Thought Articles

Until recently, Romania knew only one system of management – the unitary system, where the management is formed by only the sole director/board of directors – applicable, with certain differences, to both joint stock companies (JSCs) and limited liability companies (LLCs). Following the World Bank’s 2004 Report on the Observance of Standards and Codes, which indicated deficiencies in the existing company legislation, changes brought to Romanian corporate law from 2006 sought to adapt it to the Organisation for Economic Co-operation and Development’s corporate governance principles, as well as to EU principles. One of the novelties introduced by the reforms is that JSCs can now choose between the existing unitary system and the newly introduced dual system of administration, where the management is formed of the supervisory board and the directorate.

This chapter was first published in the PLC Cross-border Labour and Employee Benefits 2008/09 Handbook: Volume 2: Employee Share Plans and is reproduced with the permission of the publisher, Practical Law Company. Main characteristics. As there are no specific regulations concerning share option plans, companies that implement these plans usually tailor their provisions to comply with similar plans in their home jurisdictions. A company usually grants its employees options to acquire a specific number of shares in the company at a price pre-determined by the employer. The price can be set according to the nominal or market value of the shares, or on a different basis. When the employees exercise their options, they receive the shares in exchange for the pre-determined price. The employer’s shareholders must approve the share option plan in a shareholders’ general meeting before the plan is introduced (Companies Law). This condition only applies to Romanian companies.

Reproduced with permission from Law Business Research Ltd. This article was first published in The Mergers & Acquisitions Review, (published in September 2008 – editor Simon Robinson). Robust economic growth (a 6 per cent GDP increase in 2007 and an 8.2 per cent in the first quarter of 2008), combined with a steady influx of foreign direct investment (€7.2 billion in 2007 and €1.58 billion in the first quarter of 2008), created favourable conditions for further consolidation of the Romanian M&A market in 2007/2008. According to market sources, in 2007 the local M&A market represented 5.7 per cent of the country’s GDP and ranked fifth in Central and Eastern Europe, after Russia, Hungary, Turkey and Austria, with a value of $8.4 billion, representing 4.4 per cent of the M&A market in Central and Eastern Europe (about $190 billion). Some 125 transactions were reported as concluded, averaging around €52 million per transaction, and totalling approximately €6.5 billion for 2007 alone, representing an increase of €0.5 billion on 2006.

This article is an extract from The 2008 Handbook of Competition Economics, a Global Competition Review special report - www.globalcompetitionreview.com Economic aspects seem to play a more important role lately in the defence of the companies under investigation before the Competition Council. The authority’s legal assessment on facts is often exposed to criticism before the relevant courts on the ground that it does not take into consideration the economic justifications of the facts presented by the defendants. In cartel cases, in the absence of direct proofs and the application of leniency procedures so far, the council tends to rely on indirect or circumstantial evidence corroborating the existence of a cartel by way of deduction, common sense, economic analysis or logic operation. However, the use and evidential value of indirect proofs seem cautiously evaluated in court.

The reform of the Romanian pensions system is regarded as a large-scale process whereby important public and private resources are mobilised. Although some of the legal framework for the reform has been in place for several years, the private pensions system has actually become operational following some adjustments in 2007.

This chapter was first published in the PLC Cross-border Mergers and Acquisitions Handbook 2008/09 and is reproduced with the permission of the publisher, Practical Law Company. 2007 was a notable year for the M&A market in Romania as a result of its accession to the EU on 1 January 2007. However, Romania is a young market economy and the legislative and the economic environments must undergo significant changes.