While Romania has been a country that has been constantly inviting and attracting new business, being a non-European citizen or company that aims to open a business can come with its own set of headaches. These are in part due to changes in the global situation and further requirements of the EU.

Certain challenges may come into light during opening and operating a business in Romania one of them being the relationship with the local banks and their views in relation to foreign ownership of Romanian companies.

If we look at opening a business from a corporate perspective the recent changes made to the Romanian Legal system focused mainly on streamlining business initiatives; they have in many cases given foreign investors a clear advantage by establishing a process which is meant to simplify the overall process of incorporating and opening a new business inside the country.

Despite the introduction of new procedures for incorporation and registration and taking this into account, a potential investor must be wary about the things that continue to pose a threat to them whatever business field is.

One of the main issues that has come to light due to the recent political tensions that have had an impact on the evolution of the economic and financial markets is banks increasing their level or awareness. Banks became more and more cautious in regard to non-European citizens looking to do business in European countries, even more so when said individual comes from a country that is categorized as High Risk.

Banks have since then implemented new requirements that must be met before opening a corporate bank account. This limits the potential for new businesses to immediately trade efficiently and easily.

The banks have in some cases asked that the company’s shareholders if individuals resident in Romania prove such residency by a residence permit issued by the Romanian authorities.  Further, the company’s shareholders must obtain documents issued by the state authorities whose nationality they hold in order to prove their home address.

Banks can also ask for statements in regarding the ability to communicate in English or if necessary ensure that a translator is available for meetings.

The exact conditions that are being demanded by any given bank might vary, thus delaying opening the company’s activity.

Once the shareholder has jumped through these “hoops” and the account has been opened, any mismatches between the statements made and the actual financial activity of the business may provoke the bank into suspending the bank accounts until the issue is cleared or the company provides new evidence to support its financial activities.

A company with no employees suddenly creating a payment order for employee salaries might become a reason for suspension until the bank is convinced that no illegal activities are being conducted.

Recent policies that have become a thorn in the back of businesses looking to conduct themselves in Romania can include:

• Refusal to open a Business Bank Account because the shareholders declared their intent to conduct business with high-risk countries such as China, Russia or Ukraine.
• The inability to use internet banking during the first months of business activity.
• During the first 6–12 months of business activity, international transfers must be initiated from one of the bank’s local branches even though some banks may be inclined to accept plausible explanations.

These are a few of the issues one might encounter when deciding to do business in Romania. They should not be seen as a discouragement but should be treated as a experience to ensure in the future their business operates effectively and successfully in Romania.

Most individuals that are looking to do business in such countries, even more so when they are non-European citizens or come from High-risk countries have decided to get professional assistance in order to rest assured that they can continue doing what they do best, leaving the intricacies of the European and Romanian law to the professionals in the field.

Carmen Tcaciuc

Associate