About Foreign Participation Companies – Formation, Legal Personality, Nationality
When considering the formation of a foreign participation company, we are referring to the same rules that apply to Romanian nationality companies. However, there are some specific aspects worth mentioning:
The articles of incorporation, serving the same well-known purpose for Romanian companies, are, of course, essential in the formation of a foreign participation company. Nevertheless, there are specific provisions that differentiate the two types of businesses: aspects related to the citizenship and residence of associates, aspects related to the company’s name, aspects related to the company’s nationality, aspects related to the subscription and payment of the share capital, aspects related to the organization and operation of the company, and aspects related to dispute resolution.
As for the registration of the company in the Trade Register and the authorization of its operation, Law 26/1990 regarding the Trade Register applies. The Trade Register in Romania is interconnected with the Trade Registers in other EU member countries, and there is a common registration at the European level. Additionally, Minister of Justice Order 2594/C/2008 must be considered for the approval of methodological norms regarding the keeping of Trade Registers, record-keeping, and information issuance. This is a regulatory act subordinate to the law that mentions practically all the stages that need to be followed to establish a foreign participation company with its headquarters in Romania.
The stage of tax registration is subject to the provisions of the Fiscal Code in order to obtain the CUI (unique fiscal registration code) that companies, including those with foreign participation, must have.
Regarding the legal personality and identifying attributes of foreign participation companies, foreign participation companies with headquarters within the country are considered Romanian legal entities.
Regarding the nationality of foreign participation companies, we are interested in the criterion used to determine nationality:
The criterion of the registered office is provided for in Article 1(2) of Law 31/1990, but it is also provided for in Articles 2580, 2568, and 2571 of the New Civil Code (NCC): a legal entity has the nationality of the state in which it has its registered office, according to its articles of incorporation. This is the determining criterion for establishing the nationality of a foreign participation company according to our country’s legislation.
In connection with these provisions, there is an important mention. Concerning the determination of the nationality of companies that have headquarters in multiple states, one of which is in Romania, Article 2571(2) NCC applies, which states that if a commercial company has headquarters in multiple states, the determining factor for identifying nationality is the actual headquarters. The actual headquarters are defined in Article 2571 NCC as the place where the main center of management and control of the company’s activities is located, even if the decisions of the respective body are adopted in accordance with the instructions of shareholders or associates from other states.
Of course, the practice presents numerous issues that may arise as a result of establishing a foreign participation company, and the reality is that many people might find it challenging to manage such a process, especially given the international element. Therefore, it is always recommended to seek the opinion of an expert regarding the establishment of a company.
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