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The Romanian Government adopted on 14 April 2022, Emergency Ordinance no. 46/ 2022 (EGO 46/2022), published in the Official Gazette no. 379 of 18 April 2022 implementing Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for screening foreign direct investments into the Union, as well as for amending and supplementing the Competition Law no. 21/1996.

Scope of Application: to direct investments and new investments made by foreign investors in Romania

“Foreign investor” is defined as a third-country investor (from outside the EU) or an investor who is established in the EU, but is under the direct or indirect control of a person from a third country. Under certain circumstances, a trustee who engages in, or contemplates, foreign investments on account of a trust fund may also be considered a foreign investor.

As a foreign direct investment is considered:

i. investment of any kind by a foreign investor for the purpose of establishing or maintaining lasting and direct links between the foreign investor and the undertaking concerned or a separate organizational unit of an enterprise, to which such funds are made available or to be made available to them for the scope of carrying out an economic activity in Romania, and which allow the foreign investor to exercise control over the administration of the undertaking.

ii. when there is a change in the ownership structure of a foreign investor legal entity, if this change in the legal entity makes it possible to exercise control, directly or indirectly, by a natural person/legal entity/legal entity, without legal personality, that is not citizen of an EU Member State/its registered office is not in a Member State of the European Union/is organized under the laws of a state that is not a member of the European Union.

Acquiring direct or indirect control under EGO 46/2022, is according to the legal definition of control for merger control purposes, and means the possibility, assessed based on factual or legal circumstances, of exerting a decisive influence on an enterprise, in particular by:

a) rights of ownership or use over all or part of the assets of an enterprise;

b) rights or contracts that confer a decisive influence on the structure of the enterprise, the vote or the decisions of the management bodies of an enterprise,

such influence being acquired by the person or persons or by the undertakings which:

a) are holders of the rights or beneficiaries of the contracts provided in par. (5);

b) are not holders of the rights or beneficiaries of the contracts provided in par. (5), but have the power to exercise the decisive influence conferred by them.

Screening Procedures: a strict obligation is introduced for a foreign investor to ask the Commission for Clearance of Foreign Direct Investment (CEISD) for prior consent with suspensive effect to any investment that:

a) has a connection with the following security sectors subject to scrutiny by the Supreme Council of National Defence:

  • citizens and human collectives;
  • borders;
  • energy;
  • transportation;
  • supply of vital resources;
  • critical infrastructure;
  • IT and telecommunication services;
  • taxation, financing, banking and insurance;
  • protection against disasters;
  • protection of agriculture and the environment;
  • industrial security;
  • privatization of state-owned companies and their management.

b) exceeds the threshold of 2,000,000 euros, calculated at the exchange rate communicated by the National Bank of Romania valid for the last day of the financial year from the year prior to the investment.

c) not exceeding the threshold of 2,000,000 euros, if, by its nature or potential effects, may have an impact on security or public order or presents risks to them.

A host of detailed information must be disclosed in the application for clearance of a foreign investment, including information on the ownership structure of the investor and the target, on the source of financing for the foreign investment; the approximate value of the foreign direct investment;

the products, services and business operations of the foreign investor and of the undertaking in which the foreign direct investment is planned or has been completed, etc.

The screening procedure ought to be completed and an assessment of the investment made, within 60 days from the day on which the application for the investment clearing procedure is deemed completed.

The procedure is finalized with the CEISD submitting to the Competition Council a proposal for clearance of the foreign direct investment which, within 30 days, will issue a decision to this effect.

If there is a potential security risk, the CEISD submits to the Government a proposal to issue a conditional clearance or a prohibition resolution. The conditional clearance would mean that the investor and the CEISD would need to agree on those terms and conditions in which the investment could move forward, in order to eliminate the potential risks.

If a foreign direct investment is, at the same time, an economic concentration that falls under Competition Law no. 21/1996, the foreign investor will submit both an application for authorization of the investment, as well as a notification of an economic concentration. In this case, the procedure provided by the Competition Law will be finalized according to the decision on the settlement of the application for authorization of the foreign investment.

Sanctions: Failure to comply with EGO 46/2022 (if the investor went ahead with the foreign investment without filing a request for approval) carries the risk of a fine for the foreign investor in an amount of up to 10% of its worldwide turnover for the preceding fiscal year, or a fine ranging between 10,000,000 lei and 50,000,000 lei in the case of newly established enterprises which do not have registered turnover in the year prior to the lack of compliance.

Entering into force: The provisions of EGO 46/2022 entered into force on 18 April 2022, with the exception of those provisions concerning civil penalties and their legal regime, which are to enter into force 30 days as of the publication date of EGO 46/2022.