Over the last few weeks I have been encouraged by a resurgent interest in Romania and Romanian businesses. It is extremely easy if you sit in Bucharest to see Romanian as a microcosm of Bucharest. This is all wrong as we constantly tell our clients. Look outside Bucharest.
As a Romanian law firm with a wide range of clients from major industry leaders to small startups we see our role as Romanian lawyers in Bucharest is to guide lead and sometime contradict our clients and point out potential issues which are to be resolved. Everyone has a view of Romania.
When as a solicitor fresh out of London to come to Romania to open a Romanian law firm was a new experience. Opening the first foreign law office in Romana after 1989 was an adventure. To still be here some 30 years later is a success of which I and my Firm are proud of. There have been some mis-steps on the way, but as we emphasise to all our clients both Romanian and international clients Romania is still a wonderful place to do business.
Whether opening a Romanian company to carry on business in Romania to owning a Romanian property, all these things in Romania are possible. All are an adventure and if done properly satisfying.
Before going into business it is important to understand the local laws and society and the way that Romanian business works. Romanian company law is quite different from company law in England and the United States. The ways of doing business are vastly different.
The legal liability of Romanian company directors (administrators) is different from the liability of an English company director. The responsibilities of a director are different as are their powers. The structure and authority in business is different as is the thinking behind the law. You need to have a clear explanation of the liabilities of an administrator before taking on this responsibility. This is not to advise you not to become a director of a Romanian company but to emphasise that you need to understand what it entails. The rules of taxation of a Romanian company appear to be straight forward, but again take advice.
There are many Romanian lawyers who unfortunately do not understand the thinking of a foreign investor and therefore misadvise them. Too often assumptions are made regarding their client. It is natural if someone speaks English for the investor to assume that the Romanian lawyer or the Romanian law firm delivers advice in the same manner and with the same understanding as they would receive in England.
Just like any other relationship the relationship between a lawyer and his client is based on trust and clear communication but often there is a wide difference between what is said and what is understood. Words used by a natural English speaker often do not mean the same for a Romanian speaker. Context can produce disastrous miscommunication. For example “I want“ in the Romanian language is actually a translation of “I would like.” This can have a quite different impact in English and to a native English speaker.
So where does that leave the investor in Romania. There are many lawyers in Romania who will offer legal advice and assistance but only at a superficial level. They read the Romanian law and repeat it without considering its effect. They will not necessarily produce an explanation. This, in ninety per cent of the cases does not cause an issue, but it can. Many new investors into Romania especially in a start up mode choose their lawyer based on price without considering their experience and what services they can provide. It is better in our view to use a Romanian law firm rather than an individual lawyer. The lawyer with the best will in the world cannot cover all the legal aspects that maybe required. The forming of a company is easy as this is just drafting the statutes. It should not be an automatic process but require research and an understanding of what the client is expecting from the company at the time of incorporation as well as in the future. After registration then the fun can begin. What about taxation both corporate and individual? What about employment law? What about visa requirements? What about accounting and book-keeping? What about KYC/AML? And so the list goes on.
Our advice is that when you come to Romania to invest write as many questions on a piece of papers as you can and ask your Romanian lawyer the questions and seek to understand the answers. The price for getting their questions answered fully could save you higher fees in the future. Do not choose your lawyer on price but on an evaluation of the advice that they give now and can give in the future.
Be an individual client and not just a name and someone who will pay this month’s bills. The fee for proper legal advice maybe higher with the correct advice but you will save both time and money in the future.
