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Tuca Zbarcea & Asociatii and Freshfields Bruckhaus Deringer to Represent AVAS in the Latest International Arbitration Case before the ICSID The consortium consisting of law firms Tuca Zbarcea & Asociatii and Freshfields Bruckhaus Deringer has won AVAS’s bid selection procedure and will represent Romania in arbitration case no. ARB/10/22 before the International Center for Settlement of Investment Disputes (ICSID). The request for arbitration registered with the ICSID on November 19, 2010, was filed by the Turkish businessmen Ömer Dede and Serdar Elhüseyni, further to the alleged failure by the Romanian authorities to comply with the privatization agreement regarding SC IMUM SA Medgidia. The consortium consisting of law firms Tuca Zbarcea & Asociatii and Freshfields Bruckhaus Deringer has won AVAS’s bid selection procedure and will represent Romania in arbitration case no. ARB/10/22 before the International Center for Settlement of Investment Disputes (ICSID). In April, the Authority for State Assets Recovery (AVAS) initiated a bid selection for Romania’s legal representation in the latest arbitration case brought by a foreign investor before the ICSID in Washington. The request for arbitration registered with the ICSID on November 19, 2010, was filed by the Turkish businessmen Ömer Dede and Serdar Elhüseyni, further to the alleged failure by the Romanian authorities to comply with the privatization agreement regarding SC IMUM SA Medgidia. “Under the ICSID rules of procedure, each party must propose the arbitrators and the president of the arbitral tribunal within 90 days. The president cannot be a national of any State party to the dispute,” said Florentin Tuca, Managing Partner of Tuca Zbarcea & Asociatii and coordinator of the legal team defending the Romanian State. Depending on the procedural schedule, the procedures may last as long as four or five years. This is the fourth time that Tuca Zbarcea & Asociatii has to defend Romania’s interests before the ICSID. The legal teams selected by Tuca Zbarcea & Asociatii and Freshfields Bruckhaus Deringer to defend Romania in arbitral case no. ARB/10/22 have vast experience in similar arbitration procedures. The lawyers who will represent the Romanian State on behalf of Tuca Zbarcea & Asociatii are Florentin Tuca, Managing Partner; Levana Zigmund, Partner; Cristina Metea, Partner; Cornel Popa, Partner; and Anca Puscasu, Managing Associate, i.e. almost the same team responsible for Romania’s success in the Noble Ventures Inc, EDF Services Ltd. and S&T Oil Equipment and Machinery arbitration cases. The main coordinators from Freshfields Bruckhaus Deringer will be Partners Boris Kasolowsky and Brian King. In total, Romania has been called eight times before the ICSID. It has obtained favorable results in three arbitration cases, while the other five are still pending. Lawyers from Tuca Zbarcea & Asociatii represented the Romanian State in all three arbitration cases that have been won against claims of more than USD 700 million.
June 21, 2011
Ţuca Zbârcea & Asociaţii and Freshfields Bruckhaus Deringer to Represent AVAS in the Latest International Arbitration Case before the ICSID

The consortium consisting of law firms Ţuca Zbârcea & Asociaţii and Freshfields Bruckhaus Deringer has won AVAS’s bid selection procedure and will represent Romania in arbitration case no. ARB/10/22 before the International Center for Settlement of Investment Disputes (ICSID).

The request for arbitration registered with the ICSID on November 19, 2010, was filed by the Turkish businessmen Ömer Dede and Serdar Elhüseyni, further to the alleged failure by the Romanian authorities to comply with the privatization agreement regarding SC IMUM SA Medgidia.
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The consortium consisting of law firms Ţuca Zbârcea & Asociaţii and Freshfields Bruckhaus Deringer has won AVAS’s bid selection procedure and will represent Romania in arbitration case no. ARB/10/22 before the International Center for Settlement of Investment Disputes (ICSID).

In April, the Authority for State Assets Recovery (AVAS) initiated a bid selection for Romania’s legal representation in the latest arbitration case brought by a foreign investor before the ICSID in Washington.

The request for arbitration registered with the ICSID on November 19, 2010, was filed by the Turkish businessmen Ömer Dede and Serdar Elhüseyni, further to the alleged failure by the Romanian authorities to comply with the privatization agreement regarding SC IMUM SA Medgidia.

“Under the ICSID rules of procedure, each party must propose the arbitrators and the president of the arbitral tribunal within 90 days. The president cannot be a national of any State party to the dispute,” said Florentin Ţuca, Managing Partner of Ţuca Zbârcea & Asociaţii and coordinator of the legal team defending the Romanian State.
Depending on the procedural schedule, the procedures may last as long as four or five years.

This is the fourth time that Ţuca Zbârcea & Asociaţii has to defend Romania’s interests before the ICSID.

The legal teams selected by Ţuca Zbârcea & Asociaţii and Freshfields Bruckhaus Deringer to defend Romania in arbitral case no. ARB/10/22 have vast experience in similar arbitration procedures.

The lawyers who will represent the Romanian State on behalf of Ţuca Zbârcea & Asociaţii are Florentin Ţuca, Managing Partner; Levana Zigmund, Partner; Cristina Metea, Partner; Cornel Popa, Partner; and Anca Puşcaşu, Managing Associate, i.e. almost the same team responsible for Romania’s success in the Noble Ventures Inc, EDF Services Ltd. and S&T Oil Equipment and Machinery arbitration cases.

The main coordinators from Freshfields Bruckhaus Deringer will be Partners Boris Kasolowsky and Brian King

In total, Romania has been called eight times before the ICSID. It has obtained favorable results in three arbitration cases, while the other five are still pending. Lawyers from Ţuca Zbârcea & Asociaţii represented the Romanian State in all three arbitration cases that have been won against claims of more than USD 700 million.

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Tuca Zbarcea & Asociatii – EUR 5 million win for the Property Fund The High Court of Cassation and Justice has awarded the Property Fund the right to collect 15% of the dividends of SNGN Romgaz Medias S.A. for 2005, when the fund became a shareholder in the gas company. On June 7, the High Court of Cassation and Justice granted the final appeal of the Property Fund, represented by Tuca Zbarcea & Asociatii, ordering SNGN Romgaz Medias to pay the fund RON 18,510,458 worth of dividends, corresponding to the 2005 net profit distribution. Legal interest, calculated as of 2007, will be added to the principal debt. Tuca Zbarcea & Asociatii’s legal team was coordinated by partners Robert Rosu and Ioana Hrisafi-Josan. The High Court of Cassation and Justice has awarded the Property Fund the right to collect 15% of the dividends of SNGN Romgaz Medias S.A. for 2005, when the fund became a shareholder in the gas company. On June 7, the High Court of Cassation and Justice granted the final appeal of the Property Fund, represented by Tuca Zbarcea & Asociatii, ordering SNGN Romgaz Medias to pay the fund RON 18,510,458 worth of dividends, corresponding to the 2005 net profit distribution. Legal interest, calculated as of 2007, will be added to the principal debt. Tuca Zbarcea & Asociatii’s legal team was coordinated by partners Robert Rosu and Ioana Hrisafi-Josan. The final decision handed down by the High Court of Cassation and Justice entirely overturned the judgment passed in the appeal stage by the Alba Iulia Court of Appeal in December 2010, which stated that a court of law cannot overrule the shareholders’ wishes as to how dividends are to be allocated. “The Supreme Court’s decision could prove tremendously useful in that it may provide us with a test case of the legal effectiveness of resolutions passed by General Shareholder Meetings. It demonstrates that the shareholders’ decision not to seek in court the annulment of General Shareholder Meetings’ resolutions does not necessarily mean they are legally effective,” said Robert Rosu, partner at Tuca Zbarcea & Asociatii. The Property Fund brought the lawsuit against SNGN Romgaz Medias in the summer of 2008, claiming 15% of the company’s dividends for the whole of 2005, according to the Property Fund’s shareholding. As the Property Fund became a shareholder of the company on December 28, 2005, SNGN Romgaz Medias decided in the General Meeting of Shareholders held in November 2007 to allocate dividends worth RON 153,401 to the Property Fund, corresponding to a three-day period of 2005 (28 December through 31 December 2005). The decision of the General Meeting of Shareholders was not challenged by the Property Fund by means of an action for annulment at that time. Through its decision made this week, the Supreme Court ended a legal dispute that has been going on for three years, during which time the Tuca Zbarcea & Asociatii legal team representing the Property Fund has had to deal with complex legal issues surrounding the balance between the court’s need to secure the enforcement of certain mandatory legal requirements and the shareholders’ freedom to shape corporate will. Basically, the former concept’s prevalence over the latter, where observance of public order rules is at issue, was the key argument raised by the Property Fund’s legal team.
June 9, 2011
Ţuca Zbârcea & Asociaţii – EUR 5 million win for the Property Fund

The High Court of Cassation and Justice has awarded the Property Fund the right to collect 15% of the dividends of SNGN Romgaz Mediaş S.A. for 2005, when the fund became a shareholder in the gas company.

On June 7, the High Court of Cassation and Justice granted the final appeal of the Property Fund, represented by Ţuca Zbârcea & Asociaţii, ordering SNGN Romgaz Mediaş to pay the fund RON 18,510,458 worth of dividends, corresponding to the 2005 net profit distribution. Legal interest, calculated as of 2007, will be added to the principal debt.

Ţuca Zbârcea & Asociaţii’s legal team was coordinated by partners Robert Roşu and Ioana Hrisafi-Josan. [+]

The High Court of Cassation and Justice has awarded the Property Fund the right to collect 15% of the dividends of SNGN Romgaz Mediaş S.A. for 2005, when the fund became a shareholder in the gas company.

On June 7, the High Court of Cassation and Justice granted the final appeal of the Property Fund, represented by Ţuca Zbârcea & Asociaţii, ordering SNGN Romgaz Mediaş to pay the fund RON 18,510,458 worth of dividends, corresponding to the 2005 net profit distribution. Legal interest, calculated as of 2007, will be added to the principal debt.

Ţuca Zbârcea & Asociaţii’s legal team was coordinated by partners Robert Roşu and Ioana Hrisafi-Josan.

The final decision handed down by the High Court of Cassation and Justice entirely overturned the judgment passed in the appeal stage by the Alba Iulia Court of Appeal in December 2010, which stated that a court of law cannot overrule the shareholders’ wishes as to how dividends are to be allocated.

“The Supreme Court’s decision could prove tremendously useful in that it may provide us with a test case of the legal effectiveness of resolutions passed by General Shareholder Meetings. It demonstrates that the shareholders’ decision not to seek in court the annulment of General Shareholder Meetings’ resolutions does not necessarily mean they are legally effective,” said Robert Roşu, partner at Ţuca Zbârcea & Asociaţii.

The Property Fund brought the lawsuit against SNGN Romgaz Mediaş in the summer of 2008, claiming 15% of the company’s dividends for the whole of 2005, according to the Property Fund’s shareholding. As the Property Fund became a shareholder of the company on December 28, 2005, SNGN Romgaz Medias decided in the General Meeting of Shareholders held in November 2007 to allocate dividends worth RON 153,401 to the Property Fund, corresponding to a three-day period of 2005 (28 December through 31 December 2005). The decision of the General Meeting of Shareholders was not challenged by the Property Fund by means of an action for annulment at that time.

Through its decision made this week, the Supreme Court ended a legal dispute that has been going on for three years, during which time the Ţuca Zbârcea & Asociaţii legal team representing the Property Fund has had to deal with complex legal issues surrounding the balance between the court’s need to secure the enforcement of certain mandatory legal requirements and the shareholders’ freedom to shape corporate will. Basically, the former concept’s prevalence over the latter, where observance of public order rules is at issue, was the key argument raised by the Property Fund’s legal team.

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Romanian Companies Invited to Invest Heavily in the Republic of Moldova The law firms Tuca Zbarcea & Asociatii and Turcan Cazac held the conference “Romanian Investments in the Republic of Moldova – Challenges and Perspectives” at the Intercontinental Hotel in Bucharest on Thursday, June 2, 2011. The event was organized in cooperation with the consulting and audit company Grant Thornton and with the support of Finmedia. The law firms Tuca Zbarcea & Asociatii and Turcan Cazac held the conference “Romanian Investments in the Republic of Moldova – Challenges and Perspectives” at the Intercontinental Hotel in Bucharest on Thursday, June 2, 2011. The event was organized in cooperation with the consulting and audit company Grant Thornton and with the support of Finmedia. In attendance were Romanian and Moldovan businesspeople along with officials from the two States, representatives of employers’ organizations, banks, investment funds, law firms, consulting companies and other interested parties. The Ambassador of the Republic of Moldova in Romania, Iurie Renita, emphasized that the political climate in his country is now highly favorable, since the Alliance for European Integration won the 2009 elections. He added that this will help attract significant foreign investments. “I invite you to invest in the European future of the Republic of Moldova,” Iurie Renita urged the Romanian businesspeople attending the event. From exporting workforce to exporting goods and services The Deputy Prime Minister and Minister of the Economy for the Republic of Moldova, Valeriu Lazar, told the gathering that the current government had taken power in September 2009 at a very difficult time for the country. He added that, after economic growth of around 8% in 2008, his country had suffered a 6% decline in 2009. Following a stabilization program devised by the government, the Republic of Moldova had managed to achieve an economic growth rate of 6.9% in 2010. “The greatest challenge for our economy and society is to change our development paradigm. We must move from the export of workers to the export of goods and services. Our government has the vision and power to make this happen,” declared Valeriu Lazar. He pointed out that the Republic of Moldova ranks third in the world by the value of remittances from citizens working abroad in relation to GDP. “We have lost people and entrepreneurial intelligence,” bemoaned the Moldovan official. More than one million Moldovan citizens are currently living and working in EU States, while the population of the Republic of Moldova is now estimated to number fewer than 3.5 million inhabitants. Romania’s example Valeriu Lazar argued that the Republic of Moldova can benefit from Romania’s example and expertise in the process of joining the European Union. “The strategic goal of the current government is to join the European Union. We understand that this process involves a very ambitious schedule of reforms,” he told participants. The Minister also outlined a series of planned projects in Energy, Health and Infrastructure. He added that, in the coming period, the government will finalize the privatization strategy for several interesting companies. The Republic of Moldova could open the door to Romanian investments in the Russian Federation. “The Republic of Moldova could be a platform; it could open the door to Romanian investments in the Russian Federation,” emphasized Deputy Prime Minister Valeriu Lazar. The State Secretary in the Ministry of Commerce and the Business Environment (MCBE), Claudiu Constantin Stafie, expressed his conviction that “a real partnership between Romanian and Moldovan companies, the joint production of goods and the outsourcing of business to markets from the CSI and European Union are steps forward that now, more than ever, must be made. The most efficient policies for promoting long-term growth are those facilitating geographical concentration and economic integration, both in and among the countries.” The MCBE State Secretary also assured the Moldovan guests that Romania will remain a central and reliable business partner to the Republic of Moldova, and that the MCBE will use all available instruments to support and make use of the cooperation opportunities presented by the two economies. An important step will be taken in June, when the governments of Romania and the Republic of Moldova will hold a common session in Galati. In turn, the Chairman of the Foreign Policy Commission of the Romanian Senate, Titus Corlatean, stressed that the Republic of Moldova now has a professional and EU-oriented government. He added that the Romanian Parliament is to help its Moldovan counterpart adopt European legislation more quickly, and, to this end, a common European integration commission will be established at the level of the two Parliaments. Titus Corlatean noted the significant progresses made by the Republic of Moldova within the Eastern Partnership of the European Union (EU), with Moldova now in advanced discussions over the execution of the EU-Republic of Moldova Association Agreement. The Romanian Senator also asserted that local companies should work with companies from the Republic of Moldova in order to regain a foothold on the Russian market. The Republic of Moldova has a well trained workforce and attractive fiscal regime Doina Cebotari, advisor to the Moldovan Prime Minister on business matters, and Dumitru Dediu, advisor to the Moldovan Prime Minister on attracting foreign investments, presented the investment opportunities in the neighboring State. They told the assembled guests that the Republic of Moldova has a workforce that is relatively cheap (the average wage is EUR 190/month), well trained and educated, speaking several foreign languages (Russian, French, English and others). The country also has an attractive fiscal regime, low rate of inflation, steady exchange rate and, in general, an open economy, having signed commercial treaties with the CSI and EU. In addition, negotiations with the EU on the Deep and Comprehensive Free Trade Agreement (DCFTA), which will step up the commercial relations between the EU and the Republic of Moldova, will begin in the fall. The main business sectors in the Republic of Moldova worth investing in include Energy, Infrastructure, the Agricultural Food Industry, IT&C Outsourcing, Transportation, Assembly and Manufacturing, the Automotive Industry and Services. The investments can be made directly, via the privatization program or through public-private partnerships (PPPs). Romania and the Republic of Moldova must build a common business culture The Chairman of the Association of Romanian Businesspeople (AOAR), Florin Pogonaru, highlighted the need to build a common Romanian-Moldovan business culture. He pointed out that it is important to maintain a predictable and stable environment, adding that, as Chairman of the European Institute in Romania, he wishes to establish closer relations with his counterparts from the Republic of Moldova. In turn, Viorel Badea, Chairman of the Commission for Romanians Living Abroad, invited Romanian companies to invest in the Republic of Moldova. In his view, two of the sectors that will enjoy fast growth will be Agriculture and Energy. The Senator also underlined that it is necessary to develop the capital market, as well as the financial and banking system. “Large Romanian companies, such as Electrica, Transelectrica, Transgaz, Romtelecom, CEC and Eximbank, should participate in privatizations in the Republic of Moldova,” the Senator urged. Florentin Tuca: Chisinau conquered me Florentin Tuca, Managing Partner at Tuca Zbarcea & Asociatii (the top law firm in Romania), invited participants to visit the Republic of Moldova and explore the business potential of the country. In his view, direct contact with the people is of the essence. “Chisinau has a cleaner, less aggressive and less tainted atmosphere than Bucharest. It reminded me of the city of Iasi in 1997-1998. This city conquered me. It is very friendly and pleasant, a place for great meals and conversations,” commented Florentin Tuca. At the end of September 2010, Tuca Zbarcea & Asociatii announced the implementation of a cooperation agreement with the leading business law firm in Chisinau, Turcan Cazac. The two firms are working together under a “best friend” principle, which allows the provision of tailored consulting services to a significant segment of the business community in the Republic of Moldova and Romania, encompassing both investors that already have a significant presence on the local market and those interested in developing commercial relations with the Republic of Moldova or Romania. According to Tuca Zbarcea & Asociatii representatives, discussions are being conducted on strategic projects, with the two law firms working, at different stages, with current and potential investors in the Republic of Moldova. Grant Thornton works with many companies from the Republic of Moldova Frenchman Stephane Bride, Managing Partner at Grant Thornton for Romania and the Republic of Moldova, presented the fiscal and business opportunities in the Republic of Moldova, including, among others: zero profit tax, a 15% dividend tax rate (charged only upon payment), progressive VAT rates (20% - 8% - 6% or 0%) and reimbursable VAT for investments made in certain towns, except for Chisinau and Balti. Also, fixed assets are exempt from VAT and custom duties if they are subscribed to the share capital. The Republic of Moldova has signed 44 treaties for the avoidance of double taxation with various States, including Romania. According to the Grant Thornton representative, even if the zero profit tax were to be increased to 12%, the Republic of Moldova would remain one of the countries with the lowest profit tax rates in the region. Also, companies investing in one of the seven free economic areas enjoy full exemption from the payment of profit tax for three years for investments of over USD 1 million, and five years for investments of over USD 5 million. IFC has invested over USD 70 million in the Republic of Moldova Ana Maria Mihaescu, Head of the IFC (International Finance Corporation) mission for Romania and the Republic of Moldova, mentioned that the IFC had invested over USD 70 million in the Republic of Moldova as of 2008. The IFC’s investments in various projects can reach up to 50% of the total project value. For greenfield projects worth more than USD 50 million, the institution can cover up to 25% of the costs and up to 35% of the total value for greenfield projects of under USD 50 million. The IFC’s portfolio in the Republic of Moldova contains eight companies, including Vinariile Bostavan, Eximbank Moldova, Orange Moldova, PC Bank Moldova, UF Moldova and Victoriabank. The IFC also granted a USD 10 million loan to Chisinau town, for the execution of infrastructure projects, restoration and construction of aqueducts and sewage systems in Chisinau and its suburbs, as well as the repair of certain streets in the Moldovan capital. The IFC, a member of the World Bank Group, boosts the durable economic growth of developing countries by financing investments in the private sector, mobilizing private capital on the local and international financial markets and providing consulting services for private companies and governments. Russian is the business language in the Republic of Moldova Alexander Turcan, a Partner at Turcan Cazac law firm in the Republic of Moldova, outlined a few specifics of the business environment in the country. He said that Russian is the business language in the Republic of Moldova, as Russian (Slavic) culture has deep roots in local business and the largest investments have been made by Russians. In fact, the main business partner of the Republic of Moldova is the Russian Federation, coming first (25.5%) in a 2010 ranking of exports, while Romania is second (16.3%) for exports and third (10%) for imports from the Republic of Moldova. The lawyer listed a few of the advantages of establishing companies in the Republic of Moldova, such as the very accessible minimum share capital (both for limited liability companies and joint stock companies), the short time taken to set up a company (no more than three days, as compared to other neighbors of Romania, such as Bulgaria, where the process can take as long as 20 days), a relatively friendly and steady fiscal system, including progressive wage taxation, a 7% tax on individuals’ income for a wage under EUR 130/month and up to 18% for wages exceeding this level. As regards access to justice, Alexander Turcan remarked that corruption continues to affect the application of justice and advised the businesspeople attending the event not to file their disputes with Moldovan partners with Moldovan courts (commercial and civil), but with Romanian or neutral courts. In fact, Romanian investors in the Republic of Moldova are protected by a series of treaties concluded by the two countries for the promotion and mutual protection of investments, and may also take their disputes to the International Center for the Settlement of Investment Disputes (ICSID). “The interests of Romanian investors in the Republic of Moldova should also be protected at an institutional level, with the establishment of a Moldovan-Romanian chamber of commerce being an important step in this direction,” concluded Alexander Turcan. In the first quarter of this year, commercial exchanges between Romania and the Republic of Moldova have been stepped up The volume of commercial exchanges between Romania and the Republic of Moldova amounted to USD 1.2 billion in 2008, but declined to USD 800 million in 2010. In the first quarter of this year, business relations were revived: Romania’s exports grew by 33%, while Romanian imports from the Republic of Moldova increased by 83%. *** The presentations given at the conference “Romanian investments in the Republic of Moldova – Challenges and Perspectives” can be downloaded here.
June 6, 2011
Romanian Companies Invited to Invest Heavily in the Republic of Moldova
The law firms Ţuca Zbârcea & Asociaţii and Turcan Cazac held the conference “Romanian Investments in the Republic of Moldova – Challenges and Perspectives” at the Intercontinental Hotel in Bucharest on Thursday, June 2, 2011. The event was organized in cooperation with the consulting and audit company Grant Thornton and with the support of Finmedia. [+]

The law firms Ţuca Zbârcea & Asociaţii and Turcan Cazac held the conference “Romanian Investments in the Republic of Moldova – Challenges and Perspectives” at the Intercontinental Hotel in Bucharest on Thursday, June 2, 2011. The event was organized in cooperation with the consulting and audit company Grant Thornton and with the support of Finmedia.

In attendance were Romanian and Moldovan businesspeople along with officials from the two States, representatives of employers’ organizations, banks, investment funds, law firms, consulting companies and other interested parties.

The Ambassador of the Republic of Moldova in Romania, Iurie Reniţă, emphasized that the political climate in his country is now highly favorable, since the Alliance for European Integration won the 2009 elections. He added that this will help attract significant foreign investments. “I invite you to invest in the European future of the Republic of Moldova,” Iurie Reniţă urged the Romanian businesspeople attending the event.

From exporting workforce to exporting goods and services

The Deputy Prime Minister and Minister of the Economy for the Republic of Moldova, Valeriu Lazăr, told the gathering that the current government had taken power in September 2009 at a very difficult time for the country. He added that, after economic growth of around 8% in 2008, his country had suffered a 6% decline in 2009. Following a stabilization program devised by the government, the Republic of Moldova had managed to achieve an economic growth rate of 6.9% in 2010.

“The greatest challenge for our economy and society is to change our development paradigm. We must move from the export of workers to the export of goods and services. Our government has the vision and power to make this happen,” declared Valeriu Lazăr. He pointed out that the Republic of Moldova ranks third in the world by the value of remittances from citizens working abroad in relation to GDP. “We have lost people and entrepreneurial intelligence,” bemoaned the Moldovan official. More than one million Moldovan citizens are currently living and working in EU States, while the population of the Republic of Moldova is now estimated to number fewer than 3.5 million inhabitants.

Romania’s example

Valeriu Lazăr argued that the Republic of Moldova can benefit from Romania’s example and expertise in the process of joining the European Union. “The strategic goal of the current government is to join the European Union. We understand that this process involves a very ambitious schedule of reforms,” he told participants. The Minister also outlined a series of planned projects in Energy, Health and Infrastructure. He added that, in the coming period, the government will finalize the privatization strategy for several interesting companies.

The Republic of Moldova could open the door to Romanian investments in the Russian Federation. “The Republic of Moldova could be a platform; it could open the door to Romanian investments in the Russian Federation,” emphasized Deputy Prime Minister Valeriu Lazăr.

The State Secretary in the Ministry of Commerce and the Business Environment (MCBE), Claudiu Constantin Stafie, expressed his conviction that “a real partnership between Romanian and Moldovan companies, the joint production of goods and the outsourcing of business to markets from the CSI and European Union are steps forward that now, more than ever, must be made. The most efficient policies for promoting long-term growth are those facilitating geographical concentration and economic integration, both in and among the countries.”

The MCBE State Secretary also assured the Moldovan guests that Romania will remain a central and reliable business partner to the Republic of Moldova, and that the MCBE will use all available instruments to support and  make use of the cooperation opportunities presented by the two economies. An important step will be taken in June, when the governments of Romania and the Republic of Moldova will hold a common session in Galaţi.

In turn, the Chairman of the Foreign Policy Commission of the Romanian Senate, Titus Corlăţean, stressed that the Republic of Moldova now has a professional and EU-oriented government. He added that the Romanian Parliament is to help its Moldovan counterpart adopt European legislation more quickly, and, to this end, a common European integration commission will be established at the level of the two Parliaments. Titus Corlăţean noted the significant progresses made by the Republic of Moldova within the Eastern Partnership of the European Union (EU), with Moldova now in advanced discussions over the execution of the EU-Republic of Moldova Association Agreement. The Romanian Senator also asserted that local companies should work with companies from the Republic of Moldova in order to regain a foothold on the Russian market.

The Republic of Moldova has a well trained workforce and attractive fiscal regime

Doina Cebotari, advisor to the Moldovan Prime Minister on business matters, and Dumitru Dediu, advisor to the Moldovan Prime Minister on attracting foreign investments, presented the investment opportunities in the neighboring State. They told the assembled guests that the Republic of Moldova has a workforce that is relatively cheap (the average wage is EUR 190/month), well trained and educated, speaking several foreign languages (Russian, French, English and others). The country also has an attractive fiscal regime, low rate of inflation, steady exchange rate and, in general, an open economy, having signed commercial treaties with the CSI and EU. In addition, negotiations with the EU on the Deep and Comprehensive Free Trade Agreement (DCFTA), which will step up the commercial relations between the EU and the Republic of Moldova, will begin in the fall.

The main business sectors in the Republic of Moldova worth investing in include Energy, Infrastructure, the Agricultural Food Industry, IT&C Outsourcing, Transportation, Assembly and Manufacturing, the Automotive Industry and Services. The investments can be made directly, via the privatization program or through public-private partnerships (PPPs).

Romania and the Republic of Moldova must build a common business culture

The Chairman of the Association of Romanian Businesspeople (AOAR), Florin Pogonaru, highlighted the need to build a common Romanian-Moldovan business culture. He pointed out that it is important to maintain a predictable and stable environment, adding that, as Chairman of the European Institute in Romania, he wishes to establish closer relations with his counterparts from the Republic of Moldova.

In turn, Viorel Badea, Chairman of the Commission for Romanians Living Abroad, invited Romanian companies to invest in the Republic of Moldova. In his view, two of the sectors that will enjoy fast growth will be Agriculture and Energy. The Senator also underlined that it is necessary to develop the capital market, as well as the financial and banking system. “Large Romanian companies, such as Electrica, Transelectrica, Transgaz, Romtelecom, CEC and Eximbank, should participate in privatizations in the Republic of Moldova,” the Senator urged.

Florentin Ţuca: Chişinău conquered me

Florentin Ţuca, Managing Partner at Ţuca Zbârcea & Asociaţii (the top law firm in Romania), invited participants to visit the Republic of Moldova and explore the business potential of the country. In his view, direct contact with the people is of the essence. “Chişinău has a cleaner, less aggressive and less tainted atmosphere than Bucharest. It reminded me of the city of Iaşi in 1997-1998. This city conquered me. It is very friendly and pleasant, a place for great meals and conversations,” commented Florentin Ţuca.

At the end of September 2010, Ţuca Zbârcea & Asociaţii announced the implementation of a cooperation agreement with the leading business law firm in Chişinău, Ţurcan Cazac. The two firms are working together under a “best friend” principle, which allows the provision of tailored consulting services to a significant segment of the business community in the Republic of Moldova and Romania, encompassing both investors that already have a significant presence on the local market and those interested in developing commercial relations with the Republic of Moldova or Romania.

According to Ţuca Zbârcea & Asociaţii representatives, discussions are being conducted on strategic projects, with the two law firms working, at different stages, with current and potential investors in the Republic of Moldova.

Grant Thornton works with many companies from the Republic of Moldova

Frenchman Stephane Bride, Managing Partner at Grant Thornton for Romania and the Republic of Moldova, presented the fiscal and business opportunities in the Republic of Moldova, including, among others: zero profit tax, a 15% dividend tax rate (charged only upon payment), progressive VAT rates (20% - 8% - 6% or 0%) and reimbursable VAT for investments made in certain towns, except for Chişinău and Bălţi. Also, fixed assets are exempt from VAT and custom duties if they are subscribed to the share capital. The Republic of Moldova has signed 44 treaties for the avoidance of double taxation with various States, including Romania.

According to the Grant Thornton representative, even if the zero profit tax were to be increased to 12%, the Republic of Moldova would remain one of the countries with the lowest profit tax rates in the region. Also, companies investing in one of the seven free economic areas enjoy full exemption from the payment of profit tax for three years for investments of over USD 1 million, and five years for investments of over USD 5 million.

IFC has invested over USD 70 million in the Republic of Moldova

Ana Maria Mihăescu, Head of the IFC (International Finance Corporation) mission for Romania and the Republic of Moldova, mentioned that the IFC had invested over USD 70 million in the Republic of Moldova as of 2008. The IFC’s investments in various projects can reach up to 50% of the total project value. For greenfield projects worth more than USD 50 million, the institution can cover up to 25% of the costs and up to 35% of the total value for greenfield projects of under USD 50 million. The IFC’s portfolio in the Republic of Moldova contains eight companies, including Vinăriile Bostavan, Eximbank Moldova, Orange Moldova, PC Bank Moldova, UF Moldova and Victoriabank. The IFC also granted a USD 10 million loan to Chişinău town, for the execution of infrastructure projects, restoration and construction of aqueducts and sewage systems in Chişinău and its suburbs, as well as the repair of certain streets in the Moldovan capital.

The IFC, a member of the World Bank Group, boosts the durable economic growth of developing countries by financing investments in the private sector, mobilizing private capital on the local and international financial markets and providing consulting services for private companies and governments.

Russian is the business language in the Republic of Moldova

Alexander Ţurcan, a Partner at Ţurcan Cazac law firm in the Republic of Moldova, outlined a few specifics of the business environment in the country. He said that Russian is the business language in the Republic of Moldova, as Russian (Slavic) culture has deep roots in local business and the largest investments have been made by Russians. In fact, the main business partner of the Republic of Moldova is the Russian Federation, coming first (25.5%) in a 2010 ranking of exports, while Romania is second (16.3%) for exports and third (10%) for imports from the Republic of Moldova.

The lawyer listed a few of the advantages of establishing companies in the Republic of Moldova, such as the very accessible minimum share capital (both for limited liability companies and joint stock companies), the short time taken to set up a company (no more than three days, as compared to other neighbors of Romania, such as Bulgaria, where the process can take as long as 20 days), a relatively friendly and steady fiscal system, including progressive wage taxation, a 7% tax on individuals’ income for a wage under EUR 130/month and up to 18% for wages exceeding this level.

As regards access to justice, Alexander Ţurcan remarked that corruption continues to affect the application of justice and advised the businesspeople attending the event not to file their disputes with Moldovan partners with Moldovan courts (commercial and civil), but with Romanian or neutral courts. In fact, Romanian investors in the Republic of Moldova are protected by a series of treaties concluded by the two countries for the promotion and mutual protection of investments, and may also take their disputes to the International Center for the Settlement of Investment Disputes (ICSID).

“The interests of Romanian investors in the Republic of Moldova should also be protected at an institutional level, with the establishment of a Moldovan-Romanian chamber of commerce being an important step in this direction,” concluded Alexander Ţurcan.

In the first quarter of this year, commercial exchanges between Romania and the Republic of Moldova have been stepped up

The volume of commercial exchanges between Romania and the Republic of Moldova amounted to USD 1.2 billion in 2008, but declined to USD 800 million in 2010. In the first quarter of this year, business relations were revived: Romania’s exports grew by 33%, while Romanian imports from the Republic of Moldova increased by 83%.

***

The presentations given at the conference “Romanian investments in the Republic of Moldova – Challenges and Perspectives” can be downloaded here.

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