Thought Articles

The Romanian M&A market has been characterised in recent years by a constant growth, in line with the growth of the economy. In absolute figures, the market increased ten-fold from Euro 0.5 billion in 2003 to over Euro 5 billion in 2005 and 2006, respectively.

Characterised by investment analysts as one of the most profitable European real estate markets, Romania is currently experiencing an influx of investments targeted mainly at residential, commercial and office sites. Although a careful analysis of the investment target is a prerequisite in any type of deal, a thorough investigation of the ownership title is of particular importance in Romania, due to specific legal provisions applicable in this respect.

Business activities may be carried out in Romania by legal entities or by authorized individuals. There are several legal structures available for investors wishing to set up companies in Romania, but the most frequent types of companies of choice for investors are joint stock companies and limited liability companies, which both offer to shareholders a limitation on their liability, they being solely responsible for paying up the value of the shares they have contributed. The principle of limitation of liability can only be defeated in case of liquidation of the company, in case the relevant shareholder had defrauded the creditors, by abusing of the limitation of its liability and of the distinct personality of the company, or in case of insolvency proceedings.

Romania’s accession to the European Union involved a long process of harmonizing the Romanian legal system by reference to the principles of the laws of the European Community in various fields and of the legal systems of the other Members of the European Union.

Over the past few years prior to Romania's accession to the EU, the legal environment regarding employment experienced substantial changes. Efforts were made to finalize the transition from the legal framework inherited from the communist regime to a modern system matching the rules and principles applicable in EU member states, including employees' rights in the event of a transfer of undertaking.

This article is an extract from The 2007 Handbook of Competition Economics, a Global Competition Review special report - www.globalcompetitionreview.com In the last few years the decision-making practice of the Competition Council has been constantly growing and diversifying, as well as the complexity of legal and economic analysis undertaken in each case. Still, the assessment of the Council has not yet become as sophisticated as to reach the European Commission’s standards of investigation. While the Romanian legislator provided for different solutions to certain matters, the business environment is increasingly pressuring the Competition Council to have regard to the European Commission’s practice and the case law of the European Courts. Aligning to this trend, the Competition Council has also started to officially guide its decisions on the basis of the European precedents.