International standards and best practices: benefits and risksThe Romanian legal angle
Andrei Burz Pinzaru
Partner
We are supporters of transposing international best practices at local level as a basis for increasing effectiveness in business
© 2012 Reff & Asociatii
Best practices as the starting point
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More time to focus on the stringent commercial aspects
Less time spent on technicalities
Increased efficiency
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Benefits of standardization
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Size and complexity
Turning a “template” into a “bible”
Pragmatic approach and specific tailoring required
Improper dealing by local laws with foreign concepts
The “security agent” concept incompletely covered by law no. 71/2011
Mandatory applicable local law principles
Voting rights to the agent in case of default vs. revocable mandate under Romanian law
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Risks: downsides of “importing” best practices
Properly consider the use of the new LMA recommended form of facility agreement for real estate finance in Romania
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Real estate financing vs. Creditul ipotecar pentru investitii imobiliare
Lenders and their counsel to consider:
Applicability of the Romanian mortgage lending law no. 190/1999
Mandatory provisions of the Romanian mortgage lending law
Costs of funding for the borrower
Rules in case of variable interest
Contract termination and procedure – depending on type of default occurred
Enforceability towards insurer
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Freedom of choice is the rule
When there is a conflict of laws
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English law vs. Romanian law
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Transferability of the claim
Regulated by the law governing the claim
English law or Romanian law specific aspects to consider
New instrument for transfer under the New Civil Code:
assignment of contract
Impact on the security
If English law governed facility agreement, impact depends on solution
chosen for security structure
Romanian law specifics
Notarized form mandatory to ensure publicity for transfer of Mortgage
receivables
Incomplete regulation of the security agent’s mandate
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Bespoke, not ready made: LMA recommended version should be tailored to suit the commercial specifics of each transaction
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LMA response to highly negotiated clauses in commercial real estate finance –
not “one size fits all”
Operations of accounts “The Security Agent has sole signing rights in relation to the Rent Account.”
Lease covenants“No Borrower may without the consent of the [Agent/Majority Lenders]:-Enter into any Agreement for Lease-Agree to any amendment, supplement, extension, waiver, surrender or release in respect of any Lease Document-Exercise any right to break, determine or extend any Lease Document”
Negotiable character
Commercial sense and negotiation positions
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Customizing the standard
© 2012 Reff & Asociatii
Reff & Associates is the correspondent law firm of Deloitte Romania, integrated with the global Deloitte multi-disciplinary advisory practice. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.