How can your lawyer protect your investment in Romania?

lawyer protect your investment

The use of lawyers in Romania has in the past been limited to using them for legal advisory and court work. Clients should consider using their lawyers in other fields in Romania. This is particularly in a Romanian M&A or a Romanian commercial transaction or one dealing with a Romanian partner. Your Romanian lawyer should be used not only for legal matters but for commercial matters from a legal perspective.

When asked to draft or consider a contract the lawyer should be instructed to review the legal basis of the transaction not only the drafting and amending of a contract. The boards of most companies who intend to do business are aware that as well as legislation and regulation to be complied with that there are other matters which from a legal perspective which will affect their business.

Reputation and reputational damage should figure in a company’s agenda. As well as knowing the client within the parameters as set out in such legislation as the UK Bribery Act and the US Foreign Corrupt Practises Act and expanding EU legislation questions are now being raised as to other legal risks which may affect a company. These risks may not directly arise out of the contract but may arise out of the whole atmosphere surrounding the transaction.

In Romania these additional questions can be answered quickly and we have noticed that whilst we would often consider these questions they are beginning to be asked by the client companies themselves. Romania still has a poor reputation with regard to corruption and clients therefore need to consider how these acts of corruption will/could affect their business. A good commercial decision has to be taken in the light of all factors. There are a number of checks that can be undertaken by the law firm in Romania which will lead to some clarification. This can be very important especially in the fields of Romanian M&A.

The first is public awareness. A quick search on the internet and a review of number of publications will reveal if the Romanian partners or its directors or staff has been involved in any action which may adversely affect the reputation of the client. Whilst such a review will not disclose all the details it will allow a view and permit further in depth enquiries to be made. In addition there are institutions including the courts and Trade Registry who have their records published online which enable information to be obtained. The courts now publish details of all court cases and one can check in which cases the potential partner is involved either as defendant or plaintiff. The local financial administration site can be searched to see if there are any outstanding claims in relation to tax matters and tax debts. This can be particularly important if monies are being advanced to cover future orders or the Romanian party is to provide funds in a venture.

There is the Electronic Achieve which is maintained by the State and it is a register of registered charges and claims over non-land and property assets. This is particularly important if monies are being advanced or an order is placed for goods. This may also clarify what other indebtedness the potential partner/client has and how they have conducted their business in the past.

A simple check in all the above will give the client a better view of the third party in Romania.
Even a simple discussion with the lawyer about the current legal political and financial situation in Romania will allow a better understanding of the business climate to be arrived at and this will allow a more accurate business decision. The commercial reputation of the incoming foreign investor/company will therefore be better protected.

We see our role here in Romania, to be not only the Romanian law firm on the ground advising on the M&A transaction but also the initial eyes and ears of the incoming foreign investor in Romania.

The moral of this article must be – use your lawyers in Romania as your eyes and ears and draw on their information and experience.

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