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Mergers & Acquisitions in Romania

I am interested in the mergers and acquisitions domain and would like to know some general information about the process. What can you tell me?

The law that regulates the matter is Law no. 31/1990. According to this law, the fusion is the process by which:

a) one or more companies are dissolved without going into liquidation and transfer all their assets to another company in exchange for the allocation of shares from the shareholders of the company or companies being acquired to the acquiring company and, if applicable, a cash payment that can’t exceed 10% of the nominal value of the distributed shares; and

b) more companies are dissolved without going into liquidation and transfer all their assets and liabilities to a company that they form, in exchange for the allocation of shares from their shareholders to the newly created company and, if applicable, a cash payment that can’t exceed 10% of the nominal value of the distributed shares.

The acquisition is the process by which a firm takes over all or part of another company in exchange for a price. Taking control of a company is done by buying majority stake, thus whoever owns the majority has the highest decision-making power over what happens in the company, because they have the highest number of votes in GMS (General Meeting of Shareholders).

What’s the general tax system of mergers and acquisitions in Romania between EU resident companies and resident and non-resident companies?

There is generally a 16% dividend tax rate that is applicable on dividends that are paid to non-residents. There can be, however, an exemption of the dividend payments made by a resident legal entity towards a European Union legal entity, if certain conditions are met.

On what concerns the payments of interest and royalties, the payments made by a Romanian company to a non-resident are submitted to withholding a 16% tax. However, this is not the case for the interest and royalties paid by a Romanian resident company to a EU resident company in an EU Member State, in which case the payment of such interest and royalties are subject to exempt from WHT starting with the 1st of January, 2011, under certain conditions and qualifications.

Tax on dividends, as well as tax on interest and royalties can be lowered if the payment is made to a company in a country with which Romania concluded a tax treaty.

I own a company in Sweden and I am looking to invest in Romania through the mergers and acquisitions market. What are the advantages of the market and what are the arguments that make Romania a good investment country?

The mergers and acquisitions market (M & A) in Romania amounted to about 1.2 billion last year, a level similar to 2013. There is a solid growth expected this year amid improving economic outlook.

The total value of mergers and acquisitions market in Romania was the third largest in the region of Central and Eastern Europe.

The most dynamic sectors in terms of number of transactions performed in 2014 were ICT, the financial sector and the retail and the average value of transactions was 20 million, most of which were transactions of small and medium sizes.

 What kind of services do you provide regarding the Romanian aquisitions field?

 Our attorneys advise a wide range of clients, from multinationals to Romanian companies, in all phases of the business life cycle.

Advice may involve simple matters such as company incorporation and day-to-day corporate “housekeeping” matters or complex share acquisitions, company restructurings and mergers.

We prepare preliminary and final offers and related documentation.

We provide legal assistance during bidding procedures and/or direct negotiations, ensuring legal services, including legal due-diligence, in order to assess key issues highly significant for your final goal (corporate issues, real-estate, commercial contacts, financial agreements, authorization and licensing, competition compliance, IP protection compliance).

We are also specialized in assessing key issues related to the implementation of the transaction (incorporation requirements, shareholders’ agreements, re-authorization, tax-related issues); preparation and negotiation of the transaction documents and related documents.

We provide comprehensive legal assistance in front of the relevant Romanian authorities.

The constantly changing business environment in Romania introduces certain types of difficulties that, at some point, might confuse. That is why we gathered a professional team of lawyers in Bucharest, ready to always answer to any type of legal controversy regarding Romania Corporate M&A fieldCall us now for a free consultation.

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