrategicConcept,promotingthecooperationwiththeEU,shapingtheAlliedmilitarymissions,developingaNATOanti—missilesystem,definingNATO’sroleinenergysecurity,combatingnewthreats(suchasthecyber—defence).

Inparticular,RomaniahashadaverysolidcontributiontotheAlliedoperationsinAfghanistan,asRomanianforcesnotonlyhavebeenconstantlysignificantinnumber,buttheyalsohavebeeninvolvedindifficultmissions.

Atthebeginningof2010,RomaniadecidedtosupplementitstroopsinAfghanistanby600militarytoreachamaximumlevelofalmost1800armedforces.ThefullrecognitionofRomania’soutstandingstatuswithinNATO,butalsoontheinternationalstagecamewiththeAlliedSummitorganizedinApril2008inBucharest,whichwasthelargestNATOSummiteverandthemostimportantforeignpolicyeventhostedbyRomania.

DevelopingPartnershipsandParticipationontheInternationalStage

RomaniahasfirmlysupportedtheintegrationofWesternBalkansstatesintotheEUandNATOandconstantlyencouragedtheEuropeanandEuro—AtlanticaspirationsofthecountriesfromitsEasternneighbourhood.RomaniaiscommittedtoanactivecontributiontotheEUpolicyandactionstowardstheEasternproximityaimedatanchoringtheEasternneighbourstotheEUidentityandvalues.Thespecial

relationshipwiththeRepublicofMoldova,basedoncommonhistoricalandculturalties,isexpressedbothinsupportingthecountry’saspirationsforEuropeanintegrationandinextendingsubstantialandconcretesupportbilaterally,inorderforRepublicofMoldovatobeabletoreformandtomodernize.RomaniaistirelesslypromotingthestrategicandeconomicimportanceoftheBlackSearegionfortheEUandNATO.RomaniahasalsobeenassertiveinsupportingtheconsolidationofEUandNATO’srelationswithRussiabasedonprinciplesandpragmaticapproaches.Romaniahasdevelopedveryclosebilateralrelationswithasignificantnumberofcountriesfromallovertheworld.IthasconcludedStrategicPartnershipswiththeUnitedStates,theUnitedKingdom,France,Italy,Hungary,theRepublicofKorea,andveryrecently,in2009,withPolandandAzerbaijan,concludedaneconomicpartnershipwithGermany,andalsoestablishedspecialcooperationframeworkswithcountriessuchasChina,Japan,TurkeyorIsrael.

CooperationwiththeUnitedStateshasbeenplacedatthecoreofRomania’spartnershippolicy.TheadoptionoftheRomania—USJointDeclarationonStrategicPartnershipforthe21stcentury,alongsidethesigningoftheAgreementbetweenRomaniaandtheUnitedStatesofAmericaonthedeploymentoftheUSballisticmissiledefensesysteminRomaniaonthe13thofSeptember,ontheoccasionofthevisitbythePresidentofRomaniatotheUnitedStates,markedtheentryofourbilateralrelationsintoanewstage,broaderanddeeper.TheJointDeclarationreassertsthestrategiccharacteroftherelationsbetweenRomaniaandtheUSandsetsthepillarsoffutureRomania—UScooperation:politicaldialogue,security,economy,people—to—peoplecontacts,scienceandtechnology,research,education,culture.Atthesametime,cooperationinthemilitaryfieldandonsecurityissueshaslongrepresentedthecornerstoneoftheRomania—USStrategicPartnership,andinthiscontexttheMDAgreementreconfirmstheimportancegivenbybothcountriestothebilateralcollaborationinthisareaandhighlycontributestoenhancingthesecuritynotonlyofRomaniaandtheUS,butofallNATOmembers.BesidetheadoptionoftheRomania—USJointDeclarationandthesigningoftheMDAgreement,ourcountry’smilitaryengagementalongsideAmericanforcesintheatresofoperationssuchasAfghanistanandIraq,aspartoftheglobalfightagainstterrorism,aswellasthe2005AgreementregardingtheactivitiesofUSforceslocatedontheRomanianterritory,provethespecialnatureofthebilateralpartnership.Moreover,theapprovalgivenbyRomania’sSupremeCouncilofNationalDefenceinFebruary2010totheUS’requestregardingRomanianparticipationtothefutureAmericanMissileDefenceSysteminEuropeisofhighestrelevancenotonlyforRomania—USstrategiccooperation,butalsoforRomania’snationalsecurity.

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EspeciallyaftertheEUaccession,Romaniahasusedpartofitsdiplomaticenergiestorevitalizeand/orexpanditsrelationswithpartnersfromotherregionsandcontinents.RomaniaisacutelyawareoftheglobalsignificanceofdevelopmentsinCentralAsiaandtheMiddleEast,anditsbilateralrelationswithcountriesfromtheseregionshaveknownsignificantsuccessesforthepastyears,withpositiveeconomicimplications.

Anotherforeignpolicyaspectwithparticularrelevancefromabusinessperspectiveisthat,after1990,Romaniahassteadilyintensifieditsrelationswithinternationalfinancialorganizations,includingtheInternationalMonetaryFund,theWorldBankGroup,theEuropeanBankforReconstructionandDevelopment(EBRD),theEuropeanInvestmentBank(EIB),theCouncilofEuropeDevelopmentBank.Althoughstilldifficult,Romania’sobjectivetostrengthenrelationswiththeOrganizationforEconomicCo—operationandDevelopment(OECD),withaviewtopromotingitscandidacyforfullmembership,remainshighontheagendaoftheGovernment.

ABriefLookintoRomania’sEconomicEvolutionafter1990

Theeconomicevolution,after1990,registeredtwodistinctstages.Duringthefirststage(1990—1999),Romaniapassedthroughaneconomicrecession,deeperin1990—1992,whentheeconomyregistereda27%decreaseandduring1997—1999years,witha12%downturn.Thisprocess,accompaniedbyanalmostpermanentinflationandanincreaseofunemployment,tookplaceinthecontextofde—centralizationandprivatizationmeasuresand,after1997,ofanacceleratedeconomicrestructuring.Thesecondperiod(2000—2008)witnessedastrongeconomicrecovery,withanaverageannualgrowthrateofover6%,withpeaksin2003—2008whenRomaniascoredastrongincreaseinconsumptionandproduction—orientedinvestments.

Anenhancedandfriendlybusinessenvironment,theconsequencesofintroducingaflattaxrateandthepositiveattitudeofforeignpartnerstowardsRomania—inthecontextofitsNATOandEUaccessions—ledtorecordforeigninvestmentsflows.During2005—2008,directinvestmentsinRomaniaamountedtoapproximately28billionEuros,morethanhalfofthetotalforeigninvestmentsofthelast20years.Asaconsequenceoftheglobaleconomiccrisis,thefigureregisteredadownturnin2009whenitreachedEUR4.89billion(approx.½ofthe2008level).TheRomanianeconomyoffersquiteanumberofcompetitiveadvantageswhichrecommendsitasoneofthefavouritedestinationsforforeigninvestmentsintheregion.Theseadvantageswereenhancedbypolicymeasuresandanadequatelegalframeworkpromotedbytheauthoritiesinthisimportantfieldofeconomicdevelopment.The

Romanianforeigntraderegisteredasignificantincreasebothfromaquantitativeandaqualitativeperspective,especiallyduringthelastyearswhenitdisplayedannualgrowthratesabove10%.2008markedapeakinforeigntrade,thetotalvolumereachingEUR90billion(ofwhichEUR34billionexports).Duringthelastdecade,themaintradingpartnerswereGermany,Italy,France,Turkey,Hungary,theNetherlands,GreatBritainandAustria.Structurally,theevolutionofforeigntraderegisteredsignificantdevelopments,whereasRomaniaexportedmoreservicesandmanufacturedproductswithanenhancedvalue—addedcontent.

Thesetrendsreflectedthepositiveeffectsofeconomicrestructuring,thenationaleconomy’sofferingpotentialandanimproveduseofaccessfacilitiesonforeignmarkets.Currently,EU’sweightinRomania’sforeigntradestandsatover70%,provingRomania’sdegreeofintegrationintotheEuropeaninternalmarket.

Asaconsequenceoftheglobaleconomiccrisisthatemergedinfall2008(leadinginteraliatolowlevelsofcommercialandcreditflows),2009wasinRomaniaayearofeconomicrecession.AlthoughtheRomanianbankingsystemwassolidandtheeconomyregisteredalmostadecadeofsustainedgrowth,Romaniawasaffectedbythecrisis,mainlybecauseofitslinkswiththeEuropeanandglobalmarkets.Lastyeartheeconomyregistereda7.1%decreaseoftheGDP(lowerthanestimated),accompaniedbyanincreaseofthebudgetdeficitandofunemploymentfigures.Government’seffortstomitigatethecrisisimpactwereorientedtowardsmacroeconomicstability,stimulatingtheeconomicre—launchandmaintaininginvestors’interest.Inordertopreventfurtherdifficultiesandsupportthestructuralreformprocess,RomaniahasconcludedwithEuropeanpartnersandinternationalfinancialinstitutionsafinancialassistancepackageofuptoEUR20billionforaperiodoftwoyears(2009-2011),whichwassuccessfullyconcludedatthebeginningof2011.Themainobjectivesconcerningtheabove-mentionedpackagefocusedonbalanceofpaymentssupport,ensuringthecreditandinvestmentflowsandconsolidationoftheNationalBank’sreserves.

Withinthiscontext,Romania’seconomicperspectivesgraduallyimproved.Theyear2010ledtoastabilizationoftheGDPandtheeconomyreturnedtogrowthin2011,withanestimated1.5%advancefortheentireyearandanestimated2%nextyear.

Inspiteofglobalfinancialmarkettensionsanddeteriorationindomesticassetquality,thebankingsectorhasremainedresilient.ContinuedfiscalconsolidationhasimprovedRomania’scredibility.Theambitiousfiscalconsolidationprocessandstructuralreformsimplementedin2010broughtencouragingresultsanditisaimedatensuringthebasisforasustainableeconomicrecoveryonthebackofenhancedcompetitiveness.Inthiscontext,thepartnershipwiththeEuropeanCommission,IMFandtheWorldBankcontinuedwithintheframeworkofanew,precautionary—type,financialagreement(2011—2013).

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TheRomanianGovernmentmaintainsitstargetdateforjoiningtheEurozone(in2015),withintheframeworkofitscontinuingeffortstowardsthefulfilmentofStabilityandGrowthPact,convergencecriteria(weareamemberoftheEuroPlusPact),aswellasensuringlongtermexchangeratestabilityofthenationalcurrency(Leu).Thesustainedpaceofreformswillbemaintainedwithanemphasisonpublicadministration’scapacitytomanagepublicfundsandtogenerateEU—financedprojects;financingpriorityprojectsinagriculture,education,healthcare,energy,environmentandcreatingnewinvestmentopportunitiesforinvestors.Romania’sstrategicprioritiesfortheforthcomingperiodaimatdevelopingtheinfrastructure,ensuringenergysecurityandalternativeroutesoftransport,modernizingtheagriculture,improvingtheeducationandhealthcarequality.

ACulturalandGenerationalRevival

Anewgenerationofhighlyskilledandcompetitivepeoplehaslargelytakenovertheleadershipbothinprivateandpublicsectors,boostingRomania’sdevelopmentfromallpointsofview.Thiscanbeseennotonlyintheforeignpolicyorinbusiness,butalsoinRomanians’vividculturallife.

HerearesomefascinatingexamplesoftheRomaniancreativityafter1990:

•Cinema:Romanianmovieshaveimpressedinternationaljuriesandaudiencesinthepastyears.TheRomaniandirectorCristianMungiuwontheEuropeanFilmAwardoftheEuropeanFilmAcademyandthePalmed’orprizeattheInternationalFilmFestivalinCannesin2007forhismovie“4weeks,3months,2days”.“Police,Adjective”,directedbyCorneliuPorumboiuwasawardedin2009withtheprizeoftheInternationalFederationofFilmCritics.TheGrandPrixoftheJuryatthe60thBerlinFilmFestival,theSilverBear,waswonbyFlorinSerban’smovie“IfIWanttoWhistle,IWhistle”.TwomajorfilmfestivalswithbroadinternationalparticipationtakeplaceannuallyinTransylvania,inClujandSibiu.Movieslike“ColdMountain”,“Amen”,“CallasForever”wereshotinRomania.FrancisFordCoppola’sfilm“YouthWithoutYouth”isbasedonashortstoryofRomanianreputedphilosopherandauthorMirceaEliade.•Literature:MirceaCărtărescuistheRomanianwriterwhoseworkshavebeentranslatedinovertwelvelanguagesafter1989.The2009NobelprizeforliteraturewenttotheGermanwriterofRomanianorigin,HertaMuller,whosebooksstemfromherexperienceintotalitarianRomania.TheRomanian—bornwriterMariusDanielPopescuwasthewinnerofSwitzerland’sprestigious“RobertWalser”Awardforliteratureforhisnovel“SymphonyoftheWolf”,basedonlifeexperienceinCeausescu’sRomania.ThebookoftheyearintheCzechRepublicin2006wasthenovel“SimionLiftite”authoredbytheRomanianPetruCimpoiesu.


•Musicandtheatre:ThebiggestclassicalmusicfestivalinSouth—EasternEurope,TheEnescuFestival,takesplaceeverytwoyearsinBucharest.Everyyear,inNovember,RomaniahostsanInternationalChamberMusicFestival—SoNoRo,inBucharestandothermajorcities.AninternationaljazzfestivalisorganizedeveryyearinthepicturesquemountainvillageofGărâna.TheInternationalTheatreFestivalinSibiubringstogetherparticipantsfrom70countries,presents350eventsin55venues,with60,000spectators.•Culturalpromotion:ThereareRomanianCulturalInstitutesin17countriesandthenetworkisgrowing.Thesecondbiggestbuildingintheworld,locatedinBucharest—thePalaceofParliament—hostsamuseumforcontemporaryart.Doina,atraditionalRomanianfolksongispartoftheUNESCORepresentativeListoftheIntangibleCulturalHeritageofHumanity.

Romania`sMinistryofForeignAffairs131AleeaAlexandru,Sector1,Bucharest,011822

Phone:(40)213192108or3192125Fax:(40)213196862

www.mae.ro

1 TheMinistryofForeignAffairs(MFA)takesresponsibilityonlyforthecontentoftheabovepresentation.TheMFAencouragesprivatecompaniestopromotetheirviewsontheRomanianbusinessenvironment.“BetterBusinessinRomania”isabookletauthoredbyŢucaZbârcea&Asociaţii.



TogetherForYourBusiness—

NoStageinaCompany’sLifewithouttheBucharestChamberofCommerceandIndustry!

ThefirstChamberofCommerceandIndustryintheworld,forefatherandmodelofallthechambersestablishedeversince,isthatofMarseilles,whichdatesfrom1599.

InRomania,merchantsandmanufacturersareorganisedinguildsandcorporationsuntiltheUnionofthePrincipalities,in1859,whenbusinesspeopleexpresstheirinterestinsettingupachamberstructure.

Onthe10thofNovember1861,beforethefirstlawonchambersofcommerceexistsinRomania,C.A.Rosetti,seniorofthetradersinBucharest,explainstheneedforchambersofcommercetobeindependentfromthegovernment:“TheMinistryofFinance,whichthetradeandindustryofthecountrydependon,cannot,nomatterhowhardittries,givespecialheedtothesereformsandimprovements,becauseitlacksthetimetodosoand,mostofall,becausetheinterestsofcommerceandindustryarenotalwayscompatiblewiththoseoftheinternalrevenueservices,butareoftenconflicting.”

Onthe30thofSeptember1864,afterhavingbeensupportedbyalltheenlightenedmindsofthetime,suchasNicolaeKretzulescuandMihailKogalniceanu,thelawonchambersofcommerceispromulgatedbyitssigningbyAlexandruIoanCuza.Onthe28thofJanuary1868,theBucharestChamberofCommerce(BucharestCCI)startsoperating—thefirstsuchlikeinstitutionontheterritoryofRomania,asitwasatthattime—withMironVlastoasPresident.


DuringtheinaugurationceremonyoftheBucharestCCI’sBuildingonthe23rdofMay1911,HMKingCarolIunderlines,infewwords,themissionofchambersofcommerceandtheirstandinginademocraticsociety:“Chambersofcommerceandindustryhavegiventhegovernmentvaluedsupportthroughenlightenedcounselandoutstandingundertakings.Iammostpleasedtosaythattheseundertakingsandcounselhavealwayshadatheartnotindividualinterests,butthoseofthecommunity.”

Acenturylater,onthe13thofNovember2011,theBucharestCCIcelebratesthecentennialofitshistoricalheadofficebyorganisinganextraordinaryconcerthostedbytheRomanianAthenaeumandperformedbythe“GeorgeEnescu”PhilharmonicOrchestraconductedbyHoriaAndreescu.TheeventishonouredwiththepresenceofmembersoftheRoyalHouseofRomaniaandover700participants,closepartnersoftheBucharestCCI—representativesofthediplomaticcorpsaccreditedinBucharest,academics,economicactors.Duringthisspecialevent,Prof.SorinDimitriu,Ph.D.,PresidentoftheBucharestCCI,announcesthedecisionoftheManagingBoardthatthe2011HermesTrophyshallbeawardedtoHMKingMihai,asatributetotheRoyalHouseofRomaniaforitscontributiontothemodernisationandstrengtheningoftheBucharestCCI.

TheBucharestCCI’sactivityhasalwaysbeenmostrewardingandhasgiven,sincetheverybeginning,effectivesupporttoRomania’seconomicdevelopment.AsearlyasJune1868,withtheassistanceoftheBucharestCCI,“theregistrationofcommercialcompanies”—theancestorofpresent—dayTradeRegistry—isintroducedforthefirsttimeinRomania.TheBucharestCCIissubsequentlyauthorisedtopublishtheaverageexchangerateofthemainforeigncurrencies,itisco—authorofthetextofthefirstlawontrademarks,andinitiatorofthelawonencouragingdomesticindustry.

In1884,uponproposaloftheBucharestCCI,thelawonencouragingdomesticindustryispromulgated.In1895,theBucharestCCIopensthefirstcommercialinformationoffice,andin1899itannouncesitspositiononcartels.In1926,followingaBucharestCCIinitiative,thepostalchequeisfirstintroducedasnon—cashmeansofpayment.TheChambersupportsandfinancescommercialandvocationaleducationandcontributesageneroussumtotheconstructionoftheAcademyofEconomicStudiesBuilding.

Currently,theBucharestCCI(www.ccib.ro)hasdiversifiedtherangeofservicessupplied;thus,throughoutthelifeofacompany,theBucharestCCIcansupplytraderswithcounsellingandexpertise,assistingthemindevelopingtheirbusinessmostrapidlyandefficiently.

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AsstipulatedbytheinitiatorsofthefirstlawonchambersofcommerceinRomania,theBucharestCCIcontinuestobeaself—sufficient,non—governmental,non—political,non—profit,publicpurposeorganisationwithoutapatrimonialpurpose,alegalpersoninitsownright,whoseaimistorepresent,defendandpromotetheinterestsofitsmembersandothereconomicplayersofBucharestbeforethepublicauthoritiesanddomesticandinternationalbodies,forthedevelopmentoftrade,industry,agriculture,services,tourism,etc.,inlinewithmarketeconomyrequirements.

TheBucharestCCIisorganisedandoperatesunderLawNo.335of3rdofDecember2007anditsdutiesstillincludesupporttoitsmembersintheireconomicrelationswithofficialrepresentativesofbothotherstates,andlocalpublicadministrationauthorities,fortheeconomicandsocialdevelopmentofBucharest,includingbypublic-privatepartnership.

Likewiseinthepast,whentheBucharestCCIusedtohaveitssayintheelaborationoflawsessentialtothedevelopmentofmarketeconomyinRomania,theChambercontinuestosendbillstoauthorisedinstitutions,onitsowninitiativeorafterconsultationofitsmembers.

TheBucharestCCI,representedbyProf.SorinDimitriu,Ph.D.,Presidentelectedin2008,concludesprotocolswithlocalandcentralpublicadministrationauthoritiesandregionalstructures,fortheeconomicdevelopmentofBucharest.

Furthermore,underitsArticlesandinconformitywiththeobjectivessetoutbythenewmanagingteam,theBucharestCCIinitiates,supportsanddevelopspromotion,researchanddevelopment,andinnovationprogrammesandprojects,organisestrainingprogrammes,andpromotesEUandinternationalbodiesregulationsandpracticesbyorganisingsymposia,conferences,seminarsandothersimilareventsforbothmembersandothereconomicoperators.

TheBucharestCCIorganisesandmanagestradefairs,exhibitions,shows,businessforums,economicpartnershipactionsathomeandabroad,inown,leasedorrentedlocations;itorganisestheannualChartofTopCompaniesofBucharest,grantingmoralrewardstoeconomicactorsfortheirbusinesseffortsandstimulatingcompetition.

ThisbriefoverviewoftheactivitiesoftheChambershowsbeyondanydoubtthat,asstatedhereinbefore,theBucharestCCIcansupplyservicesthatmakeiteasierforbusinessesatanystageinacompany’slife.


Herearebelow,withnopretenceofexhaustiveness,themaincategoriesofservicessuppliedbytheBucharestCCIforthebenefitofthebusinesscommunity.TherangeofservicesjustifiestheChamber’smotto,“Togetherforyourbusiness”.

Registrationandauthorisationofcompaniesandactivities•InformationandconsultancyontheRomanianbusinesslegalenvironment;•Counsellingandassistanceforregistrationandauthorisationofcompaniesandactivities;

•Counsellingandassistanceforregistrationofassociationsandfoundations;•Counsellingandassistancefortheregistrationofamendmentstocompanyformationdocuments.

Consultancyservicestoforeigncompaniesandentrepreneurs•Consultancyandassistanceontheformalitiesforsettinguprepresentationoffices,subsidiaries,branchesandcompaniesinRomania;

•ConsultancyandinformationontheBucharestbusiness;•Organisationofbusinessmeetings,partnerships,forums,conferences,companyprofiles;

•EvaluationofRomaniancompanies.

Businessinformation•Supplyofinformationoncompaniesandmarketingdatabases;•Businessopportunities(demand,supply,tenders,auctions,cooperationandoutsourcing);

•Marketsurveysandinformationonareasofexpertise;•InfoFin—financialanalysisreportdevelopedbyBucharestCCIexpertsbasedontheanalysisoftheuptoseven—yearevolutionofbalancesheetdataandmajorindicatorssuchassolvency,liquidity,returnonassetsandactivity;potentialcommercialorcreditriskscanbethusidentifiedandclient—orsupplier—relatedriskscanbebettercontrolled.

Consultancyandassistanceforbusinessdevelopment•Information,assistanceandconsultancyregardingtheparticipationinEUtendersandcommunity—financedprogrammes;

•Tailor—madeassistanceforcompanies’participationinnationalandEuropeanprojects;

•Assistanceinintellectualpropertyrightsexploitation;•Technologytransferactivities;•Informationoninternationalandforeigntradelegislation.

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Eventsanddebatesorganisation•TheChartofTopCompaniesinBucharest,highlightingthebestperformingeconomicactorsthathavetheirheadquartersintheCapital;

•HermesTrophyannualawards,forhonouringoutstandingpersonalitiesfromoutsidethechambersystemfortheircontributiontotheconsolidationoftheBucharestCCI;

•Counsellingandassistanceforeventsorganisation;•Organisationofmeetingsonbusinessenvironmentissues(seminars,conferences,forums,workshops,etc.);

•Organisationofin—houseseminarsandworkshopsonrequest;•Organisationofdebatesonlegislativeissues;•Organisationoffairsandexhibitions;•AssistancetocompaniesforparticipatinginfairsandexhibitionsorganisedbyROMEXPOS.A.,bygrantingdiscounts;

•Organisationofscientificeventsandexhibitions.

Promotionofcompanyproducts/services•Organisationofeventsoncompanyproducts/servicessupply;•PromotionontheBucharestCCIwebsite(www.ccib.ro)anditsonlineperiodicalAfacerea(www.ccib.ro/afacerea);

•Representingmembercompaniesinfairs,exhibitionsoreconomicmissionsinRomaniaorabroad;

•DisseminationofR&Dprojectsresults.

Entrepreneurialtrainingandvocationalprogrammes•Organisationoftraining,courses,includingin—houseprogrammesforentrepreneursorcompanyemployees,withRomanianandforeignexperttrainers.

Issueofcertificates•Certificatesoforigin;•Force majeurecertificates(force majeurecasesoccurredduringoperation,ontheterritoryofBucharestMunicipality,basedonevidence);

•Certifyingdeeds.

MediationCentre•Settlementofcivilandcommerciallitigationsbycertifiedmediatorsbyagreementofbothparties,withlowerexpensesthanthoseincurredbygoingtocourt,andinshortertime.

TheplacewherecultureandbusinessmeetUndertheauspicesofthe“CarolITrust”FoundationchairedbyHRHPrinceJeanofLuxembourgandsetupinordertobringthehistoricalChamberBuildingat4,IonGhicaSt.backintotheeconomicandculturallifeof


theCapital,theBucharestCCIorganises,periodically:•Chambermusicrecitals;•Coupérecitals;•Classicalconcerts;•Booklaunches.

TheBucharestChamberofCommerceandIndustry2OctavianGogaBlvd.,Sector3,Bucharest,030982

Phone:(40)213190173or3190121Fax:(40)213190133

www.ccib.ro

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Corporate

Overview

BusinessactivitiesinRomaniamaybecarriedoutasarulebycompanies(whichmaybeownedwithoutanyrestrictionsbyRomanianorforeignshareholders)orbyotherformsofbusinessorganizationssuchasauthorizedindividuals,individualundertakingsorfamilyundertakingswithintheframeworksetoutintheCompaniesLawNo.31/1990(theCompaniesLaw)andtheGovernmentEmergencyOrdinanceNo.44/2008ontheperformanceofbusinessactivitiesbyauthorizedindividuals,individualundertakingsandfamilyundertakings(GEO44/2008).Listedcompanieshavetoobservealsothecapitalmarketregulations,whicharediscussedinadedicatedchapterherein.Asamatterofprinciple,businessorganizationsmayconductanytypeofactivity1.Limitations,suchasspecialapprovalsorpermits,orrestrictionsastotheformofcompanyallowedtoperformcertainactivities,maybeimposedbylawinvariousbusinesssectorsplacedunderthesupervisionofapublicregulatoryauthority,suchascertainfinancialservices(insuranceandbanking).

TheCompaniesLawprovidesthelimitedlistoflegalformsunderwhichacompanymaybeestablishedinRomania:thegeneralpartnership(“societateînnumecolectiv”),thelimitedpartnershipwithshares(“societateîncomandităsimplă”),thelimitedstockpartnership(“societateîncomandităpeacţiuni”),thejointstockcompany(“societatepeacţiuni”)andthelimitedliabilitycompany(“societatecurăspunderelimitată”).Foundersarefreeunderthelawtochoosethetypeofcompanytheyestablish,butcertainbusinessactivitiesmaybeconductedonlybycompanieshavingacertainlegalform(e.g.onlyjointstockcompaniesmayoperateininsuranceorbanking).

1 Theavailableeconomicactivitiesarelistedinanofficialcode—ClasificareaActivităţilordinEconomiaNaţională—commonlyknownastheCAENCodewhichrepresentsatranspositionoftheNACECode,validattheEuropeanlevel.

Changingthelegalformofthecompanyduringitsoperationsispossible,withtherequiredcorporateapprovals,andprovidedthelegalrequirementsforthenewformaremet.

ThetypesofcompaniesmostfrequentlyincorporatedinRomaniaarejointstockcompaniesandlimitedliabilitycompanies,especiallyduetothelimitationoftheshareholders’liabilitytothevalueoftheirsubscribedshareholding.Nevertheless,piercingthecorporateveilisexpresslyregulated,sothatshareholdersabusing2thelimitationoftheirliabilityandthedistinctpersonalityofthecompany,thusdeceivingthecompany’screditors,shallbeheldliablewithoutlimitationforthecompany’soutstandingdebts.RegistrationformalitiesrequiredtosetupaRomaniancompanyusuallylastthreedaysfromsubmittingthecompletedocumentationwiththeTradeRegistry.

AmongthemostimportantreflectionsoftheEUnormsinRomania’scorporatelaw,wenotethefollowing:•Romaniancompaniesmeetingatleasttwoofthefollowingcriteria:(i)aggregateassetsamountingtoatleastEUR3,650,000,(ii)netturnoveramountingtoatleastEUR7,300,000or(iii)numberofemployeesexceeding50individualsmustpreparetheirfinancialstatementsinaccordancewiththeECIVthDirectiveandhavethemaudited,whilethecompanieswhichdonotmeetthecriteriaarepermittedtoprovideonlysimplifiedfinancialstatements(eventhoughtheymaychoosetoapplytheECIVthDirective,inadditiontotheRomanianAccountingStandards);

•FurthertoRomania’saccessiontotheEUonthe1stofJanuary2007,businessactivitiesmaybecarriedoutunderthetwo“fundamentalfreedoms”centraltotheeffectivefunctioningoftheEUInternalMarket:thefreedomofestablishmentandthefreedomtoprovideservices.Thefreedomofestablishmentenablesaneconomicoperator(whetherapersonoracompany)tocarryoutbusinessactivitiesinastableandcontinuousmannerinoneormoreMemberStates.ThefreedomtoprovideservicesenablesaneconomicoperatorprovidingservicesinoneMemberStatetoofferservicesonatemporarybasisinanotherMemberState,withouthavingtoestablishitselfinthesecondstate,too;

•Romaniacreatedthelegalenvironmentfortheincorporation/authorizationoftheEuropeancompanies,freefromobstaclesarisingfromdisparitiesandlimitedterritorialapplicationofthenationalcompanylaw,asperECNo.2157/2001;

•Also,RomaniaimplementedtheEuropeanregulationsoncross—bordermergers.Romanianlimitedstockpartnerships,jointstockcompaniesorlimitedliabilitycompanies,aswellastheEuropeancompaniesheadquarteredinRomaniamaytakepartincross—bordermergers.

2 Thelawdeemsabusivetheactsoftheshareholdertousethecompany’sassetsasiftheywereitsown,ortodiminishthecompany’sassetsforitsownbenefit,whileawarethatindoingsothecompanyishinderedinperformingitsobligations.

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capital,ordecreased,theminimumsharecapitalrequirementsobserved,withavalueequaltothatofthelossesthatcannotbecoveredfromthecompany’sreserves).Failuretoobservesuchprovisionscouldtriggerthedissolutionofthecompanyalthoughsuchsanctionhasbeenrarelyputintopractice.

Sharesmayberegisteredsharesorbearershares.Asamatterofpractice,bearersharesarerarelyusedinRomania.Sharesmaybeordinary(i.e.onesharegivesrighttoonevoteintheshareholdersmeetingandtothedividendsproportionallytothequotaofthesharecapital)orpreferential(i.e.givingprioritytodividendsbutnotentitlingtovotingrights).Preferentialsharesmayaccountforonlyupto¼ofthesharecapitalnominalvalue.Thearticlesofassociationofajointstockcompanymayprovideforadifferentnumberofvotesattachedtoacertainblockofshares.

Onesharemaybejointlyownedbyseveralpersons,however,theco—ownershavetoappointajointrepresentativetoexercisetherightsderivedfromtheshare.Unlessotherwiseprovidedinthecompany’sarticlesofassociation,theshareholdersmayfreelytransfertheirsharestoanyperson.Ifthecompanyislisted,thetransferhastoobservetherulesgoverningtherelevantregulatedmarket.Dependingonthestockapersonwishestopurchaseinalistedcompany,certainproceduresshallbeobserved(i.e.publicoffers).

Asageneralrule,thejointstockcompanymayacquireupto10%ofitsownsharesprovidedtheyarefullypaid.Therearefewexceptionstothislimit,suchaswherethecompanyacquiresitsownshareswithaviewtodecreasingthesharecapitalorwithinenforcementproceedingsagainstashareholderfordebtsduetothecompany.Suchsharesdonotgivetherighttovoteortoreceivedividendswhileheldbythecompanyitself.

Thesharesmaybesubjecttosecurityinterests,whichbecomeopposabletowardsthirdpartiesasofregistrationwiththeElectronicArchiveforSecurityInterests.

TheJointStockCompany’smanagementThemainmanagementbodyofastockcorporationistheGeneralAssemblyofShareholders(theGAS).Dependingonthematterstobesubmittedtoshareholders’approval,theGASmaybeordinary(e.g.appointinganddismissingthedirectorsandauditors,approvingtheyearlyfinancialstatementsandthemanagementreport)orextraordinary(e.g.increase/decreaseofthesharecapital,changeinthecompany’slegalform,mergers,spin—offs).

Shareholdershavinganinterestcontrarytothecompany’sinterestinthemattersubmittedfortheGASapprovalhavetorefrainfromvoting.

JointStockCompanies

SharesandsharecapitalJointstockcompaniesmusthaveatleast2shareholders3andasharecapitalofatleastRON90,000.TheminimumlegalsharecapitalvaluemaybechangedfromtimetotimesothatitreflectstheRONequivalentofEUR25,000.

Thecompany’ssharecapitalmaybeformedbycontributionsin—kind,incashand/orinreceivables.Cashcontributionsarealwaysmandatoryuponthecompany’sestablishment.In—kindcontributionsmustbeevaluatedandeffectivelydeliveredtothecompany(thecompanybeinggivenarealrightovertheproperty,suchasownership,orusufructetc.).Only30%oftheentiresubscribedsharecapitalisrequireduponestablishmentwhiletheremaining70%mustbepaideitherwithin12monthsfromestablishment,ifformedofcontributionsincash,orwithin2years,forcontributionsin—kind.Contributionsinreceivablesaredeemedpaidwhenthedebtoreffectivelymakesthepaymenttothecompany.

Thesharecapitalofajointstockcompanymaybeincreased,byissueofadditionalsharesorbyincreasingthefacevalueoftheexistingshares,throughcontributionsincashorin—kind,orthroughtheincorporationofthecompany’sreserves(saveforthelegalreserves),undistributeddividendsandsharepremiumsorbysetting—offoutstandingreceivablesagainstthecompanywithnewlyissuedshares(debttoequityswaps).Positivebalanceregisteredupontherevaluationofthecompany’sassetsmaynotbeusedtoincreasingthesharecapitalofajointstockcompany.

Theexistingshareholdershaveapre—emptionrighttosubscribingthenewlyissuedshares,aswellasforthebondsconvertibleintoshares,proratawiththeirparticipationinthecompany.Exceptionally,thepre—emptionrightmaybelimitedorwithdrawnforwellgroundedreasonsbythegeneralassemblyoftheshareholders,withspecialmajorities:thedecisionmustbepassedinthepresenceof¾ofthesubscribedsharecapitalandwiththemajorityofvotesoftheshareholderspresentorrepresentedintherespectivemeeting.

Incertaincases,thesharecapitalincreaseordecreasebecomesmandatory(e.g.intheeventofareductionofthenetassetsbelowhalfofthesubscribedsharecapital,thesharecapitalmustbeeitherincreasedtoacertainlevelwhichensuresthatthenetassetsvalueexceedshalfofthesubscribedshare

3 5wastheminimumnumberofshareholdersaccordingtotheformoftheCompaniesLawasinforcebeforethe1stofDecember2006.Themodificationoftheminimumnumberofshareholdersinastockcorporationhasdeterminedseveralcompaniestoreducetheirnumberofshareholdersto2sincethisbringsmoreflexibilityintheoperationofthecorporatebodiesofastockcorporation.

©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved. ©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.

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Underthelaw,votingrightsmaynotbeassignedtoanypersonandanyagreementsonexercisingthevoteinacertainmannerarenullandvoid.

Thislatterinterdictionraisesissuesinpractice,asitplacesdoubtsonthevalidityofshareholders’agreements,especiallyasregardsclausescontainingarrangementstoexercisethevoteinacertainwayonspecificmatters(e.g.whenvotingtoappointthedirectorsnominatedbyeachoftheshareholders).

TheordinaryandtheextraordinaryGASdifferasregardsthequorumandvotingrules.Onthefirstcall,theordinaryGASmaydulypassresolutionsonly(i)inthepresenceoftheshareholdersholdingatleast¼ ofthetotalnumberofvotingrightsand(ii)withthemajorityofthevotingrightsexercisedinthemeeting.

Onthesecondcall4,thereisnominimumsharecapitalrequiredtoattendorberepresentedandthedecisionwillbetakenwiththemajorityofthevotingrightsexercisedinthemeeting.TheconstitutiveactmaynotunderthelawprovideforalowerquorumorahighermajorityforthesecondcalloftheordinaryGAS,alimitationwhichraisedcontroversyinpracticeconcerningtheenforceabilityofshareholders’agreementsprovidingforacertainvetorightinrelationtoimportantdecisionsinajointstockcompany.

InthecaseoftheextraordinaryGAS,thepresenceoftheshareholders(ortheirrepresentatives)holdingatleast¼ofthetotalnumberofvotingrightsisrequiredatthefirstcall,and1/5ofthetotalnumberofvotingrightsforthesecondcall.Decisionsmaybedulypassedwiththevoteoftheshareholdersrepresentingatleast½ofthevotingrightsoftheshareholderspresentorrepresentedatthemeeting.However,aspecialmajorityof2/3ofthevotingrightsofthepresentshareholdersisrequiredfordecisionsonmajorissues,suchastheincreaseordecreaseinthesharecapital,mergerorthecompany`swindingup.

Thearticlesofassociationmayprovideforincreasedthresholdsofquorumandvotingmajorities.Theshareholdersholdingatleast5%ofthesharecapitalmayrequestthataGASbecalled,orthattheagendaofanalreadyconvenedGASbesupplemented.Aswell,theymayrequesttheauditorstoreviewanyactoroperationofthecompanyorinitiateclaim,onthecompany’saccount,againstthefounders,directorsormanagersofthecompanyfordamagestheycausedthecompany.

TheCompaniesLawprovidesfortwotypesofmanagementsystemsavailableforjointstockcompanies:theone—tiermanagementsystem,wherethemanagementisentrustedtoaboardofdirectors(“consiliudeadministraţie”)whichcanorin

4 Thesecondcalltakesplacewhenthenecessaryquorumisnotmetuponfirstcall.

certaincasesisobligedtodelegatemanagementpowerstoseveralmanagers(“directori”),andthetwo—tiermanagementsystem,wheretheeffectiveadministrationofthecompanyisensuredbyanexecutivecommittee(“directorat”)underthecontrolofasupervisorycouncil(“consiliudesupraveghere”).

Themanagersmayalsobeappointedfromamongthemembersoftheboardofdirectors,providedthatthemajorityoftheboardmembersremainnon—executiveinordertoensuretheobjectivityoftheboardanditsindependencefromthemanagement.Certainprerogativesoftheboardmaynothoweverbedelegatedtotheexecutiveofficers(e.g.,establishmentofthemainactivityanddevelopmenttrendsofthecompany;establishmentoftheaccountingandfinancialcontrolsystemandapprovalofthefinancialplanning;appointmentandrevocationoftheexecutiveofficerandthesupervisionoftheexecutiveofficers’activity;fillingtherequestfortheopeningoftheinsolvencyprocedure,aswellastheprerogativesdelegatedtotheboardbythegeneralassembly).Ontheotherhand,inthetwo—tiermanagementsystem,apersoncannotholdfunctionsintheexecutivecommitteeandinthesupervisorycouncilsimultaneously.

Themembersoftheboardofdirectorsandthemanagers,intheone—tiermanagementsystem,andthemembersoftheexecutiveandsupervisorycommittee,inthetwo—tiersystem,maynotbeconcomitantlyemployeesofthecompany,theirrelationshipwiththecompanybeingregulatedbyamanagementcontract.However,themanagersandthemembersoftheexecutivecommitteeareassimilatedwiththeemployees,fromtheperspectiveofthetaxesduetothesocialsecuritybudgets,whichmeansthat,withfewexceptions,thesamecontributionshavetobepaidinrelationtotheirremunerationasinthecaseoftheemployees.

Therearenoresidencyorcitizenshiprestrictionsonthedirectors,managers,membersoftheexecutiveorsupervisorycommitteesofajointstockcompany.Themanagersofacompanyoptingfortheone—tiermanagementsystemandthemembersoftheexecutivecommitteeinajointstockcompanythatadoptedthetwo—tiermanagementsystemcanonlybeindividuals(naturalpersons).Inpractice,theone—tiermanagementsystemiselectedbythevastmajorityoftheRomanianjointstockcompanies

Inthecaseoflistedcompanies,thedirectorsmaybeappointed,attherequestofashareholderholdingatleast10%equityparticipation,bywayofcumulativevoting,asdiscussedinthechapterdedicatedtoCapitalMarket.

TherearelegalprovisionsrequiringGASapprovaloncertainoperations(e.g.acquisition,transferorleaseofassetsamountingtooverhalfofthebookvalueofthecompany’sassets)beforethecompany’sdirectorsareallowedtoconcludethem.Inaddition,thearticlesofassociationmayprovideforseveralotheroperations


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whichrequiretheGASpriorapprovalbeforeallowingthemanagementtoconcludeatransaction.Aswell,thereisageneralrequirementthatdirectorsmustrefrainfromvotingonissueswhereintheyhaveadirectorindirectinterest.Asarule,managementmemberscouldbeheldliableonlybytheGASfortheirmanagementoperations.However,theshareholdersholdingmorethan5%ofthesharecapitalmayengagetheliabilityofthemanagementmembersincasetheGASdidnotexercisesuchright.Theofficialreceiverappointedincaseinsolvencyproceedingsareinitiatedagainstcompaniesmayalsoengagetheliabilityofthemanagementmembersand,failingtodoso,thecreditorsoftheconcernedcompanymayexercisesuchrightunderspecificcircumstancesregulatedintheinsolvencylegislation.

LimitedLiabilityCompanies

SharesandsharecapitalAlimitedliabilitycompanymayhave1to50shareholdersandmustholdasharecapitalofatleastRON200(approx.EUR50).Anindividualoralegalentitymaybethesoleshareholderinonelimitedliabilitycompanyonly.Thesoleshareholderofalimitedliabilitycompanymaynotbeitselfalimitedliabilitycompanyownedbyasoleshareholder.

Duringthecompany’slife,providedthattheabove—mentionedminimumthresholdisobserved,thesharecapitalmaybeeitherincreasedordecreased.Therulesgoverningthecaseofreductionofthenetassetsbelowhalfofthesubscribedsharecapitalinjointstockcompaniesapplyalsotolimitedliabilitycompanies.

Thesharesofalimitedliabilitycompanycannotbetradedonaregulatedmarket.Thelimitedliabilitycompanycannotissuebonds.Thesharesarefreelytransferablebetweentheshareholders,whiletransferstowardsthirdpartiesaresubjecttotheapprovaloftheshareholdersholdingatleast¾ofthecompany’ssharecapital.Theeffectivenessofthetransferofsharestowardsthirdpartiesisconditionedbythelapseof30—dayoppositiontermorbytherejectionofsuchoppositionthroughanirrevocablecourtdecision.Theoppositiontermisnotapplicabletosharecapitalincreasesthroughcontributionsmadebythirdparties.

Thelimitedliabilitycompany’smanagementDecisionmakinginalimitedliabilitycompanybelongstotheGAS.ThedirectorsareobligedtoconvenetheGASwhenevernecessary,butinanycaseatleastonceayear.Theshareholdersofatleast25%ofthesharecapitalhavetherighttorequesttheconveningoftheGAS.Unlessotherwiseprovidedinthecompany’sarticlesofassociations,thedecisionsmaybepassedwithintheGASbasedonthevotesof,cumulatively:over50%oftheshareholdersandover50%ofthesharecapital.

TheshareholdershavinganinterestinthemattersubmittedtotheGASforapprovalhavetorefrainfromvoting.IntheeventthattheGAScannotvalidlytakeadecisionduetotheabsenceofthemajorityrequiredbythelaw,theGASmaydecideatthesecondcallirrespectiveofthenumberoftheshareholdersattendingthemeetingandoftheirquotatothecompany’ssharecapital.

Thelimitedliabilitycompanyismanagedbyoneorseveraldirectors,whomaybeshareholdersorthirdparties.UnlessotherwiseapprovedbytheGAS,thedirectorsaresubjecttocertainnon—competingrestrictions(i.e.theymaynotholddirectorshippositioninanothercompanyconductingthesamebusinessoracompetingbusinessactivityandmaynotperform,ontheirownaccountoronbehalfofathirdparty,thesamebusinessactivityoracompetingbusinessactivity).Theone—andtwo—tiermanagementsystemsdescribedforjointstockcompanies,andthelimitationsattachedthereto,areexpresslyexcludedfromapplicationinthecaseoflimitedliabilitycompanies,totheeffect,interalia,thatthedirectorsinalimitedliabilitycompanymaybeconcomitantlyemployeesofthatcompany.

TheGASbutnottheshareholdersthemselvesmayengagethemanagementliability.Similarwithjointstockcompanies,themanagementliabilitymaybeengagedduringinsolvencyproceedingsbytheofficialreceiverorbythecreditors.

AuthorizedIndividuals

Authorizedindividualsmaycarryonbusinessactivitiesasself—employedauthorizedindividuals,asownersofindividualenterprises,orasmembersoffamilyenterprises.Theownersofindividualenterprisesaretheonlyauthorizedindividualsabletoactasemployersandtoconcludeindividualemploymentagreementswiththirdparties.TheactivityoftheauthorizedindividualsismainlyregulatedbytheGovernmentEmergencyOrdinanceNo.44/2008(GEO44/2008).Authorizedindividualsarepersonallyliableforalltheobligationsundertakenduringthebusinessoperations.UnderGEO44/2008,RomaniancitizensandcitizensofEUMemberStatesandEEAareallowedtocarryoutinRomania,asauthorizedindividuals,allthebusinessactivitiesprovidedbytheCAENCode.

TheactivitiesperformedbyindividualsrequirepriorregistrationwiththeTradeRegistryOfficehavingjurisdictionintheareawheretheapplicantshaveresidenceorwheretheactivitiesaretobecarriedout.TheTradeRegistryshouldissuetheregistrationcertificatewithinaperiodofmaximum5businessdaysasofthesubmissionoftheapplicationandcompletedocumentation.Theregistrationcertificatebestexpressesthesimplifiedprocedureofauthorizationindividualsenjoy,asitincorporatestheactualregistrationoftheindividual,therequiredfunctioning


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authorisations(e.g.sanitaryauthorization,fireextinctionauthorizationetc.),aswellastheregistrationoftheauthorizedindividualwiththefiscalauthorities.However,underspecialenactments,certainactivitiesrequireadditionalspecificauthorisationbeforebeginningtheactualoperations(e.g.theinsuranceagentmustbeauthorizedbyaninsurance/reinsurancecompany).GEO44/2008isalsonotapplicablewhenthepermissiontopracticecertainactivitiesisgrantedthroughadecisionofaspecificprofessionalbody,asitisthecaseoflawyers,certifiedaccountantsorfinancialauditors.

RestructuringBusinesses

Inthecontextoftheeconomicandfinancialcrisis,severalbusinessrestructuringoptionsgatheredground,includingmergers,spin—offstransferoflinesofbusinesses,andacquisitionanddisposalofassets.TheCompaniesLawregulatesinadedicatedchapterthemergerandspin—offofcompanies.Themergermaytakeplaceeitherbymergingoneormorecompaniesintoanother,existingcompany(“fuziuneprinabsorbţie”)orbytwoormorecompaniesdecidingtoformanewcompany(“fuziuneprincontopire”).Inthefirstcase,theabsorbedcompaniesaredissolvedwithoutundergoingliquidation,whileinthesecondcaseallparticipatingcompanies(exceptfornewlycreatedone)followthesameprocessofdissolutionwithoutliquidation.Spin—offsaremadebytransferofonecompany’sassetsandliabilities,eitherentirelyorpartially,totwoormoreexistingornewlycreatedcompanies.Thespun—offcompanyisdissolvedwithoutundergoingliquidation.Transferringpartofonecompany’sassetsandliabilitiestooneormoreexistingornewlycreatedcompaniesisassimilatedtospin—off.

Mergersandspin—offshavetobeapprovedbytheGASofeachparticipatingcompanyandmustfollowaspecificimplementationprocess.Thelegalframeworkapplicabletomergersandspin-offshasbeenamendedinthesecondhalfof2010inviewofshorteningthedeadlineforcompletingsuchoperations,especiallythroughtheeliminationofthesuspensiveeffectoftheoppositionfiledbythecreditorsofthecompaniesparticipatingintheoperations.

Companiesinfinancialtroublemayundergoreorganizationbasedonaplanapprovedwithininsolvencyproceedingsbeforetheirsharesaresoldortheirassetstransferredtothirdparties.Thesuccessfulfinalizationofsuchreorganizationplanoffersanimportantlevelofcomforttoboththecreditorsoftheconcernedcompanies,andtothepurchasersofitssharesorassets.Allsuchprocessesinvolveamulti—disciplinarylegalanalysis.Besidesthecorporateaspects,thepermittingmatters(includingapprovalsfromthecompetentauthoritiesandtransferofauthorizations)andtheemploymentissues(suchastheprotectionofemployeesincaseoftransferofundertakings)mustbecarefullyassessed.

Environment

General.MainRegulations.RegulatoryAuthorities

Romanianlegislationonenvironmentiscurrentlyundergoingchanges,asimplementingnewregulationsforenvironmentalprotectionhasbecomeoneofRomania’slegislativeprioritiesafterjoiningtheEUinJanuary2007.

Duringthelastyears,RomanianauthoritieshavemadeseriouseffortsinordertotransposetheprinciplesoftherelevantEUDirectivesinthisfieldand,atthetimeofthisanalysis,themostimportantEUDirectivesalreadyimplementedinRomaniaarethefollowing:•DirectiveNo.96/61/ECconcerningintegratedpollutionpreventionandcontrol(theIPPCDirective);

•DirectiveNo.2004/35/EConenvironmentalliabilitywithregardtothepreventionandremedyingofenvironmentaldamage;

•DirectiveNo.85/337/EEConassessmentoftheeffectsofcertainpublicandprivateprojectsontheenvironment;

•DirectiveNo.2003/35/ECprovidingforpublicparticipationinrespectofthedrawingupofcertainplansandprogramsrelatingtotheenvironmentandamendingCouncilDirectives85/337/EECand96/61/ECwithregardtopublicparticipationandaccesstojustice;

•DirectiveNo.2000/60/ECestablishingaframeworkforCommunityactioninthefieldofwaterpolicy;

•DirectiveNo.79/409/EEContheconservationofwildbirds;•DirectiveNo.92/43/EEContheconservationofnaturalhabitatsandofwildfaunaandflora.


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Themainauthoritiesentrustedwiththeapplicationoftheenvironmentalrulesare:• Thelocalenvironmentalprotectionagenciesestablishedineachcounty;• Theregionalenvironmentalprotectionagencies(i.e.oneregionalenvironmentalprotectionagencycoordinatestheactivityofseverallocalenvironmentalprotectionagencies);

• TheNationalEnvironmentalGuard.

TheMinistryofEnvironmentandtheNationalEnvironmentalProtectionAgencyalsohavecompetenciesinapplyingtheenvironmentalregulations;however,theirimplicationislimitedtoprojectsthatmayhavesignificantimpactatnationallevel,orwhichmayimpactontheenvironmentofotherstates.

ImplementingProjectsWhichMayGenerateanEnvironmentalImpact

Implementingprojectsthatmaygenerateimpactontheenvironmentrequiresatwo—tierauthorization.Ontheonehand,suchprojectsmayonlybedevelopedsubjecttoobtaininganenvironmentalagreement(“acorddemediu”),whichsetsouttheconditionstobefulfilledsoastoensurethattheimplementation(construction)oftheprojectcomplieswiththestatutoryenvironmentalrequirements.Theenvironmentalagreementisoneofthedocumentssubstantiatingtheapplicationforabuildingpermit.Ontheotherhand,worksmaynotbecommissioneduntiltheoperatorobtainsanenvironmentalauthorization(“autorizaţiedemediu”),whichisseparatefromtheenvironmentalagreement.

TheenvironmentalagreementTheenvironmentalagreementisissuedfurthertoconductingacomplexprocedurecoordinatedbytheenvironmentalprotectionagenciesatdifferentlevelsor,incertaincases,bytheMinistryofEnvironmentitself.ThestatutoryframeworkinthefieldofenvironmentalimpactassessmentwasamendedinApril2010soastoensureabetterimplementationoftheEIADirective2001/42/CEaswellasabettersynchronizationwiththelegalenactmentsinthefieldofbuildingpermitting.Asafirststepofthislegalprocedure,theenvironmentalauthoritiesconductafirstassessmentaimedatestablishingthemagnitudeoftheenvironmentalimpactpossiblygeneratedbytheproject.Forprojectsdeemedtogenerateminorimpact,thelawprescribesasimplifiedpermittingprocedure,theprojectdevelopersbeingallowedtobeginconstructionworkswithoutanenvironmentalimpactassessment.Forprojectsgeneratinganimportantimpactontheenvironment,developersareinvitedtoprepareanenvironmentalimpactassessment.Tothisend,afterhavingconsultedtheinterestedmembersofthepublic,thecompetentauthoritypreparesachecklistwiththeitemstobecoveredinthereport.

Thereportissubmittedbytheenvironmentalauthoritytoapublicdebate.Basedonthefindingsintheenvironmentalimpactassessmentreportand,ifthecase,onthecommentsreceivedfromthepublic,theenvironmentalauthoritytakesitsdecisiononissuingtheenvironmentalagreement.Thedecisionispublishedinthemedia,soastoallowanyinterestedpersontochallengeit.Theenvironmentalagreementsarevalidforthewholeperiodofprojectdevelopment.

ThepublicpotentiallyaffectedbytheprojectandtheNGOsspecializinginenvironmentalprotectionplayanimportantroleintheprocedure,astheyhavetherighttoparticipateintheprocessbysubmittingtheirpointsofviewinrelationtotheprojectandbyparticipatingtothepublicdebatesorganizedbytheenvironmentalauthorities.

Forprojectsthatmaygenerateimpactontheenvironmentofneighboringcountries,theMinistryofEnvironmentconductsconsultationswiththerelevantauthoritiesinthepossiblyaffectedstate.Decisionsonissuingtheenvironmentalagreementforsuchcasesmusttakeintoaccountthecommentsandsuggestionspossiblyreceivedfromthepotentiallyaffectedstate.Theenvironmentalagreementisapre—requisiteforobtainingthebuildingpermitforprojectswithsignificantimpactontheenvironment.In2009,theframeworkprocedureforissuingtheenvironmentalagreementwasamendedtoensurebettersynchronizationwiththelegalframeworkgoverningtheissuanceofthebuildingpermit.

TheenvironmentalauthorizationWhiletheenvironmentalagreementisthedocumentregulatingtheimplementationofenvironmentimpactingprojects,activitieswithpossibleimpactontheenvironmentmayonlybecarriedoutsubjecttoanenvironmentalauthorization.Theauthorizationsetsforththespecifictechnicalconditionstobecompliedwithwhencarryingonaspecificactivitypossiblygeneratinganimpactontheenvironment.

Theenvironmentalauthorizationmayprovideforasetofmeasurestobeimplementedinordertoreducetheimpactontheenvironment,establishingalsothetimescheduleforimplementingtherespectivemeasures.Failuretoabidebyitstermsmaytriggerthesuspensionorannulmentoftheenvironmentalauthorization.

ProjectssubjecttotheIPPCDirectiveForinstallationssubjecttotheIPPCDirective,integratedenvironmentalagreementsandintegratedenvironmentalauthorizationsarerequired.

Theintegratedenvironmentalagreementisthedocumentsettingouttheconditionstobefulfilledsoastoensurethatdevelopment(construction)oftheprojectcomplieswiththestatutoryenvironmentalrequirements.


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Unlesstherelevantwaterinstallationsexceedacertaincapacity,theuseofundergroundandsurfacewatersisfreeforsmallactivitiesspecifictohouseholds,suchashumanandanimalconsumption.

Therighttousewatersforotheractivitiesisonlygrantedthroughadministrativeactsregulatingthetermsandconditionsofuse,namely:• Thewatermanagementpermit(“avizdegospodărireaapelor”);and/or• Thewatermanagementauthorization(“autorizaţiedegospodărireaapelor”).

Thewatermanagementpermitisapre—requisitedocumenttobeginningconstructionworksfornewinvestmentprojectsbuilton/nearwatersources,orrelatedtotheuseofwaters.Applyingforthebuildingpermitispossibleonlyafterhavingobtainedthewatermanagementpermit.

Thewatermanagementauthorizationisrequiredbeforethecommissioningandexploitationofnewprojectserectedon/nearwatersources,orwhicharerelatedtotheuseofwater.Thewatermanagementauthorizationregulatesindetailthetermsandconditionsunderwhichtheuseofwaterisallowed.

Exceptionally,forcertainprojectsoractivities,thelawexemptstheprojectdevelopers/operatorsfromtheirobligationstoobtainthewatermanagementpermitorthewatermanagementauthorization.Inthissituation,amerenotificationtotherelevantbranchof“RomanianWaters”NationalCompanyissufficient.

EmissionofGreenhouseGases

In2001,RomaniawasamongthefirststatestoratifytheKyotoProtocolregardingtheframeworkConventionoftheUnitedNationswithrespecttotheclimatechanges.In2006,RomaniatransposedtheDirective2003/87/ECestablishingaschemeforgreenhousegasemissionallowancetradingwithintheCommunity.Asof1stofJanuary2007,anyoperatorofequipmentslistedinAnnexItotheDirective2003/87/ECmustholdagreenhousegasemissionauthorizationandanadequatenumberofgreenhousegasemissioncertificatesallowingacertainlevelofgreenhousegasemissions.

Atthesametime,startingwiththe1stofJanuary2007,Romaniahasimplementedagreenhousegasemissiontradingscheme.ThetotalnumberofgreenhousegasemissioncertificatesgrantedtoRomaniaisapprovedbytheEuropeanCommissionseparatelyfor2007andthenforeach5—yearsubsequentperiod.Forthefirsttwoperiods(i.e.for2007andfor2008—2012),operatorsofinstallationslistedinAnnexItotheDirective2003/87/ECweregrantedacertainnumberoffreegreenhousegasemissioncertificatestobeusedinrespectoftheirpollutingactivity.

Applyingforabuildingpermitisonlypossibleafterhavingobtainedtheintegratedenvironmentalagreement.

TheintegratedenvironmentalauthorizationsetsforththespecifictechnicalconditionstobecompliedwithwhenoperatinganinstallationsubjecttotheIPPCregulations.Whileestablishingmeasurestoreducetheimpactisallowedinenvironmentalauthorizations,theintegratedenvironmentalauthorizationisissuedonlyiftheinstallationinquestioncomplieswiththebestavailabletechniques.Incertainexceptionalcases,theintegratedenvironmentalauthorizationmayprovideforasetofmeasuresensuringthattheoperatorreachesthestatutoryrequirementswithin6months.

InthecontextoftheaccessiontotheEU,Romaniafacedthechallengeofbringingtheoldinstallationstomeetthebestavailabletechniques.Sinceimplementingsuchtechniquescouldnotbeachievedinashortperiodoftime,Romaniahasnegotiatedtransitionperiodsforensuringprogressivecomplianceofcertaininstallations.

ChangeofOperatorsofImpactingActivities

Whenevertheoperatorofanactivitygeneratingsignificantimpactontheenvironmentissubjecttochangeofcontrol,saleofassets,merger,spin—off,concessionorotheroperationsentailingachangeoftheoperator,suchoperationsmustbenotifiedtotheenvironmentalprotectionagency,inorderforthelattertoinformthepartiesinvolvedonthespecificenvironmentalobligationstheymustundertake.

Havingreceivedthelistofenvironmentalobligations,thepartiesinvolvedinanyoftheoperationsabovewillnegotiatetheallocationofsuchobligationsamongthem.

Theexactmannerthepartiesinvolvedunderstoodtosplittheresponsibilityforfulfillmentoftherelevantenvironmentalobligationsmustbenotifiedtotheenvironmentalprotectionagency.

WaterManagement

Whilemostwatersareincludedinthestate’spublicdomainandadministeredbythe“RomanianWaters”NationalCompany(CompaniaNaţională“ApeleRomâne”),theGovernmenthastheexclusiverighttoestablishtherulesgoverningtheuseofwaters,irrespectiveofwhetherwatersourcesareincludedinthepublicdomainornot.


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wildbirdsandCouncilDirective2006/105/ECof20thofNovember2006adaptingDirectives73/239/EEC,74/557/EECand2002/83/ECinthefieldofenvironment,byreasonoftheaccessionofBulgariaandRomaniatotheEU.

InRomania,thereareseveraltypesofprotectedareas,dependingontheirimportance:• Protectedareasofnationalinterest;• Protectedareasofinternationalinterest;• ProtectedareasofCommunityinterest(Natura2000);• Protectedareasoflocalinterest.

Dependingontheimportanceofvariousprotectionareas,theirmanagementmaybeentrustedtospecialstructuresorganizedforthispurposecompaniesortocustodians,whichmaybeindividualsorlegalentities.

ThemanagementoftheDanubeDeltaWildlifeReservationisentrustedtoaspecially—createdentity,theDanubeDeltaWildlifeReservationAdministration.ThisentityisunderthedirectcontroloftheMinistryofEnvironmentandForests.

Foreachprotectedarea,theadministratorsorcustodianspreparethemanagementplansandtheregulationssettingforththerulesapplicablewithinthearea.SuchmanagementplansandregulationsareapprovedbytheRomanianGovernmentor,asthecasemaybe,bytheMinistryofEnvironment.Thepossibleinfluenceofanyenvironmentalimpactingprojectsontheprotectedareasissubjecttoassessmentwithintheenvironmentalimpactassessmentprocedureconductedforthepurposeofobtainingtherelevantenvironmentalagreement.

LiabilityforDamagesCausedtotheEnvironment

Theliabilityfordamagescausedtotheenvironmentisgovernedbytheprinciple“polluterpays”.Operatorsmustpromptlyinformthelocalenvironmentalprotectionagencyonanydamagecausedtotheenvironment,aswellasonanyimminentthreatofsuchdamage.Inanysuchsituation,theoperatormusttakeallnecessaryreparatoryand/orprecautionarymeasures.

Iftheoperatordoesnotcomplywiththeseobligations,oriftheoperatorisnotidentified,therelevantenvironmentalprotectionagencyisentitledtotakeallreparatoryorprecautionarymeasuresitself,ontheaccountoftheoperatorwhohastobeartherelatedcosts.Inordertorecoverthecosts,theenvironmentalprotectionagencymayproceedtoseizingthegoodsoftheoperator.Ifdamagetotheenvironmentorathreatofsuchdamageiscausedbytwoormoreoperators,theirliabilitywillbejoint.

For2007and2008—2012,thegreenhousegasemissiontradingschemeprovidesforacertainlimitednumberofcertificatesformingthenationalreserveavailablefornewentrants(i.e.installationscarryingoutoneormoreoftheactivitiesindicatedinAnnexItotheDirective2003/87/EC,whichhasobtainedagreenhousegasemissionspermitsubsequenttothenotificationtotheCommissionofthenationalallocationplan).Allocationofcertificatestonewentrantsisfreeandismadeona“firstcame,firstserved”basis.Shouldthedemandfromnewentrantsexceedthenumberofcertificatesavailableinthenationalreserve,thenewentrantswhocouldnotobtainfreecertificateswouldhavetoacquiresuchfromthemarket.Forinstallationswhicharedefinitelyclosed,therelevantgreenhousegasemissioncertificatesarevalidonlyfortheclosingyear;theremainingcertificatesaretobetransferredtothenationalreserve.

NoiseRequirements

TheRomanianstandardsinthefieldofnoisepollutionstipulatethatanyconstructionswhichmaygenerateenvironmentalnoisemustbelocatedinsuchawaysoastheimpactoverinhabitedareasdoesnotexceedcertainthresholds.Asperthelegalprovisionsinforce,thecontinuousnoiselevelmeasuredincertaintechnicalconditionsmustnotexceed50dbandlevel45forthenoisecurveduringtheday.Duringthenight,thenoiselevelvaluesmustbelowerwith10db.Also,thecontinuousnoiselevelmeasuredinsideapartments,schoolsorlibraries(withwindowsclosed)mustnotexceed35dbandlevel30forthenoisecurveduringtheday.Duringthenight,thenoiselevelvaluesmustbelowerwith10db.Thesethresholdshavetobetakenintoaccountwhendevelopingnewprojects;atthesametime,forprojectsgeneratingenvironmentalimpact,theymustbeconsideredwhenpreparingtheenvironmentalimpactassessmentreportrequiredforobtainingtheenvironmentalagreement.Inthefieldofnoiseimpact.RomaniahasimplementedDirective2002/49/ECrelatingtotheassessmentandmanagementofenvironmentalnoise,thusimplementingasystemaimedatpreventingthenegativeeffectscausedbyenvironmentalnoise.Publicauthoritiesmustpreparenoisemapsforthenoisyareasidentifiedinthelaw(i.e.bigcities,airports,roads,railwaysandharbors)andproposeactionplansthatwouldhelppreventandreducetheimpactofenvironmentalnoise.

ProtectedAreas

RomanianlegalframeworkwasalignedtotheEUrequirementsprimarilythroughtheimplementationofDirectiveNo.92/43/EEContheconservationofnaturalhabitatsandofwildfaunaandflora,DirectiveNo.79/409/EEContheconservationof


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PrivateProperty

Saveforpublicproperty,anyrealestatecanbesubjecttoprivatepropertyrights.

Asageneralrule,anylegalornaturalentitymaybetheholderofprivatepropertyrights.However,theConstitutionandthespecificapplicablelaw(LawNo.312/2005ontherightofforeigncitizensandstatelessindividuals,aswellasofforeignlegalentitiestoacquiretheprivatepropertyrightoverlands,whichcameintoeffectonthe1stofJanuary2007)setforthlimitationsontherightofforeigncitizensandstatelessindividualstoacquireownershipoverlandsinRomania.CitizensofanEUMemberStateorstatelessindividualsdomiciledinanEUMemberState,whoarenotRomanianresidents,aswellaslegalpersonsestablishedunderthelawsofanEUMemberState,willbeallowedtoacquireownershipoverlandsinRomaniaforthepurposeofestablishingasecondaryresidenceorabusinessunitstartingwith2012.Ownershipoveragriculturallands,forestsorforestlandswillbemadeavailabletocitizensofanEUMemberStateortostatelessindividualsdomiciledinanEUMemberState,whoarenotRomanianresidents,onlystartingwith2014,andonlyprovidedsuchpersonsworkasindependentfarmersandbecomeRomanianresidents.

Non—EUcitizensandstatelessindividualsnotdomiciledinanEUMemberStatemayonlyacquireownershipoverlandsinRomaniainaccordancewithinternationaltreatiesandtothereciprocityprinciple,underconditionsnotmorefavorablethanthosesetforEUcitizens,EUlegalpersonsand,respectively,Romaniancitizens.ThemostpracticalwayforforeigninvestorstoacquirelandinRomaniaistoset—upaspecialpurposevehiclewithitsheadquartersinRomania.ThiswillbeaRomanianlegalentityand,therefore,willbeentitledtoacquirelandwithoutthelegallimitationsimposedtoforeigncitizens.

FormalRequirementsfortheValidTransferofLands

UnderRomanianlaw,deedshavingasobjectthetransferofownershipoverrealestatemustbeconcludedinauthenticatedform(i.e.signedinfrontofaRomanianpublicnotary),underthesanctionofabsolutenullity.

AccordingtotheRomanianFiscalCode,individuals(naturalpersons)obtainingincomefromtransferringtherightofownership(ordismembermentsofownership)overrealestate(constructionsofanykindandtheaffectedlandand/orlandofanykindwithoutconstructions)arecompelledbylawtopayincometaxtothestatebudget.

RealEstate

PublicProperty

BothStateandterritorial—administrativeunits(communes,cities,municipalitiesandcounties)ownpropertiesconsistingofrealestatethat,accordingtocertainlegalprinciples,belongseithertothepublicortheprivatedomain.

Publicpropertyincludesallrealestatethatunderthelaworbyitsnatureisofpublicuseorinterest.Asanexample,thepublicpropertyoftheRomanianStateincludesestatessuchasroads,beaches,parks,railwayinfrastructure,etc.

AccordingtotheprinciplesoftheRomanianConstitution,realestateinthepublicdomain(i)maynotbesubjecttotransfersofownershipright;(ii)maynotbesubjecttoenforcementproceduresand(iii)maynotbeencumberedbysecurityinterests.Anytransactionreferringtoanassetthatispartofthepublicdomain,andwhichdoesnotobservetheabove—mentionedrules,isdeemedtobenullandvoid.

Someoftheprivaterealestateprojects,especiallyprojectsdevelopedinpartnershipwithlocalauthorities,involvetransfersoflandsandbuildingsfrompublicpropertyintoprivatepropertyortransfersbetweenthepublicdomainsoftheStateandrespectivelyofthecities.Thelawimposescertainlimitationstosuchtransfers.

AccordingtotheConstitution,assetsinthepublicdomainmaybeexploitedbythirdpartiesbymeansofconcession.Thesale,concessionorleaseofsuchrealestatesshouldbeachievedbymeansofapublictender.

Exceptionally,therighttouserealestatebelongingtopublicpropertymaybegranted,freeofchargeandforalimitedperiodoftime,tothepublicutilityinstitutions.


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Certainlimitationstothefreelegalcirculationofrealestateareregulatedbyspecificrestitutionlaws(i.e.LawNo.10/2001regardingthelegalregimeofcertainabusivelytakenoverrealestatesandLawNo.247/2005regardingthereforminthefieldsofownershipandjustice,aswellascertainadjacentmeasures):iftheownershiptitleoverarealestatewhichfallswithintheregulatoryscopeoftherestitutionlawsissubjecttoanadministrativeprocedureand/orlitigation,thesaidrealestatemaynot,amongothers,bevalidlytransferredbeforesuchproceduresand/orlitigationaresettled.

ClaimsRegardingRealEstateAbusivelyTakenbytheRomanianStateduringtheCommunistRegime

WithintheprocessofacquiringlandforthepurposeofdevelopingrealestateprojectsinRomania,realestateinvestorsshouldalwaysconsiderthecriticalissueofclaimsfiledbyformerownersofrealestateabusivelytakenbytheRomanianStateduringtheCommunistregime(bywayofabusiveexpropriation,abusiveconfiscation,abusivenationalizationetc.).Startingwith1991,theRomanianParliamentissuedaseriesofenactmentsregulatingtherestitutionofsuchrealestate,suchas:• LandLawNo.18/1991(“Legeafonduluifunciar”);• LawNo.1/2000onthereinstatementoftheownershiprightoveragriculturalandforestlandclaimedinkeepingwiththeprovisionsoftheLandLawNo.18/1991andLawNo.169/1997;

• LawNo.10/2001regardingthelegalregimeofcertainabusivelytakenoverrealestatesbetween6thofMarch1945and22ndofDecember1989;

• LawNo.247/2005regardingthereforminthefieldsofownershipandjustice,aswellascertainadjacentmeasures,whichcompletesandunifiesthegenerallegalframeworkonrestitutionofrealestate.

Therulesetforthintheabove-mentionedenactmentsisthatrestitutionoftheabusivelytakenrealestateshouldbemadeinkind.Specifically,therightsofownershipmustbereconstitutedfortheoriginalrealestate,ontheiroriginallocations/sites.Onlyshouldrestitutioninkindnotbepossible,theformerownersshallbegrantedcompensation.Thisrulemayhavesignificantconsequencesif,forinstance,atthedateoftheclaim,therealestateispublicpropertyofacityandsubjecttoaconcessionagreementawardedtoaprivateinvestor.AsaruledepartingfromtheordinarylegalprovisionsrelatedtoregistrationwithintheLandBook,theownershiptitlesissuedbasedonthe

Thevalueofsuchincometaxdependsonthetransferprice,aswellasonthetimeperiodelapsedbetweenthedatewhentherealestatewasacquiredbythesellerandthedatethesellertransferstheownershipand/ordismembermentsofownershipoversaidrealestate,asfollows:• Iftheownership(orthedismembermentofownership)overtherealestatehasbeenacquiredbythesellerwithina3—yearperiodpriortoitsbeingtransferred,theincometaxamountsto:(i)3%oftheprice,ifthepricedoesnotexceedRON200,000,respectivelyto(ii)RON6,000plus2%ofthevalueexceedingRON200,000,ifthepriceexceedsRON200,000;

• Iftheownership(orthedismembermentofownership)overtherealestatehasbeenacquiredwithinaperiodexceedinga3-yeartermpriortothetransfer,theincometaxamountsto(i)2%oftheprice,ifthepricedoesnotexceedRON200,000and(ii)RON4,000plus1%ofthevalueexceedingRON200,000,ifthepriceexceedsRON200,000.

LimitationstotheFreeLegalCirculationofRealEstate

Asageneralrule,privatelyownedrealestatemaybefreelytransferred.Exceptionstothefreelegalcirculationruleareincludedinspeciallaws.

Forinstance,inthecaseofpropertyrightsestablished5overcertaintypesofagriculturallandregulatedbytheLandLawNo.18/1991,ownershipcouldnotbetransferredbyitsinitialownerfora10—yearperiodbeginningwiththeyearfollowingtheoneinwhichthepropertywasregistered.InaccordancewiththeprovisionsofLawNo.71/2011fortheimplementationofLawNo.287/2009ontheCivilCode,thislimitationwasremovedasoftheentryintoforceoftheNewCivilCodeonthe1stofOctober2011.

AnotherlimitationtothefreelegalcirculationofrealestateisincludedintheRomanianForestryCodewithrespecttothetransferoftherightofownershipoverforestlands,whichmayonlybepermittedsubjecttoobservingtheRomanianState’spreemptionright.UnderLawNo.422/2001ontheprotectionofhistoricalmonuments,theRomanianState,respectivelytheterritorial—administrativeunits,alsobenefitofapreemptionrightincasesoftransferoftherightofownershipoverrealestateclassifiedas“historicalmonuments”undertheapplicablelegalprovisions.

5 Thislimitationonlyappliedtotheestablishment(“constituire”)ofpropertyrights,andnotalsotothecasesofreinstatement(“reconstituire”)ofsuchrights,twodifferenthypothesesunderthelaw.


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(“opozabilitatefaţãdeterţi”).Therefore,untilthischangeintheirlegalregime,registrationswiththeLandBookshallbecarriedoutaccordingtotheprovisionsofLawNo.7/1996oncadastreandrealestatepublicity(the“CadastreLaw”),totheeffectofopposability,ratherthanconstitutionofrights.

Inviewoftheabove,recordingintheLandBookrightsacquiredbyinvestorsoverrealestatesinvolvedinaproject(forinstance,rightsderivingfromconcession,lease,aprohibitiontosell)isessentialinordertoensuretheopposabilityandstabilityoftherightsoacquired(whileafterthefinalizationofthenationalgeneralcadastreofRomaniasuchregistrationwillbemadeforconstitutivepurposes).ThereviewoftherecordsintheLandBookwithrespecttoarealestatecontemplatedbytheprojectmayrevealissueswhichsignificantlyinfluencethedevelopmentoftheproject,makingitarequiredsteppriortoacquiringrights(forinstance,theLandBookmayrevealthattheestateissubjecttoaninterdictiontoalienateandtosetupmortgages,orthattheestateisunderconcessiontoathirdparty,etc.).

BesidesthenewruleontheconstitutiveeffectsofLandBookregistrations,whichhasnotyetbecomeeffective,theNewCivilCodealsoestablishesasetofprinciplesconcerningtheeffectsoftheregistrationoflegalrights,deedsandacts,registrationmethods,caseswherethereisaconflictbetweenseveralformsofregistrationandtherightofanypersontohaveaccesstopublicregistries,evenifsuchpersondoesnotjustifyaninterest.

TherighttodemandfulfillmentofregistrationformalitiesisprotectedundertheNewCivilCode,whilecontractualclausesseekingtolimittherighttoperformcertainregistrationformalitiesaredeemednullandvoid.Whereregistrationproceduresrelatedtoadeedorrighthavebeenperformed,thirdpartiesmaynotprovethattheywerenotawareofsuchdeedorright.TheprovisionsoftheNewCivilCodeestablishtwolegalrelativepresumptions,i.e.:thepresumptionrelatedtotheexistenceoftheregisteredactorrightifitwasnotamendedorde-registeredandthepresumptionoftheinexistenceofade-registereddeedoract.

TheCadastreLawsetsforththemannerinwhichlegaloperationsregardingrealestatepropertiesaretobepublished.TherecordsarekeptbytheNationalAgencyforCadastreandRealEstatePublicity,throughitsterritorialunits.Thegeneralcadastrerecordsystemisdesignedtoprovideapublicrecordofalltransactionsandrelevantlegalissuesrelatedtorealestatelocatedinthesameterritorialunit.

TheLandBookprovidesforadescriptionofestates(cadastralnumberoftheestate,dimensionsoftheestate,itscategoriesofuseand,asthecasemaybe,thebuildingsandthelocationoftheestatebyindicatingneighboringareas),forvariousaspectsrelatedtotheownershipright(nameoftheowner,thelegaldeedorfactwhichgivesrisetotheowner’sright,anyrights—of—way,legalfacts,personal

lawsonrestitutionoflandpropertiesshallberegisteredwiththeLandBookexofficio.Further,LawNo.247/2005setsforththelegalframeworkgoverningcompensations,bywayofestablishingFondulProprietateaSA,asecuritiescollectiveplacementbody,intheformofafinancialinvestmentcompany.

ConsideringthelargenumberofpropertiesabusivelytakenbytheStatebetween1946and1989,andthemultitudeoflegalissuesraisedinconnectionwithsuchpropertiesovertheyears,alsoduetochanginglegislation,adetailedlegalduediligenceinvestigationonthebackgroundoftheownershiptitleovertherelevantrealestate(landand/orbuilding)isarequirementbeforeinitiatinganyrealestateprojectinRomania,irrespectiveofwhethertherealestateiscurrentlyintheState’spublicdomain,intheprivatedomainofacity,orownedbylegalentityoranindividual.

RealEstatePublicity

AsamajorlegislativenoveltyinRomanianrealestateregulations,theNewCivilCode,inforcestartingfrom1stofOctober2011,setsforththeruleaccordingtowhichthefinalregistration(“intabularea”)ofacertainrightwiththeLandBookwillhaveaconstitutiveeffect,leadingtothecreationoftherespectiveright,ratherthanamereopposabilityeffect,asunderthepreviousrule.

Conversely,privateownershipoveranimmovableassetshallceaseupontheregistrationwiththeLandBookofthe(previous)owner’swaiverthereof,undercertainregulatedforms,anditsde-registrationfromtheLandBook.Bywayofexception,ownershipmayalsobeobtainedwithoutregistrationwiththeLandBook(whichwillretainanopposabilityeffectonly)whenacquiredbyoneofthefollowingmeans:naturalaccession,inheritance,forcedsale,expropriationforpublicutilityreasonorothercasesexpresslyregulatedunderthelaw.Realrightsacquiredbyforcedsalearenotenforceableagainstgood-faiththirdpartyacquirersiftheenforcementproceedingshavenotbeenpreviouslynotedintheLandBook.Nevertheless,inordertolegallydispose(e.g.sellaproperty)ofarightobtainedbyoneoftheabovementionedlegalmeans,theownerwillhavetopreviouslyregisteritsownershiprightwiththeLandBookforopposabilitypurposes.

However,thissetofnewrulesshallonlybecomeapplicableafterthecompleteimplementationoftheunitaryandmandatorycadastralsystemprovidingatechnical,economicalandlegalrecordofrealestate,asystemalreadyinitiatedinRomaniastartingwith1996.Untilthenationalgeneralcadastresystemisfullyinplace,andfinalregistrationswillbecomeconstitutiveofrightsasenvisagedbytheNewCivilCode,thepublicrecordsystemwillonlyhavethepurposeofmakingsuchrightsopposableagainstthirdparties


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Asforleasedassets,theNewCivilCodesetsforththat,ifownershipovertheleasedassetistransferred,theleasecontractshallbeenforceableagainsttheacquirerpursuanttothefollowingrules:• InthecaseofimmovableassetsregisteredwiththeLandBook,onlyiftheleaseagreementwasnotedtherein;

• InthecaseofimmovableassetsnotregisteredwiththeLandBook,onlyifthecertifieddate(“datacertã”)oftheleaseagreementisprevioustothedateoftheownershiptransfer;

• Inthecaseofimmovableassetssubjecttopublicityformalities,ifthelesseefulfilledsuchformalities;

• Inthecaseofothermovableassets,ifupontheownershiptransferdate,theassetwasusedbythelessee.

Construction

Constructionworkscanonlybeperformedonthebasisofabuildingpermit(“autorizaţiedeconstrucţie”)thatisissuedbythelocalpublicauthoritieswithaviewtoensuringcomplianceoffutureconstructionwiththelegalprovisionsregardinglocation,design,andscopethereof.

TownplanningdocumentationsThemaintownplanningdocumentationsaretheGeneralUrbanismPlan(PlanUrbanisticGeneral—PUG),theLocalUrbanismPlan(PlanUrbanisticZonal—PUZ)andtheDetailedUrbanismPlan(PlanUrbanisticdeDetaliu—PUD).

ThePUGhasageneralapplicabilitytoacertainlocality,andestablishes,interalia,thelimitsoftheintra—murosterritory(thecitylimits),theusetowhichtheintra—muroslands(locatedwithinthecitylimits)maybeput,theprotectedareas(asthecasemaybe),thedevelopmentofthetechnicalinfrastructure,requirementspertainingtothelocationandcharacteristicsoftheconstructions.ThePUGrepresentstheguidelineforthedevelopmentofacertainlocalityandmaybeupdatedfromtimetotime,every10yearsatmost.Inthisrespect,basedontheheadarchitect’sspecializedreport,themayorshallinitiatetheprocedureforprocurementofPUGupdatingservicesandextensionofthein—forcePUG’svalidityterm,withatleast18monthsprioritsexpiry.Atthesametime,theLocalCommittees/GeneralCouncilofBucharestMunicipalityareentitledtoextendbymeansofadecisionthevaliditytermofthePUGuntiltheentryintoforceofthenewPUG,howeverwithoutexceedingtwoyearsfromtheexpiryoftheinitialvalidityterm.

ThePUZmainlyensurescoordinationbetweenthedevelopmentplansandthePUGofaspecificlocality.ThePUZispreparedforeachspecificareaoftherespectivelocalityandrefersto:(i)streetnetworkorganization;(ii)urban—architecturalorganization,dependingontheurbanstructure;(iii)landusage;(iv)infrastructure

rightsorotherlegalrelationsoractionstakeninconnectionwiththeproperty)aswellasforaspectsregardingthebackgroundofvariousdismembermentsofownership(therighttousethelandlocatedundertheconstruction,therighttouse,therighttodwellon,therights—of—wayrelatedtotheland,mortgagesandrealestateprivileges,leasesandassignmentsofincomeexceeding3years,actionsregardinggarnisheeproceedings,pursuitoftheestateorofitsproceeds).

IfacertainrightoverrealestateisrecordedintheLandBook,itispresumedtoexist,ifacquiredorsetupingoodfaithandlackinganyprooftothecontrary.RegistrationsintheLandBookdonotrepresentanabsoluteevidenceoftherightofownershipovertherealestateproperty.

TheNewCivilCodeexpresslyincludesandgeneralizesrulespreviouslyapplicableonlyincertainmatters,suchasrulesconcerningtheeffectofenforceabilityagainstthirdparties(opposability),therankofregistrationand,whereexpresslyprovidedbythelaw,theconstitutiveeffectofregistration.Therefore,asageneralrule,rights,deedsoractsareenforceablebetweenthepartiesevenlackingregistrationformalities.Itisalsoprovidedthataperformedregistrationformalitydoesnotsubstitutetheconditionswhicharerequiredforthevalidexistenceofthedeed.Inadditiontotheabove,theregistrationdoesnotinterruptthestatuteoflimitation.

Besidestheabove,asoftheentryintoforceoftheNewCivilCode,provisionalLandBookregistrationsandLandBooknotationshavealegalcharacterandmaybedoneonlyinthecasesexpresslyprovidedbythelaw.Realrights(“drepturireale”)whicharesubjecttoaconditionprecedentortoaconditionsubsequentmaynotberegisteredwiththeLandBook,andmayberecordedasprovisionalLandBookregistrationsonly.

LackingevidencethattheconditionprecedentaffectingarightprovisionallyrecordedwiththeLandBookwasmet,therightshallbede—registeredexofficiowithin5yearsasofthedateofitsregistration.Conditionssubsequentshallalsobede—registeredexofficioifde—registrationforhavingmettheconditionwasnotrequestedwithin10yearsasoftheregistrationoftheaffectedright.

UndertheNewCivilCode,registrationswiththeLandBookbecomeeffectiveasofthedateonwhichtheregistrationapplicationisregisteredwiththeLandBook.TheNewCivilCodealsosetsforthindetailprovisionsregardingtheorderofprioritybetweenconcurrenttitlesormultipleregistrationsintheLandBook.Wherethereareconcurrenttitlesemanatingfromthesamepredecessorintitle,theholderofaLandBookregisteredrightisdeemedtobethefirstpersonwhomadesuchregistration,irrespectiveofthedateofthetitleonwhichtheLandBookregistrationreliesupon.


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Theconstructionrequirementsestablishedunderthetownplanningdocumentationaredescribed,forindividualizedparcelsofland,throughurbanismcertificates.Thepurposeofsuchcertificates,whichmaybeissuedattherequestofanyinterestedperson(individualorlegalentity),ismainlyto:(i)provideinformationonthelegal,economicalandtechnicalregimeofacertainplot,includinginrelationtothebuildingserectedthereon,(ii)detailthetownplanningrequirementsthatapplytoitand(iii)indicatetheapprovalsandpermitsrequiredinordertobeginconstructionontheplot.

Theurbanismcertificateisissuedbythesameauthoritiesissuingthebuildingpermit,respectivelytheMayorofthelocalitywherethelandislocatedorthePresidentoftheCountyCouncil,ifthelandonwhichconstructionworksaregoingtobeperformedexceedstheboundariesofasingleterritorial—administrativeunit.Theurbanismcertificatedoesnotgrantitsholdertherighttoperformconstructionworks.Thesoledocumentallowingconstructionworksisthebuildingpermit.Urbanismcertificatesarealsoissuedforgrantingconcessionrightsonlands,foradjudicationofprojectsreferringtopublicworks,andforcertainlegaltransactions.

ThebuildingpermitDependingonthetypeofland(intra—murosorextra—muros),aswellasontheusetowhichthelandisput(agriculturalorindustrial),certainstepshavetobetakenbeforeapplyingforabuildingpermit.

Iftherelevantplotisclassifiedasfarming(agricultural)land,oneoftheprerequisitestoobtainingabuildingpermitistochangethecategoryofuseoftheland,aprocessthatrequiresacertainadministrativeprocedure(includingdrawing—upofcadastraldocumentationandobtainingapprovalsfromvariousgovernmentalagencies)befollowedandfeesbepaid.

Thebuildingpermitmayonlybeissuedafterthefulfillmentofthefollowingsteps:(i)obtainingtheurbanismcertificate,whichdescribes,interalia,thetownplanningrequirementsfortherelevantarea,(ii)obtainingtherelevantendorsementsandapprovalsbytheauthoritiesindicatedintheurbanismcertificateand(iii)submittingthetechnicaldocumentationofthefutureconstruction.

Buildingpermitsmaybeissuedtotheholderofarealrightontheestate(landand/orconstruction),suchas:ownership,usageright,usufructright,orsuperficies.However,abuildingpermitmaybeissuedonthebasisofafree—leaseorleaseagreementonlyinthecaseoftemporarybuildings,andprovidedthattheowneroftherealestateexpresslyconsentstosuchconstructionsbeingbuiltonitsland.Buildingpermitsareissuedbythesameauthoritiesempoweredtoissueurbanismcertificates.Ifthebeneficiaryischangedbefore

development;(v)technicalregimeapplicabletotherespectivearea,and(vi)protectionofhistoricalmonumentslocatedintherelevantarea.ThePUZisapprovedbytheLocalCounciloftheCityHallwherethelandislocated.Onceapproved,itbecomescompulsoryfortherespectiveareainrelationtothetechnicalparameterscontained,anditmaynotbeamendedforaperiodof12monthsafteritsapproval.ThePUZestablishesregulationswithrespecttotheconstructionregime,functionofthearea,maximumpermittedheight,landusecoefficient(“CoeficientdeUtilizarealTerenului”—“CUT”),landoccupancyratio(“ProcentdeOcuparealTerenului“—“POT”),buildingsalignmentrecedingplanesanddistancestolateralandbacksidelimitsoftheplot,architecturalfeaturesofthebuildings,permittedmaterials.

ThePUDisaspecificregulationthatsets—forthdetailedrequirementsregardingthelocationandareaofaconstructiononaspecificplot,aswellasitsharmonizationtosurroundingareas.ThePUDincludes,interalia,regulationsregarding:(i)accessibilityandconnectiontotheurbannetworks;(ii)generalconstraintsregardingthebuiltvolumesandthefittings;(iii)functionalandestheticalharmonizationoftheconstructionwiththesurroundingareas.ThePUDshallhavetheexclusivenatureofaspecificregulationofaplotinrelationtotheneighboringplots.Thiscannotchangetheplanswithahigherrank,butonlydetailthespecificconstructionfashionconsideringthefunctionoftheareaandthearchitecturalidentitythereof.

Accordingtothelegalprovisionscurrentlyinforce(GovernmentEmergencyOrdinanceNo.7/2011fortheamendmentandcompletionofLawNo.350/2001onterritorymanagementandurbanism),theinitiativeofpreparingthelanddevelopmentandtownplanningdocumentationsexclusivelybelongstothepublicadministrationauthorities

Shouldtheapplicationfortheissuanceofanurbanismcertificate(“certificatdeurbanism”)seekanamendmenttothetownplanningdocumentations(e.g.PUZ)approvedforsucharea,orshouldthespecificconditionsofthelocationornatureoftheinvestmentobjectivesrequireit,thelocalpublicauthorityshallbeentitled,forspecificcases,toconditiontheauthorizationoftheinvestmentonthepreparationbycareoftheprivateinvestorwhofiledtheapplication,ofaPUZandontheapprovalthereofbythelocalpublicauthorityor,forsomeothercases,toconditiontheauthorizationoftheinvestmentonthepreparationandapprovalofaPUD.

Startingfromthe1stofJanuary2012,notownplanningdocumentations(suchasPUZorPUD)havingthepurposetobringintolegalitycertainconstructionsbuiltwithoutabuildingpermitorfailingtocomplywiththeprovisionsofthebuildingpermitmaybeinitiatedandapproved.Decisionsapprovingtownplanningdocumentationsissuedinbreachofthelawmaybeannulledattheprefect’srequest,oruponanotificationfromthegeneralinspectoroftheStateInspectorateinConstructions,countyheadarchitect,orcentralspecializedauthorities.


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Creditor&DebtorDisputes

Overview

Economicinstabilityinthelastyearhascontinuedtoexertsignificantpressureonthebudgetsofcompaniesindebt,withamiablepaymentofoutstandingreceivablesstillusuallychallengedandsubjecttodelay.This,inturn,hasincreasedthenumberandcomplexityofdisputesissuedincourtsandinarbitration,callingforthnewdevelopmentsinthedisputeresolutionsystem.

WithanewCivilProcedureCodeunderway,tentativelysettoenterintoforcebyJuly2012—alongsideanalreadyenactedNewCivilCode,andfutureNewCriminalandCriminalProcedureCodes—Romanialooksatamajorreformofitsjudiciarysystemintheimmediatefuture.Forthetimebeing,theCivilProcedureCode(theCPC)stillinforce,andamendedattheendof2010byLawNo.202/2010whichimplementedinadvancecertainmeasuresenvisagedbytheNewCivilProcedureCode,providestheproceduralrulesforcivildisputesarisenundertheNewCivilCode;fromthispointofview,civilprocedurelawundergoesalegislativetransitionperiod.

Anexpansionofalternativedisputeresolutionmechanismshasalreadybegun,withcourtsbeingheldtorecommendmediationtolitigatingpartiessincetheentryintoforceofsubstantialamendmentstotheMediationLawonthe3rdofMarch2010.

Againstthisbackground,urgentandcost—effectivecourtapplicationshavebeenmadeavailabletocreditorsinrecentyearsfortherecoveryoftheircertain,liquidandexigibledebts.ThesespecialurgentproceduresarecurrentlyregulatedbylawsexternaltotheCPCbuttheNewCivilProcedureCodeincludestheminthemainbodyofcivilprocedurerules.Inanswertourgentdebtrecoveryproceduresmadeavailableincourts,theCourtofInternationalCommercialArbitrationattachedtotheRomanianChamberofCommerceandIndustry,whichhostsmostofthearbitrationsinRomania,hasapprovedasetofrulesforexpeditedarbitrations,includinganon—lineprocedure,withawardstobepassedinapproximatelyonemonthasofrequest.

completionoftheworks,thebuildingpermitremainsvalidandisautomaticallytransferredtothenewbeneficiary,whichisboundtoobserveitsprovisions.

Thebuildingpermitisissuedsubjecttothepaymentofataxof(i)0.5%oftheestimatedvalueoftheconstructionworksreferringtodwellings,(ii)3%oftheestimatedvalueoftheworksreferringtositeorganization,providedthatsuchworksareauthorizedindividually,andnottogetherwiththemainconstructionworkstowhichtheyrefer,(iii)2%oftheestimatedvalueoftheconstructionworksforthecamping,cottages,campsorcaravansor(iv)1%oftheestimatedvalueoftheconstructionworks(suchtaxisfurtheradjustedattheendoftheprojectbasedonthefinalconstructionprice).Shouldtheextensionofthebuildingpermitberequired,anadditionaltaxamountingto30%oftheinitialauthorizationtaxhastobepaid.Thecompletionoftheconstructionworksandtheircompliancewiththerequirementslaiddowninthebuildingpermitareascertainedbymeansofreceptionminutes—adeedpreparedbytherepresentativesofthelocalauthorities,oftheconstructorandofthebeneficiaryoftherespectiveconstructionworks.

Suchreceptionminuterepresentsalsothedeedascertainingthecompletionoftheconstructionworks,beingoneofthedocumentsbasedonwhichthenewbuildingmayberegisteredwiththeLandBook.

Consequently,basedonthelegalprovisionsinforce,(GovernmentEmergencyOrdinanceNo.64/2010regardingtheamendmentandcompletionofLawNo.7/1996oncadastreandrealestatepublicity)theregistrationofconstructionswiththeLandBookisgroundedcumulativelyonthebuildingpermit,thereceptionminutesuponthecompletionofworks,aswellasonacadastraldocumentation.

Asanexception,theownershiprightoverconstructionsmayalsoberegisteredwithintheLandBookbyexecutionphases(“pestadiideexecuţie”),onthegroundsof:(i)thebuildingpermit,(ii)theminutesonthephysicalstageoftheconstructionworks,endorsedbytherepresentativeofthepublicadministrativeauthoritywhichissuedthebuildingpermit,aswellasof(iii)thecadastraldocumentation.Asalreadydetailedabove,theconstitutiveeffectoftheregistrationoftheownershiprightwiththeLandBookshallbeapplicableonlyafterthefinalizationofthenationalgeneralcadastreofRomania,theregistrationhavingonlyanopposabilityeffectuntilsuchtime.


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Proofofhavingcarriedoutthepre-actionprocedure(minutesofthemeetingwheretheattempttoreconcilefailedorproofthatthedebtorrefusedorfailedtoattendeventhoughformallyinvitedor,asthecasemaybe,minutesofmediationresult)isrequiredincourt.

Fordebtsderivingfrommattersotherthanbetweenprofessionals,eventhoughtheCPCdoesnotrequireapreliminaryprocedure,thecreditorisexpectedtonotifythedebtorofdelaybeforeissuingclaim,ifnototherwiseprovidedbywayofexceptioninthelaworagreedbytheparties.Thenoticeofdelaywillhavetoincludeareasonabledeadlineforthepaymentofdebt.Ifsuchpriornoticeisomitted,thedebtorwillbenefitfromareasonabletime-frameinsidewhichpaymentofdebtwillleadtothedismissaloftheclaim,withlegalfeestobebornebythecreditor.

ClaimformalitiesUnlikeotherjurisdictions,noclaimformsaremadeavailableorrequiredbythecourtsinRomania,eventhoughthelawrequiresminimalcontentsfortheapplication.TheCPCprovidesaminimalcontentoftheclaimbutcertainformalitiesmaybefulfilledaftertheregistrationoftheclaim,withinthetermsetbythejudge.Anyclaimissuedincourtmusthaveattachedevidencethatlegalstampintherequiredamounthasbeenpaid.Theamountofthelegalstampdependsgenerallyonthevalueofthelitigation.

EvidenceRomaniaisajurisdictionwherethetypesofevidenceadmissibleincourtsarelimitedlyprovidedbylaw.Theyincludedocuments(privatelymade,authenticatedand,since2001,electronicdocumentsprovidedwithelectronicsignature),witnesses,interrogatory,expertreportsandonsiteassessments.Allevidencemustbeapprovedandistakenbythecourt.Thecourtmaypermitrequestsforproductionofdocumentsinthepossessionoftheadversaryorathirdpartytothetrialprovidedtheevidenceproposedislegal(includinglegallyobtained),credible,relevantandconclusiveandtherequesteddocumentsdonotcontainprivilegedinformation.

InterimandurgentmeasuresTheCPCmakesavailableinterimapplicationsforcreditor—debtordisputessuchasinjunctionstoseizetangibleassetsorplaceliensonbankaccountsinordertopreservetherightsofthecreditor.Theapplicationsareadjudicatedinurgentprocedure.Inassistanceofcreditorsseekingtopreserverightsthatmaybejeopardizedbydelay,orprevent,mitigateorremedydamages,orremoveimpedimentsthatmayforestallenforcement,theCPCprovidestheurgentapplicationforaninjunction,anurgentprocedureavailablepriortoorafterissuingclaims.

ResolutionofDebtRecoveryDisputesbytheCourts

StructureofthecourtsandcompetencyrulesTheRomanianjudiciarysystemconsistsoffourlevelsofcourts:localcourts,tribunals,courtsofappealandtheHighCourtofCassationandJustice,Romania`ssupremecourt.

Asageneralrule,adebtrecoveryclaimwillbeissuedinthecourtholdingjurisdictionovertherespondent’sbusinessheadquartersordomicile6.Intermsofthematerialjurisdiction,claimsmaybeissuedinfirstinstanceinthelocalcourtsortribunals,dependingonthevalueoftheclaim.Thecurrentthresholdissetatapprox.EUR115,000,withnodistinctionbeingmadebetweencivilandcommercialmatters7.

Pre—actionprotocolsInmattersbetweenprofessionals8only,shouldthedisputearisefromcontract,theCPCrequiresthecreditortocarryout(i)adirectconciliationprocedure,or(ii)amediationprocedureasapre—actionprotocol,lackingwhichtheclaimmaybedeniedincourtasinadmissible.

Themandatorypriorconciliationconsistsinaninvitationsentbythecreditortothedebtorforameetingduringwhichthepartiesattemptprivateamicablesettlementofthedispute.Thetimeframesetbylawpermitsthismandatorypre—actionphasetobecompletedinapproximately30days.Providedalternativelytoconciliation,mediationproceduresareregulatedbyLawNo.192/2006onmediation,andinvolvetheassistanceofathirdpartymediatorinthenegotiationofasettlement.

Agreementsreachedbythepartiesbyconciliationormediationareprivateinstruments,butthepartiesmayopttohavethemauthenticatedbythenotarypublic,withtheadvantagethatauthenticatedinstrumentsascertainingpaymentobligationsaredeemedwritsofenforcement.

6 Alternativecriteriatodeterminethecourthavingterritorialcompetenceasfirstinstanceareprovidedforcertaincases,suchastheplacewheretheagreementisperformed.Otherexceptionsareprovidedforclaimsbearingonimmoveableassets,wherethecompetencyisdeterminedbylocusreisitae.7 Thedistinctionbetweencivilandcommercialclaims,apinnacleofformercivilproceedingslegislation,hasbeenrepealedwiththeentryintroforceoftheNewCivilCode,onthe1stofOctober2011.AllmatterscoveredintheNewCivilCode,whichalsocontainsregulationsinmattersformelyincludedintheCommercialCode,arehenceforthdeemed„civil”.NewrulesofprocedureincludedintheNewCivilProcedureCodearemeanttoimplementthisreunification;thelawimplementingtheNewCivilCodealreadyputinplacecertainreorganizationalmeasuresatthecourts’leveltoreflectthischange.8 Professionals,asdefinedundertheNewCivilCode,are“personsoperatinganenterprise”.

©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.©2012SCAŢucaZbârcea&Asociaţii.AllRightsReserved.

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Theinjunctiontopayrepresentsanavailablemeansofactiononlyinthecaseofdebtsflowingfromagreementsconcludedbetweenprofessionals,orbetweenprofessionalsandauthorities.Debtsalreadyregisteredwithinaninsolvencyprocedure,aswellasdebtderivingfromprovider—consumerrelationsarenotrecoverablebyinjunction.Ontheotherhand,themotiontopayhasalargerscopeofregulation:itincludesalldebtsflowingfromcontractsthathavebeenconcludedinwrittenform,orfromstatutes,regulationsorothermanuscriptsthataresignedbytheparties,andattesttorightsandobligationderivingfromtheexecutionofworks,servicesorotherundertakings.Incaseofbothprocedures,shouldlegalconditionsbemet,thecourtwillpassacourtorderdirectingthedebtortopay,withagraceperiodbetween10and30days,ifthepartiesdonototherwiseagree.Thecourtorderisonlychallengeablebywayofactioninannulment,tobefiledin10daystimefromtheservingoftheaward.Wherelegalconditionsarenotmet,theapplicationisdeniedasinadmissiblebyirrevocableorderandthecreditormayresorttothegeneralproceduretofileclaimfortherecoveryofhisdebt.

Boththemotiontopayandtheinjunctiontopayprovidesignificantadvantagestothecreditors:expeditedandsimplifiedprocedures,reducedlegalfees(afixedlegalstampfeeisrequired—currentlysetattheequivalentofapproximatelyEUR10—,ratherthanaproratafeefromthevalueoftheclaim).However,inpractice,debtorsgenerallycontestthedebtsclaimedbyurgentapplicationinordertoobtaindenialoftheapplicationasinadmissible,andprovokeasettlementonthemeritsunderthegeneralrules,whichrequirepriordisputeresolutionprocedures,aproratalegalstampfee,ampleevidenceandabroaderrangeofavailableappeals.

AlternativeDisputeResolutionProceduresAvailableforDebtRecovery

Arbitration,conciliationandmediationareavailableinRomaniaasalternativemethodsofadjudicatingclaimstothecourts.Amongthem,arbitrationisthemostcommon,andwewilloutlinetheframeworkofarbitrationsinRomaniabelow.

ConciliationConciliationismadeavailableattheChamberofCommerceandIndustrybutisrarelyresortedto,especiallywiththeCPCprovidingamandatorydirectconciliationaspre—actionprotocolinallcommercialcasesbearingonpatrimonialclaims.

CreditorsprefertocarryouttheconciliationundertheCPCandthuscompletearequiredstepbeforeissuingclaim,ifsettlementfails,ratherthanresorttoprivateconciliation.

RightsofappealJudgmentspassedinfirstinstanceareusuallychallengeablebyfirstappeal,in15daysasofservice.Thefirstappealisanordinaryapplicationseekingtoobtainrevisionofthejudgmentonitsmeritsandthecourtmaytakenewevidence.Decisionspassedinfirstappealarechallengeablebyfinalappeal,whichisanextraordinaryappealthatmayonlybegroundedonlimitedlyprovidedreasons.Infinalappeal,nonewevidenceisacceptedexceptfordocuments.

Thecurrentrules,however,renderenforceabilitytofirstcourtjudgmentsinmattersbetweenprofessionals,ifthedisputederivedfromcontract.Suchjudgmentsare,nevertheless,challengeablebyfirstappeal.

Thedistinctionbetweencommercialandcivilmattershavingbeenremoved,theNewCivilProcedureCodeincludesrulessettoaccommodatethechange,amongwhich,itunifiesprovisionswithregardtoavailablechallenges,institutingasinglemeansofordinarychallenge(theappeal)andthreeexceptionalmeansofchallenge(thefinalappeal,thecontestationforannulment,andtherevision).Inallcases,theappealwillconstitutetheonlymeansofchallengeofdevolutivecharacter,seekingtoverifythejudgmentonthemerits.FinalappealsaretobelargelyretainedwithinthejurisdictionoftheHighCourtofCassationandJustice,theirscopebeinglimitedtoexaminingthelegalityofjudgments.

Otherextraordinarychallenges,availableonlyforlimitedlyprovidedreasons,aretherevision(mainlyfordiscoveryofnewevidenceorcontradictorydecisionsorminusorpluspetita)andthemotiontoannul(forbreachofcompetencyrulesorfailuretofulfillthesummoningprocedure).

SpecialurgentapplicationsTwourgentproceduresofdebtrecoveryhavebeenmadeavailabletocreditorsowedcertain,liquidandexigibledebts:themotiontopay(“somaţiadeplată”)introducedbyGovernmentOrdinanceNo.5/2001,andtheinjunctiontopay(“ordonanţadeplată”),madeavailablebyGovernmentEmergencyOrdinanceNo.119/2007.

Inordertobecapableofseekingrecoverybywayofeitherurgentprocedures,thecreditormustbeowedadebtthatiscertain(thereisnodisputeonitsexistence),liquid(accuratelydeterminedordeterminable),exigible(maturedandenforceable)andpayableinmoney.Inbothprocedures,tosatisfytheurgency,thecreditormustbecapableofevidencingthedebtbydocuments(agreements,invoices)asotherevidentiarymeans,suchaswitnessesorexpertreports,arenotadmissible.

Differencesbetweenthetwoproceduresmainlyrelatetofieldofapplication.


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Domesticarbitrationawards(passedinRomaniaandwhichdonotpresentprevailingtieswithanotherjurisdiction)arefinalandbindingfortheparties.SuchawardsareenforceableinRomaniaunderthesameproceduresasacourtjudgmentandchallengeableonlybymotiontoannul,forlimitedlyprovidedreasons,tothecourtrankingsuperiortotheonethatwouldhavehadjurisdictionontheclaimlackingthearbitralclause.

Decisionspassedonmotionstoannulanawardmaychallengedbyfinalappealonlimitedlyprovidedgrounds.Inpractice,theoccurrenceofawardnullificationsisveryscarce,significantlyduetotheprofessionalexcellenceofthearbitratorsmadeavailableattheCourtofInternationalCommercialArbitration.

Furtherincentiveforadjudicationofclaimsinarbitration,enforcementabroadofarbitrationawardsisfacilitatedbyRomania’srecognitionofthe1958NewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwards.

Thecostsofarbitration,however,aregenerallyperceivedashigherthanthecostsofcourtproceedings.

EnforcementofDomesticJudgmentsandArbitralAwards

WritsofexecutionEnforceabilityis,inRomania’sjurisdiction,specificinprincipletodomesticjudgments(issueduponfirstorsecondappeal,dependingonthematter)anddomesticarbitralawards,whicharerecognizedenforceabilityipsojureontheterritoryofRomania.Thereareotherinstrumentstowhichlawrecognizesenforceability,suchascertainagreements(suchasloancontractsconcludedwithbanks,thelegalassistancecontractconcludedwithalawyer),ordocumentsauthenticatedbythenotarypublicincertainconditions.

Creditorswantingtoenforcethewritsofexecutionhavetosubmitthemtothelocalcourttobevestedwithexecutorypower.Thisisaformalprocedure,bywhichthecourtverifiestheexistenceoftheenforceablejudgmentorawardandappliesastampandsignature(commonlyreferredtoas“vestingformula”).Thereareexemptionsfromthevestingrequirement,suchasinthecaseofjudgmentsissuedinfirstcourtinmattersbetweenprofessionals,stemmingfromcontract.Subsequently,writsofexecutionarehandedovertoacourtbailiff,whowillhavetoobtainapprovaloftherequestforenforcementfromthecompetentcourt.Oncesuchapprovalisobtained,thebailiffcanproceedtoenforcement.

MediationTheChamberofCommerceandIndustryhasbeenofferingtheserviceofmediationsince2003,butthisalternativedisputeresolutionmethodcaughttheattentionofthegeneralpubliconlyafter2006,whenalawtoregulateitwaspassed.MediationisexpectedtodevelopasignificantpracticeaftertheMarch2010legalamendmentrequiringalljudgesandarbitrators,aswellasanyotherjurisdictionalauthorities,toexplainandrecommendmediationtodisputingparties.Withthelawpermittingthepartiestorequesttheiragreementreachedbymediationbeembodiedinacourtjudgment,confidentialityofproceedingsandprivilegetotheparties’submissionsduringmediation(whichmaynotbeusedincourt),theconstanteffortsofthebusinessandlegalcommunitytopromoteandpopularizemediationareexpectedtobringforthdevelopmentsinthenextfewyears.TheNewCivilProcedureCodealsoincludesaspecificprovisionrequestingjudgingpanelstoexplainandrecommendmediationtolitigatingparties.

ArbitrationAnycommercialorcivilmatterwhichbearsonrightsonwhichthepartiesarebylawpermittedtocompromise(pecuniary)iscapableofsettlementbyarbitrationunderRomanianlaw.TheCPCprovidesthemainbodyofrulesregardingarbitration,whichmaybead—hocorinstitutionalized.

InstitutionalizedarbitrationsarepreferredbythepartiesandmostclaimsareissuedattheCourtofInternationalCommercialArbitrationattachedtotheChamberofCommerceandIndustry,establishedin1953inBucharest,whichhandlescivilandcommercial,domesticandinternationalarbitrationsunderitsownrules,compliantwiththeCPC.NewcourtsofarbitrationhavebeenestablishedmorerecentlyatcountychambersofcommerceandinBucharest.Thepartiesarepermittedtoestablishtherulestogovernthearbitrationintermsofconstitutingthetribunal,appointmentandrevocationofarbitrators,proceduralrules,theplaceofthearbitrationetc.,eitherdirectlyorbyreferencetoanexistingsetofnorms,providedtheydonotdepartfrompublicpolicyrulesintheCPC.Inthecaseofinstitutionalizedarbitrations,theapplicablerulesareusuallytherulesofthepermanentcourtundertheauspicesofwhichthetribunalisconstituted.

Disputesmaybesettledbyonearbitratororbyatribunalformedoftwoormorearbitrators,ifthepartiessodecide.Failingtodoso,thetribunalisformedofthreearbitrators,whichisalsotheruleundertheArbitrationRulesoftheCourtofInternationalCommercialArbitration.Adjudicatingclaimsbyarbitrationratherthanincourtsprovidesaseriesofincentivestotheparties.Arbitrationsaregovernedbytheruleofconfidentiality,contrarytocourtproceedings,whicharepublicasarule.Arbitralawardsmustbepassed,asrule,in5monthsfromtheconstitutionofthetribunal,withpermittedextensionsofupto2months.


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RecognitionandenforcementofjudgmentsissuedinEUMemberStatesTheprocedurefortherecognitionandenforcementinRomaniaofjudgmentsissuedinMemberStatesisgovernedbyCouncilRegulationNo.44/2001of22ndofDecember2000onjurisdiction,recognitionandenforcementofjudgmentsincivilandcommercialmatters.TheRegulationestablishesasimplifiedprocedure.Essentially,ajudgmentpassedinaMemberStateisdeemedrecognizedenforceabilityinRomaniapursuanttoanapplicationfiledbytheinterestedparty,attachingaformalcertificateissuedbythecourtthatpassedthedecision.

RecognitionofenforceabilityofaforeignjudgmentissuedinaEUMemberStatemayonlybedeniedinthefollowingcases:• Iftherespondentwasnotsummonedbythecourtincompliancewiththeapplicablelaw,exceptforthecasewhentherespondentwashowevergiventhepossibilitytochallengesuchjudgmentbutfailedtodoso;

• IfthejudgmentisirreconcilablewithajudgmentissuedinRomaniainadisputebetweenthesameparties;

• IfthejudgmentisirreconcilablewithanearlierjudgmentpassedinanotherMemberStateorinathirdStateinvolvingthesameobject,causeofactionandparties,providedthattheearlierjudgmentfulfilstheconditionsnecessaryforitsrecognitioninRomania;

• IfthejudgmentbreachesjurisdictionrulesprovidedintheRegulation(with regardtoexclusivejurisdictionofcertaincourtsoncertainmatters,jurisdictiononconsumerprotectionorinsurance)oriftherecognitionofenforceability wouldinterferewithobligationsMemberStatesundertookpreviouslytotheentryinforceoftheregulationunderArticle59oftheBrusselsConvention.

Astotheenforcement,theadmissionofsuchanapplicationisconditionalupontheapplicant’sprovingthattheforeignjudgmentisauthentic(basedonaformalcertificateissuedbythecourtthatpassedthedecision)andenforceable(recognitionhasbeenobtained,therighttoenforcewasnotextinguishedbyprescription,thejudgmentissusceptibleofbeingenforced).Decisionsontheenforcementmaybeappealedagainst.

RecognitionandenforcementofjudgmentsissuedinNon—MemberStatesTheprocedurefortherecognitionandenforcementinRomaniaofjudgmentsissuedinNon—MemberStatesisregulatedbyLawNo.105/1992onprivateinternationallawrelations.Inordertoobtainrecognition,thecreditormustprovethattheforeignjudgmentisfinal,thattheforeigncourthadjurisdictiontoruleonthecaseandthatreciprocityexistswithrespecttotheacknowledgementoftheeffectsofforeignjudgmentsbetweenRomaniaandtheStateoftheissuingcourt.Theenforcementofnon—EUforeignjudgmentsinRomaniaisconditionaluponthepetitionerprovingtheenforceabilityofthejudgment(recognitionhasbeenobtained,therighttoenforcewas

Writsofexecutionmaybeenforcedwithin3yearsasofthemomentthedebtorisallowedtorequestenforcement,withtheexceptionofwritsbearingonimmoveableproperty,forwhichtheprescriptiontermisof10years.

Subsequently,writsofexecutionarehandedovertoacourtbailiff,whowillhavetoobtainapprovaloftherequestforenforcementfromthecompetentcourt.Oncesuchapprovalisobtained,thebailiffcanproceedtoenforcement.Writsofexecutionmaybeenforcedwithin3yearsasofthemomentthedebtorisallowedtorequestenforcement,withtheexceptionofwritsbearingonimmoveableproperty,forwhichtheprescriptiontermisof10years.

EnforcementproceduresEnforcement,governedbytheCPC,maybeindirect,whenthedebtissatisfiedfromamountsthecreditorobtainsfromenforcement(eitherfromsellingthedebtor’sassets,ordirectlyfromthedebtor’saccountsorfromthirdpartiesowingmoneytothedebtor)ordirect,wheneverthecreditorseekstosatisfyhisrightbyaperformanceinkind(forinstance,whenthedebtorowesthecreditoranassetandthecreditorpursuesthedebtorforthatasset).Enforcementiscarriedoutbybailiffs,aprofessionalbodyorganizedunderthesupervisionandcontroloftheMinistryofJustice.

Thereareavailablemethodsforthedebtortoforestall,stay,orevencanceltheenforcementprocedure.Theproceduremaybeforestalledbywayofapreliminaryrequestforastay,whichisfiledbyurgentapplicationinadvancetotheadjudicationofa“main”requestforastay.Themainrequestforastayisfiledconcomitantlywiththeoppositiontoenforcement,andrequiresthedebtortodepositabail,usuallyestablishedpro—ratafromtheamountofthedebtunderenforcement.Oppositionstoenforcementseektocanceltheenforcement,whollyorpartially,usuallyforformalmiscarriages,suchasinvalidityoftheenforcementformalpapers,whicharepreparedbythebailiff,ortheabsenceofavalidwritofexecution.

RecognitionandEnforcementofForeignJudgmentsandArbitralAwards

RecognitionandenforcementofforeignjudgmentsForeignjudgmentsmayberecognizedenforceabilityandenforcedinRomaniabyprocedureswhichdifferdependingontheplaceofissuebeinginsideoroutsidetheEU.Inbothprocedures,theapplicationforrecognitionandtheapplicationforenforcementmaybesubmittedsimultaneouslyandbeadjudicatedbythecourtinthesamedecision.Neitherprocedureallowsthecourtscompetenttoadjudicateapplicationsforrecognitionandenforcementtoreviewthejudgmentonitsmerits.


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formerenactment(LawNo.64/1995),establishinganew,simplifiedandexpeditedinsolvencyprocedureincertaincases,dischargingthesyndicofhisadministrativeduties,increasingthedutiesofthejudicialadministratorandoftheliquidatoraswellastheroleoftherepresentativebodiesofthecreditors,andaimingtoimprovetheserviceofprocessbyestablishingtheInsolvencyProceedingsBulletin.

SpecialprovisionsexistunderRomanianlawfortheinsolvencyofbanks(GovernmentOrdinanceNo.10/2004)andprivateinternationallawmattersregardinginsolvency,havingtodowithstatesoutsidetheEU(LawNo.637/2002).Asof1stofJanuary2007,theCouncilRegulationNo.1346/2000ofthe29thofMay2000oninsolvencyproceedingsregulatestheprivateinternationallawrelationsinthefieldofinsolvencyapplicabletoEUMemberStates.

GeneralconditionsAccordingtoRomanianlaw,insolvencymeansthedebtor’smanifestincapacitytopayitsmatureddebtsoutoftheavailableliquidity.WithinthemeaningofRomanianlaw,“debtor”inthematterofinsolvencymaybe:commercialcompanies,regionalassociations,agriculturalcompanies,privatelegalentitiescarryingoutcommercialactivities,economicinterestgroups,aswellastheindividualswhocarryoutcommercialactivitieseitherindividuallyorinfamilyassociations.

Theinsolvencyproceduremaybeinitiatedattherequestofthedebtoritself,ofanyofitscreditors,orattherequestofcertainespeciallyenabledinstitutions,suchastheNationalSecuritiesCommissionfordebtors—listedcompanies.

Thefollowingconditionsmustbecumulativelymettogroundandapplication:• ThedebtorowesamountsinexcessofRON45,000(approximatelyEUR10,500)orinexcessof6nationalaveragesalariesfordebtsarisingfromlabourorcivilrelations(approximatelyEUR2,800);

• Thedebtorisunabletopayitsmatureddebtswithcashformorethan90days;• Thedebtormaydeclareitselfinsolventandplaceitselfundertheprotectionofajudicialreorganizationprocedureshoulditsinsolvencybeimminent.

InsolvencyproceduresandparticipantsAllapplicationsundertheInsolvencyLaware,infirstinstance,withinthejurisdictionoftheinsolvencydivisionofthetribunalwherethedebtorisheadquartered.Theparticipantstotheinsolvencyprocedureare:thecourt,thesyndicjudgeappointedbythepresidentofthecourt,thecreditors’collegialbodies(theassemblyandthecommittee),thejudicialadministrator(appointedbythesyndicforreorganization),thespecialadministratorofthedebtor(appointedbythedebtor’sshareholders)andtheliquidator(appointedbythesyndicforliquidation/bankruptcy).

notextinguishedbyprescription,thejudgmentissusceptibleofbeingenforced).

TheNewCivilProcedureCodewillbringaboutonlyminoradjustmentstotherequirementsforrecognition,amongwhich:• Inordertoobtainrecognition,thecreditorwillalsohavetoprovethattheforeigncourtjurisdictionwasnotexclusivelybasedonthepresenceofthedefendantorassetsbelongingtohimintheStateofthesaidjurisdiction,ifthispresenceheldnodirectrelationtothedispute;

• Twonewsituationsinwhichrecognitionmayberefusedareregulated:(i)thecaseofaforeignjudgmentincompatiblewithanypreviousforeignjudgment,likelytoberecognizedinRomania,or(ii)thecaseofaforeignjudgmentgiveninbreachoftherighttodefense;

• Bythejudgmentapprovingtheenforcementoftheforeignaward,theRomaniancourtshallalsoestablishtheconversionintothelocalcurrencyofthesumofmoneyestablishedbytheforeignaward.TheexchangerateshallbetheoneestablishedforthedaywhenthejudgmentwasrenderedenforceableintheStatewhereitwasrendered,andnottheexchangerateestablishedforthedaywhenthejudgmentgrantingtheenforcementwasgiven.

RecognitionandenforcementofarbitralawardsForeignarbitralawardsarerecognizedandenforcedinRomaniaunderthe1958NewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwardsandunderLawNo.105/1992onprivateinternationallawrelations.

Incaseofinconsistencies,theNewYorkConventionprevails.TheabovepresentedconditionsinrelationtotherecognitionandenforcementofforeignjudgmentsissuedinNon—MemberStateswillapply,inprinciple,totherecognitionandenforcementofforeignarbitralawards.

TheNewCivilProcedureCode’sprovisionsonthesubjectarealsoprincipallyboundtoensurefullcompliancewiththeNewYorkConvention.

Insolvency

InsolvencyframeworkInsolvencyinRomaniaisgovernedbytheInsolvencyLaw(LawNo.85/2006)passedintheprocessofharmonizingdomesticlawswiththelegalprinciplesappliedintheEuropeanCommunity.TheInsolvencyLawdevelopsaroundtwobasicprinciples—ensuringceleritytoinsolvencyproceedingsandabetterprotectionofthecreditors’intereststhroughinstrumentsmadeavailabletotheirrepresentativebodiesintheproceedings(thecreditors’assemblyandthecreditors’committee).Inanefforttotransposesuchprinciples,theInsolvencyLawbroughtcertainamendmentstothe


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Agreementsconcludedbythedebtorwithinthe3yearspriortoopeningtheprocedure,exceptfortransfersmadeduringthenormalcourseofoperations,aresubjecttoverificationbytheadministrator/liquidatorandmaybeannulledbythecourtifconcludedinbadfaithtothedetrimentofcreditors.Shouldliabilityforcausingthedebtortobecomeinsolventbeestablishedonthepartofaperson(forinstance,onthepartofthemanagers),thesyndicmayordersuchpersontobearsome/allofthedebtor’sdues.

Thebankruptcyproceduremaybeclosedbydecisionofthesyndicatanystageifestablishedthatthedebtorhasnoassets,orthattheexistingassetscannotsatisfytheadministrativeexpensesandnocreditorofferstoadvancethenecessaryamounts.Bythesamedecision,thesyndicordersthedebtor’sderegistrationfromtheregisterinwhichitwasrecorded(theTradeRegistryusually,forcommercialcompanies).

PreventiveArrangement

January2010hasseentheentryintoforceofanewlegalproceduredesignedtoprotectover—burdenedcompaniesfromendingininsolvency:thepreventivearrangement(“concordatulpreventiv”).Thepreventivearrangementisaproceduremeanttosolvetemporaryfinancialdifficultiesofacompanyinordertoensurecontinuanceofitscommercialactivityanditconsistsofanagreementbetweenthedebtorandthecreditorsholdingatleasttwothirdsoftheexistinguncontestedreceivables.Thepreventiveagreementmustincludeaplanofredressforthefutureofthedebtor,whichmaycomprise,interalia,measuresaimingtorestructuringpersonneland/ormanagementstaff,theclosingdownofbranchesand/orworkingpointsetc.Thedebtorisboundtopayatleast50%ofitsduesduringtheimplementationoftheredressplan.

Theprocedureprovidesthedebtornotableadvantages.Forinstance,onceanofferofarrangementismade,thesyndicjudgecanprovisionallysuspendlegalenforcementproceduresinitiatedbythecreditorsinquestion.Also,ifanarrangementisreachedwithcreditorsholdingatleast80%ofexistingreceivablesagainstthedebtor,andprovidedthereceivablesdisputedbythedebtoramounttolessthan20%ofthedebttotal,thejudgewillsuspendallenforcementproceduresagainstthecompany,fortheperiodofthearrangement.

Duetoitsessentiallyamiablecharacter,andtoitslessradicaleffectonthecommercialimageandcredibilityofacompany,theuseofpreventivearrangementsisexpectedtobecomeagrowingtrendincreditor—debtordisputesettlementmethods.

TheInsolvencyLawmakesavailabletwotypesofproceduresfordebtorsunabletopaytheiroutstandingdebts:thegeneralinsolvencyprocedureandthesimplifiedprocedure.

Thegeneralprocedureisformedoftwophases:• Thejudicialreorganizationprocedure,aimedatallowingthedebtortopursueitsactivityandpayitsdebtsunderareorganizationplan.Ifthedebtordoesnotcomplywiththeplanorthecontinuanceofitsactivitiescauseslossestoitsassets,theofficialreceiver,thecreditors’committeeoranyofthecreditors,aswellasthespecialadministratormayrequest,atanytime,tothesyndicjudgetoapprovebankruptcyprocedurebeopened;

• Thebankruptcyprocedure,whereinthedebtor’sassetsareliquidatedandtheamountsobtainedaredistributedtosatisfythecreditors.Theliquidationofadebtor’sassetsiscarriedoutbytheliquidatorunderthecontrolofthesyndicjudge.Inordertomaximizethevalueofthedebtor’sassets,theliquidatorwilltakeallmeasuresnecessarytopublicizethesale,inwhatevermannerdeemedadequate.Theliquidationcostsarebornefromthedebtor`sassets.

Afteraperiodofobservation,insolvencyunderthegeneralprocedureallowsforreorganization.Thelegaltexthighlightsthatassistanceprovidedtothedebtorinviewofsurvivingfinancialdistress,reorganizingitsactivityonanefficientbasisandsatisfyingitscreditors’claimsbestsatisfiesthegoalofinsolvencyprocedures,whichisnotlimitedtothepayingofcreditors,butalsoincludesdebtor’seconomicredress.

Thesimplifiedprocedure,applicableincertaincases(suchasthedebtorhavingbeenalreadyplacedunderjudicialreorganizationwithintheprevious5yearsfromapplication),permitsthebankruptcyprocedurebeopenedwithoutthepreliminaryphaseofthejudicialreorganization.

Underthegeneralprocedure,thesyndic—judgemayorderthedebtorintobankruptcyif(i)thedebtordepartsfromtheprovisionsofthereorganizationplanconcerningopportunitiestopayitsdebtsor(ii)areorganizationplanisnotsubmitted,ornotconfirmedbythecreditors’assembly,orbythesyndic—judge.Shouldtheseconditionsbemet,thebankruptcyprocedureisopenedbywayofcourtorder,totheimmediateeffectthatallclaims,judiciaryorextra—judiciary,bearingonthedebtor’sassetsaresuspended.

Duetoa2009amendmenttotheInsolvencyLaw,bankscannotdiscontinuecreditfinancingtothedebtoroninsolvencygrounds.Thesamerationaleisapplicabletoallpendingcontractsatthemomentofopeningtheprocedure—suchcontractscannotbeterminatedduetotheopeningofinsolvencyproceduresagainstthepartyindebt.


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DurationAsageneralrule,individualemploymentagreementsaredeemedconcludedforanunlimitedduration.Thisruletriggersimportantconstraintsforemployers,dismissingemployeesbeingpossibleonlyinexceptionalcircumstances,strictlyregulatedintheLabourCode.Employersareallowedtoconcludetime—limitedindividualemploymentagreementswiththeiremployeesonlyinthecasesexpresslymentionedbytheLabourCode,suchastemporaryincreasesintheemployer’sactivity,replacingemployeeswhoseemploymentissuspendedorinthecaseofseasonalactivities.Usingtemporaryworkispermittedinordertoperformcertainpreciseandtemporarytasksbyemployeesprovidedbytemporarylabouragents,entitiesrenderingtheso—called“leasingofpersonnel”services.Themaximumtermofthetemporaryworkorthefixed-termemploymentagreementsisof36months.

MinimallevelofrightsEmployeescannotbegivenrightsandbenefitswhicharebelowthelevelestablishedinthelabourlegislationandthecollectivebargainingagreements.Anyderogationsfromorwaiversofsuchrightsshallnotbeconsideredvalid,evenifacceptedbytheemployeesorexpresslyprovidedintheindividualemploymentagreements.

WorkingtimeRegularworkingtimeis8hoursadayand40hoursaweek.Employees`consentisrequiredforovertimework.Theworkingtimedurationcannotexceed48hoursaweek,includingovertime.Additionalovertimeisexceptionallyaccepted,providedthattheaverageworkingtimecomputedonafour—monthbasisdoesnotexceedhowever48hours.Overtimeshallbeextrapaid,unlesspaidtimeoffisofferedinlieuwithin60daysafterthedateitwasperformed.

LeavesanddaysoffEmployeesbenefitfromdailyandweeklyrest.SaturdaysandSundaysaredaysoffbutchangingthedaysofweeklyrestispossibleprovidedthattheemployeesareadditionallypaid.

Thefollowingdaysaredeclaredpublicholidaysunderthelaw:• 1stand2ndofJanuary;• FirstandsecondEasterdays;• 1stofMay;• FirstandsecondPentecostdays;• 15thofAugust;• 1stofDecember;• FirstandsecondChristmasdays.

Employment

Overview

Duringthepastyears,Romania’sattractivenessforforeigninvestorscame,amongothers,fromthehighlyskilledandrelativelycheaplabourforceitofferedinthecontextofeconomicgrowthandmacrostability.AuthoritiestriedtoadaptthelabourlegalframeworkasthetransitionfromthestateplannedeconomywascompleteandtheemploymentenvironmenthadtorespondtothedemandsentailedbyRomania’stargettojointheEuropeanUnionin2007.Now,Romaniaisstillfacingthechallengesoftheeconomicandfinancialcrisiswhichalsoimpactedemployment,ascrisesusuallydo.Flexiblepublicpoliciesandanadequatelegalframeworkhavemorethaneveravitalroleinalleviatingunemployment.

Recently,RomaniatookasignificantstepforwardinfreeingupthelabourmarketinthespiritofEUlegislationandcompetitivelabourmarket.Thelatestchangesofthemainregulationsinthefieldofemploymentareverymuchwelcomedbytheinvestorsandaredeemedtobringmoreflexibilityinthelabourrelations.

IndividualEmploymentAgreements

ConclusionEmployershavetheobligationtoconcludewrittenemploymentagreementswitheachoftheiremployees.Concludingindividualemploymentagreementsinwritingismandatoryandisaconditionfortheagreementtobevalid.Failuretocomplywithsuchobligationmayresultinapenaltyfortheemployerifthenumberofemployeesforwhichtheemployerhasnotconcludedawrittenemploymentagreementisunder5.Incasesuchnumberisbigger,theactoftheemployershallbedeemedasanoffenceunderthecriminallaw.


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ThesamesanctionshallapplyiftheemployerscannotprovethatthereasonsfordismissalarerealandfallwithinthecategoriesrecognizedbytheLabourCodeasentitlingemployerstoperformdismissals.Incasethenumberofredundanciesthroughoutperiodsof30calendardaysexceedscertainthresholds,thecollectivedismissalprocedureshallbeactivated.Specificstepsshallhavetobeobservedandconsultationswithtradeunionsneedtobeconducted.

Employersareobligedtoobservea20—daypriornoticeterm,exceptwhenthedismissalisdonefordisciplinaryreasons.Specialprovisionsregardingdismissalsofpersonnel(includingasregardsseverancepayments)arecommonlyprovidedundercollectivebargainingagreements.

CollectiveBargainingAgreements

CollectiveBargainingAgreements(theCBA)maybeconcludedatdifferentlevels:company,groupofcompaniesandindustrysectorlevel.CBAsconcludedatlowerlevelscannotprovideforrightsinferiortothosesetforthbyCBAsconcludedathigherlevels.

TheLabourCodeobligescompanieswithmorethan21employeestoconductcollectivenegotiationsinviewofconcludingaCBA.Theobligationistocarryoutnegotiationsonly,andnottoactuallyconcludetheCBA.

TheprovisionsofCBAsarecompulsoryforthepartiesandapplytoallemployees,irrespectiveofwhethertheyaremembersofatradeunionornot.CBAshavetobeconcludedforminimum12monthsandmaximum24months.

TradeUnions

Therighttoestablishtradeunionorganisationsandtobecomememberofsuchorganisationsareguaranteed.Employerscannotbanaccessoftheemployeestotradeunions.Tradeunionrepresentativeshavetherighttobecommunicatedthedecisionstakenbytheboardofdirectorsorbyothermanagementboardoftheemployerregardingissuesofprofessional,economicorsocialinterest.

Forthepurposeofdefendingtherightsandpromotingtheinterestsoftheirmembers,tradeunionsmustbeservedwithnecessaryinformationforthenegotiationoftheCBAsandotheragreementsrelatingtoemploymentrelations.Employershavetheobligationtorecognisethetradeunionsassocialpartnerandconductcollectivenegotiationswiththetradeunionsthatarerepresentatives

Employeesareentitledtoapaidannualleaveofminimum20workingdays.Additionalleavemayberegulatedunderthecollectivebargainingagreements.Theminimumperiodofpaidannualleavemaynotbereplacedbyanallowanceinlieu,exceptwheretheemploymentrelationshipisterminated.Inthesecases,holidayentitlementiscalculatedonaproratabasisproportionatetothetimehe/shehasworkedinthatsameenterpriseduringtherespectiveyear.Inadditiontotheannualpaidleave,employeescanbegrantedpaidorunpaidleaveincertainspecificcircumstances.

BonusesInadditiontothebasesalary,therearecertainmandatorybonusesthatarepaidtotheemployees,suchas:• Overtimebonus—minimum75%ofthebasesalary;• Night—timeworkingbonus—25%ofthebasesalary.

Otherbonusesmaybeprovidedunderthecollectivebargainingagreements.

Non—competeobligationUndertheLabourCode,employeeshaveageneralobligationofloyaltytowardstheiremployer,preventingthemfromperformingsimilaractivitiesforotheremployersthroughoutthedurationoftheindividualemploymentagreement.Thepartiesmayagreetoturnthisintoanon—competeobligationapplicablealsoaftertheterminationoftheindividualemploymentagreement,foraperiodofmaximum2years.

Amonthlyindemnificationshallbegrantedbytheemployerfortheentirenon—competeperiodfollowingtheterminationoftheemployment,whichcannotbelessthan50%oftheemployee’saveragegrosssalaryinthelast6monthsofemployment.

DismissalBothdismissalforcause(restructuring)anddismissalwithoutcause(thelegalterminologyusedbytheLabourCodeis“dismissalforreasonsrelatingtotheemployee”asopposedto“dismissalforreasonsnotrelatingtotheemployee”)arerecognisedbyRomanianemploymentlegislation,butemployersmayresorttothemonlyinalimitednumberofsituations.Dismissalforcausecanbedoneifeconomicoroperationalreasonspreventemployersfrommaintainingthecurrentnumberofjobs.Dismissalsforbadperformanceandfordisciplinaryreasonsareamongthemostcommonlymettypesofdismissalforcause.

Ineachcase,specificproceduresmustbefollowed.Employers’failuretocomplywithsuchproceduresmaytriggertheanullementofthedismissaldecisionsincourt.


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Thiscategoryofconflictsmayentitlestrikes.However,strikescannotbedeclaredduringtheexistenceofacollectivebargainingagreementattheunitlevel.Asamatterofprinciple,strikesmaybedeclaredonlyinordertoprotectprofessional,economicandsocialinterestsofemployeesandcannothavepoliticalgoals.Duringstrike,hiringemployeestoreplacethoseonstrike,ordismissingemployeesonstrike,arestrictlyforbidden.Unlikeotherlegalsystems,Romanianlabourlegislationdoesnotrecognize“lock—out”asstrikecounter—measure.

Theindividuallabourconflictsaresettleddirectlybythecourtsoflaw.

atunitlevel.Also,employersareboundtoconsultthetradeunionsforspecificaspectsoflaboursuchaslabournorms,reducingtheworkingdaysfrom5to4days/weekincaseoftemporaryreductionofemployer’sactivityforperiodslongerthan30days,participatinginthelaboursafetyandhealthcommitteesetc.

Thetradeunionsmayopenlabourconflicts(strikesorlawsuits)incasetheirclaimsarenotsatisfiedortheemployersfailtoobservetherightsoftheemployeesderivingfromthelaworfromCBAs.

TransferofBusiness

Romanianlabourlegislationprovidesforseveralprotectionrulesintheeventabusinessorpartsthereofaretransferredfromoneemployertoanother.Suchrulesshallapply,inprinciple,whenthetransferofbusinessisaccompaniedbyanassettransfer.

Boththetransferorandthetransfereeshallbeundertheobligationtoconsulttheiremployeesaboutthetransferandtoinformthemof:• Proposedtransferdate;• Reasonsfortransfer;• Legal,economicalandsocialconsequencesoftransferontheemployees;• Measurestobetakenwithrespecttotheemployees;• Workingconditionsafterthetransfer.

However,noconsentfromtheemployeesisrequired.Theemployeesshallhavetobegiventhepossibilitytobetransferredwiththetransferee.Incasetheyrefusethetransfer,thetransferormaydismissthemasaresultofcuttingtheirjobpositions.ThetransfereeisliabletoobservetherightswhichthetransferredemployeeshadwiththetransferorundertheirindividualemploymentagreementsandtheCBA.

LabourConflicts

Labourconflictsmayregardcollectiveorindividualrightsoftheemployees.Collectivelabourconflictsmayoccurwhen:• TheemployerrefusestoproceedwiththenegotiationoftheCBA;whenthereisnoCBAsigned,orthepreviousCBAhasexpired;

• Thecompanyrefusestoaccepttheemployees’claims;• Thepartiesdonotreachanagreementuntilthedatesetupforcompletingthecollectivenegotiations.


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Therearealsospecificprovisionsconcerningprocurementcontractsintheutilitiessectorsandframeworkagreements.

Publicprocurementcontractsrelatetotheacquisitionofworks,goodsorservices,inexchangeforthepricetobepaidbythecontractingauthority,whilebypublicworks/servicesconcessioncontractsprivateentitiesaregranted,inconsiderationoftheirperformingtheworks/services,therighttoexploitthepublicworks/serviceswithorwithoutthepaymentofadditionalamountsofmoney.Thisdistinctionisfurtherreflectedintheallocationofrisks,e.g.whenmostpartoftherisksarebornebytheprivatesector,thecontractistobequalifiedasapublicworks/servicesconcessioncontract.Otherwisethecontracthasthenatureofaregularpublicworks/servicescontract.

BesidestheProcurementLaw,aspecialenactmentiscurrentlyinplace,regulatingtheconcessionofpublicassets—i.e.GovernmentEmergencyOrdinanceNo.54/2006ontheregimeofpublicassetsconcessioncontracts,asapproved,withamendmentsandcompletions,byLawNo.22/2007.

Asregardspublic-privatepartnerships,thePPPLawregulatestheconceptofpublic-privatepartnershipcontractsandtheprocedurestobecarriedoutbythepublicpartnerstoawardsuchcontracts.Thepublic—privatepartnershipcontractisconcludedbetweenthepublicpartnerandtheprivatepartner,itcoversoneorseveralactivitiesrelatedtothedesign,financing,construction,rehabilitation,modernization,operation,maintenance,developmentandtransferofapublicassetorpublicserviceandthespecificactivitieswhicharetheobjectofthecontractarefinancedbytheprivatepartner.

InadditiontotheProcurementLaw,GovernmentEmergencyOrdinanceNo.54/2006andthePPPLaw,therearealsootherenactmentswhichgoverntheregimeofcertainspecificconcessions.Forinstance,LawNo.51/2006onpublicutilitycommunityservices,subsequentlyamendedandsupplemented,isthegeneralenactmentregulatingtheregimeofpublicutilitycommunityservices(i.e.,servicesregardingthesupplyofwater,residualwaterandsewage,supplyofthermopower,wastecollection,publiclighting,managementofpublicandprivateproperty,publiclocaltransport),whichmaybeprovidedtothelocalcommunitieseitherunderadirectmanagementstructure,bythelocalauthoritiesorpublicbodiessubordinatedtothelocalauthorities,orunderdelegatedmanagement,bycommercialcompanies,furthertotheconclusionofamanagementdelegationcontract,whichisaspecifictypeofconcession,betweenthelocalmunicipalityandthecommercialcompanyprovidingtheservice.

PublicProcurement&Concessions

Overview

Publicprocurement,concessionsandpublic—privatepartnershipsinRomaniaareregulatedbyasetofenactmentswhichsetforththelegalframeworkwithinwhichco—operationbetweenthepublicsectorandtheprivatesectormaybeestablishedwithaviewtodevelopingpublicprojectswiththeinvolvementoftheprivatesector.PublicprocurementandconcessionsaregovernedmainlybyGovernmentEmergencyOrdinanceNo.34/2006ontheawardofpublicprocurementcontracts,publicworksconcessioncontractsandservicesconcessioncontracts,asapproved,withamendmentsandcompletions,byLawNo.337/2006,subsequentlyamendedandsupplemented(theProcurementLaw),whilepublic—privatepartnershipsareregulatedbytherecentlyadoptedLawNo.178/2010onpublic—privatepartnership,subsequentlyamendedandsupplemented(thePPPLaw).

TheProcurementLawandthePPPLawaimedatharmonizingtheRomanianlegislationwithEUDirectivesinthisfieldandtransposedtheprovisionsofDirective2004/18/ECoftheEuropeanParliamentandoftheCouncilof31stofMarch2004onthecoordinationofproceduresfortheawardofpublicworkscontracts,publicsupplycontractsandpublicservicecontracts,Directive2004/17/ECoftheEuropeanParliamentandoftheCouncilof31stofMarch2004coordinatingtheprocurementproceduresofentitiesoperatinginthewater,energy,transportandpostalservicessectorsandofDirective2007/66/ECoftheEuropeanParliamentandoftheCouncilof11thofDecember2007amendingCouncilDirectives89/665/EECand92/13/EECwithregardtoimprovingtheeffectivenessofreviewproceduresconcerningtheawardofpubliccontracts.ThemainlegalstructuresregulatedbytheProcurementLawarethepublicprocurementcontractandthepublicworks/servicesconcessioncontract.


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Also,theProcurementLawprovidesapartlyspeciallegalregimeforthe“sectorcontracts”—i.e.theprocurementcontractsinthepublicutilitiessectors(i.e.water,energy,transportandpostalservicesandotheractivitiesqualifiedasrelevantactivities)althoughtheyareincludedinthecategoryofpublicprocurementcontracts.

AwardproceduresTheProcurementLawregulatesthefollowingawardprocedures9:(i)opentender,(ii)restrictedtender,(iii)competitivedialogue,(iv)negotiationwithorwithoutthepublicationofaprocurementnotice,(v)requestforoffersand(vi)contestofsolutions.

Theopentenderisinprincipleaone—phaseprocedure,butthecontractingauthoritymayorganizeasupplementaryphaseofelectronictender.Anyinterestedundertakingmaysubmittenderinthisawardprocedure.

Therestrictedtenderiscarriedoutintwostages:(i)theselectionoftheapplicantsinaccordancetotheestablishedselectioncriteria,and(ii)thesubsequentevaluationofthetenderssubmittedbytheselectedapplicants.

Thecompetitivedialogueiscarriedoutinthreestages:(i)thepre—selectionofapplicants,(ii)thedialoguebetweenthecontractingauthorityandthepre—selectedapplicants,withaviewtoidentifyingthesolutionsbasedonwhichfinaltendersarepreparedandsubmitted,and(iii)theevaluationoffinaltenders.

Thecompetitivedialogueproceduremaybeappliedwhenthefollowingconditionsarecumulativelymet:(i)thecontractisdeemedtobeofgreatcomplexityand(ii)theawardofthecontractcouldnotbeachievedbyopenorrestrictedtender.Thecompetitivedialogueprocedurehasonlybeenrecentlyappliedincomplexinfrastructureprojectswheretheinvolvementofexperiencedprivateundertakingsinestablishingthestructureoftheprojectsisarealnecessity.

Thenegotiationwithpublicationofaprocurementnoticeisapplicableincasessuchaswhen,followinganopentender,arestrictedtenderoracompetitivedialogueprocedure,thesubmittedtendersarefoundunsatisfactoryorunacceptable,oriftheservicesinquestiondonotallowforaproperdescriptioninthetenderbookastheopenorrestrictedtenderproceduresexpresslyrequire.TheProcurementLawalsoregulatescaseswhenthenegotiationmaybecarriedoutwithoutthepriorpublicationofaprocurementnotice,amongwhich,whenduetothetechnicalorartisticaspectsoftheproject,orinordertoprotectexclusivityrights,thepublic

9 Thecontractingauthorityisentitledtodirectlyacquireproducts,servicesorworkswithoutcarryingoutoneofthespecificproceduresprovidedforbytheProcurementLaw,ifthevalueoftheacquisitionisbelowEUR15,000.

Principles

BoththeProcurementLawandthePPPLawprovideforthemainprinciplescontractingauthoritiesshouldobserveinawardingpublicprocurementcontracts,publicworks/servicesconcessioncontractsandpublic—privatepartnershipcontracts,suchas(i)non—discrimination,(ii)equaltreatment,(iii)transparency,(iv)proportionality,(v)efficientuseoffundsand(vi)assumingresponsibility.

PublicProcurementContracts

TypesofpublicprocurementcontractsTheProcurementLawregulates(i)workscontracts,(ii)supplycontractsand(iii)servicecontracts.

Theworkscontractmayrefertooneofthefollowingactivities:• Constructionorconstruction—relatedworksasexpresslylistedintheProcurementLaw;or

• Designandexecutionofaconstructionorofconstruction—relatedworksasexpresslylistedintheProcurementLaw;or

• Theexecutionbyanymethodofaconstructionaccordingtotheconditionssetforthbythecontractingauthority.

Theobjectofthesupplycontractisthesupplyofoneormoreproducts,throughsale—purchase,leaseorleasing,withorwithoutapurchaseoption.

TheservicecontractregulatestheprovisionofoneormoreservicesexpresslyreferredtointheProcurementLaw(e.g.transport,telecommunications,researchanddevelopment,accounting,auditing,consultancyforbusinessandmanagement).Whileseveraltypesofservicecontractsareexpresslydefinedaspublicprocurementservicecontracts(e.g.theaccommodationservices,therailwayandwaterwaytransportservices,thelegalservices),theyareneverthelessexemptedfromtheotherwisemandatoryproceduresregulatedintheProcurementLawandmadesubjectonlytothegeneralprinciplesgoverningtheawardofpublicprocurementcontractsandtoafewotherspecificprovisionsoftheProcurementLaw.

TheProcurementLawdoesnotapplytocertaincases,suchasnationalsecurity—relatedservices,orwheneverspecialexemptionsderivefromthenatureofthecontractedservices,orfromtheapplicationofinternationaltreaties.

Ifcontractsarefinancedbyinternationalfunds,theawardproceduresmayderogatefromtheProcurementLawandfollowtherulesandregulationsimposedbytherespectivefinancinginstitutions.


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ConcessionContracts

TypesofconcessioncontractsTheProcurementLawregulatestwotypesofconcessioncontracts:(i)publicworksconcessioncontractsand(ii)servicesconcessioncontracts.Thegeneralprinciplesguidingtheawardofthepublicprocurementcontractsapplyalsoforawardingconcessioncontracts.

Oneofthemainissuesraisedinpracticeinthecaseofcomplexcontractsisdeterminingthenatureofthepubliccontract,whetheritshouldbequalifiedasapublicprocurementcontract,oraconcessioncontract.Suchdistinctionisnotalwayseasytomake,asanalyzingwhetheritistheprivatesectororthepublicsectorthattakesovermostrisksoftenrequireshighlyspecializedfinancialandtechnicalexpertise.

Whereconcessionshavepublicassetsastheirobject,thespecialrulesprovidedbyGovernmentEmergencyOrdinanceNo.54/2006onpublicassetsconcessioncontractsbecomeapplicable.However,thedistinctionsbetweenpublicworksconcessioncontracts,servicesconcessioncontractsandpublicassetsconcessioncontractsarenotalwaysclear—cut,withthepracticalconsequenceofpossibleuncertaintyastothenature,andthereforeapplicablelegislationtoparticularcontracts.

TheapplicationofGovernmentEmergencyOrdinanceNo.54/2006isseenasratherexceptional,therulebeingthattheProcurementLawapplies.Also,furthertotheentryintoforceofthePPPLaw,thenatureofthecontractshouldbeestablishedfromtheoutset,as—dependingonwhetherthecontractisapublicworks/servicesconcessioncontract,apublicassetconcessioncontractorapublic—privatepartnershipcontract—therelevantprovisionsandawardproceduresofeitheroftheProcurementLaw,GovernmentEmergencyOrdinanceno.54/2006orthePPPLawshallapply.

Giventhevarioustypesandpurposestowhichpublicpropertyassetsareputtouse,andbasedontheadministrationpractice,severalgeneralcriteriafordistinguishingbetweenthethreetypesofconcessionmaybeused:• Wheretheuseofpublicpropertyassetsinvolvestheperformanceofconstructionworksaimedatcreatinganewpublicassettobefurtheroperated,thecontractmayqualifyasapublicworksconcessioncontract.Forinstance,inthecaseofconstructingandoperatingamotorway,oraparkingfacility,althoughsuchstructuremayinvolvetheuseofapublicpropertysite,thecontractistobeconsideredasapublicworksconcessioncontractbecauseitsmainobjectistheperformanceofconstructionworks;

procurementcontractcanonlybegrantedtoacertainentity.However,suchinstancesareratherexceptionalandsubjecttostrictinterpretation.Therequestforoffersisasimplifiedprocedurebywhichthecontractingauthorityrequestsoffersfromseveralparticipants.ItmayonlybeappliedwhenthevalueofthecontractdoesnotexceedcertainthresholdssetforthbytheProcurementLaw,namelyEUR125,000forsupplycontractsandservicescontractsandEUR4,845,000forworkscontracts.

Thecontestofsolutionsmaybeorganisedwhenthecontractingauthoritydevelopsprojectsinurbanplanning,cityscapeandlandscapedesign,architectureanddataprocessing.

Allawardproceduresmustobservethegeneralrulesapplicablewithrespectto(i)theprocurementnotice,(ii)informingtheparticipantsaboutthelegal,financialandtechnicalrequirements,(iii)theevaluationandawardcriteria,(iv)theformsrequiredforsubmittingtheoffer,(v)thecommunicationprocedurebetweentheauthorityandtheparticipants,(vi)thedeadlinesapplicableforsubmittingtheofferandtheotherdocumentswiththecontractingauthority,(vii)aswellasotherrequirementshavinggeneralapplicability.

Therequestforoffersisasimplifiedprocedurebywhichthecontractingauthorityrequestsoffersfromseveralparticipants.ItmayonlybeappliedwhenthevalueofthecontractdoesnotexceedcertainthresholdssetforthbytheProcurementLaw,namelyEUR100,000forsupplycontractsandservicescontractsandEUR750,000forworkscontracts.Thecontestofsolutionsmaybeorganisedwhenthecontractingauthoritydevelopsprojectsinurbanplanning,cityscapeandlandscapedesign,architectureanddataprocessing.

Allawardproceduresmustobservethegeneralrulesapplicablewithrespectto(i)theprocurementnotice,(ii)informingtheparticipantsaboutthelegal,financialandtechnicalrequirements,(iii)theevaluationandawardcriteria,(iv)theformsrequiredforsubmittingtheoffer,(v)thecommunicationprocedurebetweentheauthorityandtheparticipants,(vi)thedeadlinesapplicableforsubmittingtheofferandtheotherdocumentswiththecontractingauthority,(vii)aswellasotherrequirementsthathavegeneralapplicability.

Besidestheawardproceduresmentionedabove,othermethodsmayapplyinspecialcases,suchastheframeworkagreement,thedynamicacquisitionandtheelectronictender.Uponcompletionofanyawardprocedure,thecontractingauthorityestablishes,basedontheawardcriterionandafterapplyingtheevaluationfactors,thewinningtender,andconcludesthepublicprocurementcontractwiththerespectivetenderer.


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Asregardspublicutilitycommunityservices,theabove—mentionedawardingproceduresregulatedintheProcurementLawalsoapplytopublicworks/servicesconcessioncontractsregardingwastecollection,publiclightingandmanagementofpublicandprivateproperty.Servicesregardingwatersupply,residualwaterandsewageandthermopowersupplyareawardedthroughtwospecificprocedures:(i)publicopentenderand(ii)directnegotiation.Similarlytothepublicassetsconcessioncontracts,themanagementofsuchservicesisasaruledelegatedfurthertoapublicopentenderprocedure,andinexceptionalcircumstancesonly(i.e.,ifatenderprocedurewastwicecarriedoutandneithertimehavethreevalidoffersbeensubmitted),mayitbeawardedfurthertoadirectnegotiationprocedure.Themanagementofthelocalpublictransportserviceisalsodelegatedfurthertospecificproceduresprovidedforintherelevantenactments.

Public-PrivatePartnershipContracts

DistinctionbetweenPublic-PrivatePartnershipContractsandPublicWorks/ServicesConcessionContractsThePPPLawregulatesthepublic—privatepartnershipasatypeofcontract,ratherthanasalegalconcept,asitdescribestheobjectandthemainfeaturesofpublic—privatepartnershipcontractsandtherelatedawardprocedures.

Asexpresslyspecifiedtherein,thePPPLawappliestopublic—privatepartnershipcontractsanddoesnotapplytopublicworks/servicesconcessioncontractsandtopublicassetsconcessioncontracts.Therefore,inordertoproperlyidentifytheapplicablelawtothetypeofcontractwhichisintendedtobeawarded,itshouldbedeterminedfromtheoutsetwhetherthecontractqualifiesaspublicworks/servicesconcessioncontractorasapublic—privatepartnershipcontract,although,asamatterofprinciple,thetwoconceptsshouldnotberegardedassubstantiallydifferent.

Thedifferencesbetweenpublicworks/servicesconcessioncontractsandpublic—privatepartnershipcontractsmaybederivedfromtheprovisionsofthePPPLaw,whichsetsoutcertainrequirementsforacontracttoqualifyasapublic—privatepartnershipcontract,suchas:•Apublic—privatepartnershipcontractrequiresthesettingupofaprojectcompanytoperformtheprojectbytheprivatepartnerandthepublicpartner.Ifnoprojectcompanyissetup,ortheprojectcompanyissetupbytheprivateentityonly,thecontractmaynotbequalifiedaspublic—privatepartnership,but,ifallotherconditionsaremet,asapublicworks/servicesconcessioncontract;

• WheretheuseofpublicpropertyassetsinvolvestheperformanceofvariousactivitiesqualifiedasservicesbytheProcurementLaw,and/orsuchactivitiesmaybeperformedbyacontractingauthorityitselfgivenitslegalstatus,rolesandresponsibilities,thecontractmayqualifyasservicesconcessioncontract.Forinstance,whereapublichospitalintendstograntaprivateoperatortherighttouseaspecificlocationinordertoprovidehealthassistanceservices,thismaybeachievedunderaservicesconcessioncontract,giventhatthehospitalcouldprovidetheservicesitself,andgrantingtherighttouseitsfacilitiestoaprivateentityismerelyameanstoprovidetheservices.Likewise,inthecaseofmostofthepublicutilitycommunityservices,whichareunderthepowerandresponsibilityoflocalauthorities,anoperatorprovidesthemunderaservicesconcessioncontract(managementdelegationcontract),theuseofassetsbeingincidentaltotheprovisionofservices;

• Wheretheuseofpublicpropertyassetsinvolvestheperformanceofconstructionworksand/ortheprovisionofservicesbuttheyaremerelyincidentaltotheuseoftheassets,and/ortheresultsoftheworks/servicesareusedandoperatedforapurelyprivatepurpose,thecontractmayqualifyasapublicassetsconcessioncontract.Forinstance,whereapublicadministrationintendstoallowaprivateentitytouseapublicpropertyplotoflandinordertoinstallawindfarmandproduceelectricity,thecontractmaybeconsideredasapublicassetsconcessioncontract.Itshouldalsobementionedthat,asageneralrule,theverynatureofthepublicassetsconcessioncontractalwaysrequiresthepaymentofaroyaltybytheconcessionairetotheconcessiongrantor,as,undertheapplicablelaw,thosecaseswheretheconcessiongrantorallowstheconcessionairetousethepublicassetwithoutreceivingaroyalty,orwherethegrantorpaysacertainamountofmoneytotheconcessionairemaynotqualifyaspublicassetsconcessioncontract.

AwardproceduresAccordingtotheProcurementLaw,publicworks/servicesconcessioncontractsareawardedfurthertocarryingoutatender(openorrestricted)oracompetitivedialogueprocedure.SuchcontractsmaybeawardedfurthertoanegotiationprocedurewithpublicationofapriorprocurementnoticeonlyintheexceptionalcircumstancessetforthintheProcurementLaw.

PublicassetsconcessioncontractsareawardedfurthertocarryingoutthespecificproceduressetoutbyGovernmentEmergencyOrdinanceNo.54/2006,namely(i)tenderor(ii)directnegotiation.Asarule,publicassetsconcessioncontractsareawardedbywayoftender,whilethedirectnegotiationproceduremayonlybeemployedinexceptionalcircumstances(i.e.,ifatenderprocedurewastwicecarriedoutandneithertimehavethreevalidoffersbeensubmitted).


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inarapidmanner,asa20—day(or,inexceptionalcircumstances,30—day)periodforsettlingthecomplaintsisimposedtotheNationalAppealCouncil.However,inpractice,theneedtorapidlysolvethecomplaintsmayhaveadverseeffectsonthemannertheclaimantsareallowedtosubstantiateanddocumenttheircase,asthecomplaintsinthisfieldusuallyinvolvetechnicalissues,whichmayonlybedeterminedbasedonexpertreportswhosepreparationwithinthisreducedtimelineseemsratherunrealistic10.Asregardstheeffectsofsubmittingacomplaint,filingsuchacomplaintinconnectionwiththeproceduredoesnot,underthecurrentrules,triggeritsautomaticsuspension,butinsteadprohibitsthecontractingauthorityfromconcludingthepublicprocurementcontractwhentheprocedureiscompletedanduntiladecisionoftheNationalAppealCouncilisissued.

Prospects

TheRomanianlegislationisgenerallyinlinewiththeEUDirectivesonpublicprocurementandconcessions.Also,recentinitiativesonpublic—privatepartnershipintroducedanotherlegalstructurewhichmaybeusedtodeveloppublicprojectswiththeinvolvementoftheprivatesector.Althoughregulationsonthetwogeneralcategoriesofcontracts(concessionsandpublic—privatepartnerships)arerathersimilar(despitebeingincludedindifferentenactments)anddonotensureaclearconceptualdistinctionbetweenthetwo,theRomanianlegislationseemscomprehensivewithrespecttothelegalmeansandstructuresavailabletopublicentitiesforcarryingoutpublicprojects.Publicauthoritieshavevariousoptionsavailablesoastochoosethelegalstructureswhicharebesttailoredtothenatureoftheprojectstheyintendtodevelop.Inthecurrentglobaleconomiccontext,publicfundsareseenasanimportantsourceofinvestment.TherehabilitationandthemodernizationoftheinfrastructureremaingoalsthatstillhavetobeachievedasmostofthelocalinfrastructurerequiresurgentinvestmentsinordertoreachEuropeanstandards.Majorinvestmentsininfrastructureareannounced,astheGovernmentandlocalauthoritiesseemtorelyonconcessionandpublic–privatepartnershipstructurestocontinueortoinitiateinfrastructureprojects.Indoingso,thepublicauthoritieswillresorttothelegalstructuresofferedbythepublicprocurements,concessionsandpublic—privatepartnershipregulations,whichallowandcallforprivatesectorparticipation.Publicproceduresaimedatawardingcomplexpublicprocurement/concession/public—privatepartnershipcontractswillprobablybeoftenusedand,consequently,privateinvestorswillencountermanyopportunitiesofbecominginvolvedinsuchcomplexprojectsinthefuture.

10 Wealsonotethatthesenewrulesaresurroundedbyalegalcontroversyastotheirallegedunconstitutionality,astheymaybeconstruedtopreventtheinterestedpartiesfromaddressingthecourtsinthefirststageoftheircomplaint,while,underthepreviousrules,thisrightwasensured,astheinterestedpartycouldoptbetweenaddressingthecourtortheNationalAppealCouncil.Thecontroversyarisesfromallegedbreachestotheconstitutionalprinciplesoffreeaccesstojusticeandoftheoptionalnatureofadministrativejurisdictions.

•Theprojectcompanyshouldbesetupasajoint—stockcompanywhereinthecontributionofthepublicauthorityisanin—kindcontribution.Lackingcompliancewithsuchrequirements,thecontractwouldnotqualifyasapublic—privatepartnershipcontract(butitmayqualifyasapublicworks/servicesconcessioncontract);

• ThePPPLawdoesnotcoverthecasewherethepublicpartnergrantstheprivatepartnerwiththerighttoexploittheresultsoftheworks/servicesandalsopaystheprivatepartneranamountofmoney,asprovidedbytheProcurementLawinthecaseofpublicworks/servicesconcessioncontracts.Therefore,thepublic—privatepartnershipcontractappearsclosertotheclassicalconceptofconcession,wherethefinancingoftheprojectisensuredbytheprivateentity,whichfurtherrecoverstheinvestmentfromtherevenuesreceivedfromthethirdpartiesusingtheresultoftheworks/servicesandpaysaroyaltytothepublicpartner.

AwardproceduresThePPPLawregulatestwoproceduresforawardingpublic—privatepartnershipcontracts:(i)openprocedureand(ii)competitivedialogue.TheawardproceduresinthePPPLawarerathersimilartothoseoftheProcurementLaw,respectively,theopenproceduresetoutinthePPPLawissimilartotheopentenderregulatedbytheProcurementLaw,whiletheregulationofthecompetitivedialogueunderthePPPLawfollowsthesamelinesastheregulationofthesameprocedureundertheProcurementLaw.

ProtestsAgainstAwardProcedures

OneofthemajordebatesensuingfromtheapplicationoftheProcurementLawconcernedtheprotestsinterestedundertakingswereentitledtofileagainstactsissuedbythecontractingauthoritiesduringanawardprocedure.UntilJanuary2011,suchprotestsweresettledbyeithertheNationalAppealCouncil(anadministrativejurisdictionalbodycompetenttosettlecomplaintsinconnectionwithactsissuedinpublicprocurementprocedures)orthecourtsoflaw.

However,furthertothemostrecentamendmentsbroughttotheProcurementLawinJanuary2011,thetwo—tiersystemwhichallowedinterestedpartiestobringtheircasebeforeeithertheNationalAppealCouncilorthecourtsoflawwasreplacedbyaone—tiersystem,whereinactsissuedinpublicprocurementproceduresaretobechallengedbeforetheNationalAppealCouncilonly,whileitisonlythedecisionsissuedbytheNationalAppealCouncilthatmaybecontestedincourts,namelybywayofappeal,filedwiththecompetentcourtofappeal.Thelawmaker’snewapproachtothemechanismsofsolvingcomplaintsinthisareaofpracticefocusesonthepurposesofcreatingauniformpracticeinthisfieldandsolvingthecomplaints


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PracticesProhibitedundertheAntitrustRules

CartelsandverticalagreementsAgreementsbetweencompetitorsaimedatdistortingmarketcompetitionaretoptargetsandseverelysanctionedbythecompetitionauthorities,bothatdomesticandEUlevel.Botharticle5(1)oftheCompetitionLawandarticle101(1)oftheTFEUprohibitanyexplicitortacitagreementsbetweenundertakingsorassociationsofundertakings,anydecisionsofassociationoranyconcertedpracticesbetweenthem,pursuingamongotherspricefixing,customersormarketsallocationorbidrigging.Cartelsareillegalsecretagreementsconcludedbetweencompetitorsastofixprices,restrictsupplyand/ordivideupmarkets.Theagreementsmaytakeawidevarietyofformsbutoftenrelatetosalepricesorincreasesinsuchprices,restrictionsonsalesorproductioncapacities,sharingoutofproductorgeographicmarketsorcustomers,andcollusionontheothercommercialconditionsforthesaleofproductsorservices.

Althoughgenerallyconsideredlessrestrictivethancartels,theagreementsbetweennon—competitors,betheycustomersorsuppliers(e.g.distributionagreements,supplyagreements,outsourcingorspecializationagreements)alsorequireparticularawareness.Severaltypesofagreementsarequalifiedashardcorerestrictionsandconsequentlybannedirrespectiveoftheparties’marketshare.Suchagreementsmainlyconsistinresalepricefixing,marketallocationandbidrigging.Someexamplesinthisrespectareprovidedhereinbelow:• Resalepricemaintenance—therestrictionofthebuyer’sabilitytodetermineitssaleprice;

• Passivesalesbaninanexclusivedistributionnetworklimitingthedistributortorespondtounsolicitedorderscomingfromcustomerslocatedinterritoriesexclusivelyreservedbythesupplierorallocatedtoanotherdistributor;

• Activeandpassivesalesbantoterritorieswhicharenotexclusivelyreservedbythesupplierorallocatedtoanotherdistributor,inanon—exclusiveormixeddistributionnetwork;

• Restrictionofsalestoend—usersinaselectivedistributionbymembersofaselectivedistributionsystemoperatingattheretailleveloftrade,withoutprejudicetothepossibilityofprohibitingamemberofthesystem fromoperatingoutofanunauthorizedplaceofestablishment;

• Restrictionofcross—suppliesbetweendistributorswithinaselectivedistributionsystemoperatingatdifferentlevelsoftrade;

• Sparepartsrestrictionsconsistingintherestrictionagreedbetweenasupplierofcomponentsandabuyerwhoincorporatesthosecomponents,whichlimitsthesuppliertosellingthecomponentsassparepartstoend—usersortorepairersorotherserviceprovidersnotentrustedbythebuyerwiththerepairorservicingofitsgoods.

Competition

Overview

ThemarketbehaviororstrategiesadoptedbybusinessespresentinRomaniamayfallunderthedomesticand/orEuropeanCommunitycompetitionrulestotheextenttheyrestrictcompetitiononthemarket.

WhilethenationalCompetitionLawisconcernedwiththedomesticmarket,theEClegislationsetsforththepolicyimperativeofmarketintegrationandalsoaimsatensuringend—usersandresellersareabletosourceproductsanywhereintheEuropeansinglemarket.

SomeofthehighestfineshavebeenimposedbytheEuropeanCommissiononcompaniesseekingtofrustratethisaim,eveniftheiractionshadlittleeffectoncompetition.

BetweenAugust2010andJuly2011,theRomanianCompetitionLaw11hasbeensubjecttoasecondsubstantialreviewinits15—yearenforcementrecordfollowingitsadoptionin1996.

ThemainchangesfollowedthegeneraltrendsinantitrustfieldattheEuropeanlevel,theCompetitionCouncilbeingprovidedwithreinforcedrightsofinvestigation.Highlightsinclude(i)arebuttablepositivepresumptionofdominancesetinthecaseofundertakingsholdingashareabove40%ontherelevantmarket;(ii)theenforcementoftheCompetitionCouncil’ssanctioningdecisionsmayonlybestayedincourtshouldtheconcernedundertakingpayasuretyinaccordancetotheprinciplessetunderFiscalProceduralCodeinforce;(iii)proceduresrelatedtoenforcementofunfaircompetitionpracticesweretransferredinthecompetenceoftheCompetitionCouncil.

11 CompetitionLawNo.21/1996,republishedintheOfficialGazetteofRomaniaNo.742of16thofAugust2005andfurthermodifiedbyLawNo.149/2011approvingGEONo.75/2010,publishedintheOfficialGazetteofRomaniaNo.490of11thofJuly2011.


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•2008marketallocationontheinsulinmarketcase(totalamountoffinesappliedEUR22,600,000)12:EliLilly(producer)andthreedistributorsweresanctionedforanallegedallocationoftheportfolioofdiabetesproductsproducedbyEliLillyinthecontextofthenationaltendersorganizedforthecentralizedacquisitionbytheMinistryofPublicHealthofsuchproducts13.Incourt,somepartiestotheallegedinfrigementsucceededinreducingthefineinitiallyupholdbytheCompetitionCouncil;• 2008bidriggingbetweendistributorsonthedialysismarket(totalfineEUR1,600,000):threedistributorsparticipatedinabidrigginginthecontextofthenationaltenderorganizedbytheMinistryofHealthin200314;

• 2006marketsharingontheTVcableservicesmarketinTimişoaracity(totalfineEUR2,350,000):thecasewasoverturnedincourtonproceduralgrounds,sincetheCompetitionCouncil’srighttoapplyfineshadbeentimebared;

• 2005pricefixingbetweenWrigley—26distributors(totalfineofEUR5,480,000);• 2005pricefixingonoralandpersonalcareproducts(totalfineEUR4,200,000):theCouncilchargedColgatePalmoliveandfourofitsdistributorsandimposedaggregatefinesofEUR4,200,000,forindirectlyfixingtheminimumresaleprices,bothasverticalpricefixinginvolvingColgateandashorizontalagreementbetweenthedistributors15.ThedecisionhasbeenoverturnedonproceduralgroundsbytheHighCourtofCassationandJustice16,whichfoundthattheCompetitionCouncil`srighttoreviewthecasehadbeentimebared;

• 2005greycementcartel:thehighestfine(amountinginaggregatetoEUR26,000,000)concernedthethreeRomaniancementproducers,Lafarge,HolcimandCarpatcement(partoftheHeidelbergerCementgroup),whichwerefoundliableforapricefixingcartel17.CarpatcementsucceededtowintheappealagainsttheCouncil’sdecisionbeforetheRomanianHighCourtofJustice,whichorderedtheannulmentoffinesimposedtothiscompany18.

AtEClevel,theEuropeanCommission’srecentenforcementrecordisnotablebythelevelofthefinesimposedtocartelmembers.Insomecases,thesanctionsweresignificantlyraisedbytheECwatchdogasaresultofrepeatedanticompetitivebehaviourofthedefendants,asshowninthefollowingrecentexamples:•ConsumerDetergents:theCommissionappliedfinesamountingtoEUR315,200,000inapricefixingcartelcaseagainsthouseholdlaundrypowderdetergentsproducersProcter&Gamble,UnileverandHenkel(thelatterbeing

12 TheEURequivalentsareapproximated.13 CompetitionCouncil’sDecisionNo.15of12thofMarch2008.14 CompetitionCouncil’sDecisionNo.12of3rdofMarch2008.15 CompetitionCouncil’sDecisionNo.124of11thofJuly2005.16 HighCourtofCassationandJustice,DecisionNo.2720of25thofMay2007.17 CompetitionCouncil’sDecisionNo.94of26thofMay2005.18 HighCourtofCassationandJustice,DecisionNo.1358of5thofMarch2007.

AstheCompetitionCouncilincreaseditsfocusonfalsebiddingandmarketsharinginpublicprocurementprocedures,itestablishedaspecialdivisionentrustedwithcomplaintsfromauthoritiesorbiddersaffectedbytheanticompetitivebiddingpractices.

Otherrestrictionsincludedinverticalagreementsmaybeexempted,eitherbytheapplicationofspecificblockexemptions,orfollowinganindividualexaminationundertakenonacasebycasebasis.

Theindividualexemptionrequiresabalancebetweenthenegativeeffectsoftheverticalagreements(e.g.raisingtheartificialmarketentrybarriers,restrictiononinter—brandandintra—brandcompetitionetc.)andtheexpectedpositiveeffects(e.g.productsqualityimprovement,investmentsforenteringnewmarkets,betterdistributionservicesetc).

TheenforcementrecordoftheCompetitionCounciloncartelcasescoversvariousindustriessuchaspharmaceuticaldistribution,cableTVservices,fastmovingconsumersgoods,greycementmarketsetc.Asshownbelow,someofthecartelcasesbuiltbytheCompetitionCouncilwereoverturnedincourt:• 2010marketallocationbetweenthe14administratorsofmandatoryprivatepensionsfunds(totalfineofEUR1,220,000):theallegedinfringementrelatedtothesharingamongpensionfundsadministrators,basedona50—50%principle,ofparticipantshavingsubscribedfortwodifferentfunds(“doubles”)withintheinitialsaleswindow.Althoughtheagreementhasdealtonlyamarginalpartofconsumers,i.e.thedoubles,theCompetitionCouncilqualifiedthisarrangementasaclientsharingagreementbetweencompetitors,infringingbotharticle5(1)letterc)ofCompetitionLawandarticle101(1)TFEU.ThecaseiscurrentlyunderreviewbeforetheRomaniancourts;

• 2010minimumpricefixingbythemembersoftheRomanianBodyofExpertandAuthorisedAccountants(RBEAA)(totalfineofEUR950,000):thesanctionwasappliedforthepricefixingpracticesemployedbyRBEAAmembersundertheorganization’sInternalRegulationonthecriteriaandproceduresinsettingthefees,considerationandcompensationduetoRBEAAmembersbytheirclients,andforcontinuingapplyingsuchpracticesubsequenttoreceivingindicationsfromtheauthoritythatthepricefixingbehaviourisanticompetitive.ThiscasesetsarecordfortheCompetitionCouncilintermsoffinepercentages,namely9.2%ofRBEAA’spreviousyear’sincome;

•2010bidriggingcartelonthemarketofhydrotherapytreatmentservicesinBăileOlăneşti(totalfineofEUR980,750):inthiscase,themembersofthecartelsettheleveloftariffsandnumberofavailableplacesfortreatmentthateachundertakingwasbiddingfor.Moreover,thecartelmemberscreatedasystemwherebytheymonitoredtheoffersbeingsubmittedtothetender;


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Repsol,Sasol,ShellandTotalalsoengagedinmarketallocationforthisproductandExxonMobil,Sasol,ShellRWEandTotalalsofixedpricesforslackwaxsoldtoend—consumersontheGermanmarket.Thecompaniesheldregularmeetingstodiscussprices,allocatemarketsand/orcustomersandtoexchangesensitivecommercialinformation.TheCommission’sinvestigationstartedwithdownraidspromptedbyShell’sapplicationforimmunitywherebyitrevealedtheexistenceofthecarteltotheCommission;

• Liftsandescalatorscartel:theEuropeanCommissionappliedaEUR992,000,000finetoOtis,KONE,SchindlerandThyssenKruppgroupsforoperatingcartelsfortheinstallationandmaintenanceofliftsandescalatorsinBelgium,Germany,LuxembourgandtheNetherlands,foundtobeinviolationofArticle101TFEUthatoutlawsrestrictivebusinesspractices.Betweenatleast1995and2004,thesecompaniesriggedbidsforprocurementcontracts,fixedpricesandallocatedprojectstoeachother,sharedmarketsandexchangedcommerciallyimportantandconfidentialinformation.TheCommissionfoundthattheeffectsofthiscartelmaycontinuefortwentytofiftyyearsasmaintenanceisoftendonebythecompaniesthatinstalledtheequipmentinthefirstplace;bycartelisingtheinstallation,thecompaniesdistortedthemarketsforyearstocome.KONEsubsidiariesreceivedfullimmunityfromfinesundertheCommission’sleniencyprogrammeinrespectofthecartelsinBelgiumandLuxembourg,astheyfirstprovidedinformationaboutthesecartels.Similarly,OtisreceivedfullimmunityinrespectoftheNetherlandscartel.ThefinesimposedontheThyssenKruppcompanieswereincreasedby50%,asitwasarepeatoffender.

LeniencypolicyBothnationalandEuropeanUnionlegalframeworkprovidefordifferenttypesofincentivesforcompaniesthatvoluntarilydisclosetheexistenceofacartelandbringevidencetoprovetheinfringementorcooperateduringtheprocedure.Theimmunityorreductionofthefinevarieswidelydependingonthetimingandsignificantaddedvalueoftheinformationandevidenceprovidedbythecartelmembers.

Atnationallevel,althoughtheleniencypolicyisavailablefrom2004,nomajorcartelcasehassofarbeendiscoveredandsanctionedbytheCompetitionCouncilfollowingaleniencyapplication.ThefirstleniencycasefinalisedbeforetheCompetitionCouncil(2010)wasalocalcartelformedbythetaxidriversinTimisCounty.Sincethen,nootheranticompetitivepracticeswereidentifiedandsanctionedfurthertoleniencyapplication.However,thePresidentoftheCompetitionCouncildeclaredonseveraloccasionsthattheauthorityisassessingvariousdisclosuresundertheleniencyprocedure.SimilarlytotheleniencymodelapplicableatEuropeanCommission’level,theleniencyguidelinespreviouslyinforce,onlyappliedtocartels,i.e.collusivebehaviourbetweencompetitorstargetingpricefixing,marketsharing,exportsorimportsrestrictions.

grantedimmunityunderleniencyprocedures).ThecartelwasimplementedineightEuropeanUnioncountries;

• LCDpanels:theEuropeanCommissionsanctionedsixLCDpanelproducers(SamsungElectronicsandLGDisplayofKoreaandTaiwanesefirmsAUOptronics,ChimeiInnoLuxCorporation,ChunghwaPictureTubesandHannStarDisplayCorporation),atotalfineofEUR648,925,000beingappliedforoperatingacartelwhichharmedEuropeanbuyersoftelevisionsets,computersandotherproductsthatusethekeyLiquidCrystalDisplaycomponent;

• Airfreight:theCommissionfined11aircargocarriers(forinstance,AirCanada,AirFrance—KLM,BritishAirways,CathayPacific,Cargolux,JapanAirlines,LANChile,Martinair,SAS,SingaporeAirlinesandQantas),thetotalfineamountingtoEUR799,445,000foroperatingaworldwidecartelwhichaffectedcargoserviceswithintheEuropeanEconomicArea.Thecarrierscoordinatedtheiractiononsurchargesforfuelandsecuritywithoutdiscountsoverasixyearperiod;

• Animalfeedphosphates:theCommissionimposedfinestotalingEUR175,647,000onfivecompaniesforoperatingacartelthatlastedoverthreedecadesandcoveredalargepartofEEA.AllbutonecompanysettledthecasewiththeCommissionandthereforereceiveda10%reductiononeachoftheirfines.Thisisthefirstsettlementofacartelcaseinahybridscenario,whereboththesettlementandordinaryprocedureswerefollowed;

• Bathroomequipmentcartel:theCommissionfined17bathroomequipmentmanufacturersatotalofEUR622,250,783forapricefixingcartelcoveringsixEUcountries.TheCommissiondecisionshowsthatbetween1992and2004,17companiescoordinatedthesalespriceforbathroomfixturesandfittingsinGermany,Austria,Italy,Belgium,FranceandtheNetherlands.Thecoordinationtookplaceduringmeetingsof13nationaltradeassociationsinGermany(over100meetings),Austria(over80),Italy(65),andalsoBelgium,FranceandTheNetherlands,andinbilateralcontacts.Itconsistedoffixingpriceincreases,minimumprices,andrebates,andexchangingsensitivebusinessinformation;

• Carglasscartel:theCommissionimposedfinestotalingEUR1,383,896,000onAsahi,Pilkington,Saint—GobainandSoliverforillegalmarketsharing,andexchangeofcommerciallysensitiveinformationregardingdeliveriesofcarglassintheEEA,inviolationofTFEU.Betweenearly1998andearly2003,thesemajorplayers,discussedtargetprices,marketsharingandcustomerallocationinaseriesofmeetingsandotherillicitcontacts.TheCommissionstartedthecartelinvestigationonitsowninitiativefollowingatip—offfromananonymoussource.TheCommissionincreasedthefinesonSaint—Gobainby60%becauseitwasarepeatoffender.Asahiprovidedadditionalinformationtohelpexposetheinfringementanditsfinewasreducedby50%undertheleniencyprocedure;

• Waxproducerscartel:theCommissionimposedonthewaxproducersfinesamountingtoEUR676,000,000forpricefixingandmarketsharingcartel.From1992to2005,theproducersofparaffinwaxesandslackwaxoperatedacartelinwhichtheyfixedpricesforparaffinwaxes.ExxonMobil,MOL,


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Suchformofcooperationisdeemedasspecialmitigatingcircumstancewhichmayeventriggerareductionofthefinebelowitsminimumthresholdsetat0.5%oftheturnoverobtainedintheyearprecedingthesanctioningdecision.

AbuseofdominantpositionDominantplayersonthemarketcouldalsoinfringetheantitrustrules,bothatnationalandEuropeanUnionlevelbyadoptingunilateralmarketstrategieswhichcouldharmconsumersand/orcompetitors.Dominationisdefinedastheabilityofacompany,toact,toalargeextentindependentlyfromitscompetitors(actualandpotential)anditsclientsinthatparticularmarket.

TherecentlyrevisedCompetitionLawprovidesforarelativepresumptionofdominance:firmswhichholdmorethan40%oftherelevantmarketinquestionandpresumedtobedominant,shouldotherfactorsnotprovethecontrary.Themarketshareishoweverjustonefactorinassessingdominance.Thestructureoftherelevantmarket,positionofthemaincompetitors,entrybarriersorspecificadvantagesenjoyedbyacompanymayalsoinfluencethedominanceassessment.

Holdingadominantpositionisnotprohibited,itisabusewhichcanbecaughtundertheantitrustrules.Theabusivebehaviourmayconsistin:(i)exploitativepractices,i.e.abusingmarketpowerintradingrelationshipswithcustomersorsuppliers(e.g.unfairpurchaseorsellingprices,tyingarrangements,pricediscrimination)and(ii)exclusionarypractices,i.e.abusingmarketpowerwithanaimtoharmcompetitors(e.g.refusaltodeal,predatorypricingetc).

Article6oftheCompetitionLawprovidesonlyanexemplificativelistofbehavioursthataredeemedasabuseofthedominantposition:•Imposing,directlyorindirectly,ofsellingandbuyingprices,pricelistsorotherinequitablecontractualclausesandtherefusetonegotiatewithcertainsuppliersorbeneficiaries;•Limitationofproduction,distribution,technologicaldevelopmentinthedisadvantageoftheconsumers;•Application,regardingthecommercialpartners,ofdissimilarconditionsforequivalentperformances,causingtosomeofthemadisadvantageinthecompetitiveposition;•Conditioningofconcludingcertaincontractsbythepartner’sacceptationofclausesstipulatingsupplementaryperformanceswhich,neitherbytheirnaturenoraccordingtocommercialpractices,haveanyconnectionwiththeobjectofsuchcontracts;•Imposingexcessiveorruinousunder—costprices,toeliminatecompetitors,orexportingunderproductioncostsandcoveringthedifferencethroughhigherdomesticprices;•Exploitationoftheeconomicaldependencestatusofaclientorsupplier.

Withthenewguidelinesadoptedonthe7thofSeptember2009,theCompetitionCouncilbroadenstheleniencyscopeandopensupthepossibilityfordistributorsorsupplierstoalsoreportverticalanticompetitiveagreements,suchaspricefixing,marketallocation,importsorexportsrestrictionsconcludedwiththeirdownstreamorupstreampartners.

Assuch,fromnowon,thedistributorsorresellersmayseekleniencybydisclosingtheanticompetitiveprovisionsorpracticesagreedwithorimposeduponbytheirsuppliers.Tothesameextent,thesuppliersmaybeawardedfullimmunityfromfinesiftheyarefirsttoprovideinsiderinformationonanticompetitivepracticesagreeddownstreamandtheyhavenotinitiatedtheinfringement.ThisisamajordevelopmentoftheleniencypolicyinRomania,provingtheCompetitionCouncil’sfullinterestinverticalrestraintsandpotentiallyputtingthespotlightonthedistribution/resellingmarkets,ifthedistributorsorproducerswillfeeltemptedto“breaktheice”anddisclosetheanticompetitivepracticestheyagreeduponwiththeirclientsorsuppliers.

Inordertoobtaintotalimmunityundertheleniencypolicy,acompanywhichparticipatedinacarteloraverticalanticompetitivepracticemustbethefirsttoinformtheCompetitionCounciloftheundetectedillegalactivitybyprovidingsufficientinformationtoallowtheauthoritytoopenaninvestigationandlaunchaninspectionatthepremisesofthecompaniesallegedlyinvolvedintheanticompetitivepractice.IftheCompetitionCouncilisalreadyinpossessionofenoughinformationtolaunchaninvestigation,orhasalreadyopenedone,thecompanymustprovideevidencethatenablestheCompetitionCounciltoprovetheinfringement.Inallcases,thecompanymustalsofullycooperatewiththeCompetitionCouncilthroughoutitsprocedure,provideitwithallevidenceinitspossessionandputanendtotheinfringementimmediately.

Companieswhichdonotqualifyfortotalimmunitymaybenefitfromareductionoffinesiftheyprovideevidencethatrepresents“significantaddedvalue”tothatalreadyintheCompetitionCouncil’spossessionandiftheyhaveceasedinvolvementintheanticompetitivepractice.Evidenceisconsideredtobeofa“significantaddedvalue”fortheCompetitionCouncilwhenitreinforcesitsabilitytoprovetheinfringement.Thefirstcompanytomeettheseconditionsmayreceive30%to50%reduction,thesecond20%to30%andsubsequentcompaniesupto20%.

Moreover,accordingtotheCompetitionLawrecentlyrevised,companiesmayalsobenefitof10%to30%finereductioniftheychoosetocooperatewiththeCompetitionCouncilandexpresslyrecognizetheinfringementafterthecommunicationofthestatementofobjectionsorduringthehearingsbeforetheCouncil’sPlenum.


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IndependentlyfromthesanctionsappliedundertheCompetitionLaw,thenaturalandlegalpersonsarereservedtherighttoclaimfortherecoveryinfullofthedamagesresultingfromtheanti—competitivepracticeprohibitedbytheCompetitionLaw.

Therecentlyrevisedlawprovidesthatthestatusoflimitationofthedamagesactionis2yearsandstartstoelapsefromthedatetheCompetitionCouncil’sdecisionremainsdefinitiveandirrevocable.

ThisprovisionmayleadtotheinterpretationthattheapplicantmaynecessarilysubmitacomplainttotheCompetitionCouncilandobtainanadministrativedecisionontheinfringementpriortoseekingdamagesincourt.AlthoughtheburdenofproofontheclaimantisdefinitelymoresevereintheabsenceoftheCompetitionCouncil’spriorinvestigationofthecase,wedonotexcludehoweverdirectdamagesactionsincourt,asthenationaljudgeshaveextensivepowerstodirectlyapplybothnationalandEuropeanUnionantitrustrules.

Companieshavingblownthewhistleincartelcasesorhardcoreverticalagreementswhichbenefitofleniencyarealsoexoneratedfromthejointliabilityresultingfromadamagesaction,whichbearsonallparticipantstotheinfringement.

Asregardsthequantumofthedamages,theRomanianlawsystemacknowledgesthefullcompensationprincipleincaseoftortliability.Thus,theauthoroftheanticompetitivepracticecouldbecompelledtoreimburseboththeactualprejudice(damnumemergens)andthelossofbenefit(lucrumcessans).

Mergers

Themergeroftwoormorepreviouslyindependentparties,orthedirectorindirectcontrolbroughtaboutbysharecapital/assetsacquisition,bycontractorbyothermeansqualifiesasaneconomicconcentrationandmaytriggeranotificationobligationinthecompetentjurisdiction.Inmergercases,adivisionofcompetencebetweentheEuropeanCommissionandthenationalauthoritiesapplies.

TheCommissionhasexclusivepowertoexamineconcentrationswithaCommunitydimensiondeterminedonthebasisofcertainturnoverthresholds,whiletheCompetitionCouncilassessconcentrationswithnationaldimension.

CommunitynotificationthresholdsTwoalternativesetsofthresholdsmustbetakenintoaccountinordertodetermineifaconcentrationbetweenundertakingshasaCommunitydimensionandthusmustbenotifiedtotheCommission.

TheCompetitionCouncilhasrecentlyappliedsignificantfinesintwoabusecases,namely(i)onecaseagainstthenationalpost—officeoperatorfordiscriminatorypricesapplyingafineofapproximatelyEUR24,060,000(ii)theother,againstthetwomaintelecomoperators(i.e.OrangeandVodafone)applyingfinesofapproximatelyEUR34,800,000andEUR28,300,000,respectivelyforactionsrelatedtorestrictionofaccesstoessentialfacilities.Suchcasesarecurrentlyonthetopofthefinerecordappliedbytheauthorityinitspractice.

AccordingtotherecentlyrevisedCompetitionLaw,companiesmaynowoffercommitmentsduringtheinvestigationprocedurethattheywillcomplywithacertainconductastoendtheallegedinfringement.

Competence:TheEuropeanCommissionortheCompetitionCouncil?AsystemofparallelcompetencesoftheEuropeanCommissionandthenationalcompetitionauthoritiesisinstitutedattheleveloftheCommunity.WhiletheEuropeanCommissionusuallyintervenestoinvestigateanti—competitivepracticesaffectingmorethanthreeMemberStatesorjustifyingaCommunityinterest(i.e.therespectivepracticeaffectstheinternalmarkets’freedomsorthecasehasanoveltycharacteratCommunitylevel),theCompetitionCouncilremainscompetenttoexaminepracticesaffectingmainlytheRomanianmarket.

Fines.PublicandPrivateenforcementThesanctionsforviolationsoftheCompetitionLawareseriousandtheymayreachbetween0.5%and10%oftheinvolvedparty’sturnoverontheyearpriortothesanctioningdecision.Othersanctionsincludeinvalidityofcontractterms,damagesclaimsrequestedincourtbythedamagedcompetitorsandotherrestrictionsimposedbytheCompetitionCouncilorthecourtsonthebusinessactivity.TheCompetitionLawcanalsoleadtocriminalliabilityofthoseindividualsresponsiblefortheviolation.Sofar,theCompetitionCouncilhasonlyonceremittedthecasetocriminalprosecution.

Throughoutmorethan14—years,theRomanianCompetitionCouncilappliedfinesamountinginexcessofEUR110,000,000fortheinfringementsofdomesticantitrustrules.However,thelargestpartofthisamounthasbeenappliedduringthelastfewyears,whentheCompetitionCouncilacceleratedtheinvestigationprocessandalsoraisedthefineslevelimposedontheplayersfound“guilty”ofanticompetitivepractices.

Privateenforcementrelatestolegalactionsthatcanbebroughtbeforeanationalcourtbyoneprivatepartyagainstanundertakingthatinfringedthecompetitionregulations.Privateenforcementofcompetitionrulescantakedifferentforms,includingactionsfordamages,actionsforinjunctiverelief(tostopthebehaviourcontrarytothecompetitionrules),actionsfornullity,etc.


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However,thebuyermayclosethetransactionpendingclearanceprovidedthatitdoesnottakeanymeasuresdeemedasirreversiblewithregardtothetarget’soperations.Forjustifiedcases,thebuyermayalsorequireforaderogationfromtheaboverule.Withina5—yearstatuteoflimitationperiod,theCompetitionCouncilcanimposeafineofupto10%oftheRomanianturnoverachievedbythebuyerforcompletinganotifiedmergerbeforeclearance.

ReviewperiodsTheCompetitionCouncilshallissueadecisiontoeitherauthorizethemerger,oropenanin—depthinvestigationwithin45daysafterthesubmissioniseffective(uponregistrationattheCompetitionCouncilor,uponsubmissionofadditionalrequiredinformation).Inpractice,thereviewperiod(phaseI)islikelytotakeupto60—90days,sincetheauthorityusuallytakes15—25daysbeforeitdeclaresthesubmissioncompleteandthestatutorytimestartstorun.Incertaincases,asimplifiedprocedureisavailable.Ifaninvestigationisopened(phaseII),theCompetitionCouncilshallissueadecisionofrefusal/authorization/conditionalauthorizationwithina5—monthtermafterthenotificationiseffective.

AuthorizationfeeIftheauthorizationoftheeconomicconcentrationisgranted,anauthorizationfeerangingfromEUR10,000uptoEUR25,000shallbepaid.

StateAidRegulations

Consideringthatstateaidmaydistortorthreatentodistortcompetitionbyfavouringcertainundertakingstothedetrimentofothers,theEuropeanUnionrulesprovideforastrictcontrolofstateaidmeasuresgrantedbyMemberStates.

MeasuresqualifyingasstateaidMeasuresgrantedbyMemberStatesshouldqualifyasstateaidifthefollowingcriteriaaremet:•Transferofstateresources—grantedbycentralorlocalauthorities,publicbanks,foundations,private/publicintermediatebodiesappointedbytheState;•Economicadvantage—whichwouldnotbeobtainedintheordinarycourseofbusiness;•Selectivity—onlyselectedundertakingshaveaccesstothemeasure.Assuch,measuresapplyingwithoutdistinctiontoallundertakingsinalleconomicsectorsinaMemberState(e.g.anation—widefiscalmeasure)arenotselectiveandthereforeshouldnotfallunderthestateaidprinciples;•Effectoncompetitionandtrade—theundertakingbenefitingfromthemeasuremustbeengagedineconomicactivities.

Firstsetofthresholds• ThecombinedaggregateworldwideturnoverofalltheundertakingsconcernedismorethanEUR5,000million;and

• TheaggregateCommunity—wideturnoverofeachofatleasttwooftheundertakingsconcernedismorethanEUR250,000,000;

• Unlesseachoftheundertakingsconcernedachievesmorethan2/3ofitsaggregateCommunity—wideturnoverwithinoneandthesameMemberState;

• Theworldwideturnoverthresholdisintendedtomeasuretheoveralldimensionoftheundertakingsconcerned;theCommunityturnoverthresholdseektodeterminewhethertheconcentrationinvolvesaminimumlevelofactivitiesintheCommunity;andthe2/3ruleaimstoexcludepurelydomestictransactionsfromCommunityjurisdiction.

Secondsetofthresholds• ThecombinedaggregateworldwideturnoverofalltheundertakingsconcernedismorethanEUR2,500million;

• IneachofatleastthreeMemberStates,thecombinedaggregateturnoverofalltheundertakingsconcernedismorethanEUR100,000,000;

• IneachofatleastthreeMemberStatesincludedforthepurposeofthepointabove,theaggregateturnoverofeachofatleasttwooftheundertakingsconcernedismorethanEUR25,000,000;

• TheaggregateCommunity—wideturnoverofeachofatleasttwooftheundertakingsconcernedismorethanEUR100,000,000;

•Unlesseachoftheundertakingsconcernedachievesmorethan2/3ofitsaggregateCommunity—wideturnoverwithinoneandthesameMemberState;

•Aconcentrationthatdoesnotmeetthefirstsetofthresholds,butmeetstheonesmentionedabovehasaCommunitydimensionandthusmustbenotifiedtotheCommission.

NationalnotificationthresholdShouldthemergernotfallinthejurisdictionoftheEuropeanCommission,itwouldrequireclearancebytheCompetitionCouncilifthefollowingthresholds19arecumulativelymetinthefiscalyearprecedingthetransaction:•Theparties’combinedworldwideturnoverexceedsEUR10,000,000;and•AtleasttwoofthepartiesinvolvedinthetransactionhaveaturnoverinRomaniaexceedingEUR4,000,000.

ImplementationpriortoclearanceRomaniaisconsideredtobea”suspensivejurisdiction”,i.e.atransactionmaynotbeimplementedpriortoclearanceissuedbytheCompetitionCouncil.

19 Forthepurposeofthethresholdtest,thegroupthateachinvolvedpartybelongstoshallalsobetakenintoconsideration.


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StateaidwhichisnotsubjecttopriornotificationproceduresAsanexception,certainstateaidmeasuresdonotfallunderthenotificationrequirement.Suchmeasuresareeitherfallingunderthe(i)de minimis aidrulesor(ii)areblockexemptedunderaspecificCommissionregulation.

Transparentincentivesnotexceedingtheminimumthreshold(EUR200,000overanyperiodof3fiscalyears)aredeemedtobeauthorizedandarenotsubjecttonotificationrequirement.

TheEuropeanCommissionhasissuedaGeneralBlockExemptionRegulation(EC)No.800of6thofAugust2008declaringcertaincategoriesofaidcompatiblewiththecommonmarketinapplicationofArticles107and108TFEUcodifyingpreviousblockexemptionregulationsandregarding:• Regionalaid;• Smallandmediumsizeenterprisesinvestmentandemploymentaid;• Aidforcreationofenterprisesbyfemaleentrepreneurs;• Aidforenvironmentalprotection;• Aidforconsultancyinfavorofsmallandmediumsizeenterprisesandsmallandmediumsizeenterprisesparticipationinfairs;

• Aidintheformofriskcapital,aidforresearch,developmentandinnovation;• Trainingaid;and• Aidfordisadvantagedordisabledworkers.

Inordertobenefitfromthenotificationexemption,astateaidmeasuremustobserveinteraliathefollowingcriteria:•Theaidmeasureistransparent—aidinrespectofwhichitispossibletocalculatepreciselythegrossgrantequivalentexantewithoutneedtoundertakeariskassessment;•TheaidmeasuredoesnotexceedtheaidintensitythresholdsprovidedintheGBER(i.e.thegrossaidamountexpressedasapercentageoftheeligiblecosts);•TheaidmeasuredoesnotexceedtheindividualnotificationthresholdsprovidedintheGBER;•Theaidmeasureistargetedatactivitiesorinvestmentsthatprovean “incentiveeffect”—undertheEuropeanUnionprincipleson“lessandbettertargetedaid”anystateaidmeasuremustbetargetedtoanactivityorinvestmentthatwouldhavenotbeenperformedintheabsenceofaid;•TheaidmeasurecomplieswiththespecificrequirementsundertheGBERforeachcategoryofaidcontemplatedabove;

Subjecttothecriteriadescribedabove,measuresqualifyingasstateaidmaytakevariousforms,suchasgrants,capitalinjections,debtwrite—off,exemptions,reductionsordeferralsoffeesand/ortaxpayments,accelerateddepreciationallowances,preferentialinterestrateloans,interestraterebates,loanguarantees,pricereductionsinconnectiontogoodssuppliedandservicesprovidedbypublic,centralandlocalauthoritiesorotherbodiesmanagingcentralorlocalstateresources,includingsaleorrentoflandownedbypubliccentralorlocalauthoritiesorotherbodiesmanagingcentralorlocalstateresourcesbelowmarketprice.

Stateaidmeasuresmaybegrantedunderaspecificstateaidschememadeavailabletoalargernumberofundertakingsorintheformofindividualaid.Individualaidmaytakethefollowingtwoforms:(i)adhocaidand(ii)individualawardsofaidonthebasisofanaidscheme(theindividualawardrequiringtheperformanceofanotificationprocedureunderstateaidrules).

StateaidcontrolbytheEuropeanCommissionTheCommissioniscompetenttokeepunderconstantreviewallsystemsofaidexistingintheMemberStates.ThesupervisionoftheCommissioninconnectionwithstateaidisbasedonasystemofexanteauthorization.Consequently,eachMemberStateisrequiredtoinformtheCommission,basedonanotificationprocedure,ofanyplantograntormodifyanypreviouslyauthorizedstateaidmeasure.MemberStatesarenotallowedtoputsuchaidintoeffectbeforeithasbeenauthorizedbytheCommission(i.e.the“Standstill—principle”).AidgrantedinabsenceofauthorizationbytheCommissionisautomaticallydeemedas“unlawfulaid”andissubjecttorecovery.

Basedonitsexaminationofthenotifiedaid,theCommissionmay(i)issueadecisionattestingthat“thenotifiedmeasuredoesnotconstituteaid”;(ii)issuea“decisionnottoraiseobjections”ifitfinds,afterapreliminaryexamination,thatnodoubtsareraisedastothecompatibilitywiththecommonmarketofanotifiedmeasure;(iii)issuea“decisiontoinitiateaformalinvestigationprocedure”if,afterapreliminaryexamination,itfindsthatdoubtsareraisedastothecompatibilityofthenotifiedmeasurewiththecommonmarket.Moreover,iftheCommissionfindsthataidgrantedbyaMemberStateorthroughthatMemberState’sresourcesisnotcompatiblewiththecommonmarket,orsuchaidisbeingmisused,theCommissioniscompetenttodecidethattheMemberStateconcernedmustabolishoraltersuchaidwithinaperioddeterminedbytheCommission.IftheStateconcerneddoesnotcomplywithsuchdecisionwithintheprescribedtimetheCommissionoranyotherinterestedMemberStatemayreferthematterdirectlytotheEuropeanCourtofJustice.


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IntellectualProperty

Overview

IntellectualpropertyrightsareprotectedinRomaniabyvariouslegalenactmentsapplyingspecificallytoeachcategoryofIPrights:patents,utilitymodels,trademarks,industrialdesigns,integratedcircuits,copyrights.TheRomanianlegalframeworkonIPrightshasbeengraduallyharmonisedwiththecorrespondingEuropeanlegislationand,generally,withtheprinciplesprovidedininternationaltreatiesandconventions21.ThepublicauthoritiesinvestedwithcompetenceintheprotectionofintellectualpropertyrightsaretheStateOfficeforInventionsandTrademarks(OSIM)(inrelationtoindustrialpropertyi.e.inventions,trademarks,geographicindications,industrialdesigns,integratedcircuits)andtheRomanianOfficeforCopyright(ORDA)(relevantforcopyrightprotectedworks).

Patents

ThePatentLawNo.64/1991(thePatentLaw)setsforththespecificpatentabilityconditions.ThepatentensuringprotectionontheterritoryofRomaniaisvalidfor20yearsfromthedatetheregularnationalapplicationisfiled,andissubjecttoyearlyfeesformaintenance.

21 Romaniaisapartytothemaininternationaltreatiesandconventionsonintellectualproperty,amongwhich:theParisConventionfortheProtectionofIndustrialProperty(1883),includingitssubsequentrevisions;theConventionestablishingtheWorldIntellectualPropertyOrganization(1967);theMarrakechAgreementestablishingtheWorldTradeOrganization(1994);theMadridArrangement(1967)andtheProtocolrelatedtotheMadridArrangement(1989);theTrademarksTreaty(Geneva,1994);theNiceArrangementontrademarksclassification(1957);theTreatyonTrademarksLaw(Singapore,2006);thePatentCooperationTreaty(Washington,1970);EuropeanPatentConvention(Munich,1973);theStrasbourgAgreementconcerningtheInternationalPatentClassification(1971);theLocarnoAgreementontheclassificationofindustrialdesigns(1968);theHagueArrangementontheinternationaldepositforindustrialdesigns(1925);theBerneConventionontheprotectionofliteraryandartisticworks(1886).

• Themeasuremustnotbetargetedat(i)aidtoexport—relatedactivities,namelyaiddirectlylinkedtothequantitiesexported,totheestablishmentandoperationofadistributionnetworkortoothercurrentcostslinkedtotheexportactivity;or(ii)aidcontingentupontheuseofdomesticoverimportedgoods;

• Themeasuremustnotbetargetedtocertainsectors20;• Themeasureisnottargetedat(i)aidschemeswhichdonotexplicitlyexcludethepaymentofindividualaidinfavorofanundertakingwhichissubjecttoanoutstandingrecoveryorderfollowingapreviousCommissiondecisiondeclaringanaidillegalandincompatiblewiththecommonmarket;(ii)adhocaidinfavorofanundertakingwhichissubjecttoanoutstandingrecoveryorderfollowingapreviousCommissiondecisiondeclaringanaidillegalandincompatiblewiththecommonmarket;(iii)aidtoundertakingsindifficulty.

20 Suchsectorsarethefollowing:(i)aidfavoringactivitiesinthefisheryandaquaculturesectors,exceptfortrainingaid,aidintheformofriskcapital,aidforresearchanddevelopmentandinnovationandaidfordisadvantagedanddisabledworkers;(ii)aidfavoringactivitiesintheprimaryproductionofagriculturalproducts,exceptfortrainingaid,aidintheformofriskcapital,aidforresearchanddevelopment,environmentalaid,andaidfordisadvantagedanddisabledworkerstotheextentthatthesecategoriesofaidarenotcoveredbyCommissionRegulation(EC)No.1857/2006;(iii)aidfavoringactivitiesintheprocessingandmarketingofagriculturalproductswhentheamountoftheaidisfixedonthebasisofthepriceorquantityofsuchproductspurchasedfromprimaryproducersorputonthemarketbytheundertakingsconcernedorwhentheaidisconditionalonbeingpartlyorentirelypassedontoprimaryproducers;(iv)aidfavoringactivitiesinthecoalsectorwiththeexceptionoftrainingaid,researchanddevelopmentandinnovationaidandenvironmentalaid;(v)regionalaidfavoringactivitiesinthesteelsector;(vi)regionalaidfavoringactivitiesintheshipbuildingsector;(vii)regionalaidfavoringactivitiesinthesyntheticfibressector.


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FailuretoopenthenationalphaserenderstheapplicationineffectiveinRomania.TherequestsforinternationalregistrationmayalsobefiledwiththeOSIM,asreceivingoffice.

Thedurationoftheprotectionoftheutilitymodelisof6years,availableforextensionfortwo2—yeareachsuccessiveperiods,andmaynot,extensionsincluded,exceedthemaximumof10years.

ApplicantsattheOSIMmayre—qualifytheirrequestfrompatenttoutilitymodeland,conversely,fromutilitymodeltopatent,withouttherebycausingtheexaminationprocedurebeautomaticallyclosed.Re—qualificationsareonlyadmittedonceandarenotavailableforinternationalrequestswherethenationalphasehasalreadycommenced.Therighttotheutilitymodelmaybetransferred,whollyorpartially,byassignmentorbyexclusive/non—exclusivelicensing.Utilitymodelscanbeencumberedandpursuedinenforcementprocedures.

Trademarks

AccordingtotheTrademarkLawNo.84/1998(theTrademarkLaw),exclusiverightstouseatrademarkinRomaniaaregrantedbyregistrationwiththeOSIM,eitherdirectlyorbywayofaninternational(WIPO)application.

Inordertoberegistered,atrademarkmustnotbeidenticalorconfusinglysimilartoaprevioustrademarkbelongingtoadifferentownerandregisteredforidenticalorsimilarproductsorservices.Whenevertheprevioustrademarksarenotorious(eitherinRomaniaorintheEuropeanUnion),theriskofconfusionisanalyzedevenifthenewtrademarkisforproductsorservicesthatarenotidenticalorsimilar,ifregistrationriskstocausedamagetothenotorioustrademark.Theapplicantmayinvokepriorityrights.

AccordingtotherulesapplicablefollowingRomania’saccessiontotheEuropeanUnion,CommunitytrademarksshallautomaticallyenjoyprotectionontheRomanianterritory.Thismechanismoperatesipsojure,withouttheneedfortheholdertofulfillanyformalitiesorproceduresattheOSIM.Apotentialconflictwithadomestictrademarkshallbesolvedbasedonthepriorityrules.

TheholderofanationaltrademarkpreviouslyregisteredingoodfaithisallowedtoopposetheuseoftheCommunitytrademarkonlyonRomanianterritory.OppositionsmayberaisedtothecompetentRomaniancourtsincompliancewithRegulationNo.207/2009ontheCommunitytrademark.

However,sincetheautomaticextensionofprotectionisnotreciprocal(i.e.national

Therighttopatentbelongstotheinventorortohis/herrightfulsuccessor.Foremployee—inventors,therighttopatentbelongseithertotheinventor(forinventionsmadeintheexerciseoftheemployee’sspecificduties,usingtheemployer’stechnologiesordata,orhisknowledgeaboutsuch,orwithsupportfromtheemployer,ifnototherwiseprovidedinthelabouragreement)ortotheemployer(forinventionsmadebytheemployeeunderalabouragreementthatexpresslyprovidesthatinventionsarewithintheemployee’sspecificduties).

Patentabilityconditionsareharmonisedwithinternationalregulations.Aninvention22(foraproductoraprocedureinanytechnologicalfield)ispatentableinRomaniaifitisnewworldwide,involvesaninventivestep(i.e.itdoesnotfollowevidentlyforatrainedindividualfromtheknowledgeincorporatedintheexistingtechnicaldevelopmentstage)andissusceptibleofindustrialapplication.

ApplicationsforpatentaresubmittedtotheOSIM.Theinventionshallbedisclosedinthedescription,drawingsandclaimsinamannerwhichisclearandcompleteaswellasscientificallyandtechnicallycorrect.Theapplicantmayinvokepriorityrights.TheinformationcomprisedinthepatentapplicationwillbekeptconfidentialuntiltheapplicationispublishedbyOSIM.Thepatentapplicationsarepublishedimmediatelyaftertheexpiryofa18—monthtermfromthedateoftheregularnationalfilingorfromtheclaimeddateofpriority.Publishedpatentapplicationsbenefitfromprovisionalprotectionuntilthepatentisissued.Thepatentissubjecttopublicoppositionfor6monthsfromthepublicationofthedecisiongrantingit.

UtilityModels

TheprotectionofutilitymodelsismainlyregulatedinRomaniabyLawNo.350/2007,concernedwithsuchtechnicalinventionsthatcannotbeprotectedbypatentaccordingtothePatentLawastheydonotinvolveinventiveactivity.Utilitymodelsrefertoanytechnicalinventionsprovidedthattheyarenew(theyarenotalreadyincludedinthecurrentdevelopmentstageofthetechnique),thattheyexceedthelevelofmereprofessionalskill,andthattheyareapplicableintheindustrialfield.

Therighttotheutilitymodelbelongstotheinventororhis/herrightfulsuccessor.TheutilitymodelacquiresprotectionbyregistrationwiththeOSIM.

Thelawpermitsinternationalregistrationofutilitymodels.InternationalapplicationsmaybefiledwithforeignreceivingofficesandmayindicateRomaniaasadesignatedcountry.

22 Scientificdiscoveries,theoriesandmathematicalmethods;estheticalworks;plans,principlesandmethodsforthedevelopmentofmentalactivitiesinentertainment,business,computerprograms;methodstopresentinformationarenotdeemedinventions.


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Anindustrialdesignisdeemedtobedistinctive(haveanindividualcharacter)iftheoverallimpressionithasontheexperienceduserdiffersfromtheimpressionmadebyanyindustrialdesignmadepubliclyavailablebeforethedateoffilingtheapplicationforregistration,orbeforetheprioritydateifprioritywasclaimed.

Theindustrialdesigntheappearanceofwhichisdeterminedbyatechnicalfunctioncannotberegistered.

Severalindustrialdesignsmaybesubmittedforregistrationinthesameapplication,inamultipledepositcomprisingindustrialdesignsintendedtobeincorporatedinarticlesofthesamecategoryofgoodsaspertheLocarnoAgreementclassification.

Industrialdesignssubjecttoamultipledepositshouldmeettheconditionofunityofdesign,unityofproductionorunityofuse,orshouldbelongtothesamesetorcompositionofitems.

Theapplicationfortheregistrationofindustrialdesignsisrequiredtoprovideagraphicrepresentationofthedesignandamaximum100wordsdescriptionofthedesigntoexplainthenovelty.Thedateoftheapplicationmeetingtheminimallegalrequirementsconstitutesthedateofthenationaldeposit.Theapplicantmayinvokepriorityrights.

Within4monthsfromthenationaldeposit,theapplicationispublished.Thirdpartieshavetherighttoopposetheregistrationwithin2months.TheOSIMwilldecidetograntordenyregistrationofanindustrialdesignwithin12monthsfrompublication,subjecttopotentialoppositionsbeingrejected.

TheregistrationcertificategrantsexclusiverightstoitsownerfortheuseoftheindustrialdesignontheRomanianterritorystartingretroactivelyfromthedateofthenationaldeposit.

Theregistrationcertificateofanindustrialdesignisvalidfor10yearsfromconstitutingthenationaldepositandmayberenewedforthreesuccessive5—yearperiodsuponpaymentofthelegalfees.

Accordingtotherulesapplicablefollowingaccession,EUdesignsautomaticallyenjoyprotectionontheRomanianterritory.Thismechanismoperatesipsojure,withouttheneedfortheholdertofulfillanyformalitiesorprocedureswithOSIM.

Apotentialconflictwithadomesticdesignshallbesolvedbasedonthepriorityrules,theholder/applicantofanearlierlocaldesignregistered/appliedforingoodfaithbeingentitledtoopposetheuseofaCommunitydesignonRomanianterritory.

(i.e.nationaltrademarksdonotautomaticallybenefitfromprotectionintheMemberStates)holdersofnationaltrademarkscannotsubstantiate,attheEuropeanUnionlevel,amotiontoannulortoobtainwithdrawalofrightsforlackofuseagainsttheownerofasubsequentlyregisteredCommunitytrademark.

TheholderofapreviouslyregisteredCommunitytrademarkorofpreviouslyacquiredrightsmayaskthecompetentcourttocancelthenationaltrademarkortowithdrawtherightssuchatrademarkhas.ClaimsofcounterfeitmaynotbesubmittediftheownerofthepreviousCommunitytrademarktolerated,foraperiodof5years,theuseofthesubsequentnationaltrademarkwhichwasregisteredingoodfaith.

Within7daysasoffiling,theapplicationispublishedbyOSIM,sothatanyinterestedpersonmayopposetoregistrationofthetrademark.OSIMtakesadecisionontheregistrationofthetrademarkwithin6monthsfromasofpublicationoftheapplication.

PursuanttotheOSIMissuingafinaldecisionforregistration,thetrademarkwillberegisteredwiththeNationalRegisterforTrademarks.

ThetrademarkcertificateissuedbytheOSIMgrantsexclusiverightstotheownertousethetrademarkinRomaniaforaperiodof10yearsstartingretroactivelyfromthedateofsubmittingtheapplication.Uponpaymentoflegalfees,theprotectionperiodcanbeextendedbysubsequent10—yearperiods.

FurthertothelatestamendmenttotheTrademarkLaw,theconceptofCommunityexhaustionoftrademarkswasstatutorilyrecognized.Accordingtothisconcept,thefirstsaleofatrademark—protectedproductwithintheEuropeanEconomicSpacebytheowner,orwiththeowner’sconsent,exhauststhetrademarkrightsoverthesegivenproductsnotonlydomestically,butalsowithinthewholeEuropeanEconomicSpace.Thedirectconsequenceisthatresellerswithinthisregioncannotbepreventedfromundertakingparallelimports,unlessalegitimateinterestrelatedtothealterationoftherespectiveproductscouldberaised.

IndustrialDesigns

BasedontheprovisionsoftheIndustrialDesignLawNo.129/1992(theIndustrialDesignLaw),thenewexternalappearanceofaproductintwoorthreedimensionshavingapracticalfunctionmayberegisteredasindustrialdesign.Noveltyanddistinctivecharacteraretheregistrationconditionsforanindustrialdesign.AformisnovelifitispracticallyunknownintheterritoryofRomania,andhasnotbeendisclosedforthesamecategoryofgoodsinRomaniaorabroad.


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Protectionforartists’interpretationsorperformancesisvalid50yearsfromthedateofsuchinterpretationorperformance.However,ifsuchwerefixedonamaterialduringthisperiodoftime,andwerelegallypublishedorcommunicatedtothepublic,the50—yearprotectionperiodstartsfromthedateofsuchfixingorpublicationorcommunication.Thesameappliestotherightsofsoundorvideorecordingsproducers.

Copyrightsareclassifiedinmoralrightsandeconomicorpatrimonialrights.Whilemoralrights(e.g.therighttodecidewhetherandhowtheworkisgoingtobepublished;therighttodecidethenameunderwhichtheworkshallbepublishedetc)maynotbetransferredbytheauthor,economicrightsmaybeassignedtothirdpartiesbywayofcopyrightlicensing.Theauthor,or,asthecasemaybe,theholderoftheeconomiccopyright,maylicensethepatrimonialcopyrights,inwholeorinpart,aswellasrestricttheuseoftheworkbythelicenseestocertainterritoriesand/ortocertaintimelimits.

Thelicensingagreementmustidentifythepatrimonialrightsthataretransferredtherebyandmustprovide,foreachright,thepermittedmethodsofuse,thetermandscopeofthelicensing,aswellasthepaymentsduetotheholderofthecopyright.Ifanyoftheseprovisionsismissing,theinterestedpartymayrequesttheterminationoftheagreement.Thelicensingagreementconcerningallthefutureworksoftheauthor,whetherornotsuchworksarenamed,isnullandvoid.

Ifthelicensorisalsotheauthorofthework,andthelicenseeusestheworkinamannerthatmaybefoundinsufficientandconflictingwiththelicensor’slegitimateinterests,theauthorhasthepossibilitytoclaiminvalidityofthecopyrightlicenseagreementafter2yearsfromtheentryintoforceofthelicense.Thetermisof3monthsincasetheworkwastobepublishedinadailypublicationandof1yeariftheworkwassupposedtobepublishedinperiodicals.Theauthormaynotwaiveinadvancesuchrighttoseektermination.

Inthecaseofagreementsforcreationoffutureworks,intheabsenceofaclausetothecontrary,theeconomicrightsbelongtotheauthor.Thepersoncontractingthecreationofafutureworkisentitledtoterminatetheagreementiftheworkfailstocomplywiththeagreedconditions.Incaseoftermination,theauthorkeepstheamountwhichhe/shehasalreadyreceived.Intheabsenceofacontractualclausetothecontrary,fortheworkscreatedbyemployeeswhilefulfillingtheirprofessionaldutiesunderanindividuallabouragreement,thepatrimonialrightsbelongtotheauthor.Inthiscase,theauthormayauthorizethirdpartiestousetheworkonlywiththeemployer’sconsentandsubjecttocompensationfortheemployer’scontributiontocoveringthecostsofcreation.Theemployermayutilizetheworkinitsbusinesswithoutauthorizationfromtheauthor—employee.

Copyright

TheCopyrightLawNo.8/1996(theCopyrightLaw)providesprotectiontoallliterary,artisticorscientificworks,aswellastootherintellectualcreationworks,providedthattheyareoriginal,takeaconcreteformofexpression,andaresusceptibleofbeingmadeknowntothepublic.

TheprotectiongrantedundertheCopyrightLawappliestothefollowingworks:• AuthoredbyRomaniancitizens,eveniftheyhavenotyetbeenmadeknowntothepublic;

• AuthoredbynaturalorlegalpersonsdomiciledorheadquarteredinRomania,eveniftheyhavenotyetbeenmadeknowntothepublic;

• ArchitecturalworkslocatedontheRomanianterritory;• Artists’interpretationsorperformancestakingplaceontheRomanianterritory;• Artists’interpretationsorperformanceswhicharefixedinsoundrecordingsprotectedbytheCopyrightLaw;

• Artists’interpretationsorperformanceswhicharenotfixedinsoundrecordings,butaretransmittedbytelevisionorradiobroadcastingsprotectedundertheCopyrightLaw;

• SoundorvideorecordingsproducedbynaturalorlegalpersonsresidinginRomania;

• SoundorvideorecordingsfixedonanymaterialforthefirsttimeinRomania;• Radio/televisionprogramsbroadcastbyentitiesheadquarteredinRomania;• Radio/televisionprogramstransmittedbyentitiesheadquarteredinRomania.

SuchworksbenefitfromprotectionundertheCopyrightLawwithoutregistrationoranyotherformalitybeingrequired.Non—residents,individualsorlegalentities,benefitformcopyrightprotectionasperthetermsoftheinternationaltreatiesRomaniaisapartytoor,absentsuchtreaties,underthesametermsasRomanianresidents,onareciprocitybasis.Authorsofsuchworkhavethemoralrighttoretractit,indemnifying,ifthecase,theholdersoftherighttousetheworkshouldtheyincurdamagebyretraction.

TheRomaniancopyrightslastforthelifetimeoftheauthorplusothersubsequent70yearsaftertheirdeath,beingtransmittedtolawfulsuccessors,irrespectiveofthedatewhentheworkwasbroughttopublicknowledge.Thesameappliestosoftwareworks.

Thepersonwho,afterthedeathoftheauthor,lawfullybringstopublicknowledge,forthefirsttime,apreviouslyunknownwork,benefitsfromprotectionsimilartothatofferedtoauthorsforaperiodof25yearsfromthedatetheworkwasfirstmadepublic.


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Conversely,contractualclausesmayprovidethat,forworkscreatedforthefulfillmentofprofessionaldutiesstipulatedintheindividuallabouragreement,thepatrimonialrightsdonotbelongtotheauthorofthework.Ifsuchclausesdonotsetforththedurationoftheassignmentofpatrimonialrights,thetermshallbeofthreeyearsasoftheworkdeliverydate.

Uponexpiry,thepatrimonialrightsaretransferredtotheauthorand,absentaclausetothecontrary,theemployerisentitledtorequesttheauthortopayareasonablequotafromtheincomeobtainedfromutilization,inordertocompensatecostsbornebytheemployerforthecreation.

Theeconomicrightsonphotographicworkperformedunderanindividuallabouragreement,orfurthertoanorder,arepresumedtobelong,foraperiodof3years,totheemployerorthepersonthatplacedtheorder,ifnototherwiseprovidedintheagreement.

Thephotographofaperson,whenitismadefurthertoanorder,maybepublished,reproducedbythephotographedpersonoritssuccessors,withouttheconsentoftheauthor,ifnototherwiseagreed.

Theholdersofcopyrightsandrelatedrightsmayexercisetheirlegalrightsindividuallyor,basedonamandate,throughcollectivemanagementbodies.

Collectivemanagementismandatoryforcertainrights(i.e.therighttocompensatoryremunerationfortheprivatecopy;therighttoafairremunerationforpublicloanincertaincases;therightofresale—droitdesuite;therightofbroadcastingformusicalworks;therightofpublicreleaseofmusicalworks,exceptforthepublicscreeningofcinematographicworks;therighttofairremunerationacknowledgedtoperformingartistsandproducersofphonogramsforpubliccommunicationandbroadcastingoftradephonogramsorthereproductionthereof;therighttocableretransmission),forwhichthecollectivemanagementbodiesalsorepresentholdersofrightsthatdidnotgrantthemamandate,andisoptionalforotherrights(i.e.therighttoreproducemusicalworksonphonogramsorvideograms;therighttopubliclycommunicateworks,exceptformusicalworksandartisticperformancesintheaudio—videosector;therightofloan,exceptforcertaincasesprovidedbylaw;therighttoradiobroadcasttheworksandartisticperformancesintheaudio—visualsector;therighttofairremunerationresultingfromtheassignmentofleaserights;therighttofairremunerationacknowledgedtoperformingartistsandproducersofphonogramsforpubliccommunicationandradiobroadcastingofphonogramspublishedforcommercialpurposesorthereproductionthereof).


CustomsActionagainstGoodsSuspectedofInfrigingIntellectualPropertyRights

Thefightagainsttheimportofgoodssuspectedofinfringingintellectualpropertyrightsiscarriedbythecustomsauthorities,enabledtoretainthegoodsandtoverifytheirauthenticity.ThecustomsauthoritiescollaboratecloselywithholdersofintellectualpropertyrightsinordertofacilitateaquickauthenticitycheckonsuspectproductsimportedinRomania.

Goodsthatarefoundtobreachintellectualpropertyrightsareinmostcasesdestroyed,or—iftheholderofthebreachedintellectualpropertyrightsoaccepts—offeredfreeofchargeforhumanitarianpurposes.

Inpractice,thecustomsauthoritiesareactiveinretaininggoodsthataresuspectofinfringingintellectualpropertyrights,beingespeciallyfocusedonexcisablegoods(e.g.cigarettes).However,destroyingthegoodsproventobecounterfeitedisalengthyandcumbersomeprocess.


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ProductLiability

Overview

Overthelastyears,productliabilitylegislationconsolidatedanddeveloped,generatinganincreasinglevelofpublicawarenessregardingconsumerrightsfollowingtheexpansionoftheretailactivitiesandtheactivityoftheconsumerwatchdogauthoritiesandnon—governmentalorganizations.

Currently,theConsumerCoderepresentstheframeworkenactmentinthefieldofproductliabilityandconsumerrights,regulatinginteraliatheconsumers’accesstogoodsandservices,theirrights,theproducers’obligations,aswellasthegeneralrulesapplicabletonon—governmentalorganizationsandthegeneralframeworkonproductsecurity.

ConsumerWatchdogAuthoritiesandNon—GovernmentalOrganizations

TheGovernment’spolicyinthefieldofconsumerprotectioniscoordinatedbytheNationalAuthorityforConsumerProtection(ANPC).TheANPCisresponsiblefortheconstantharmonizationoftheRomanianlegislationwiththeEClaws,aswellasforsupervisingcompliancewithspecificlegislationapplicabletothesaleofconsumergoods.UndertheANPCdirection,theeffectivesupervisionofthecompliancewiththelawisperformedbytwelveterritorialofficesforconsumers’protection,bytheInter—MinisterialCommitteefortheSupervisionoftheProductsandServicesMarketandforConsumerProtectionandbytheNationalCenterforProductsTestingandAppraisement—LAREX.

Non—governmentalorganizationsinthefieldofconsumers’protectionhaveflourishedoverthepastyearsandtheyhaveseveralprerogatives,subjecttocompliancewiththecriteriaprovidedbylaw,suchastherighttoparticipatetoconsultativecouncils(organizedbasedonterritorialcriteriaandinchargeofenforcingtheconsumerprotectionpolicyandcoordinatingtheactivityofpublicinstitutionsandnon—governmentalorganizationsinthefieldofconsumerpolicy)andtorunconsumerinformationandconsultingcenterssubsidizedwithpublicfunds.

ContentofContractsConcludedbetweenConsumersandSellers

ContractualformalisminRomaniahasnotyetreachedthestatuscurrentlyexistinginmostoftheEUmemberstates.Romanianconsumers’protectionlegislationdoesnotprovideforframeworkcontractswithapre—definedcontent,butonlyforspecificrulesregardingthedraftingandtheapplicationofcertainclausestothecontractualrelationshipbetweentheparties23.

Suchbeingthesituation,adistinctionshouldbemadebetween:• Statutoryprovisionswhichestablishgeneralrulesapplicabletoallthecontractsinthisfield;and

• Statutoryprovisionswhichsetoutspecialrulesapplicableonlytospecificcontracts.

Consumers’protectionlegislationfocusesonestablishingrulesdesignedtoensurethatcontractualclausesaredraftedinanaccurateandclearmannerallowingtheconsumertounderstandtheircontent.Incaseofambiguousclauses,thesewillbeinterpretedinfavoroftheconsumer.Abusiveclausesareconsideredanimportantthreattoconsumerprotection,astheyarefrequentlyinsertedinthecontractsconcludedbetweensellersandconsumers,wheremanyagreementsarestandardandnotsubjecttonegotiation.Contractualclauseswhicharenotsubjecttonegotiationmaybeconsideredabusiveiftheyleadtoasignificantmisbalancebetweentheparties’rightsandobligations.

23 UnlikethepreviousCivilCode,theNewCivilCode,inforceasof1stofOctober2011,includesagenerallegalframeworkforstandardclauses(whicharetobesupersededbynegotiatedclauses)andunusualclauses(definedasstandardclauseswherebythepartywhoproposesthemretains,amongothers,onlyalimitedliability,orarighttounilaterallydenunciatethecontract;inordertobevalid,suchunusualclausesmustbeacceptedexpressly,inwriting,bytheotherparty).Theseprovisionsconstitutethegeneralrulesonstandardclauses,whiletherulesprovidedinthelegislationspecificallygoverningconsumerprotectionaredeemedspecialrules,whichwillapplywithpriorityandwillonlybecomplemented,wherevernecessary,withthegeneralrules.


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Romanianlegislationprovidesforanon—exhaustivelistofclausesdejuredeemedabusive,amongwhich:•Clausesprovidingfortheunilateralrightofthesellertoamendthecontract;•Clauseswherebytheconsumerisnotentitledtoobtainremediesincasethesellerdoesnotfulfillitscontractualobligations;•Clauseswherebytheindemnificationstheconsumerhastopayincaseofofnon—compliancewiththecontractualclausesaredisproportionatelybiggerthantheeffectivedamageincurredbytheseller;or• Clausesprovidingfortherightofthesellertounilaterallyterminate thecontractwithoutasimilarrightbeinggrantedtotheconsumer.

Abusiveclauses,althoughincludedinagreementsalreadyconcludedwithconsumers,aredeemedasnullandvoidunderthelaw.Besidesthegeneralconsumers’protectionlegislationapplicabletoallthecontractsconcludedbetweensellersandconsumers,therearespeciallegalenactmentssettingrulesapplicabletospecifictypesofcontracts.Fourtypesofsuchcontractsshouldbementioned:• Distancecontracts;• Contractsconcludedawayfrombusinesspremises;• Creditcontracts;• Realestateintermediationcontracts.

Distancecontracts’specialrulesshallnotapplytocontractsrelatingtofinancialservices,tocontractsconcludedbymeansofautomaticvendingmachinesorautomatedcommercialpremises,tocontractsconcludedwithtelecommunicationsoperatorsfortheuseofpublicpayphones,tocontractsconcludedwithintenderprocedures,tocontractsconcludedfortheconstructionandsaleofimmovablepropertyorrelatingtootherimmovablepropertyrights,exceptforrental,tocontractsconcludeduponauctionsale.Incaseofdistancecontracts,consumersshallhaveaperiodof10workingdaystowithdrawfromthecontractwithoutpenaltyandwithoutprovidinganyjustification.Theonlychargethatmaybeimposedontheconsumerfortheexerciseofsuchrightofwithdrawalisthedirectcostofreturningthegoods.Similarlytothecaseofdistancecontracts,theregulationsoncontractsconcludedawayfromthebusinesspremisesdonotapplytocontractsrelatingtocertainfinancialservicesortotheconstructionandsaleofimmovableproperty.Regulationsoncontractsconcludedawayfromthebusinesspremisesshallapplytothecontractsunderwhichasellersuppliesgoodsorservicestoconsumersunderanyofthefollowingcircumstances:•Duringtripsorganizedbythetraderawayfromthebusinesspremises;•Duringavisitbyatrader(i)totheconsumer’shomeortothatof anotherconsumer;or(ii)totheconsumer’splaceofwork,wherethevisitdoesnottakeplaceattheexpressrequestoftheconsumer;or

•Inotherpublicplaceswherethetraderofferstheproductsortheservicestoconsumers.

Inaddition,theconsumershallhavetherighttounilaterallyterminatethecontractwithin7workingdaysfromeither(i)thedateofconcludingtheagreementifthisisthedatewhentheproducthasbeendeliveredor(ii)theproduct’sdeliverydateor(iii)thedateofconcludingtheservicesagreement.TheboomincreditingactivityontheRomanianmarkettriggeredtheneedforestablishingofasetoflegalrequirementsdesignedtoensureaminimumstandardofprotectionforconsumers.Thus,therulesapplicabletothecreditcontractslaydownanumberofexpressobligationstobefulfilledbytheprovidersoffinancialservices.

Thespecificnormsregardtheinformationwhichneedstobeprovidedtocustomersinthepre—contractualphase,uponmarketingandadvertisingcreditproducts,aswellastherulestobeobserveduponconclusionofcreditcontracts.Financialservicesprovidersmustinformtheconsumers,inanaccurateandexhaustivemanner,onallthecostsandrisksthatarerelatedtothecreditcontract.Also,theinterest,commissions,feesorotherbankingexpensesneedtobedirectlyinsertedinthecreditagreementratherthanmerelyindicatedbyreferencetootherdocumentssuchasgeneraltermsoftheprovider,listoftariffs,etc.

Furthermore,amendmentsbroughttothelegalframeworkduringyear2010,implementingtheprovisionsoftheDirective2008/48/EConconsumercreditcontracts,providedabroadarrayofprotectivemeasuresforconsumers(suchasprohibitiontoimposenewortheincreaseoftheexistingcommissions,fees,taxesorbankingcosts,otherthanthoseprovidedbythelaw,duringtheexecutionofthecreditagreement;theprohibitiontoimposeaseriesofcontractualclausesdetrimentaltotheconsumers,etc).Suchnewrulesapply,asamatterofprinciple,onlytocreditcontractsconcludedaftertheenactmentofaforesaidnew(exceptiftheconsumersandthebanksexpresslyagreedtoamendtheongoingcreditcontracts).

Notably,consumershavetwoproceduralmeansforchallengingclausesincludedincreditcontractswhichinfringeaforesaidstatutorystandards.Thus,theconsumersmayeither(i)fileacomplaintinfrontofANPCforthepublicauthoritytoinvestigatethecomplaintand,incaseofabusiveclauses,theymayfileacourtclaimforassessingadministrativesanctionandamending/annullingabusiveclauses;or(ii)directlyfileacourtclaimchallengingthedefaultcontractualclauses.

Thelegislationonconsumers’protectionhasalsosetparticularfocusonrealestateintermediationcontracts(legallydefinedastheintermediationactivityregardingsale—purchaseorrentalofimmoveableassets).Suchcontractsneedtoinclude,besidestheregularclauses(i.e.objectofthecontract,validityperiod,


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terminationcases),aminimumsetofcompulsoryclausessuchasthemaximumcommissionowedtotherealestateagency,theexclusivityclause(ifthecase),aswellasthecleardeterminationofcaseswhenthecustomerowestheagencyacommission.Statutoryobligationshavebeenimposedonrealestateagentsinthepre—contractualphase,suchastheobligationtoinformtheinterestedcustomeronanydeficienciesorinconveniencesoftheasset(iftheagentisawareofsuchdefects),e.g.sourcesofnoise,humidity,pollution,legalissuesetc.

LiabilityforLackofConformity

Startingwith1stofJanuary2007,RomaniahasimplementedtheprovisionsofDirectiveNo.1999/44/EConcertainaspectsofthesaleofconsumergoodsandassociateguarantees.Underthislegislation,thesellershallbeliabletotheconsumerforanylackofconformitywhichexistsatthetimewhenthegoodsweredelivered.Inthecaseofalackofconformity,theconsumerwillbeentitledtohavethegoodsbroughtintoconformityfreeofchargebyrepairorreplacement,ortohaveanappropriatediscountinthepriceortohavethecontractrescindedwithregardtothosegoods.Thepricediscountortherescissionofthecontractmaybeappliedonly(i)ifthedefectgoodhasnotbeenrepairedorreplaced;(ii)ifthesellerhasnotprovidedcompleteremedywithinareasonabletime;(iii)ifthesellerhasnotprovidedcompleteremedywithoutsignificantinconveniencetotheconsumer.Theconsumerisnotentitledtohavethecontractrescindedincaseofminorlackofconformity.

Thesellerwillbeheldliableifthelackofconformitybecomesapparentwithin2yearsfromdeliveryofthegoods.Theconsumershallinformthesellerontheoccurrencewithin2monthsfromthedatethelackofconformitywasdetected.Unlessprovedotherwise,anylackofconformitywhichbecomesapparentwithin6monthsasofthedeliveryofthegoodsshallbepresumedtohaveexistedatthetimeofdeliveryunlessthispresumptionisincompatiblewiththenatureofthegoodsorthenatureofthelackofconformity.Wherethefinalsellerisheldliabletotheconsumerbecauseofalackofconformityresultingfromanactoromissionbytheproducer,byaprevioussellerinthesamechainofcontractsorbyanyotherintermediary,thefinalsellerdisposesoftherightofredressagainsttheproducerortheprevioussellerforthedamagesitincurred.


ContractualRelationsbetweenPrejudicedConsumersandSellers

Sellersshallbeheldliablefortheprejudicescausedbydeficienciesinthequalityoftheproductsorservicesoccurringduringtheguaranteeterm,providedthatsuchdeficiencieswerenotcausedbytheconsumersthemselvesandforanyprejudicecausedbyhiddendefectsduringtheaverageutilizationperiod,providedthattheproductsorservicesbecomeimproperfortheuseenvisagedbytheconsumersorpotentiallyharmfultoconsumers’life,healthorsecurity.Insuchcases,consumersareentitled,freeofcharge,toproductrepairorreplacementandtocompensations.Theconsumersshouldfileaclaimagainsttheresponsiblesellerwithinthreeyearsfromthedatewhentheconsumerhasacknowledgedorshouldhaveacknowledgedtheexistenceofthedamage,thedeficiencyortheidentityoftheseller,butnotlaterthan10yearsfromthedatewhentheproducthasbeenintroducedonthemarketprovidedthatthedamagehasoccurredduringthe10—yearperiod.

Inaddition,consumersmayclaimcompensationbasedoncontractualcivilliabilityrules.Intheeventtheconsumersarecompensatedbyaninsurer,suchinsurershallhavetherightofredressagainsttheresponsibleseller.


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TheNationalMedicinesandMedicalDevicesAgency(theAgency)isthespecializedpublicinstitutionsubordinatedtotheMinistryofHealthwhichissuesrelevantregulationsconcerningauthorization,marketing,manufacturing,importanddistributionofthemedicinalproducts,overseestheactivitiesofthewholesaledistributorsandmonitorscompliancewiththepharmacovigilancerelatedrequirements.

TheAgencyauthorizesandregulatestheperformanceoftheclinicaltrialsandendorsestheadvertisingmaterialsusedforpromotionofmedicinalproducts.

Authorization

InordertobemarketedinRomania,medicinalproductsmusthaveinplaceavalidmarketingauthorization.TheAgencymaynotgrantmarketingauthorizationtoapplicantsnotheadquarteredinRomaniaorinanotherEUmemberstate.CompaniesheadquarteredoutsideoftheEUinterestedinobtainingmarketingauthorizationshoulduseaRomanianorEuropeanvehicleforapplying.

ThemarketingauthorizationisissuedbytheAgencyformedicinestobeauthorizedformarketinginRomaniaonly(thenationalprocedure)orinseveralEUMemberStates,includingRomaniasimultaneously(thedecentralizedprocedure).

AvalidauthorizationformarketingmedicinesinoneormoreEUMemberStates,maybeacknowledgedbytheAgencyformarketinginRomania(themutualrecognitionprocedure).Finally,avalidmarketingauthorizationmayalsobeissueddirectlybytheEuropeanMedicinesAgencyinaccordancewithRegulation(EC)No.726/2004(thecentralizedprocedure).

ThemarketingauthorizationprocedureinRomaniaisgenerallyinlinewiththeonesetforthundertheEuropeanregulations.Thus,themarketingauthorizationapplicationformtobefiledwiththeAgencyissimilartotheapplicationformrequiredbytheEuropeanMedicinesAgencyinthecentralizedprocedure,whiletheprocedurescarriedoutbeforetheAgencyentirelytransposetherequirementslaiddownunderDirective2001/83/EC.

TheinitialvalidityperiodofthemarketingauthorizationissuedbytheAgencyisoffiveyears.Theauthorizationmaynotbedenied,suspendedorwithdrawnforreasonsotherthantheonessetforthundertheHealthLaw.AsregardstheexclusivitydataperiodsetforthunderDirective2001/83/EC,Romaniadecidedtograntaten—yearperiodofprotectiontothereferencemedicinalproduct.


Pharmaceuticals

Overview

InlinewithEuropeanregulationsandpractice,theregimeofmedicinalproductsinRomaniaishighlyregulated.LawNo.95/2006onthehealthcaresystemreform—TitleXVII(theHealthLaw)isthemainregulationinthisfieldwhiledetailedmaterialprovisionsareincludedinsecondarylegislationissuedbytheGovernmentorcompetentpublicauthorities.Essentially,theRomanianlegislationinthepharmaceuticalareaobservestheEuropeanregulations,towhichithasbeenproperlyharmonizedduringthelastfiveyears.TherearehoweverspecificrequirementssetforthbytheRomanianregulatoryauthoritiesincertaindomains,suchasreimbursementandpricingofprescriptionmedicinalproductsor,recently,thespecialtaxationofthemarketingauthorizationholders;n0tably,thesespecialregulationsmaybesubjecttounpredictablechanges,dependingontherelevanteconomicpoliciesandthebudgetaryconstraints.

CompetentPublicAuthorities

TheMinistryofHealthisthepublicauthoritywhichestablishesandmonitorstheimplementationofthegeneralpolicies,strategiesandregulationsinthehealthcaresystem,includingthepharmaceuticalarea.Amongotherimportantattributions,theMinistryofHealthendorsesthepricesoftheprescriptionmedicinalproductsandcoordinatesthenationalhealthprogramswherebythetreatmentofcertaindiseaseswithrelevantproducts.

TheNationalHealthInsuranceHouse(theNHIH)isthepublicinstitutionthatregulatesthesecondarylegislationwithinthesocialhealthinsurancesystem,monitorsallocationsmadefromtheNationalSoleFundoftheSocialHealthInsurances,andoverseesthereleaseandpaymentofthereimbursedmedicinalproducts.TheNHIHalsohasimportantresponsibilitiesinrespectofestablishingtheamountoftherecentlyintroducedclawbackcontributiontobepaidbythemarketingauthorizationholders.


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ThewholesaledistributionauthorizationisissuedbytheAgencywithinmaximum90daysasofthedatewhentheapplicantfilesacompleteandvaliddocumentation,subjecttoafavorableresultoftheinspectioncarriedoutbytheAgency’srepresentativestothewarehousesandheadquarteroftheapplicant.TheauthorizationisvalidforanundeterminedperiodandmayberevokedbytheAgencyshouldtheholderfailtocomplywithauthorizationorfunctioningrelatedrequirements.

Theapplicantshouldnotnecessarilybetheownerofthewarehousebutmaynotusesuchanauthorizedwarehouseotherthanbasedonacontractconcludedwiththeauthorizedownerofthewarehouse.Thesecondarylegislationpermitscertainactivitiessuchashandling,transportationordeliverytoalsobecontracted.

InlinewithEuropeanregulationsandpractice,theRomanianlegislationimposesonwholesaledistributorsapublicserviceobligationtopromptlyandcontinuouslysupplytheRomanianmarketwithadequatequantitiesofmedicinesinorderfortheneedsofpatientstobecovered.

Reimbursement

TheGovernmentapprovesbydecisionthereimbursedDCIsList,whichprovidesfortheinternationalnon—proprietaryname(DCI)ofthemedicineswhicharesubjecttoreimbursementbytheStateinthesocialhealthinsurancesystemorwithinnationalhealthprograms.TheDCIsListshouldbeyearlyupdated,butthisruleandthetransparencyrequiredfortheactualupdateisnotstrictlyobservedbytheGovernment.

InordertobeincludedintheDCIsList,newmedicinalproductsmustbepreviouslyassessedandacceptedbyspecificcommissionsofexpertswithintheMinistryofHealthinaccordancewithcriteriarequiredforgrantingthereimbursementright.

TheDCIListincludesthreemainsub—lists(A,BandC),andsub—listCincludesthreesections(C1,C2andC3).ThepercentageofreimbursementofmedicinesrelatedtotheDCIsis90%fortheSub—listA,50%forSub—listBand100%forSub—listC(sectionsC1andC3),andappliestothereferenceprice.MedicinesonSub—listC,sectionC2,arecoveredatthevalueofthereimbursementprice.TheNHIHandthecountyhealthinsurancehousesreimbursethevalueofthemedicinesontheDCIList(saveformedicineswithinSub—listC,sectionC2)inaccordancewiththerulessetforthintheBi—annualframeworkcontractregardingtheconditionsforgrantingmedicalassistanceinthesocialhealthinsurancesystem(approvedbyGovernmentdecision)andthesecondarylegislationfurtherissuedbytheNHIHPresidentandtheMinisterofHealth.


Pricing

TheMinistryofHealthestablishesandapproves,byorderoftheMinister,themaximumpricesforprescriptionmedicinestobemarketedinRomania.Non—prescriptionmedicines(OTCs)pricingisnotsubjecttospecificendorsementandneedstobenotifiedonlytotheMinistryofHealthwithin30daysasofplacingthemedicinesonthemarket.

ThelegalregimeofprescriptionmedicinespricingissetforthinMinisterofHealthOrderNo.75/2009,asfurtheramendedandcompleted(thePricingOrder).Accordingtoit,thedecisiontoendorsethemanufacturerpriceproposedbythemarketingauthorizationholderoritslocalrepresentativeistobeissuedbytheMinistryofHealthwithin90daysasofthedateoffilingthecompleteapplication.

Inordertoobtainendorsement,theproposedmanufacturerpricemustbeloweroratmostequalwiththelowestpriceofthesameproductavailableintwelvecountriesprovidedforcomparisoninthePricingOrder.Anotherspecialruleaimedatreducingtheallowedmanufacturerpricethresholdstatesthatthemaximummanufacturerreferencepriceforgenericmedicinescannotexceed65%ofthemanufacturerpriceofthecorrespondentinnovativeproduct.Likewise,shouldgenericreferencepricebelowerthanthe65%aforementionedthreshold,themanufacturerpriceofthecorrespondentinnovativeproductmaynotexceedsuchgenericreferencepricebymorethan35%.

ThemaximumwholesaleandretaildistributionpricesofmedicinesarecomputedinaccordancewithaspecificformulathattakesintoaccounttheendorsedmanufacturerpriceandthemaximumwholesaleandpharmacymarginsalsoregulatedthroughthePricingOrder.

Oncedetermined,themanufacturerpricesaswellasthewholesaleandpharmacypricesareincludedintheNationalCatalogueofMedicinePrices(CANAMED),whichisquarterlyapprovedbyorderoftheMinisterofHealth,andmaynotbeexceeded.

Distribution

TheprovisionsoftheHealthLawandsecondarylegislationissuedbytheMinistryofHealthinthisareaalsocomplywithEuropeanrequirements.

Awholesaledistributorinvolvedinsale,purchase,warehousing,handling,transportation,deliveryorexportofmedicinesactivitiesmustholdawholesaledistributionauthorization.Authorizedmanufacturersofmedicinesaredeemedauthorizedaswholesaledistributorsofthemanufacturedproducts.


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WithregardtothedeterminationofthereferencepriceusedinthesocialhealthinsurancesystemformedicinesincludedonSub—listsAandB,thesecondarylegislationissuedbytheNHIHprovidesforaformulabasedonthesplitofDCIsintherapeuticclustersasperrelevantATCcodesandthedefineddailydosage.Byapplyingthissystem,thereimbursementreferencepricewillbedeterminedatthevalueofthemedicinalproductwiththelowestpriceintherelevantcluster.DeterminingthereferencepriceofmedicinesincludedonSub—listC,sectionsC1andC3takesintoaccounttheATCclassificationpereachDCI,assimilatedpharmaceuticalform,andstrength.Thereferencepricewillbecomputedaspersaidelements,byapplyingaspecificpercentagetothelowestpricepertherapeuticunit.

TheregulationsissuedbytheNHIHalsorequirecost—volume—resultcontractstobeconcludedinrelationtothereimbursementofcertainexpensivemedicinesthatmaybeapprovedforadministrationinaccordancewiththerapeuticprotocols.

AsregardsmedicinesonSub—listC,sectionC2,whichareusedinthenationalhealthprograms,thesecondarylegislationissuedbytheMinistryofHealthstatesthatthereimbursementpriceisdeterminedbyaapplyingaspecificpercentage(120%)tothelowestretailpricepertherapeuticunit,pereachDCI,assimilatedpharmaceuticalformandstrength.

Advertising

AdvertisingofmedicinesmustbeperformedwithstrictobservanceoftheruleslaiddownbytheHealthLawandtheGuidanceontheassessmentofadvertisingtomedicinesforhumanuseissuedbytheAgencyin2011.Accordingtotheseregulations,advertisingincludesanyformofinformationthroughdirectcontact(door—to—doorsystem)andanyformofpromotionaimedatstimulatingprescription,distribution,saleorconsumptionofmedicines.

TheHealthLawexpresslyindicatesthefollowingformsofadvertising:•Advertisingofmedicinesaddressedtothewidepublic;•Advertisingofmedicinesaddressedtopersonsqualifiedtoprescribeordistributethem;•Visitsofmedicalsalesrepresentativestopersonsqualifiedtoprescribemedicines;•Supplyofmedicinesamples;•Stimulationofprescriptionordistributionofmedicines,byoffering,promisingorgrantingpecuniaryadvantages,unlesssuchhaveasymbolicvalue;•Sponsorshipofpromotionalmeetingsattendedbypersonsqualifiedtoprescribeordistributemedicines;


•Sponsorshipofscientificcongressesattendedbypersonsqualifiedtoprescribeordistributemedicines,especiallybywayofpayingfortravellingandaccommodationcosts.

Advertisingaddressedtothewidepublicisallowedonlyformedicinesthatmaybeusedwithoutaprescriptionfromthephysician,apharmacist’sadvicebeingsufficient,asthecasemaybe.Advertisingtothewidepubicisforbiddenasregardsprescription—onlymedicines,medicinesreimbursedinthehealthinsurancesystem,andmedicinescontainingpsychotropicornarcoticsubstances.

Advertisingaddressedtopersonsqualifiedtoprescribeordistributemedicineshastoprovideatleasttheessentialinformationcompatiblewiththesummaryofproductcharacteristicsanditsclassificationforrelease.Thelawexpresslystatesthat,whencarryingoutadvertisingactivitiestopersonsqualifiedtoprescribeorreleasemedicines,nogiftsandpecuniaryorinkindadvantagesmaybeoffered,promisedorgranted,exceptwheresuchadvantagesareinexpensiveandrelevantformedicalorpharmaceuticalpractice.

Hospitalitywithinpromotioneventsisallowedshoulditbestrictlylimitedtoitsmainscopeandbenotextendedtopersonsotherthanhealthcareprofessionals.ThecompetentauthoritytooverseetheadvertisingofmedicinesistheAgency,whichissuesregulationsdetailingtheHealthLawprovisions,endorsestheadvertisingmaterialsandappliessanctionsforfailuretoobservetherelevantlegalrequirements.

TheAgency’sGuidanceontheassessmentofadvertisingappliesnotonlytopharmaceuticalcompanies,theirsubsidiariesandrepresentationoffices,butalsotoanyotherpartners(agents,agencies,representativesofmarketingauthorizationholders)contractedinconnectionwiththeperformanceofanyformofadvertisingformedicines.PharmaceuticalcompaniesareheldliabletoobservetheobligationssetforthundertheGuidanceeveniftheyassignedcertainpromotionoradvertisingactivitiestospecializedthirdparties.

Taxation

Inordertocontrolmedicineconsumptionandtoensurefinancingforincreasedconsumption,theRomanianGovernmentimposedaspecialtaxtobepaidbymarketingauthorizationholdersortheirlocalrepresentativesinconnectionwithmedicinessubjecttoreimbursementfrompublicfunds.


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Thisnewtax,whichappliesstartingwithOctober2011,iscomputedbyapplyingaspecificpercentage,quarterlydeterminedbytheNHIHdependingontheincreaseofconsumptionofreimbursedmedicines,tothevalueofthequarterlyconsumptionofreimbursedmedicinesthatbelongtoeachmarketingauthorizationholder.

Payersmustdeterminetheamountoftaxowed,declareittothecompetentfiscalbodiesandpayitbythe25thofthesecondmonthfollowingtheendoftherelevantquarter.ThetaxiscollectedbythefiscalbodiesundertherulessetforthintheFiscalProcedureCode.

TheGovernmentemergencyordinancewhichsetsforththistaxrepealedandreplacedpreviouslegislationregulatingasimilartax,accordingtowhichavariablepercentagesetforthbythelawhasappliedtothequarterlyencashmentsregisteredbythesubjectpayers.Notably,theNHIHremainedresponsiblefordeterminingthevalueofthesaidtaxpursuanttothelegislationinforceasofthedateofthemedicines’sale.Thecollectionoftheoldtaxhasbeenhoweverentrustedtothefiscalbodiesstartingwiththe1stofOctober2011.


FinancialInstitutions&SecurityInterests

FinancialMarket

Thefinancialmarketwasamongthefirstsubjectedtonewregulationimmediatelyafter1989withintheprocessofreplacingthecentralizedstateeconomywithfreemarketinstitutions.Between2002and2010,bothprimaryandsecondarylegislationregulatingthefinancialsectorhaveundergonemajorchangesinordertoimplementtherelevantEuropeanUnion(EU)DirectivesandsecondaryenactmentsandtoadjusttheRomanianfinancialsystemtotheEUrequirements,post—accession(Romania’saccessiontotheEUtookplaceonthe1stofJanuary2007).

RegulatoryauthorityNationalBankofRomaniaTheNationalBankofRomania(theNBR)actsascentralstatebank,havingmainlysupervisoryandcontrolpowersoverfinancialentitieswithinitsjurisdiction,irrespectiveofwhethertheyarecreditinstitutionsornon—bankingfinancialinstitutions.TheNBR’spowersdonotextendtothecapitalmarketanditsinstitutions(e.g.thefinancialinvestmentservicescompanies),whichareplacedunderthesupervisionandcontroloftheNationalSecuritiesCommission(theNSC).

TheNBRhasexclusivepowersinauthorizingandsupervisingthecreditinstitutions,thenon—bankingfinancialinstitutions,thepaymentinstitutionsandtheinstitutionsissuersofelectroniccurrency,Romanianentities,whicharesetupandoperateinRomania.Inthisrespect,theNBRissuesmandatoryregulations,appliessanctionsandisentitledtocontrollingandreviewingthebooksofaccountsandanyotherdocumentsofthementionedentities.


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TotheextentthattheyareauthorizedandoperatingunderthesupervisionoffinancialregulatoryauthoritiesinanEUorEuropeanEconomicArea(EEA)country,foreignentitiesmaydirectlyoperateonRomania’sfinancialmarket,withoutbeingrequiredtofollowalocalauthorizationprocedureandobservethecapitalrequirementsapplicabletoRomanianentities.

PaymentIncidentBureauThePaymentIncidentBureauiscreatedandoperatingwithintheNationalBankofRomaniaasacentreforintermediationandmanagementofinformationspecifictopaymentincidents,inconnectionwithpaperandelectronicpaymentinstruments(e.g.cheques,billsofexchangeandpromissorynotes).InformationtotheBureauisconveyedbycomputerizedsystemthroughtheInterbankCommunicationNetwork,whichlinkstheheadofficeoftheNBRtotheheadofficesofallcreditinstitutions.

CreditInformationBureauTheCreditInformationBureauisestablishedasaprivatestructure,operatingasanintermediationcentrethatmanagescreditriskinformationandcardfraudinformation.Thesystemcollectsfrom,andprovidestofinancialandcreditinstitutionsaswellasotherparticipantstothesystem(suchastheutilitiescompanies)positiveandnegativeinformationontheindividuals,debtorsoftheparticipantswhichregisterpaymentarrearsexceeding30days,onthefraudsrelatedtotheparticipants(ascertainedbydefinitiveorirrevocablecourtdecisionsoruncontestedadministrativeacts)andonthestatementsofindividualscontaininginconsistencies.

BankingRisksCentralTheBankingRisksCentralisastructurecreatedandoperatingwithintheNBRspecializedincollecting,storingandcentralizinginformationoncreditingoperationsperformedbythedeclaringentities(inprinciple,institutionssupervisedbytheNBR)towardstheirdebtors.Thesystemcollects,storesandcentralizesinformation(i)ontheexposureofeverycreditinstitutionintheRomanianbankingsystemtodebtorsthatweregrantedloansand/orhavecommitmentstotalingmorethanthereportingthreshold,(ii)onpaymentsoverdueinexcessof30days,regardlessoftheamount,owedbyindividualsagainstwhomcreditinstitutions’exposureislessthanRON20,000,aswellas(iii)informationoncardfraudscommittedbycardholders.

Procedureandpre—requisitesforauthorizationofcreditinstitutionsGeneralUndertheGovernmentEmergencyOrdinanceNo.99/2006(theBankingLaw),bothcreditinstitutionsandbranchesofforeigncreditinstitutionsheadquarteredinnon—EUmemberstatesmaybesetupandoperateinRomaniaonlyupontheirauthorizationbytheNBR.


AuthorizationofcreditinstitutionsbytheNBRinvolvesatwo—stepprocedure:(i)preliminaryauthorization,wherebytheNBRapprovesthesettingupofcreditinstitutions,and(ii)thebankinglicense,wherebytheNBRauthorizesoperationofcreditinstitutions.AsregardsthecreditinstitutionsheadquarteredinEUmemberstates,theymayoperateinRomaniaeitherdirectly,bypassportingtheirservicesbasedonthefreedomtoprovideserviceswithintheEU,orthroughbranches,inbothcasesuponanotificationtotheNBR.Noauthorizationisnecessaryinthiscase.

CorporateformUndertheBankingLaw,creditinstitutions,aswellashousingbanksandmortgagebanksmaybeincorporatedonlyasjointstockcompanies.

CapitalrequirementsSpecificcapitalrequirementsareapplicabletoeachcategoryofcreditinstitutions.TheinitialsharecapitalhastobeofatleastRON25,000,000(approx.EUR5,500,000)inthecaseofhousingbanksandofmortgagebanksandRON37,000,000(approx.EUR8,400,000),inthecaseofregularcreditinstitutions.

PreliminaryauthorizationTheapplicationforapreliminaryauthorizationshouldbejoinedbyaseriesofdocumentsprovidingdetailsonthesharecapital,theshareholdersandmanagingbodiesofthecreditinstitutionetc.,andalsoabusinessplanincludinginteraliaadescriptionofthetargets,policiesandstrategiesofthefuturecreditinstitution,includinginformationregardingtheclientsandthesegmentofmarketthatthecreditinstitutionenvisages,theproductsandservices,pricepolicies,capitalizationpolicies,thefinancingsourcesandassetstructure,personnelpolicies,adescriptionoftheinternalcontrolsystemtobeemployed,aswellasreferencestoadjustmentoftheITsystem.TheNBRisboundtodecideontheapplicationforapreliminaryauthorizationwithin4monthsasofsubmission.TheissueofthepreliminaryauthorizationbytheNBRisnotaguaranteethatthesubsequentbankinglicenseshallbealsogranted.

BankinglicenseAftertheNBRgrantsthepreliminaryauthorization,theshareholdersproceedwithincorporatingthecreditinstitutionorregisteringthebranchofacreditinstitutionfromanon—EUmemberstatewiththeTradeRegistry,asthecasemaybe.Afterthecreditinstitution/branchwasdulyincorporatedandregistered,anumberofadditionaldocumentsshouldbefiledwiththeNBR,within2monthsfromtheissuanceofthepreliminaryauthorization.TheNBRshallissuethebankinglicensewithin4monthsasofreceiptoftheapplicationandcompletejoiningdocumentation.TherelevantcreditinstitutionissubsequentlyregisteredwiththebankingregisterholdbytheNBR.


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BankinglicenseAftertheNBRgrantsthepreliminaryauthorization,theshareholdersproceedwithincorporatingthecreditinstitutionorregisteringthebranchofacreditinstitutionfromanon—EUmemberstatewiththeTradeRegistry,asthecasemaybe.Afterthecreditinstitution/branchwasdulyincorporatedandregistered,anumberofadditionaldocumentsshouldbefiledwiththeNBR,within2monthsfromtheissuanceofthepreliminaryauthorization.TheNBRshallissuethebankinglicensewithin4monthsasofreceiptoftheapplicationandcompletejoiningdocumentation.TherelevantcreditinstitutionissubsequentlyregisteredwiththebankingregisterheldbytheNBR.

BusinesspurposeandforbiddentransactionsUndertheBankingLaw,creditinstitutionsmayperformvariousfinancialactivities,suchas:takingdepositsandperforminglendingoperations(includingconsumerloans,mortgageloansetc.),financialleasing,paymentoperations,issueandmanagementofpaymentinstruments,issueofguaranteesandundertakingofcommitments,transactionswithmoneymarketinstruments,intermediationontheinterbankmarket,financialinvestmentservicesandfinancialconsulting,etc.

Creditinstitutionsmayalsoperform,withinthelimitsoftheirauthorizationandsubjecttocompatibilitywiththerequirementofbankingbusiness,thefollowingoperations:• Non—financialmandateorcommissionoperations,especiallyonbehalfofother entitieswithintheirgroup;• Assetmanagementoperationsinrespectofthemovableand/orimmovableassetsownedbythecreditinstitution,butnotforthepurposeofperformingfinancialoperations;

• Servicesfortheirownclientswhich,althoughnotconnectedwiththe performedbusiness,areanextensionofthebankingoperations;

•Exceptforthosereferredabove,transactionsbycreditinstitutionswithmovableassetsandrealestatepropertyareonlyallowedunderthefollowingcircumstances:(i)whensuchtransactionsarenecessaryfortheauthorizedoperationsofthecreditinstitution,fortheemployees’training,orfororganizingresortsorhousingforemployeesandtheirfamilies;(ii)whenthetransactionsinvolvemovableassetsandrealestatepropertyacquiredfollowingforeclosureproceedings.

Thefollowingtransactionsareentirelyforbiddentocreditinstitutions:• Pledgingofownsharesagainstthecreditinstitution’sdebts;• Grantingloanssecuredwithshares,otherequitysecuritiesorbondsissuedbythecreditinstitutionitselforbyothercreditinstitutionwithinthesamegroup;

• Receiptofdepositsorotherreimbursablefunds,equitysecuritiesorothervaluableswhenthecreditinstitutionisininsolvency.


CapitaladequacyTheprovisionsoftheBankingLawareessentiallycompliantwiththeprinciplesoftheBaselIIAccord.

Thus,aspertheNBR/NSCRegulationNo.22/27/2006,creditinstitutionsmustcomplywithcapitalrequirementsinteraliaforriskcovering,onindividualandconsolidatedbases,andformonitoringandcontroloflargeexposures.

MinimummandatoryreservesAspertheNBRRegulationNo.6/2002,allcategoriesofRomaniancreditinstitutionsarecompelledtocreateandmaintainwiththeNBRminimummandatoryreserves,innationalandinforeigncurrencies,receivinginterestatsuchratesasperiodicallydeterminedbytheNBRnorms.

Currently,inthecaseofcreditinstitutions,theminimummandatoryreservesrateforRONliabilitiesisof15%,whileforforeigncurrencyliabilitiestherespectiverateisof20%,inbothcasesforliabilitieshavingaresidualmaturitylimitedto2yearsasoftheexpiryoftheobservationperiodor,ifitexceeds2years,theliabilitieshaveattachedareimbursement,transferorananticipatedwithdrawalclause.

Inanyothercases,theminimummandatoryreservesrateiszero.Theminimummandatoryreservesapplicabletomortgagebanksarezero.

PrudentialobligationsAspertheBankingLaw,theNBRisempoweredtosetforthprudentialrequirementsapplicabletoRomaniancreditinstitutions,interaliareferringtorelatedpartiesagreements,liquidity,provisioning,corporatechangesetc,bywayofNBRnorms(regulations,instructionsandcirculars).

ReportingobligationsPursuanttotheBankingLawandtheNBRsubsequentenactments,RomaniancreditinstitutionsarecompelledtoperiodicallyfilespecificreportswiththeNBR,containinginteraliainformationinrespectof:•TierIandTierIIcapitallevelsandothercapitaladequacycomplianceindices;•Netassets;•Individualandaggregatelevelsofthelargeexposures;•Solvencyindices,onindividualandconsolidatedbasis;•Yearlyfinancialstatementsandcertainbiannualfinancialdata;•Classificationoftheloanportfolioandrelatedcreditriskprovisions;•Bankingfeesforcashinginandpaymentoperationsetc.


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MortgagebanksMortgagebanks,deemedcreditinstitutionsundertheBankingLaw,areestablishedasjointstockcompaniesoperatingundertheauthorizationissuedbytheNBR.Themainbusinessobjectofmortgagebanksconsistsof(i)providingmortgageloansforrealestateinvestments(dwellings,industrial/commercialconstructions)and(ii)issuingmortgagebonds.Mortgagebanksarenotallowedtotakedeposits.

Non—bankingfinancialinstitutionsNon—bankingfinancialinstitutionsaremainlyregulatedbyLawNo.93/2009onnon—bankingfinancialinstitutions(theLaw93/2009)andthesubsequentNBRnorms.

BusinesspurposeAsperLaw93/2009,non—bankingfinancialinstitutionsareallowedtocarryoutvariouslendingactivities,amongwhichfinancialleasingactivitiesandconsumercreditsaremostcommonlymetinpractice.Non—bankingfinancialinstitutionsareentitledtograntmortgageloansaswell.

Inaddition,theycanalsoundertakefinancingandguaranteecommitments,issueandmanagecreditcards,performpaymentservicesandperformanyconnectedorancillaryactivitiestothecreditoperationsaswellasmandateandconsultancyactivities.Nevertheless,theycannotreceivemoneyunderdepositandcannot,asarule,issuebonds,norperformotheractivitiesunlessinrelationtotheirlendingactivities.

CapitalrequirementsNon—bankingfinancialinstitutionsarerequiredtohaveasharecapitalamountingtotheRONequivalentofEUR200,000,exceptforthoseactingasmortgageloancompanies,towhichaminimumEUR3,000,000thresholdapplies.

Procedureandpre—requisitesforauthorizationAsperLaw93/2009,non—bankingfinancialinstitutionshavetoapplyforlicensewiththeNBRwithin30daysasoftheirincorporation.TheyareallowedtostartlendingactivitiesonlyafterbeingregisteredintheregistryheldbytheNBRfornon—bankingfinancialinstitutions.TheNBRshouldissuethelicensewithin60daysasofreceiptoftheapplicationandjoiningdocumentation.

PrudentialandreportingobligationsAsperLaw93/2009andthesubsequentNBRnorms,non—bankingfinancialinstitutionsmustcomplywithspecificprudentialandreportingrequirements,interaliaconcerningtheTierIandTierIIcapital,exposures,creditportfoliostructureandcorporatechanges.

PaymentinstitutionsPaymentinstitutionsareinparticularregulatedbyGovernmentEmergencyOrdinanceNo.113/2009onpaymentservices(GEO113/2009)andthesubsequentRegulationNo.21/2009passedbytheNBR.

GeneralPaymentinstitutionscanbeincorporatedonlyasRomanianlegalentitiesandaresubjecttoanauthorizationprocedurebeforestartingtheiroperations.ThepaymentinstitutionsfromEU—memberstatesmayoperateinRomaniabasedonanotificationsenttotheNBRbythecompetentauthorityintheirhomememberstate.

BusinesspurposeAsperGEO113/2009,paymentinstitutionsareallowedtocarryoutvariouspaymentoperations,totakedeposits,toperformspecifictransfers,withdrawalsoffunds,issuingandacceptingtopaymentinstruments,cashremittanceorelectronicpayments.Paymentinstitutionsarealsoabletograntcredits,butonlyinconnectionwithcertainoftheiroperationsandsubjecttospecificconditions.Theycanalsoperformoperationalandotherconnectedservices,managementofpaymentsystemsandothercommercialactivities,subjecttotheapplicablelaws.

CapitalrequirementsPaymentinstitutionsarerequiredtohaveasharecapitalwhichmayvaryinconsiderationoftheirbusinessobject,i.e.amountingtotheRONequivalentofEUR20,000(forcashremittanceoperationsonly),EUR50,000(forelectronicpaymentoperationsonly)orrespectivelyEUR125,000(forallthepaymentservicesprovidedbyGEO113/2009).

AuthorizationAsperGEO113/2009,paymentinstitutionsareallowedtostartpaymentoperationsonlyafterobtainingtheapprovalfromtheNBR,whichshouldbeissuedwithin3monthsasofthesubmissionofthecompletedocumentation.Theauthorizationdocumentationincludesinteraliainformationontheinitialcapital,businessobject,significantshareholders,managersofthepaymentoperations,businessandactivityplans,etc.Within5daysasoftheinitiationoftheauthorizedoperations,thepaymentinstitutionsmustsubmittotheNBRanotificationinthisrespect,togetherwiththeinternalregulationsandastatementofthemanagementinrespectoftheITsystem.

PrudentialandreportingobligationsAsperGEO113/2009andthesubsequentNBRRegulationNo.21/2009,paymentinstitutionsmustcomplywithspecificprudentialandreportingrequirements,interaliaconcerningtheiragents,theTierIandTierIIcapitalrequirements,measurestoprotectthereceivedfunds.


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ThechangesinthestatusofthepaymentinstitutionsaresubjecttoeitherauthorizationornotificationtotheNBR,dependingonthedegreeofriskentailedbysuchchanges.Thepaymentinstitutionsaresubjecttospecificregulatoryrequirements,aimedtoprotectingconsumersandtheirfundsdepositedwiththepaymentinstitutions.

SecurityInterests

UndertheNewCivilCode,thelegalregimeofpersonalandrealsecurityinterestshasreceivedauniformregulationandcertainnewcategoriesofsecurityinterests.

MoveablehypothecsThemoveablehypothecs,formerlyknownassecurityinterestsonmoveableproperty,areregulatedbytheNewCivilCodeasofitsentryintoforceonthe1stofOctober2011(TitleVIofLawNo.99/1999onthelegalregimeofsecurityinterestshasbeenabrogated).TheNewCivilCodeprovidesaflexibleanduniformframework,moreefficientandadequatetothecurrenteconomicreality,aswellasadditionalsecurityenforcementprocedures,asanalternativetothe“classical”proceduresprovidedbytheCivilProcedureCode,suchasallowingthecreditortoundertakeprivate—enforcementmeasures.

CreatingandperfectingthemoveablehypothecsMoveablehypothecsarecreatedbywayofwrittenagreementbetweenthesecuredcreditorandthesecurityprovider(eitherthedebtororathirdpartyprovidingsecuritytothebenefitofthedebtor).Thereisnospecialformrequirementforsuchmoveablehypothecagreementsand,unlikeimmoveablehypothecagreements,notarizationisnotnecessary.Theperfectionofthemoveablehypothecs,whichisrelevantforestablishingthepriorityrankingofthehypothec,isobtainedasofthemomentwhenthesecuredobligationisborn,thesecurityprovidergainsrightsonthesecuredasset,themoveablehypothecagreementissignedandtheregistrationformalitiesofthemoveablehypothechavebeendulyperformed.TheNewCivilCodeprovidesthecategoriesofmoveableassetswhichcanbechargedbymoveablehypothec,suchasintangibleassets,universalitiesofmoveableassets(includinggoodwill)—butonlytotheextenttheyareassignedtotheoperationsofacompany,moveableassetsattachedtorealestate,productsofthesecuredasset(e.g.proceedsofthesaleoranymoveableassetreplacingthesecuredasset),futuremoveableassets.

PublicityTheNewCivilCoderequirestheregistrationofmoveablehypothecswiththeElectronicArchiveforSecurityInterests(theElectronicArchive)for

ensuringapriorityorderamongcreditorsholdingmoveablehypothecsonthesameassets,aswellaspublicitytowardsthirdparties.TheElectronicArchivecanbeeasilyaccessedthroughatax—freeInternetdatabase,ensuringrapidverificationoftherecords.ThegeneralruleisthatthepriorityrankisgivenbythedateoftheregistrationofthemoveablehypothecwiththeElectronicArchive.ThecreditorisboundtorequestthemoveablehypothecberemovedfromtheElectronicArchivewithin10daysfollowingthefulfillmentofthesecuredobligation.

MoveablehypothecagreementsThemoveablehypothecagreementmustprovideforadeterminablevalueofthesecuredobligation,asthresholdlimitingtheamountsthatmayberecoveredbythesecuredcreditorincaseofenforcement.Theagreementmustdescribethesecuredassetsinsufficientdetailastoreasonablyallowidentificationofthesecuredassets,generaldescriptionsforcategoryofassetsbeingnolongerpermitted(e.g.“allthedebtor’spresentandfuturemoveableassets”doesnotrepresentasufficientdescriptionanymore).Generally,althoughthesecurityprovidercontinuestousethesecuredassetsduringthesecurityperiod;itispossiblethatthesecuredcreditortakespossessionofthesecuredasset(althoughthesecurityproviderremainsowner);insuchcaseparticularrulesapply.Still,thesecurityproviderisallowedtosellorotherwisedisposeoftheassetthroughouttheentiredurationofthemoveablehypothecagreement.Asageneralrule,amoveablehypothecagreementcannotpreventthesecurityproviderfromdisposingofthehypothecatedasset.Also,theNewCivilCodepohibitsnegativepledgesclausesinmoveablehypothecagreements.

EnforcementofmoveablehypothecThemoveablehypothecagreementsaredeemedenforceabletitles,whichprovideaproceduraladvantageincaseofenforcement,asthesecuredcreditorwouldnotberequiredtofileclaimonthemeritsofthecase.Throughouttheenforcementprocedure,beforethesaleofthesecuredassets,thedebtororanyotherinterestedpersonisentitledbylawtopaytheoutstandingdebtandtothusputanendtotheenforcementprocedure.Thepartiestoamoveablehypothecagreementmayagreeonmethodsofsaletobeusedincaseofenforcement.Ifthemoveablehypothecagreementissilentinthisregard,thecreditormaycapitalizeonthehypothecatedassetsthroughreasonablecommercialconditions.Underacertainprocedure,thesecuredcreditormayappropriatethehypothecatedassetsforsettlingitsclaim.

PledgeThepledgeisnowregulatedbytheNewCivilCodeasasecuritywherethesecuredcreditortakesoverthepledgedassets.Onlytangiblemoveableassetsormaterializedcommercialtitlesmaybesubjecttopledge.Thepublicityofpledgesisensuredbythemerefactofpossessionoverthepledgedassets.IfnospecificrulesareprovidedundertheNewCivilCodeonpledges,thoseapplicabletomoveablehypothecsshallapply.


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Immoveablehypothecs(mortgages)Immoveablehypothecscontinuetobepreferredamongthesecurityinstrumentsandarefrequentlyusedinvarioustypesofcommercialandretailtransactions.UndertheNewCivilCode,mortgagescanbecreatedonexistingpropertysuchaslandandbuildings,butalso(differentlyfromthepreviousregulation)onfutureimmoveableassets.Followingthecreationofanimmoveablehypothec,thesecurityproviderwillcontinuetoownandusethehypothecatedasset.Theimmoveablehypothecwillbepreserveddespiteanyownershiptransfer,followingthehypothecatedassetintothehandsofanysubsequentacquirer,sothatthesecuredcreditorisabletoenforcetheimmoveablehypothecirrespectiveofwhoownsthepropertyatthedateoftheenforcement.

Ifthedebtorfailedtodischargethedebtontheduedate,thesecuredcreditorisentitledtoenforcetheimmoveablehypothecandsatisfyitsreceivableagainstthedebtorbysellingthehypothecatedrealestatefollowingtheprocedureundertheCivilProcedureCode(whichprocedureinmanycasesprovestobelengthyandbureaucratic).

ImmovablehypothecagreementsAnimmoveablehypotheciscreatedbyagreementofthepartiesandbyregistrationthereofwiththerelevantlandbook(undertheNewCivilCode,theregistrationhasbecomeavaliditycondition).Theimmoveablehypothecagreementmustbenotarizedasaconditionforitsvalidity.Underthesanctionofnullity,theimmoveablehypothecagreementmustprovideaproperdescriptionofthemortgagedpropertyanddetailsofthesecuredobligations.

Thesecurityproviderisallowedtosellorotherwisedisposeofthehypothecatedassetthroughouttheentiredurationoftheimmoveablehypothecagreementandasageneralprinciple,animmoveablehypothecagreementcannotpreventthesecurityproviderfromdisposingofthehypothecatedasset.TheNewCivilCodeexplicitlyprohibitsthenegativepledgesclausesinimmoveablehypothecagreements.

PublicityTheCadastreLawNo.7/1996setsoutthelegalframeworkfortheregistrationofimmovablehypothecswiththelandbookskeptbytheofficesforcadastreandrealestatepublicity.Theimmoveablehypothecregistrationsystemisaimedatensuringthevaliditythereofandalsothepriorityrankamongsecuredcreditorsandthepublicityagainstthirdparties.Thus,byreviewingtheregistrationsinalandbook,athirdpartywouldbeinformedabouttheexistenceofanyimmoveablehypothecsencumberingtheproperty.Thelandbookscanberelativelyeasyaccessed.Aninternetdatabaseisnotavailableyetfortheverificationoftherealestaterecords.


EnforcementoftheimmovablehypothecAproperlynotarizedimmoveablehypothecagreementisanenforceabletitleonthebasisofwhichthesecuredcreditorcansubmitaformalrequesttothecourt,withinanon—contentiousprocedure,inordertoobtainapprovaltostarttheenforcementprocedure.

Suretyship(Fidejussio)Thesuretyship(fidejussio)isapersonalguarantee,onthebasisofwhichthesecuredcreditorisgrantedtherighttopursuetheassetsoftheguarantorincasethedebtorfailstoperformthesecuredobligation.Thesuretyshipisnotsubjecttoanyregistrationprocedureanddoesnotgiveapriorityrankingtothesecuredcreditor.Whenpursuedbythecreditor,theguarantormayusethefollowingdefenses:• Thebenefitofdiscussion(“beneficiuldediscuţiune”),wherebytheguarantor asksthesecuredcreditortofirstexhaustitsremediesagainstthedebtorbeforepursuingtheguarantor;and

• Thebenefitofdivision(“beneficiuldediviziune”),availablewheretherearemultipleguarantorsforthesamedebt;shouldoneguarantorupholdthebenefitofdivision,thecreditorwouldbeobligatedtopursueeachoftheguarantorspro—ratawiththeirundertakings.

Eitherofthesetypesofdefensemaybecontractuallywaivedbytheguarantors.

IndependentguaranteesForthefirsttimeunderRomanianlaw,theNewCivilCoderegulatestheletterofguaranteeandthecomfortletterascategoriesofindependentguarantees.

LettersofguaranteeTheletterofguaranteeisacategoryofpersonalguaranteewherebytheissuerirrevocablyundertakestopayanamountofmoneytoabeneficiaryonitsfirstdemandandsuchobligationtopayisindependentfromtheunderlyingobligationinrelationtowhichtheletterofguaranteewasissued.Asarule,thelettersofguaranteearepayableonfirstdemand.

ComfortlettersThecomfortletterisregulatedbytheNewCivilCodeasanirrevocableundertakingoftheissuertoperformorabstainfromperforminganaction,forthepurposeofsupportingthedebtorintheperformanceofitsobligationstowardsitscreditor(suchcreditorbeingthebeneficiaryoftheletterofcomfort).Theissuerofacomfortlettermayonlybeheldliablefordamagescausedtothecreditor,uponthelatterprovidingevidenceoftheissuer’sbreachoftheobligationsundertakenbythecomfortletterandonlytotheextenttheprincipaldebtordefaultstowardsthecreditor.Theissuerhasarightofrecourseagainsttheprincipaldebtorifithaspaiddamagestothecreditor.


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However,REMisacompletelydifferenttierthanBSEand,althoughitisasystemforsecurities’spottrading,itisneitheranauthorisedregulatedmarketnoramultilateraltradingfacility26;• SibiuMonetary—FinancialandCommoditiesExchange(Sibex)27 operatedbyBursaMonetarFinanciarãşideMãrfuriSA,operationalsinceJanuary2010.

ThemaininstitutionsontheRomaniancapitalmarketare:• Theregulatoryauthority(NSC);• Themarketoperators(BSEandSibex);• Thecentraldepository,ensuringdepositoryactivitiesforsecurities,clearing andsettlementofsecuritiestransactions(DepozitarulCentralSA28 forthetransactionsonBSEandDepozitarulSibexSA29 forthetransactionsonSibex);

• Clearinghouses,ensuringtheclearingandsettlementoftransactionswith derivatives(CasadeCompensareBucureştiSA30 forderivativestradedonBSEandCasaRomânădeCompensaţieSASibiuforderivativestradedonSibex);

• Investors’IndemnificationFund31, ensuringinvestors’indemnification,uptoacertainthresholdincaseofadefaultofaninvestmentfirm/assetmanagement

companytoreimburseinvestors’moneyand/orfinancialinstruments.

Themainentitiesactivatingonthelocalcapitalmarketare:•Issuersoffinancialinstrumentsconsistingmainlyoflocalcommercialcompaniesandundertakingsforcollectiveinvestments,localauthorities(municipalities,cityhalls,countycouncils)andtheState(T—bills);•Intermediaries/investmentfirmswhichmaybeeitherspecializedfinancialinvestmentservicescompaniesorcreditinstitutionsdulyauthorisedinthisrespect;•Investmentmanagementcompanies.

Investmentfirms/investmentmanagementcompaniesauthorisedinanEUMemberStatemayprovidefinancialservicesinRomania,directlyorthroughlocalbranches.

TransactionswithListedSecurities

Asageneralrule,admissionofsecuritiestotradingonaregulatedmarketismadebasedonaprospectusthatrequiresapprovalbytheNSCbeforepublication.Incasesstrictlyprovidedbylaw,asimplifiedprospectusisaccepted.

26 Currently,BVBtriestoreorganizeREMasamultilateraltradingfacility.27 TheofficialwebsiteofSibexiswww.sibex.ro.28 TheofficialwebsiteofDepozitarulCentralSAiswww.depozitarulcentral.ro.29 TheofficialwebsiteofDepozitarulSibexSAiswww.depozitarulsibex.ro.30 TheofficialwebsiteofCasadeCompensareBucureştiSAiswww.casadecompensare.ro.31 TheofficialwebsiteoftheInvestors’IndemnificationFundiswww.fond—fci.ro.


CapitalMarket

Overview

Duringthepast6years,sincetheenactmentoftheCapitalMarketsLawNo.297/2004(theCapitalMarketsLaw),theRomaniancapitalmarkethasundergoneaprocessoftransformationfromanincipientmarkettoahighlyregulatedandcomplexmarket,intheefforttomirrorandimplementtheprinciplesatworkintherelevantEUDirectivesandtheinternationalmarketpractices.

Thedevelopmentprocessisstillunderwayand,althoughtheregulatoryauthoritiesinthefieldarequiteactive,someoftheoperationalaspectssettledyearsagointhemoredevelopedmarketsarenotfullyimplementedontheRomaniancapitalmarket.

However,theregulationscurrentlyapplicableonthelocalcapitalmarketare,inprinciple,inlinewiththeEUDirectives.

RelevantInstitutions

Romaniancapitalmarketregulationandoperationareplacedundertheauthorityandsupervisionofonesoleentity,theNationalSecuritiesCommission(NSC)24.

Currently,Romaniahastworegulatedmarkets,wherebothsecuritiesandderivativesareeffectivelytradednamely:•TheBucharestStockExchange(BSE)25 operatedbyBursadeValoriBucureştiSA(BVB),inplacesince1995.BVBalsomanagestheRASDAQElectronicMarket(REM),whoseinitialoperatorhaslegallymergedwithBVBin2005.

24 TheofficialwebsiteofNSCiswww.cnvmr.ro.25 TheofficialwebsiteofBSEiswww.bvb.ro.


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tothepre-validationmechanism33; inthisrespect,NSChasadecision(tobecomeeffectiveasofthe14thofNovember2011)wherebyithasextendedtheuseofthe“globalaccounts”alsotothesharesofthecompaniesincludedintheBETindexofBSE.

Thesettlementofsecurities’transactionsinvolves,inprinciple,cashdelivery.Also,theenforcementofpledgeovertradedsecuritiesgenerallyinvolvesasaleonthemarket,atthemarketprice.Thepriceofatransferonthemarketneedstoobservecertainpre—establishedfluctuationmarginappliedtothedailyreferencemarketprice.Forfinancialinstrumentsissuedinthenationalcurrency(RON)allmarketoperations(e.g.pricedenomination,settlement,quotations)havetobemadeinRON.FinancialinstrumentsissuedinforeigncurrencymaybetradedeitherinRONorinthecurrencyofissue,inaccordancewiththetermsofthelistingprospectusendorsedbytherelevantauthorities.

Securities’lendingispermittedmainlyasasafeguardforthesettlementofsecurities’transactionsorforthephysicalsettlementofderivatives,forthepurposeofshortsalesorforkeepingthemarketmakerposition.Generally,shortsalesareallowedonlyifprecededbytheseller’sborrowingtherespectivesecurities;however,shortsalesareallowedtobemadewithoutsuchpriorsecurities’lendingifneededforkeepingthemarketmakerposition,butonlyforthesharesforwhichthe“globalaccounts”withoutpre-validationsystemisallowed.

TakeoverBids

AnypublicofferisallowedupontheNSC’sapprovaloftheofferingannouncementanddocumentation.AnyadvertisementofthetenderofferingbeforeobtainingtheNSC’sapprovaloftheofferingdocumentsisforbidden.

MandatorytakeoverofferingAccordingtotheCapitalMarketsLaw,onceapersonhasreached(eitheraloneorjointlywithpersonsacting“inconcert”)morethan33%ofthevotingrightsovertheissuercompany,therespectivepersonisboundtolaunchapublicofferingaddressedtoalltheothershareholdersforalltheremainingshares,theso—called“mandatorytakeoveroffering”(MTO).

33 Suchsituationswouldinteraliainclude,issuerswhosesharesarelistedbothontheRomaniancapitalmarketandonanEUMemberStatecapitalmarket,issuersofT-bills,issuerswhosesharesareregisteredwithaRomaniancentraldepositoryandwhichmakeobjectofacross-borderpublicoffering,issuerswhosesharesareregisteredwithbothaRomaniancentraldepositoryandacentraldepositorylocatedinaEUMemberStatewithwhomtheRomaniancentraldepositorycooperateswithforthepurposeofensuringthetransferandthesettlementoftheshares,aswellasinothercasesspecificallyregulatedbytheNSC.


TherearecertainminimumrequirementssetforthbytheCapitalMarketsLawforadmissiontotradingwhicharelistedhereinbelow.

Requirementsreferringtotheissuer• Tobeincorporatedandcarryoutoperationsincompliancewiththelaw;• TohaveapreliminarylevelofcapitalizationofatleastEUR1,000,000or,ifcapitalizationcannotbeassessed,thevalueofthecapitalandthereserves(includingtheprofitorthelossofthelastfinancialyear)tobeofatleastEUR1,000,000;

• Thecompanymusthaveoperatedforatleast3yearsbeforesubmittingtheapplicationforlisting.

Requirementsreferringtoshares• Tobefreelynegotiableandfullypaid;• Tohavesufficientspreadtothepublic(inprinciple,25%ofthesubscribedsharecapital;specialexemptionsmaybegrantedbyNSCundercertainconditions).

Inaddition,eachmarketoperatormaysetitsownrequirementstobemetbyissuerswhenapplyingforlistingtheirsecuritiesontheirtiers(e.g.dependingonthevalueofcompany’scapitalization,theBSEhasestablishedthreelistingcategories,theEUR1,000,000thresholdbeingrequiredforlistingonthe3rdcategory,whileacapitalizationofEUR2,000,000isrequiredforthe2ndcategoryandoneofEUR30,000,000forthe1stcategory).

Asaprinciple,alltransactionsmadethroughthestockexchangeentailanautomaticpre—validationprocedureaimedatensuringthatthesharesexistintoseller’saccountbothonthetradedateandonthesettlementdate.Suchpre—validationmechanismisnotapplicabletotradeswithT—billsorwithsharesalsolistedonanotherEUregulatedmarket,tocross—bordersharesettlements,ortocrossborderpublicoffers;also,tobeeffectiveasofthe14thofNovember2011,suchmechanismisnolongerapplicabletothetradeswithsharesofthecompaniesincludedintheBETindexofBSE32. Currently,thesecuritiesaremainlyheldinandtradedfromindividualaccountsopenedbytheintermediaryontheclient’snameinthesystemofthecentraldepository.

BasedonaMarch2010NSCregulation,theuseof“globalaccounts”isgenerallyallowedtoallthelocalissuersprovidedthatthetradeswiththeirsharesaresubjecttothepre-validationmechanism.Also,thesaidNSCRegulationprovidesforaseriesoflimitedcaseswherethe“globalaccounts”shallbeusedforsharesnotsubject

32 TheBETindexofBSEincludesthetop10mostliquidcompanies.


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Protectionoftheofferoragainstmaterialadverseeffectactionsbythetargetcompanyisensuredbythetarget’sBoDbeingbannedtotakeanymeasureoractinamannerthatmayinfluenceonthestatusofthecompanyorthetakeoverobjectives,saveforthecurrentmanagementoperationsandoperationsderivingfrompreviousundertakingsofthecompanyorsubsequentlyendorsedbytheExtraordinaryGAS.Prohibitedoperationsincludesharecapitalincreasesorissuesofsecuritiesgrantingsubscriptionrights,orshares’swaps,aswellaschargingortransferringthecompany’sassetsrepresentingatleast1/3ofitsnetassetsasperthelastyearlyfinancialstatements.

Ontheotherhand,theofferorisheldliablefordamagesincurredbytheissuercompanyifitisprovedthattheVTOhasbeenlaunchedexclusivelyforthepurposeofdeterminingthecompanynottoproceedwithcertainoperations.

Theofferorandthepartiesthatthelatteracts“inconcertwith”maynotlaunchanotherVTOtargetingthesamecompanywithinoneyearaftertheclosingofapreviousVTO.

CounterbidsLaunchingcounterbidsisallowedwithregardtoanypurchasingtenderoffering,withthecounterbidenvisagingatleastthesamequantityofsecuritiesorthesameparticipationlevelandthecounterbidpricebeingatleast5%higherthantheinitialbid(thefirstannouncedpurchaseoffer).Thecounterbidsmaybelaunchedwithin10businessdaysasofthepublicationoftheannouncementoftheinitialbid.AcontestisconductedbytheNSCinordertoselectonebid.Allthecompetingbidsaremeanwhilesuspended.Thepricecontestprocesstakesplaceinseveralroundsuntilnootherpriceincreaseissubmitted.Theofferorshavetoincreasethepricebyatleast5%ofthehighestpricebidedinthepreviousround.Afterthefinalpriceisdeterminedfollowingthepricecontestprocess,anamendmenttothewinningbidispublished(reflectingtherespectiveincreasedprice)andalltheotherbidspreviouslyauthorizedarecancelled.

ExitofMinorityShareholders/De—Listing

Minorityshareholdersmaybeforcedbythemajorityshareholdertoexitthecompany(squeeze—out)ormayaskthemajorityshareholdertobuy—outtheirholdings(sell—out),oncethelatterhasreached95%oftheshareshavingattachedvotingrightsinthelistedcompany,orhasacquired90%ofthesharestargetedinapublicpurchaseofferingaddressedtoalltheshareholdersforalltheirshares.Bothoperationsaretobemadeatafairpricefortheminorityshareholders,determinedaccordingtothelaworbyanindependentexpert.Followingthesqueeze—out/sell—outprocedure,thecompanyisde—listed.


providedbylaw,includingprivatization,foreclosureproceedingsconductedbytheMinistryofPublicFinanceorotherauthorizedentities,sharetransferbetweenthemother—companyanditssubsidiariesorbetweensubsidiariesofthesamemother—company,voluntarypurchaseofferingaddressedtoallshareholdersforalltheirshares.TheMTOhastobelaunchedwithin2monthsfromreachingthequalifiedposition,saveforthecasewhenthethresholdwasreached“involuntarily”(e.g.pursuanttosubscribingprorataunderasharecapitalincreaseorasaresultofmerger/spin—offoperations)whenthedeadlineisof3months.

ThepriceunderanMTOmustmeetorexceedthehighestpricepaidbytheofferor,orthepersonsacting“inconcert”withit,withinthelast12monthsbeforetheMTO.Lackingthisindex,theMTOpriceshallbethehighestofthefollowing(i)theweightedaverageshares’tradepriceforthe12monthspriortotheMTO,(ii)thepriceresultingfromdividingthecompany’snetassets’value(asperthelatestfinancialstatements)tothenumberofpubliclytradedsharesand(iii)theshares’valueasvaluatedbyanexpertinaccordancewithinternationalvaluationstandards.

VoluntarytakeoverofferingApublicofferingaddressedtoallshareholdersforalltheirsharesforthepurposeofacquiringmorethan33%ofthevotingrights,whentheofferorisnotboundtoconductatenderoffering,iscalled“voluntarytakeoveroffering”(VTO).

ThepriceoftheVTOshouldbeatleastthehighestofthefollowing:(i)thehighestpricepaidbytheofferor/thepersonsitacts“inconcert”withforthesharesinthetargetcompany,(ii)theweightedaverageshares’tradepriceforthe12monthspriortotheVTOand(iii)thepriceresultingfromdividingthecompany’snetassets’value(asperthelatestfinancialstatements)tothenumberofpubliclytradedshares.

VTOproceedingsrequireapreliminaryproceduretobeconductedbytheofferorwiththeissuingcompany’smanagement.Theofferor`stakeoverintention,includedinapreliminaryannouncementapprovedbytheNSC,iscommunicatedtothetargetcompany.Theemployeesarealsonotifiedonsuchintention.Within5daysasofreceivingthepreliminaryannouncement,thetargetcompany’sBoardofDirectors(BoD)hastoprovidetheNSC,therelevantmarketoperatorandtheofferorwithadocumentascertainingitspositionwithrespecttothetakeoverthroughtheannouncedVTO,including,ifany,theopinionexpressedbytheemployees’representatives.

Ontheotherhand,theBoDmayconveneameetingofthegeneralassemblyoftheshareholders(GAS)followingthereceiptofthepreliminaryVTOannouncement,inordertoinformtheshareholdersonitspositionwithregardtothetakeover.


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ReportingObligations

AnyissuerofsecuritiesadmittedtotheofficiallistinghastosubmitperiodicalreportstothemarketandtheNSC,mainlyincludingfinancialdataforthereportingperiodorinformingthemarketoncertainspecialevents(generalmeetingofshareholdersdecisions/convening,etc).Eachissuerhastosubmittheregulatoryauthority,themarketoperatorandthepublicwithquarterly,biannualandannualfinancialreports.Announcementsaretobepublishedinatleastonenationalnewspaperinformingthepubliconthelocationswheresuchreportsmaybereviewedandthewaytheycanbeobtained.Alltheperiodicalreportshavetobemaintainedavailabletothepublicforatleastfiveyears.Also,certaineventsorcircumstancesmustbeimmediatelyreportedtothemarketandtheNSC.ReportingobligationsareapplicablebothtoRomanianissuersandtoforeignissuersadmittedtotradingonaRomanianregulatedmarket.IssuerslistedonREMhavelowerreportingstandards.

InformationonQualifiedPositions

Ashareholderthathasreachedorlostaqualifiedposition(5%,10%,15%,20%,25%,33%,50%,75%or90%)hastoinformthetargetcompany,theNSCandthemarketoperatorontheoperationwithin3workingdays.Thecompanythusinformedisalsoobligatedtoreleasetheinformationtothepublic,theNSCandthemarketoperatorwithin3workingdaysasofbeinginformed.

CumulativeVotingProcedureforAppointingtheDirectors

MembersoftheBoDofcompanieslistedonaregulatedmarketmaybeappointedunderaspecialprocedure,theso—called“cumulativevotingmethod”.AnyshareholdermayrequesttoappointBoDmembersbyusingthisspecialmethod(whichimpliesappointmentofBoDmembersbytheshareholdersonindividualbasis,proportionalwiththeirvotingrights),buttheapplicationofthemethodbecomesmandatoryfollowingtherequestofasignificantshareholder(holdingatleast10%ofthesharecapitalorvotingrightsorapositiongivingasignificantinfluenceonthedecision—makingprocessofthecompany).Thearticlesofincorporationoftheissuermaynotcancel,amendorhindertherightoftheshareholderstorequestandobtaintheuseofthecumulativevoteprocedure.TheapplicationofthisspecialprocedureshallregardallthemembersoftheBoD.


Incaseofcompanymergerorspin—offthatwouldresultinshareholders’receivingsharesnotadmittedtopublictrade(e.g.thatwouldleadtocompany’swithdrawalfrompublictrade),theminorityshareholdersthatdissenttotheGASdecisionontheprocessareentitledtowithdrawfromthecompanyandreceivethevalueoftheirsharesasvaluatedbyanexpert.Thesamewithdrawalrightisgrantedtominorityshareholdersifthecompany’sGASdecidesthecompany’swithdrawalfrompublictrade.However,suchde—listingprocedurecanonlybeconductedunderveryrestrictivecircumstancesandrequirements.

ProtectionofMinorityShareholders

Oneofthemainconcernsofthecapitalmarketregulationsisofferingprotectiontominorityshareholders.Tothisend,twomainprinciplesareclearlystatedbytheCapitalMarketsLaw:equalityofinvestorsandtransparencyofthemarket.

Protectionofminorityshareholdersisensuredunderthecapitalmarketlawsandregulations—inturnbasedontherelevantEUDirectives(i.e.theProspectusDirectiveandtheTransparencyDirective,togetherwiththerelevantLevelIIenactments)—throughspecificobligationsimposedonissuerstomakeavailabletoinvestorsinformationonaperiodicalorad—hocbasis,orthroughspecialrightsoftheshareholdersinrelationtothedecision—makingprocessinthelistedcompany,orspecialruleswithregardtoinsideinformation/insidertradingandmarketmanipulation.Minorityshareholderswithahigherquotahavesomeadditionalrights,suchastherighttorequesttheGASbeconvened,orreportsofthefinancialauditoronspecificcompanyoperationsbemade,ortheelectionoftheBoDmembersbemadeviathecumulativevotingprocedure.

Transparencyofthemarket,themaintoolforprotectingtheshareholders,isensuredinthefirstinstancethroughtheshareholders’righttoinformation,whichisregulatedaroundthefollowingmajorrules:•Admissiontotheofficiallistingonaregulatedmarketisconditionalupon theissuerprovidinginvestorswithtrueandcompleteinformationregardingthesecuritiesandtheissuer,throughthepublicationofanofferingprospectus;•Publiclytradedissuersarerequiredtoperiodicallyinforminvestorsontheiractivityandfinancialstanding;•Publiclytradedissuersarerequiredtoimmediatelyinforminvestorsonanymajoreventconcerningissuers’activityandtheirsecurities;•Marketmanipulationandmarketabusearestrictlyforbidden(andarealsopunishedascriminaloffences);•Specificrulesaredesignedwithregardtotheconceptanduseof“insideinformation”and“insidepersons”;securities’tradebasedonprivilegedinformationbeingstrictlyprohibited.


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Energy

PowerandHeat

OverviewonthereorganizationoftheRomanianpowerandheatsectorIntheearly90s,anextensivereorganizationprocesshasbeeninitiatedinthepowerandheatsectoraimedatpreparingtheState-ownedplayersforprivatization.Asafirststepinthisdirection,theRegieAutonomeforPower(Renel)wasorganizedbytakingoveralltheassetsandliabilitiesof100State-ownedcompanies,researchandeducationalinstitutesandonetrainingcentreoperatinginthepowersector.Renel’smainbusinesswasingeneration,transportanddistributionofpower,heatgenerationandtransport,maintenanceandrepairingofenergyequipmentsandinstallations,developmentofthenationalenergysystem,importandexportofpower.In1997,asamajornewstepinthereorganizationprocess,alegalframeworkwascreatedforregiesautonomestobetransformedintocommercialcompanies,ownedsolelybytheStateintheinitialphase,butlegallyeligibleforprivatization.

Underthenewlegislation,Renelwassplitinto2companiesand1regieautonome:• ThePowerNationalCompany(Conel)havingthreesubsidiaries:Hidroelectrica(subsidiaryforpowergenerationinhydro—powerplants),Termoelectrica(subsidiaryforpowerandheatgenerationinthermal—powerplants)andElectrica(subsidiaryforpowerdistribution);

• TheNationalCompanyNuclearelectrica;and• TheRegieAutonomeforNuclearActivities.

Conel’sreorganizationcontinuedin2000withthefollowingentitiesbeingformed:• ThePowerTransportationNationalCompanyTranselectrica(Transelectrica),thenationalpowertransporteranddispatcherresponsibleforoperatingandupgradingthetransmissiongrid,aswellasfororganizingandmanagingthepowermarket;

Thecumulativevotingmethoddoesnothavet0beobservedbyforeignissuersadmittedonthelocalmarket,whichshallbeboundbythecorporaterequirementsoftheirnationallaw.

SuperMajoritiesintheGeneralAssemblyoftheShareholders

Inordertoprotectminorityshareholdersagainstdilutionbythemajorityshareholders,therearecertainspecialmajoritiesprovidedbytheCapitalMarketsLawforsharecapitalincrease.Thus,aquorumof¾ofthenumberofallshareholdersandvoteof75%ofthesharecapitalisrequiredforavaliddecisionintheGASinthecaseof:• Increasingthesharecapitalbycontributionincashwiththecancellationofthepreferencerightsoftheexistingshareholders(whichwouldallowthemtopreservetheirequityquotafollowingthesharecapitalincrease);

• Increasingthesharecapitalbycontributioninkind.

SuchmajoritiesarenotapplicabletotheforeignissuersadmittedtotradingonaRomanianregulatedmarket,whichshallapplytherulesregardingcorporateissuesthatareprovidedbytheirnationallaw.


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(powerandheatproducersresultedfromthereorganisationofTermoelectricain2004)andtheNationalCompanyofLigniteOltenia,thusresultingCEOltenia;and,ontheotherhand,themergerbetweenElectrocentraleDevaandElectrocentraleParoseni(subsidiariesofTermoelectrica)intoCEHundedoara.

PowerAuthorityregulatingthepowersectorThepowersectorisregulatedbytheRomanianEnergyRegulatoryAuthority(ANRE),anindependentpublicbodyofnationalinterest,coordinatedbytheVicePrimeMinister,whichoperatesonthebasisofitsownorganizationandoperationregulation.ANREisentirelyfinancedfromtheStatebudget,throughthebudgetoftheGovernmentGeneralSecretariat.ANRE’smaincompetencesinthepowersectorinclude:• Issuingmandatoryregulationsforoperatorsinthepowersector;• Granting,amending,suspendingandwithdrawingpowerauthorizationsandlicenses;

• Approvingmethodologiesforestablishingpricesandtariffsandthetariffsforsystem,transmissionanddistributionservices;

• Draftingframeworksupplyagreementsandframeworkagreementstobeconcludedbetweenundertakingsinthepowersectorregardingthesale,purchase,transmission,systemserviceanddistributionofpower;

• Monitoringthepowermarketandhowtheoperatorsonthismarketcomplywiththerelevantregulations;and

• Settlingdisputesrelatedtotheconclusionofsupplyagreements,interconnectionagreementsoragreementsconcludedbetweenundertakingsonthepowermarket.

ThepowersectorisregulatedmainlybyPowerLawNo.13/2007(thePowerLaw34).1

ActivitiesandparticipantsinthepowersectorThepowersectorincludesalltheactivitiesofpowergeneration,transmission,distributionandsupply,systemservices,importandexportofpower,aswellastheestablishmentandoperationoftherelatedcapacities.ThegenerationiscarriedoutbylegalentitieslicensedbyANRE,throughtheoperationofthegenerationcapacitiesalsoauthorizedbyANRE.

Theproducersareentitledtotradethepowertheygenerateonthewholesalemarket,aswellastosupplyittofinalconsumersbasedonapowersupplylicense.ThemainpowerproducersontheRomanianmarketareHidroelectrica,NuclearelectricaandCETurceni.TransmissionisanaturalmonopolyactivitycarriedoutbyTranselectrica,theRomanianTransmissionandSystemOperator.

34 PublishedintheOfficialGazetteofRomania,PartI,No.51dated23rdofJanuary2007,asfurtheramendedandsupplemented.

• ThePowerGenerationCompanyHidroelectrica(Hidroelectrica),hydro—powerproducerandsupplier;

• ThePowerandHeatGenerationCompanyTermoelectrica(Termoelectrica),actingonthepowergenerationandsupply,aswellasheatgeneration,transmission,distributionandsupplymarkets;and

• ThePowerDistributionandSupplyCompanyElectrica(Electrica),the nationalpowerdistributorandsupplier,mainlyresponsibleforoperatinganddevelopingthedistributiongrid.

Further,Electricawasreorganizedbysettingup8distributionandsupplysubsidiaries,eachhavingexclusivityoverthepowerdistributionserviceandrelatedinfrastructurewithinacertainarea,i.e.ElectricaOltenia,ElectricaMunteniaNord,ElectricaMunteniaSud,ElectricaBanat,ElectricaDobrogea,ElectricaMoldova,ElectricaTransilvaniaNordandElectricaTransilvaniaSud.Althoughonlythemonopolyactivitiesinthepowersectorhavebeenopenedforprivatizationsofar(i.e.thedistributioncompanies),whilemostofthecompetitivesegmentofthemarketcontinuestobeState-owned,privatizationsinthepowersectorsawkeyplayersintheEuropeanpowersectorenteringthedomesticmarket.

FiveoftheformersubsidiariesofElectrica(powerdistributorsandsuppliers)havebeenprivatizedthroughasimultaneoussharesaleandsharecapitalincrease.Asaresult,CEZa.s.hasacquiredthemajoritystakeofElectricaOltenia,EnelS.p.A.becamethemajorityshareholderofElectricaDobrogea,ElectricaBanatandElectricaMunteniaSudwhileE.ON.EnergieAGhasacquired51%ofthesharecapitalofElectricaMoldova.

Intheheatsector,Termoelectricaiscurrentlyinprocessofestablishingseveraljointventurecompaniestobecontrolledbyprivateinvestors,whichwouldactasindependentheatproducers.Termoelectrica’sparticipationinsuchjointventurecompanieswouldconsistinthermal—powerplantsorpartsofthemwhichappeartobeattractivefortheinvestorsduetoarelativeconstantheatmarketbutwhichneedsignificantinvestmentsforefficiencyincreasingpurposes.

Anextensivereorganizationprocesswasinitiatedinthepowerandheatgenerationsectoratthebeginningof2010,consistinginconcomitantmergersandspin—offsofthemainState—ownedpowerandheatproducerssoastoresultintotwogiantcompanies,i.e.theNationalCompanyElectra(Electra)andtheNationalCompanyHidroenergetica(Hidroenergetica).Althoughimportantstepsweremadealongthelinesofthisrestructuringplan,theprocesshasbeenabandonedandcurrentlyanewformofreorganizationisenvisagedinthesector,butatamuchsmallerscale.Thenewprocessconsistsintwomergers,namely,ontheonehandthemergeramongCETurceni,CERovinari,CECraiova


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UnbundlingofpowerdistributionandsupplyactivitiesInlinewiththeprincipleslaiddownbytheDirective54/2003/ECconcerningcommonrulesfortheinternalmarketinelectricityandrepealingDirective96/92/EC(thePowerDirective35), thePowerLawimposedunbundlingofthedistributionandsupplyactivitiesbythe30thofJune2007.

Unbundlingwasrequiredofverticallyintegratedundertakingscarryingoutbothdistributionandsupplyactivities,exceptforverticallyintegratedundertakingsservinglessthan100,000connectedcustomers,orsmallisolatedsystems.Distributionoperatorspartofverticallyintegratedundertakingswererequiredtobecomeindependentfromactivitiesnotconnectedtopowerdistribution,atleastintermsoflegalform(legalunbundling),organizationanddecisionmakingprocess(functionalunbundling).Alleightdistributionandsupplyoperators(formerandcurrentsubsidiariesofElectrica)havecompletedtheunbundlingofdistributionandsupplyactivitiesthroughspin—offintotwoseparateentities,oneforeachactivity.

PowermarketInlinewiththeprincipleslaiddownbythePowerDirective,theRomanianpowermarketwasfullyliberalizedasof1stofJuly2007,furthertoagradualliberalizationwhichstartedin2000.However,evenafterthe1stofJuly2007,ANREcontinuestoregulateseveralsegmentsofthemarket,i.e.thenaturalmonopolyactivities,thesupplybythedefaultsuppliersandlastresortsuppliers,aswellasthetransactionsbetweentheproducersandthedefaultsuppliersandlastresortsuppliersforthepowersuppliedontheregulatedmarket.

Onthecompetitivemarket,transactionsareperformed(i)underawholesalesystem(forsuppliers’acquisitionsofpowerfromproducersorfromothersuppliersforre—sellingpurposes)or(ii)underaretailsystem(foracquisitionsofpowerbyfinalconsumersfortheirownconsumption).

Onthewholesalemarket,transactionsareconcludedinthefollowingforms:• Bilateralagreementsconcludedthroughdirectnegotiations(includingimport/exportagreements);

• BilateralagreementsexecutedonthecentralizedmarketofthebilateralagreementsoperatedbythePowerMarketOperatorOpcom;

• TransactionsclosedontheDayAheadMarketoperatedbythePowerMarketOperatorOpcom;

• TransactionsconcludedonthecentralizedbalancingmarketoperatedbyTranselectrica;and

•Transactionsfortechnologicalsystemservices.

35 PublishedintheEUOfficialJournalL176of15thofJuly2003.


Transelectricaoperates,basedontheconcessiongrantedbytheMinistryofEconomy,CommerceandBusinessEnvironmentovertheentirepowertransmissiongrid(i.e.thegridhavingavoltageexceeding110kv)belongingtothepublicpropertyoftheState.

Powerdistributionentailsthetransportationofthepowerthroughthehigh,mediumandlowvoltagegridhavingavoltageofupto110kv.Similarlytothetransmission,thedistributionisanaturalmonopolyactivitycarriedoutby8entitiesholding(i)theconcessionawardedbytheMinistryofEconomy,CommerceandBusinessEnvironmentoverthedistributionserviceinacertainareaand(ii)thedistributionlicenseissuedbyANRE.

ThesupplycanbecarriedoutbyentitiesholdingthepowersupplylicenseissuedbyANRE.AsaresultofthefullliberalizationoftheRomanianpowermarketsincethe1stofJuly2007,threecategoriesofsuppliersarerecognizedbytheregulationsinforce,namely(i)competitivesuppliers,(ii)defaultsuppliersand(iii)lastresortsuppliers.

Asageneralrule,asofthe1stofJuly2007,thesupplierscansellthepoweronthecompetitivemarketatnegotiatedprices.Thedefaultsuppliers(i.e.thesupplycompaniesresultedfurthertotheunbundlingoftheformerdistributionandsupplyoperators,namelyCEZVânzare,EnelEnergie,E.ON.EnergieRomania,ElectricaFurnizareTransilvaniaNord,ElectricaFurnizareTransilvaniaSud,ElectricaFurnizareMunteniaNordandEnelEnergieMuntenia)areobligatedtosupplypower,undertermsandpricesregulatedbyANRE,tothefollowingconsumerslocatedintheareacoveredbythedistributionlicense:• Householdandnon—householdconsumerswhichhavenotexercisedtherighttoelectthesupplieronthecompetitivemarket;

• Non—householdconsumershavingamaximumcapacityof100kVAandhouseholdconsumerswhichhaveparticipatedonthecompetitivemarketanddecidedtoreturntotheregulatedmarket;and

• Newhouseholdconsumerswhichelectthedefaultsupplierandnewnon— householdconsumershavingamaximumapprovedcapacityof100kVAwhichdonotexercisetherighttoelectthesupplieronthecompetitivemarket.

Atthesametime,ANREnominatesseverallastresortsuppliersforsupplyingpower,underregulatedtermsandprices,incaseofsuspension/withdrawalofthesupplylicenseofoneorseveralsuppliers.Fortheperiodbetweenthe1stofJuly2011andthe30thofJune2012,ANREappointedaslastresortsuppliersthedefaultsuppliersindicatedabove.


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AccessandconnectiontothepowergridPermittingaccesstothepowertransmissionanddistributiongridsisamandatoryservicetobeprovidedbytheTSOandtherelevantdistributionoperator.Accesstothegridcanberestrictedonlyprovidedthattheconnectionaffectsthesafetyofthenationalenergysystemthroughthebreachoftherelevanttechnicalnormsandperformancestandards.

ConsideringthelimitedcapacityoftheRomanianpowergrids,accesstheretoprovedtobeoneofthecrucialstepsinthedevelopmentofanewpowergenerationprojectinRomania.Connectiontothepowergridisdonebasedonagridconnectionpermitfollowedbytheexecutionofthegridconnectionagreement(iftheconnectionrequiresworkstothegrid),andthepaymentoftheconnectiontariff.Applicationsforagridconnectionpermitshouldbefiledeitherwith(i)theTSO,forpowergeneration/consumptionunitshavingacapacityexceeding50MVAor(ii)thepowerdistributionoperatorholdingtheconcessionofthepowerdistributionserviceintherespectivearea,forpowergeneration/consumptionunitshavingacapacityupto50MVA.

PromotingthepowerfromrenewableenergysourcesInlinewiththetheninforceDirective2001/77/CEonthepromotionofpowergenerationfromrenewableenergysourcesonthedomesticmarket,startingwith2003,theRomanianlegislationhasbeenconstantlysupplementedinordertocreatealegislativeframeworkforthepromotionofpowerfromrenewablesourcesofenergy.Inthefirstregulatorystage(i.e.2004—November2008),thelawmakeroptedforthesystemofmandatoryquotascombinedwithgreencertificatestrading,underwhichforeachMWhofpowergeneratedfromrenewablesourcesofenergy,theproducerswereentitledtoonegreencertificate.Inthesecondregulatorystage,LawNo.220/2008establishingthesystemforpromotingthepowerproducedfromrenewablesourcesofenergyhasbeenenacted(theRenewableEnergyLaw)36. TheRenewableEnergyLawestablishedinitiallytwoalternativesystemsforstimulatingthegenerationofenergyfromrenewablesourcesofenergy:(i)thesystemofmandatoryquotascombinedwithgreencertificatestradingand(ii)thefeed—intariffsystem.OnlyoneofthesesystemswastobeselectedforapplicationbywayofGovernmentdecisionand,consistently,attheendof2009,theGovernmentDecisionNo.1479/200937 waspassedoptingformandatoryquotascombinedwithgreencertificatestrading.However,thisdecisionprovidedthatthesupportschemeshallapplyonlysubjecttobeingauthorizedbytheEuropeanCommission.

36 TheRenewableEnergyLawwaspublishedintheOfficialGazette,PartI,No.of743of3rdofNovember2008.37 GovernmentDecisionNo.1479/2009ontheestablishmentofthesystemforpromotinggenerationofpowerfromrenewablesourcesofenergywaspublishedintheOfficialGazette,PartI,No.843of7thofDecember2009.


PricesandtariffsFurthertothefullliberalizationofthemarket,transactionpricescanbenegotiatedbytheparties,exceptfortariffsandpriceswhichcontinuetoberegulatedbyANRE,namely:• Regulatedtariffsforthemonopolyactivities(i.e.powertransmission,systemanddistribution);

• Regulatedprices/tariffsappliedbylastresortsuppliersandbydefaultsuppliers;• Regulatedpricesfortransactionsbetweenthepowerproducersand thesuppliers,forpowersoldtoconsumersontheregulatedmarket;

• Regulatedtariffsfortheacquisitionofsystemtechnologicalservices(untilacompetitivemarketoftechnologicalsystemserviceswillbecreated);

• Regulatedtariffsforthemeasurementactivity;• Regulatedtariffsforgridconnection;and• Regulatedtariffsappliedbycentralizedmarketsoperators.

AuthorizationsandlicensesActivitiesinthepowersectorbeingofpublicinterest,theymaybecarriedoutonlyprovidedspecificauthorizationsandlicensesareobtainedfromANRE:developingandupgradinggenerationcapacitieshavinganinstalledpowerexceeding1MWaresubjecttoobtainingthesettingupauthorization;powergenerationandsupplyactivities,aswellaspowerdistribution,transmissionandsystemservicesareconditionaluponobtainingthecorrespondinglicenses.

Rightsoftheholdersofauthorizations/licensesoverthelandsandotherimmovableassetsownedbythirdpartiesConsideringthepublicinterestpowersectoractivitiesentail,holdersofauthorizationsandlicensesbenefit,byvirtueoflaw,ofcertainrightsoverthelandsandotherassetsbelongingtoeitherthepublicdomainortoprivateindividualsorlegalentities,suchas(i)arightofuseofsuchassetsintheeventworksarenecessaryforthedevelopment,upgrading,operationorrepairingenergeticcapacities,(ii)easementrights(undergroundandaboveground)forinstallingpowergridsandotherequipmentsrelatedtoenergeticcapacitiesandforaccessingthelocationplacethereofand(iii)arighttorequestthelimitationorcessationoftheactivitiescarriedoutnearenergeticcapacitieswhichmayendangerassetsorhumans.Iftheimmoveableassetsareownedbythestateorbythelocalauthorities,therightofuseandtheeasementrightsareexercisedfreeofcharge;ifownedbyindividualsorlegalentities,theownersareentitledtocompensationforalldamagesincurredfurthertoexercisingtheserights,thevalueofthecompensationbeingagreedbythepartiesor,failingwhich,bycourtdecision.Thetermsandconditionstoexercisetheserightsareestablishedbyconventionconcludedbetweenthetwoparties,attheowners’request,whichshouldobservetheframeworkconventionrecentlyapprovedbyGovernmentdecision.


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• Fortheperiod2008—2025,thetradingvalueofthegreencertificatesbothonthecentralizedmarketandonthebilateralagreementsmarketvariesfromEUR27(minimumvalue)andEUR55(maximumvalue)pergreencertificate;startingfrom2011,suchvaluesareindexedwiththeaverageinflationrateoftheEurozonewithintheEuropeanUnioncalculatedforthepreviousyearandcommunicatedbyEurostat;

• ThequotaofgreencertificatesacquisitionshallbeestimatedbyANREeachDecemberforthefollowingyearandbythe1stofMarchofeachyearANREshallestablishthemandatoryquotaofgreencertificatesacquisitionforthepreviousyear,basedontheachievedproductionofrenewableenergyandthegrossfinalconsumptionregisteredinthepreviousyear;

• ThesuppliershavetheobligationtopurchaseanumberofgreencertificateswhichequalstotheannualquantityofpowerpurchasedforfinalconsumersandforownconsumptionpurposesmultipliedbythemandatoryquotaofgreencertificatesacquisitiondeterminedbyANREfortherespectiveyear;

• Theproducershavetheobligationtopurchaseanumberofgreencertificateswhichequalstothequantityofpowerusedforownconsumptionpurposes(otherthetechnologicalconsumption)andforsupplyingconsumersconnecteddirectlytothepowerplant,multipliedbythemandatoryquotaofgreencertificatesacquisitiondeterminedbyANREfortherespectiveyear;

• TheamounttobepaidbythepowersuppliersandproducersfailingtoobservetheannualmandatoryquotaofgreencertificatesacquisitionshallamounttoEUR110foreachgreencertificatethatwasnotacquired;suchamountshallbealsoindexedwiththeaverageinflationrateoftheEurozonewithintheEuropeanUnioncalculatedforthepreviousyearandcommunicatedbyEurostat;

• TheamountsresultingfromthesanctionsappliedtosuppliersandproducersforfailingtoobservethemandatoryquotasofgreencertificatesacquisitionshallbecollectedbytheEnvironmentalFundAdministration41. Suchamountsshallbefurtherallocated,tothenaturalpersonsforinvestmentsinrenewablepowergenerationunitshavinganinstalledcapacityupto100kW;

• Thepowergeneratedfromrenewableenergysourcesshallbetradedonthewholesalepowermarketatmarketprice.However,thepowergeneratedfromrenewableenergysourcesinpowerplantshavinganinstalledcapacitybelow1MWcanbesoldtothedefaultsuppliersinthelicensedareaswherethepowerplantsarelocatedatregulatedpricestobefurtherestablishedbyANRE.ThetradingconditionsandtheregulatedpricesshallbenotifiedtotheEuropeanCommission.

Thequantityofpowersoldagainstregulatedpricesshallnotbenefitfromthepromotionsystem;

• PowerplantsusingrenewablesourcesofenergyshallbeconnectedtothepowergridtotheextentthatthesafetyoftheNationalEnergySystemisnotaffected.

41 TheEnvironmentalFundisaneconomical-financialinstrumenttargetedatsupportingandperformingenvironmentalprotectionprojectsandprograms,inaccordancewiththeapplicablelawsintheenvironmentalfield.


Furthermore,withaviewtoadaptinglocallegislationtothechangesbroughtinApril2009byDirective2009/28/CEonthepromotionoftheuseofenergyfromrenewablesources38, whichrepealedDirective2001/77/CE,alawfortheamendmentoftheRenewableEnergyLawwaspassedin201039. Finally,thesupportschemeforpowergeneratedfromrenewablesourcesofenergyhasbeenrecentlyapprovedbytheEuropeanCommission.Duringtheauthorizationprocessofthesupportscheme,theRomanianauthoritiesundertooktobringsomeamendmentstotheexistinglegalframeworkwiththepurposeofaligningitwiththeclearancesubsequentlyobtainedfromtheEuropeanCommission.Assuch,aGovernmentEmergencyOrdinance40 hasbeenrecentlypassedforamendingandsupplementingtheRenewableEnergyLaw(theAmendedRenewableEnergyLaw).Themainprinciplesofthesystemofmandatoryquotascombinedwithgreencertificatestrading,asregulatedbytheAmendedRenewableEnergyLaw,areasfollows:• Thenationaltargetsregardingthepercentageofpowergeneratedfrom renewableenergysources(includingthepowergeneratedinhydropowerplantshavinginstalledcapacitiesexceeding10MW)outofthetotalfinal

consumptionwillbe33%in2010,35%in2015and38%in2020;• Theannualmandatoryquotasofpowergeneratedfromrenewableenergysources(excludingthepowergeneratedinhydropowerplantshaving installedcapacitiesexceeding10MW)outofthetotalfinalconsumptionshallbegraduallyincreasedfrom10%in2011to20%in2020;

•ThenumberofgreencertificatestobedistributedbytheTSOforeachMWhofpowergeneratedbypowerplantsusingrenewablesourcesofenergy(withtheexceptionofthepowerusedforowntechnologicalconsumption)shallvarydependingontherenewableenergysource,asfollows:(i)3greencertificatesforeachMWhofpowergeneratedinthenewhydropowerunitshavinganinstalledcapacityofmaximum10MW,2greencertificatesforeachMWhofpowergeneratedintherefurbishedhydropowerunitshavinganinstalledcapacityuptomaximum10MWand1greencertificateforeach2MWhofpowergeneratedinotherhydropowerunitsthanthenewandrefurbishedunitsmentionedabove,havinganinstalledcapacityofmaximum10MW;(ii)2greencertificatesupto2017andonegreencertificateasof2018foreachMWhofwindpower;(iii)2greencertificatesforeachMWhofpowergeneratedfromgeothermalenergy,biomass,liquidbiofuel,biogas,(iv)1greencertificateforeachMWhofpowergeneratedfromlandfillgasandsewagetreatmentplantgas;and(v)6greencertificatesforeachMWhofsolarpower;

38 Directive2009/28/CEonthepromotionoftheuseofenergyfromrenewablesourceswaspublishedintheOfficialJournaloftheEuropeanUnionNo.L140of5thofJune2009.39 LawNo.139/2010onamendingandsupplementingLawNo.220/2008establishingthesystemforpromotingthepowerproducedfromrenewablesourcesofenergyhasbeenpublishedintheOfficialGazette,PartI,No.474of9thofJuly2010.40 GovernmentEmergencyOrdinanceNo.88/2011foramendingandsupplementingLawNo.220/2008establishingthesystemforpromotingthepowerproducedfromrenewablesourcesofenergy,publishedintheOfficialGazette,PartI,No.736of19thofOctober2011.


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thenumberofgreencertificatesprovidedbytheAmendedRenewableEnergyLaw.ThesemeasuresshallbeapprovedbymeansofaGovernmentdecisionandshallapplytoproducerswhichwillstartgeneratingpowerfromrenewablesourcesofenergyaftertheentryintoforceofsuchdecision;

• IncaseofpowerplantsbenefitingofoneormoreStateaid(s)(includingEUgrants),ANREmayreducethenumberofgreencertificatestobeawardedtosuchproducersbydecreasingthereferencevalueoftheinvestment/MWwiththevalueoftheaidreceived/MWandmaintainingtheinternalrateofreturnconsideredduringtheauthorizationprocessofthepromotionsystembytheEuropeanCommission;

• Untilthefulfilmentofthenationaltargetsregardingthepercentageofpowerfromrenewableenergysourcesoutofthetotalfinalconsumption,thepowerproducedfromrenewablesourceswhichbenefitsfromthepromotionsystemmaybetradedonlywithaviewtocoveringthegrossfinalconsumptionofpowerinRomania.

Withaviewtopromotingthegenerationofpowerfromrenewableenergysources,theRomanianauthoritieshaveadoptedtwoStateaidschemesmainlyaimedatfinancingthedevelopmentandupgradingofinstallationsforgeneratingpowerfromrenewableenergysources,aswellasthedevelopmentofinstallationsusingcleantechnologiesinallindustrialsectors.ThefinancialsupportgrantedundertheseStateaidschemesisfinancedfromtheEuropeanRegionalDevelopmentFund42 —limitedlyapplicableby2013.Currently,therearenocallsforprojectsopenedbythemanagementauthorityofthetwofinancingprogrammes,but,unlessthefundsallocatedforeachyeararedisbursed,itismorelikelythatothercallsshallbeopenedfortheinvestors.

PromotingtheproductionofhighyefficiencycogenerationpowerThesystemforpromotinghighefficiencycogenerationofpowerandheat,regulatedatEuropeanlevelbyDirective2004/8/EC43 hasbeenimplementedinRomaniastartingwith2007byGovernmentDecisionNo.219/200744. AfterthehighefficiencycogenerationsupportschemehasbeenauthorizedbytheEuropeanCommission,ANREhasadopted,duringthecourseof2010and2011,extensivesecondarylegislationfortheimplementationthereof.ThesupportschemeforhighefficiencycogenerationisadministeredbyTranselectricaandentailstheawardofbonusestoqualifiedpowerproducers,onamonthlybasis,foreachMWhofpower

42 TheEuropeanRegionalDevelopmentFundisastructuralEuropeanFundwhichaimstostrengtheneconomicandsocialcohesionintheEuropeanUnionbycorrectingimbalancesbetweenitsregions.43 Directive2004/8/EConthepromotionofcogenerationbasedonanusefulheatdemandintheinternalenergymarketandamendingDirective92/42/EEChasbeenpublishedintheOfficialJournaloftheEuropeanUnionNo.L52of21stofFebruary2004.44 GovernmentDecisionNo.219/2007onthepromotionofcogenerationbasedonthedemandofusefulheat,publishedintheOfficialGazette,PartI,No.200of23rdofMarch2007.


• Thepowergeneratedfromrenewablesourcesofenergywhichbenefitsfromthesupportschemeandissoldonthemarketbenefitsofguaranteedaccesstothegrid,whilethepowersoldagainstregulatedpricesbenefitsofpriorityaccesstothegrid,basedontechnicalandcommercialrulestobefurtherestablishedbyANRE;

• Thesupportschemeshallapplyforaperiodof(i)15yearsforenergygeneratedbynewunits(i.e.commissionedafterthe1stofJanuary2004andcomposedentirelyofnewequipments),(ii)10yearsforpowergeneratedbyrefurbishedhydropowerplants,withaninstalledcapacityofnomorethan10MW,(iii)7yearsforwindpowergeneratedbyunitspreviouslyusedontheterritoryofotherstates,ifsuchunitsareusedintheisolatedenergysystemsorhavebeencommissionedpriortoapplicationofthesupportschemeregulatedbytheAmendedRenewableEnergyLaw,(iv)3yearsforpowergeneratedbynon-refurbishedhydropowerplantswithamaximuminstalledcapacityofnomorethan10MW.SuchperiodsshallbediminishedaccordinglyincaseofpowerproducerswhichreceivedgreencertificatespriortotheapplicationofthesupportschemeregulatedbytheAmendedRenewableEnergyLaw;

• ThesupportschemeshallapplytoallproducersaccreditedbyANREprovidedthatthecommissioning,therefurbishmentrespectively,ofthegenerationunitsoccursbytheendof2016;

• Developersofpowerplantsgeneratingrenewableenergywhichhaveaninstalledcapacityofmorethan125MWshallbesubjecttoadetailedassessmenttobeperformedbytheEuropeanCommissionandshallbeentitledtobenefitfromthesupportschemeonlyafterthecompletionofsuchassessment.Inthiscase,ANREmaymodifythenumberofgreencertificatestobeawardedtothedeveloperoftherespectivepowerplant,inaccordancewiththeprovisionsoftheauthorizationdecisionoftheEuropeanCommission.However,producerswhichasattheentryintoforceoftheAmendedRenewableEnergyLawoperatepowerplantsgeneratingrenewableenergythathaveaninstalledcapacityofmorethan125MWshallbeaccreditedbyANRE,andbeentitledtoreceivethenumberofgreencertificatesprovidedbytheAmendedRenewableEnergyLawforaperiodof24months.SuchproducershavetheobligationtonotifytheEuropeanCommissionwithinthreemonthsasofaccreditation,andanypositivedifferencesbetweenthenumberofgreencertificatesreceivedduringthe24monthperiodandthatprovidedbytheauthorizationdecisionoftheEuropeanCommissionshallbesettledwithin24monthsasofsuchdecision;

• ANREhastheauthoritytomonitortheproducersbenefitingfromthesupportscheme.IffurthertothemonitoringandassessmentofANRE,itfollowsthattheremightbeanovercompensation(definedbytheAmendedRenewableEnergyLawasanincreaseoftheinternalrateofreturnbymorethan10%ascomparedtothevaluethereofconsideredduringtheauthorizationprocessofthepromotionsystembytheEuropeanCommission)derivingfromtheapplicationofthesupportscheme,thenANREproposesmeasuresforreducing


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Inviewofbenefitingfromthebonus,theproducershavetheobligationtotradethehighefficiencypoweronthecompetitivepowermarket.TheremainingquantitywhichwasnotsoldonthecompetitivemarketmaybetradedontheregulatedmarketforregulatedpricessetyearlybyANREatthelevelof90%oftheaveragepowertradingpriceontheDayAheadMarket,duringthepreviousyear.For2010—2012,theregulatedpricemaynotbelowerthanEUR40/MWh,VATexclusive.

Asasidenote,producersofpowerandheatfromcogenerationwhichuserenewableenergysourceshavetheobligationtochooseoneofthesupportschemes,i.e.eitherthesystemofmandatoryquotascombinedwithgreencertificatestrading,orthebonussupportschemeforhighefficiencycogeneration.

HeatOverviewontheheatprovisionserviceTheheatprovisionservicecoversallactivitiesoftheatgeneration,transmission,distributionandsupplycarriedoutatthelevelofaterritorial—administrativeunit,underthemanagementofthelocalpublicadministrationauthoritiesorofthecommunitydevelopmentassociations45, withaviewtoensuringthenecessaryheatusedtopreparewarmwaterforgeneralconsumption.

Theheatprovisionserviceiscarriedoutbyacentralizedsystem(SACET)consistinginconstructions,installations,equipmentsandmeteringdevicescorrespondingtoheatgeneration,transmission,distributionandsupply.

AuthorityregulatingtheheatsectorThemainauthoritywithcompetencesintheheatsectoristheNationalAuthorityforRegulatingtheCommunityServicesofPublicUtilities(ANRSC),apublicbodyofnationalinterest,subordinatedtotheMinistryofAdministrationandInterior,empoweredto:•Regulateactivitiesentailedbytheheatprovisionservice;•MonitorandcontrolthecomplianceoftheSACEToperatorswiththelegalrequirements;•Grantlicensesfortheperformanceofactivitiespartoftheheatpowerprovisionservice;•Elaboratetheframeworkregulationsapplicabletotheservice;and•Draftandapprovetheframeworktenderbookfortheperformanceoftheheatprovisionserviceandtheframeworkdocumentationforthedelegationofmanagement.

45 Thecommunitydevelopmentassociationsareassociationsestablishedbytwoorseveraladministrativeterritorialunitsforthepurposeofjointlyprovidingthecommunityservicesofpublicutilities.


producedfromhighefficiencycogenerationanddeliveredintothegrid,irrespectiveofwhetherthepowerissoldonthecompetitiveorontheregulatedmarket.

ANREistheauthorityestablishingonanannualbasistheproducerswhobenefitfromthesupportscheme,theamountofthebonustowhicheachisentitled,andthequantitiesofhighefficiencypowerbenefitingfromthesupportscheme.Thebonustobeawardedtoeachproducermaynotexceedtheannualreferencebonuswhichhasbeenapprovedbytheregulatoryauthorityfortheentireapplicabilityperiodoftheschemedependingonthetypeoffuelusedinthecogenerationprocess(i.e.solidfuels,gasfueltakenoverfromthetransmissionsystemandgasfueltakenoverfromthedistributionsystem).

ThebonusesaregrantedfromthecontributionscollectedbyTranselectricamainlyfrompowerconsumers(throughtheirsuppliers)andfromsupplierswhichexportpowergeneratedinRomania.

ThecontributionsaredeterminedonamonthlybasisbymultiplyingtheannualvaluesetbyANREinRON/kWhwiththequantityofthepowerinvoicedtotheconsumersand/orexportedduringtherespectivemonth.Paymentofthecontributionsismadebytheaforementionedsuppliersonamonthlybasis.Supplierswhichimportpowerproducedinhighefficiencycogeneration,certifiedassuchthroughguaranteesoforigin,anddeliveritdirectlytoconsumersinRomaniaareentitledtothereimbursementofthecontributionstheypaid.

ANREanalysesthecostsandrevenuescorrespondingtothehighefficiencycogenerationactivityestimatedforthenextyearbytheproducersbenefitingfromthesupportscheme.Shouldtheanalysisrevealovercompensation,ANREmaydiminishthevalueofthebonustobegrantedfortherespectiveperiodand,shouldtheanalysisprovethatthecogenerationunithasbeenfullydepreciated,nobonusshallbegranted.

Additionally,ANREwillassessinrespectofeachbeneficiarywhetherthebonusgrantedinthepreviousyeargaverisetoovercompensationand,ifso,theconcernedbeneficiaryshallhavetopaytheamountsindicatedbyANRE.ThefirstperiodforwhichANREwillassesstheovercompensationisofthreeyears,afterwhichovercompensationwillbeanalyzedonanannualbasis.Thesupportschemeisapplicablefortheperiod2010-2023,providedthatnoproducercanbenefitfromitformorethan11consecutiveyears.Shouldtheaggregatecapacityofcombinedheatandpowerunitsbenefitingfromtheschemereach4000MW,thenonlyhighefficiencycogenerationunitsreplacingtheexistingonesshallbeeligibleforthesupportscheme.


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ANRSCissueslicensesbasedonatwo—stageprocedure,asfollows:• Thefirstlicensegrantsthebeneficiarythereofonlytherighttoparticipatewithinanunlimitednumberofproceduresforbeingawardedthemanagementdelegationagreement;suchlicenseisissuedfora1—yearperiod;and

• Within60daysasoftheenteringintoforceofthemanagementdelegationagreement,thebeneficiarythereofmustrequestANRSCtoissueanewlicenseallowingtheactualperformanceoftheservicesobjectoftheagreement.This licenseisissuedforthedurationofthemanagementdelegationagreement, withoutexceedinga5—yearperiod.60daysbeforethelicenseexpirationdate,thebeneficiarythereofmustrequestANRSCtoissueanewlicense.

PricesandtariffsThefollowingcategoriesofpricesareapplicableintheheatsector:(i)localreferencepricesand(ii)localpricesforthepopulation.ThelocalreferencepricesareestablishedforeachlocalitybyANRSC,withtheexceptionofthepricefortheheatproducedfromcogeneration,whichfallsunderthecompetenceofANRE.Thelocalpricesforthepopulation(representingthepricesatthevaluewhereoftheheatisinvoicedtothepopulation)areestablishedbythelocalpublicadministrationauthoritiesorthecommunitydevelopmentassociations.Atthelevelofthesameterritorialadministrativeunit,thelocalpriceforthepopulationisunique,irrespectiveofthetypeofheatgeneration,transmissionanddistributiontechnologyorofthetypesoffuelsused.

Thelocalpublicadministrationauthoritiesorthecommunitydevelopmentassociationscannegotiatedifferentformulasandrulesforestablishing/adjustingthelocalpricesforthepopulationthroughthemanagementdelegationagreements,withthepriorendorsementofANRSC/ANRE.

Gas

OverviewofthegassectorInthecontextofradicalreformsthatcharacterizedtheRomanianeconomyafter1989aimingatliberalizingthenationaleconomyandsupportingthefreemovementofgoodsandservices,thegassectorhasundergoneamajorreorganizationprocesswhichentailed,interalia,aclearseparationofthegeneration,storage,transmissionanddistributionactivities,anincreaseofthecompetitioninthegasgenerationandanon—discriminatoryaccesstothetransmissionsystem.ThemainstepsmadeinthisrespectconsistedintheestablishmentandsubsequentreorganizationoftheRegieAutonomeforGasRomgazMedias(Romgaz)andoftheRegieAutonomeforOilPetromBucurești(Petrom).


Inaddition,limitedcompetencesintheheatsectorhavebeengratedtoANRE,inrespectoftheproductionofheatfromcogeneration,suchas:• Granting,modifying,suspendingorwithdrawinglicensesfortheproductionofheatfromcogeneration;

• Approvingpricesandtariffsfortheproductionofheatfromcogenerationforthepopulation;and

• ElaboratingspecificprovisionstobeinsertedintheframeworkagreementsandinthedocumentationissuedbyANRSC.

ManagementoftheheatprovisionserviceThemanagementofheatprovisionservice(includingalltheresponsibilitiesregardingtheorganization,management,operationandfinancingthisservice)fallsunderthecompetenceofthelocalpublicadministrationauthoritiesorofthecommunitydevelopmentassociations,whichcandecidetocarryoutthemanagementeitherdirectly(throughtheirinternalstructures)orbydelegation(transferringallorpartoftherightsandobligationsrelatedtotheserviceandgrantingconcessionsoverthecorrespondinginfrastructurebelongingtotheirpublicorprivateownershipbasedonadelegatedmanagementagreement).

Thedelegatedmanagementagreementisawardedbasedonpublictenderrequiringtheparticipationofatleast3bidders.Iffurthertoorganizingtwopublictenders,theminimumnumberofbiddersisnotmet,anewprocedureislaunched(directnegotiation)whichmustobservethesamepublicityrequirementsasthepublictender;negotiationsareconductedwithalleligiblebidders,irrespectivetheirnumber,andthewinnerisselectedbasedontheresultsofthenegotiations.

OperatorsoftheheatprovisionserviceAllactivitiespartofthepublicserviceofheatprovisionwithinanadministrativeunit(i.e.heatgeneration,distribution,transmissionandsupply)mustbecarriedoutbyasinglelicensedoperator.Exceptionally,basedonthedecisionofthelocalpublicadministrationauthoritiesorthecommunitydevelopmentassociations,heatgenerationactivitiesmaybecarriedoutbyoneorseveraloperators.

LicensesAllactivitiesintheheatsector(heatgeneration,transmission,distributionandsupply)maybeperformedbasedonthelicenseissuedbyANRSConly.Bywayofexception,thelicenseforproducingheatfromcogenerationfallsundertheexclusivecompetenceofANRE.Asageneralrule,onlyonelicenseisissuedforalltheseactivitiesbut,iftherearemoreoperatorsforheatgenerationwithinthesameterritorialunit,orifproductioniscarriedoutascogeneration,asinglelicenseisissuedbyANRSCforheattransmission,distributionandsupply,whilegenerationlicensesareissuedbyANRSCorbyANRE,asthecasemaybe.


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During2004—2005,thegassectorhasundergonealargeprivatizationprocesswherebytheRomanianstatesolditsmajoritystakesinDistrigazNordandDistrigazSud,aswellasinPetrom.

Asaresult,E.ON.RurhrgasAGbecamethemajorityshareholderinDistrigazNord,GazdeFranceacquiredthemajorityshareholdinginDistrigazSudwhileOMVAktiengesellschaftAustriabecamethemajorityshareholderinPetrom.

AnothermajorbreakthroughontheRomanianmarketwastheadmissionofTransgaztotradingontheBucharestStockExchange,furthertoanIPOprocesswhichtookplacein2007andwhichrepresentedthegreatestsharedemandinthehistoryofRomania,theofferingbeingoversubscribedbymorethan28times.Moreover,thiswasthefirstIPOontheBucharestStockExchangethathadanewfinancialinstrumentattachedtheretoi.e.“allocationrights”.

Inthefollowingyears,thedevelopmentofthegasmarketistargetedonpromotingexploitationofgasresourceswithaviewtoencouragingtheinternalproduction,diversifyingtheimportsourcesandincreasingcompetitionamongthesuppliers.

ThegassectorisregulatedmainlybyGasLawNo.351/2004(theGasLaw)47.

AuthorityregulatingthegassectorThemainauthorityregulatingthegassectorisANRE,whichmergedin2007withtheformerNationalRegulatoryAuthorityforGasSectorbytakingoverfromthelatterallthecompetences,budget,financingsources,personnel,rightsandobligationsthereof.

ThemaincompetencesofANREinthegassectorareasfollows:•Establishingthevalidityconditionsofgrantedauthorizationsandlicenses;•Drafting,approvingandapplyingregulationsfortheorganizationandfunctioningofthegasmarket;•Draftingandapprovingframeagreementsforgassupplyandfortheprovisionofstorage,transmissionanddistributionservicesandrelatedactivitiescarriedoutagainstregulatedtariffs;•Drafting,approvingandapplyingcriteriaandmethodsfortheapprovalofpricesandfortheestablishmentofregulatedtariffsinthegassector;and•Endorsingthetermsandconditionsoftheconcessionagreementsconcludedinrespectoftheassets,activitiesandservicesinthissector.

47 PublishedintheOfficialGazetteofRomania,PartI,No.679dated28thofJuly2004,asfurtheramendedandsupplemented.


Romgazwasestablishedatthebeginningof1991,bytakingoveralltheassetsandliabilitiesofseveralState—ownedcompanies,researchinstitutesandeducationallegalentitiesoperatinginthegassector.Romgaz’smainobjectofactivityincludedgeologicalresearchforidentifyinggasreserves,gasextraction,transmission,distributionandsupply,maintenanceandrepairingofrelatedequipmentsandinstallations.

Followingsubsequentreorganizations,Romgazceasedtoexistin2000,beingsplitintofivenewcompanies:• Transgaz,thenationaloperatorofgastransmission,transitanddispatch;• DistrigazNordandDistrigazSud,nationalgasdistributorsandsuppliers;• Exprogaz,empoweredtocarryoutgeologicalresearchandgasgeneration,supplyandstorage;and

• Depogaz,performinggeologicalresearchandgasgenerationandstorage.

Thereorganizationprocesscontinuedin2001,throughthemergerbetweenExprogazandDepogaz,asresultwhereofanewcompanywasestablishedundertheformernameofRomgaz.

SimilarlytoRomgaz,Petromwassetupalsoatthebeginningof1991,furthertothereorganizationofnumerousStateownedcompanies,researchinstitutesandeducationallegalentitiesoperatingintheoilandgassector.Petromwasresponsibleforexploring,administeringandidentifyingoilandgasdeposits(exceptforgasdepositsundertheadministrationandoperationofRomgaz),sellingtheproductsresultedtherefrom,ensuringthemaintenanceandrepairingofrelatedequipmentsandinstallations,importingandexportingrelatedproducts,equipmentsandtechnologies.

Currently,RomgazandPetromarethemaingasproducersontheRomanianmarket.

Duringthelastyears,thelegislationgoverningthegashasbeensubstantiallyamendedinordertoreflecttheprincipleslaiddownbytheEuropeanlegislation,inparticularDirective2003/55/ECconcerningcommonrulesfortheinternalmarketingasandrepealingDirective98/30/EC46 (theGasDirective),aswellastospeeduptheprivatizationinthegassector.

Themainamendmentsenvisagedtoeliminatethegasdistributiongridsfromthepublicdomainofthelocalauthorities,thusstimulatingtheprivatizationoftheState—ownedgasdistributioncompaniesandtheinvestmentsbytheconsumersinthedevelopmentofnewgasdistributionpipelines.

46 PublishedintheEUOfficialJournalL-176,dated15thofJuly2003.


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fromadifferentstateanddestinedtoathirdstate)arealsonaturalmonopolyactivitiescarriedoutbyTransgaz.BasedontheconcessionagreementconcludedwithANRM,Transgazoperatesthenationaltransmissionsystemandrelatedassetsbelongingtothepublicdomainofthestate.

Distributionentailsthetransportationofgasthroughthegridoperatingatapressurelowerorequalto6bars.Gasdistributionisamonopolyofentitiesholding(i)theexclusiveconcessionoverthedistributionserviceinacertainareabasedonaconcessionagreementawardedbyandconcludedwiththeMinistryofEconomy,CommerceandBusinessEnvironmentand(ii)adistributionlicenseissuedbyANRE.

ThemainoperatorsofthedistributionserviceareDistrigazSudReţeleandE.ON.GazDistribuţie,entitiesresultedfromtheunbundlingofDistrigazSudandDistrigazNord.

TheperformanceofsupplyisconditionaluponobtainingtheANREsupplylicense.AlthoughfurthertothefullliberalizationoftheRomaniangasmarketasofthe1stofJuly2007thesuppliershavetherighttocarryouttransactionsonthecompetitivemarketundernegotiatedtermsandconditions,partofthegassupplycontinuestoberegulatedbyANRE.

Thus,thesuppliersresultedfromtheunbundlingoftheverticallyintegratedundertakingwhichfellundertheunbundlingrequirementsandthesupplierspartofaverticallyintegratedundertakingwhichdidnotfellundertheunbundlingrequirements,havetheobligationtosupplygastotheconsumershavingtheconsumptionplaceslocatedintheareacoveredbythelicense,incasesuchconsumerschoosetobenefitfromregulatedsupply.TheregulatedsupplyiscarriedoutatthepricesandbasedontheframeworkagreementsregulatedbyANRE.

Inviewofprotectingtheconsumersincaseofwithdrawingthegassupplylicenseofthesuppliersthereof,aspecialcategoryofsuppliershasbeenestablished:thelastresortsuppliers.SuchsuppliersareeithernominatedbyANRE(incaseofthemandatorylastresortsupply)orselectedbyANREbasedonthebidssubmittedbytheinterestedsuppliers(incaseofvoluntarylastresortsupply).

ThelastresortsuppliersnominatedbyANREarethesameoperatorshavingtheobligationtosupplygastotheconsumershavingtheconsumptionplaceslocatedintheareacoveredbythelicense.Suchsuppliersareboundtosupplygas,atpricesregulatedbyANRE,tothehouseholdconsumers,hospitals,schools,kindergartens,publicinstitutionsandnonhouseholdconsumerswhoseconsumptiondoesnotexceed12,400m3/year/consumptionpoint.ThevoluntarylastresortsupplyiscarriedoutbysuppliersselectedbyANREforthebenefitofthenonhousehold


LimitedcompetencesinthegassectorhavealsobeengrantedtotheNationalAgencyforMineralResources(ANRM)consistingintheawardingandexecutionofthefollowingoilconcessionagreements:• Oilconcessionagreementsforexploration,developmentandexploitationactivities;

• Oilconcessionagreementsfordevelopmentandexploitationactivities;• Oilconcessionagreementsforexploitationactivities;•Oilagreementsfortheconcessionofundergroundstoragefacilitiesofgas;and•Oilagreementsfortheconcessionofthegasnationaltransmissionsystem.

ANRMisalsothecompetentauthoritytoestablishthereferencepriceforgaswhichistakenintoaccountforthecalculationoftheconcessionroyalty.

ActivitiesandparticipantsinthegassectorThegassectorcomprisesalltheactivitiesperformedbyundertakingsforthegeneration,transmission,transit,storage,distribution,supplyandconsumptionofgas,aswellasalltherelatedinstallationsandequipments.Thegenerationcanbecarriedoutbylegalentities(i)havingconcludedwithANRMaconcessionoilagreementinrespectofadefinedperimeter,(ii)holdingasettingupandanoperationauthorizationforthesurfacetechnologicalinstallationsrelatedtothegenerationactivityand(iii)holdingagassupplylicense.

ThemainproducersofgasontheRomanianmarketareRomgazandPetromwhichensuredmorethan97%oftheinternalgasproductionof2010,therestbeingcoveredbyother6localproducers.During2010,theinternalproductionofgascoveredaround83%ofthegasconsumption,theremaining17%havingbeenensuredfromtheimportscontractedmainlybyGDFSuezEnergyRomania,WieeRomaniaandE.ON.EnergieRomania(thecompanyresultingfromtheunbundlingofDistrigazNord).

Thestorageentailsallactivitiesandoperationsperformedforthereservationofstoragecapacitiesintheundergroundstoragesandfortheinjection,storageandextractionofgasfromthesecapacities.ThegasstorageisanaturalmonopolyactivitywhichmaybecarriedoutsubjecttoconcludingaconcessionagreementfortheundergroundstoragefacilitieswithANRM,andtoobtainingthecorrespondinglicensefromANRE.

Currently,therearethreeoperatorsofthegasstorageservice,namelyRomgaz,DepomureşandAmgaz.

Gastransmission(i.e.transportationofgasthroughthegridoperatingatapressureexceeding6bars)andtransit(i.e.transportationthroughthenationaltransmissionsystemand/orthroughspecialtransitlinesofgasoriginating


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• Regulatedtariffsforinterconnectiontothetransmission/distributiongrid.

ANRMestablishesthegasreferencepricebasedonwhichtheconcessionroyaltyiscalculated.

AuthorizationsandlicensesTheperformanceofactivitiesinthegassectorisconditionaluponobtainingtheauthorizationsandlicensesissuedbyANRE,asfollows:• Authorizationsforsettingupcapacitiesforgasgeneration,transmission,storage,dispatching,transitanddistributionandforthefunctioningandrevisionofthecapacitiesforgasgeneration,transmission,storage,transitanddistribution;and

• Licensesforperforminggastransmission,transit,storage,distributionandsupply.

Thelicensesareissuedforamaximumperiodof30years(incaseofthegassupplyandstorage),15years(incaseofthegastransmissionanddistribution)andaperiodequaltothedurationofthetransitagreement(incaseofthegastransit).

RightsoftheholdersofconcessionsoverlandsandotherimmoveableassetsownedbythirdpartiesConsideringthepublicinterestactivitiescarriedoutinthegassectorentail,theholdersofconcessionsinthegassectorbenefit,byvirtueoflaw,fromcertainrightsoverlandsandotherassetswhethertheybelongtothepublicdomainortotheprivateownershipofindividualsorlegalentities,suchas:(i)therighttousesuchassetswithaviewtoperformingworksasnecessaryforthedevelopment,upgradingorrepairingofgascapacities,(ii)easementrightsatunderground,surfaceandaeriallevelforinstallinggasgridsandotherrelatedequipmentsandforaccessingthelocationplacethereofand(iii)therighttorequestthelimitationorcessationofactivitiesthatmayendangerassetsandhumans.Theownersoftheassetsaffectedbytheexerciseoftheuseandeasementrightsareentitledtocompensationasestablishedbytheparties’agreementor,otherwise,bycourtdecision.


consumerstheconsumptionwhereofexceeds12,400m3/year/consumptionpoint.Theselectedsupplierssupplythegasatthepricesofferedinthebids.

UnbundlingofgasdistributionandsupplyactivitiesInlinewiththeprincipleslaiddownbytheGasDirective,theGasLawimposedtheunbundlingofgasdistributionandsupplyactivitiesbythe30thofJune2007.Theunbundlingrequirementsappliedtotheverticallyintegratedundertakingcarryingoutbothdistributionandsupplyactivities,exceptforthegasdistributorsservinglessthan100,000connectedcustomers.

Verticallyintegratedundertakingswereplacedundertheobligationtobecomeindependentfromactivitiesnotconnectedtogasdistribution,atleastintermsoflegalform(legalunbundling)andoftheorganizationanddecisionmakingprocess(functionalunbundling).Asaresultofunbundling,eachofthemaindistributionandsupplycompaniesDistrigazNordandDistrigazSudwasdividedintotwoseparatecompanies,oneofwhichcarryingoutgasdistributionandtheothercarryingoutgassupply,namelyDistrigazSudReţeleandGDFSuezEnergyRomania,inthecaseofDistrigazSud,andE.ON.GazDistribuţieandE.ON.EnergieRomânia,inthecaseofDistrigazNord.

GasmarketInlinewiththeprincipleslaiddownbytheGasDirective,theRomanianpowermarketwasfullyliberalizedasof1stofJuly2007,furthertoagradualliberalizationwhichstartedin2001.

However,evenafterthefullliberalization,ANREcontinuestoregulateseveralsegmentsofthegasmarket,asfollows:(i)thenaturalmonopolyactivities(i.e.transit,transmission,storageanddistributionofgas),(ii)thegassupplytoconsumerswhooptedforregulatedsupplyand(iii)thegassupplyprovidedbythenominatedlastresortsuppliers.TheactivitiesfallingundertheregulatedsegmentmaybecarriedoutbasedonframeworkagreementsapprovedbyANRE.

PricesandtariffsFurthertothefullliberalizationofthemarket,thepricescorrespondingtotransactionscarriedoutinthegassectorcanbenegotiatedbytheparties,withtheexceptionofthefollowingtariffsandpriceswhichcontinuetoberegulatedbyANRE:•Regulatedtariffsfornaturalmonopoleactivities,namelygastransmission,storage,distributionandtransit,withtheexceptionofthetransitthroughspecialtransitpipelineshavingbeendevelopedunderinternationalagreements;•Regulatedpricesforgassupplytoconsumerswhohaveoptedforregulatedsupply;•Regulatedpricesforgassupplybynominatedlastresortsuppliers;and


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TheplaintiffclaimedthatGEONo.50/2008isincompatiblewithEUlaw,becauseitisappliedtosecond—handcarsbroughtinRomaniafromanotherMemberStateandregisteredforthefirsttimeinRomania,althoughnosuchtaxwasappliedtothesimilarcarsalreadyregisteredinRomania.

Therefore,intheplaintiff’sopinion,theRomanianlegislationencouragestheRomanianbuyerstopurchasecarswhicharealreadyregisteredinRomania,tothedetrimentofthosefromotherMemberStates.Underthesecircumstances,theSibiuTribunaldecidedtostaytheproceedingsandreferthecasetotheCourtforapreliminaryrulingonthefollowingpointoflaw:“AretheprovisionsofGEONo.50/2008,assubsequentlyamended,contrarytotheprovisionsofArticle90EC,anddotheyinfactconstituteameasurewhichismanifestlydiscriminatory?”.

TheCourtfoundthatthepollutiontaxestablishedbyGEONo.50/2008doesnotmeettheconditionsofadirectdiscrimination,becausetheregulationdoesnotdistinguishbetweenmotorvehiclesaccordingtotheiroriginorbetweentheownersofthosevehiclesaccordingtotheirnationality.However,eveniftheconditionsfordirectdiscriminationarenotmet,internaltaxationmaybeindirectlydiscriminatoryasaresultofitseffects,asitwasalsoupheldinCaseC—290/05(NadasdiandNemeth).

Fromthisperspective,theCourtanalyzedwhetherthepollutiontaxcreatesanyindirectdiscriminationbetweenimportedsecond—handmotorvehiclesandsimilarsecond—handmotorvehicleswhicharealreadyonnationalterritory,approachingthetwodifferentsituationsasfollows:•Furthertocomparingthestatusofimportedsecond—handvehicleswiththestatusofsimilarvehiclesalreadyregisteredinRomaniaandsubject,atthattime,tothesametax,theCourtconcludedthatthereisnoindirectdiscrimination,becausetherespectivetaxiscalculatedbyreferencetotheactualdepreciationofthevehicles,inadditiontothepollutioncausedbysuchvehicleanditscylindercapacity.Therefore,“asystemsuchasthatestablishedbyGEONo.50/2008whichtakesaccount,incalculatingthetaxonregistration,ofthedepreciationofthemotorvehiclebyusingfixed,detailedandstatisticallybasedscalesrelatingtotheageandactualannualaveragekilometrageofthevehicle,whichmay,attherequestandattheexpenseofthetaxpayer,besupplementedbyaninspectionofthegeneralconditionofthevehicleanditsequipment,ensuresthatwhenthattaxischargedonimportedsecond—handvehiclesitdoesnotexceedtheresidualtaxincorporatedinthevalueofsimilarsecond—handvehicleswhichwerepreviouslyregisteredonnationalterritoryandweresubjectedonthatregistrationtothetaxlaiddownbyGEONo.50/2008”.


TheRomanianPollutionTaxVersustheEuropeanUnionLaw

BackgroundThefirstspecialtaxformotorvehiclesandcarswasprovidedatarticles2141to2143

oftheFiscalCodeandbecameeffectiveonthe1stofJanuary2007,whenRomaniajoinedtheEuropeanUnion.Itwasknownunderthenameof“firstregistrationtax”.Theapplicationofthistaxtosecond—handcarswaswidelycontestedascontrarytoarticle90TEC(currentlyarticle110TFEU),evenresultingintheopeningofinfringementproceduresagainstRomaniabytheEuropeanCommission48.Moreover,mostoftheRomaniancourtsadmittedtheclaimsfortherestitutionofthefirstregistrationtax,preciselyonthegroundthatthenationalregulationisincompatiblewithEUlaw.

Underthesecircumstances,theGovernmentissuedEmergencyOrdinanceNo.50ofthe21stofApril2008ontheestablishmentofthecarpollutiontax(publishedintheOfficialGazetteNo.327of25thofApril2008),effectiveasofthe1stofJuly2008andsubsequentlyamendedbyaseriesofenactments(GEONo.50/2008).

CaseC—402/09TatuTheEuropeanCourtofJusticewasseizedbytheSibiuTribunal,whichinitsturnwasadjudicatinganactionwherebytheplaintiffrequestedtherestitutionoftheamountpaidaspollutiontaxforthecarheboughtinJuly2008fromGermany.ThecarrangedintheM1category,itcompliedwithEURO2pollutionstandardandwasmadein1997.ThepollutiontaxhadbeenleviedbytheSibiuPublicFinanceAuthorityunderadecisiondatedthe27thofOctober2008,andtheplaintifffiledlegalactiononthe17thofDecember2008.

48 SeetheCommission’slettersofformalnoticeofthe21stofMarch2007(RO,EN)andthe28thofNovember2007(RO,EN)

EUCommunityLaw


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Therefore,theCourtfound,forthesecondtimein2011,thatthemechanismofthepollutiontaxestablishedbyGEONo.50/2008iscontrarytoEUlaw.

Consequencesonthedomesticlaw—briefcommentsEveniftheaforementionedjudgmentsaregivenondifferentversionsofGEONo.50/2008,mentionshouldbemadethatthesubsequentamendmentstoGEONo.50/2008mainlyreferredtothemethodforthecalculationofthetaxandbroughtnochangestoitsscopeofenforcement(art.4letter(a)ofGEONo.50/2008).Therefore,theCourt’sanalysisontheincompatibilityofadomesticprovisiondiscouragingthemarketingofsecond—handvehiclespurchasedinotherMemberStateswitharticle110TFEUremainsfullyapplicabletoanyoftheversionsofGEONo.50/2008.

Moreover,inthelatestversionsGEONo.50/2008nolongertookintoaccount,inthecalculationofthepollutiontax,theannualmileageorthedepreciationofthevehiclesubjecttoregistration.Therefore,thedomesticcourtscouldfindanincompatibilitybetweentheprovisionsofGEONo.50/2008andarticle110TFEUevenwheretheCourtdidnotfindsoundertheinitialversionofthedomesticregulation(i.e.neutralityofthepollutiontaxasregardsimportedsecond—handvehiclesandsimilarsecond—handvehiclespreviouslyregisteredonnationalterritoryandsubjectedonregistrationtothesametax).

Nevertheless,theproceduralmethodsbywhichthepollutiontaxmaybereimbursedwereandprobablywillcontinuetobeamatterofcontroversyanddissentinglegalpractice.Briefly,someoftheRomaniancourtsgrantedtherestitutionclaimsonlywhenthedecisiontocalculatethepollutiontaxwaschallengedwithin30days(atermwhich,especiallyconsideringtheinitialversionofGEONo.50/2008,expiredalongtimeago),whileothercourtsgrantedtherestitutionclaimsiffiledwithinthegeneralperiodofprescriptionof5yearsapplicabletofiscalmatters,asprovidedbyarticle135oftheFiscalProcedureCode,onthegroundthattheregulationofthepollutiontaxisincompatiblewithEUlaw,asalsoconfirmedbytheCourt.However,astheCourtalreadyascertainedtaxpayers’righttothereimbursementofthetaxeschargedbyanotherMemberStateinbreachofEUlaw(C—199/82SanGiorgio,C—62/93BPSoupergaz,C—441/98andC—442/98Michailidis),itfollowsthatalltaxpayerswhopaidthepollutiontaxmustbeallowedtorecovertheamountstheypaid.

ThemethodofreimbursingthetaxchargedunderGEONo.50/2008inbreachofEUlawiscurrentlyobjectofanappealintheinterestoflaw49, filedbythegeneralprosecutoroftheProsecutorOfficeattachedtotheHighCourtofCassationandJusticeonthe12thofMay2011.TherespectiveappealintheinterestofthelawaskstheHighCourtjudgestodecidewhetheranadministrativeclaimonthereimbursementofthetaxchargedbythefiscalauthoritiesunder

49 http://www.mpublic.ro/recursuri/2011_civil/rc_12_05_2011.htm.


•Furthertocomparingthestatusofimportedsecond—handvehiclesandsimilarvehiclesregisteredinRomaniabeforetheestablishmentofthepollutiontax,theCourtfirstrecalledthat,althoughtheMemberStatesarenotpreventedfromintroducingnewtaxesorfromchangingtherateorbasisofassessmentofexistingtaxes,thisdoesnotmeanthattheirpowerstomakenewtaxarrangementsareunlimited.Moreover,theCourtpointedoutthat“[o]nthecontrary,itissettledcase—lawthattheprohibitionlaiddowninarticle110TFEUmustapplywheneverafiscalchargeisliabletodiscourageimportsofgoodsoriginatinginotherMemberStatesinfavourofdomesticgoods”(para.52).Inthisrespect,animportantissueisthatmotorvehiclespresentonthemarketinaMemberStateare“domesticproducts”ofthatStatewithinthemeaningofarticle110TFEU.Therefore,second—handvehiclespurchasedonthemarketofthatMemberStateandthosepurchasedinotherMemberStatesinordertobeimportedandplacedincirculationintheformerStatearecompetingproducts.Sincefavoringthesaleofdomesticsecond—handvehiclesisnotallowedinthelightofarticle110TFEUandtheprovisionsofGEONo.50/2008havesuchaneffect,alsoprovedbythestatistics,theCourtconcludedthat,inthecaseatissue,theRomanianregulationiscontrarytoEUlaw(moreprecisely,itiscontrarytoarticle110TFEU).

Therefore,theCourtstipulatedthat“theanswertothequestionisthatarticle110TFEUmustbeinterpretedasprecludingaMemberStatefromintroducingapollutiontaxleviedonmotorvehiclesontheirfirstregistrationinthatMemberStateifthattaxisarrangedinsuchawaythatitdiscouragestheplacingincirculationinthatMemberStateofsecond—handvehiclespurchasedinotherMemberStateswithoutdiscouragingthepurchaseofsecond—handvehiclesofthesameageandconditiononthedomesticmarket”.

CaseC—263/10NisipeanuOnthe7thofJuly2011,incaseC—263/10Nisipeanu,theCourtruledagainonthecompatibilityofEUlawwiththeprovisionsoftheRomanianlawonthepollutiontaxapplieduponthefirstregistrationofvehicles.

SincethiscaseisalmostsimilartoC—402/09Tatu,theCourtgavethesamesolution.Thus,theCourtshowedthatthepollutiontaxestablishedbyGEONo.50/2008doesnotmeettheconditionsfordirectdiscrimination,becausetheregulationdoesnotdistinguishbetweenmotorvehiclesaccordingtotheiroriginorbetweentheownersofthosevehiclesaccordingtotheirnationality.However,eveniftheconditionsfordirectdiscriminationarenotmet,internaltaxationmaybeindirectlydiscriminatoryasaresultofitseffects.TheCourtagainpointedoutthatfavoringthesaleofdomesticvehiclesisnotallowedinthelightofarticle110TFEU,andthemechanismprovidedinGEONo.50/2008leadstosuchfavoringbyexemptingthecarsalreadyregisteredinRomaniafromthepaymentofthetax.


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GEONo.50/2008isadmissiblewhenthedecisiononthecalculationofthistaxhasnotbeenchallenged(underart.205etseq.oftheFiscalProcedureCode).Theappealalsoaskswhetheranadministrativeclaimfiledagainsttheinstitutioninchargewiththeregistrationofvehiclesisadmissible,ifthelatterrefusestoregisterthevehicleunlessthepollutiontaxispaidbeforehand.

Moreover,currentlyanewdraftenactmentmeanttoreplaceGEONo.50/2008isbeingdiscussedintheRomanianParliament.ThedraftenactmentwasevenapprovedbytheSenate,asthefirstchamberseized,onthe31stofOctober201150. ThefinalvoteistobecastbytheChamberofDeputies.IfthedraftGEOisapproved,the“taxonpollutingemissionsofvehicles”willbeowedonlyonce,bothfornewandforsecond—handcarsregisteredforthefirsttimeinRomania,nomatterifthevehicleismanufacturedinRomaniaorabroad.

50 http://www.senat.ro/Legis/Lista.aspx?cod=16234.


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