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Tips & Tricks in Romanian Market Enviroment
Welcome to the first page where your legal troubles will be promptly solved! You are seeing a young legal advisor that can prove good lawyer` skills. Romania`s evolution economy produces a flood of legal ambiguity. It is my job to guide you securely across the doubts to help you make the best use of your business opportunities.
When buyig a Romanian company or investing in a Romanian business you have to check the business from the legal perspective.
· Court cases can hamper the company, property issues can prevent the business from properly operating.
· All these have to be avoided.
· And we have the people, the experience and the knowledge necessary to do that.
I cooperate with my accounting department as well as with the Chamber of Commerce of Romania and Bucharest in order to have all the information which might be hidden by others
Real property in Romania
Strict laws govern property acquisition in Romania.
There are different regulations covering this issue depending on the person of the buyer. According to Romanian law we have four groups of buyers: Romanian nationals, foreigners, Romanian companies, and foreign companies. In this study we will refer to Romanian nationals as being individuals who have Romanian citizenship, to foreigners as individuals who do not have Romanian citizenship. Also, the law considers a company as being Romanian if the registered office is in Romania, irrespective of their share capital origin or shareholders? nationality.
With respect to the property the law defines a public domain which cannot be acquired by anyone, and the state or local authorities own it. This public domain can be concessioned to private persons or companies. Public domain is mainly of roads, certain banks, lakes and rivers, all the beaches, certain forests and some land property, usually inside towns (such as parks, sidewalks etc). In this study we refer only to property that is not public domain.
R omanian nationals are entitled to buy any property (land, buildings, forests) in Romania. There is no limit with respect to the number of buildings they can own. The only limitation is that a family cannot own more than 200 hectares of agricultural land. The limit can be exceeded in case of inheritance.
Foreigners and foreign companies are allowed to buy only buildings . They can buy any building, no matter how large. They are not allowed to buy any land, including the land underneath the building they have bought. Most of the time, the foreigners who want to buy land in Romania create a Romanian company and use it for these purposes.
Romanian companies behave like Romanian nationals: they can buy any property in Romania. Moreover, they can own more than 200 hectares of property.
All transfers of land property have to be done in writing by a qualified lawyer and signed in front of a notary public . For buildings law does not require this, but it is highly advisable for the title to be registered properly in the Land Registry. The registration procedure usually takes 30 days, but the property transfer is effective from the moment of signing.
Professional advice is needed in order to buy a property as well as a title checking to see whether the property is clear of any lien. Also, the actual owner in order for the transfer to operate must produce some documents.
Taxes on property transfers are usually around 5% of the value of the property and are paid by the buyer. Annual property taxes are around 2% and can be changed by local authorities. Annual taxes are to be paid in four installments to local authorities
Taxes in Romania
Tax system is divided into 2 categories: welfare contributions and taxes.
The welfare contributions are paid by employers and employees in various quotas.
The 138/2004 emergency ordinance draft on the introduction of the 16% flat tax for both corporate profits and individual incomes was discussed last night during the first session of the new governmental team.
The main tax increase targets the revenues of the micro-enterprises, which will have to pay 3% instead of 1.5%. At the same time, the draft prepared by the Finance Ministry says that the tax on the incomes made from dividends by individuals will be 10% instead of the current 5%, the same as for companies. The essential change brought by the ordinance aimed at modifying the Fiscal Code is replacing the current personal income globalisation system with the deduction of tax at every source of income separately.
Under the circumstances, the only deductions an employee will get will be the personal base deduction, upped to 2.5 million ROL from 800,000 ROL and the additional deduction that may not be higher than 10 million ROL, depending on the number of people that particular individual supports. The elimination of globalisation will do away with the deductions for contributions to private pension funds, contributions to private health care insurance plans, expenses for buying a computer or expenses for the thermal rehabilitation of the people's homes.
The deduction of the expenses on private health care insurance and private pensions, as well as of those for sponsorships will only be accepted for those people that are self-employed (those that engage in commercial operations, doctors, lawyers etc.) These people will no longer benefit from personal and additional deductions. The Exchequer will levy a 10% tax on the incomes made from such activities at the end of the year.
The doubling of the tax paid by micro-enterprises and the attempt to dig out the personal incomes disguised as micro-enterprise revenues. These are the main solutions the new Finance Minister IonuР“…Р’Р€ Popescu is considering in order to compensate for the loss of revenues the state budget will incur as a result of the flat tax introduction.
Popescu expects this revenue increase to translate in another about 7,000bn ROL added to the budget. At the same time, maintaining the social security contributions at 49.5% should lead to approximately 10,000bn ROL revenues.
According to the Finance Minister's estimates, the loss of revenue amounts to 7,000bn ROL from the profit tax cut, with a further 24,000bn ROL possibly added from the personal income taxation adjustment.
The Exchequer intends to collect more money from the reduction of the forfeit expenses accepted as deductible for calculating the tax on the intellectual property proceeds: from 60% to 40% of the gross income, and from 70% to 50% in the case of monumental works of art.
The emergency ordinance also stipulates an increase in the tax on the farming activities income from 15% to 16%.
The non-taxable cap for pensions will be upped to 9 million ROL.
Tax is applied on individuals, not on family, but bigger personal and fixed deductions are give for taxpayers that have children. There is a 1% income tax in interest which is held by the banks. There is also a 5% tax on dividend given to individuals and 0% tax on dividends distributed to companies.
Companies pay 2 types of taxes: some of them pay an income tax of 1.5% some of them pay a profit tax of 25% or 6%.
- Very small companies pay 1.5% income tax. They cannot choose to pay 25% profit tax. A company that has less than 100.000 income (VAT excluded) and less than 9 employees shall pay 1,5% tax on income. This is very good for services, where you do not have large expenses. However, export companies cannot be taxed in this category and shall pay a different kind of tax. These companies do not have limitations when it comes to expenses, because the state is not interested in their expense, but in their income.
- The rest of the companies shall be 6% profit tax if they make export or 25% of the profit when they do not make export. If a company makes export and gets some profit from other activity it shall be taxed 6% on the export profit and 25% on the other profit. Profit is the result of the deduction of the expenses from the income. Deductions are limited, especially for beverages, lunches, travel etc. Also, there is a linear depreciation of the ?expenses? over 270 USD/item, from 2 to 7 years. Property depreciation period is 30 years.
- There is also a 10% tax on the income of a foreign entity in Romania, especially interest taken by non-resident companies or individuals from loans given to residents. Such loans have to be registered with the National Bank of Romania (the central bank) for statistical reasons if the loan is granted for more than one year (the first payment should be more than 12 months after the first withdrawal of cash). If the loan agreement provides for a payment less than one year central bank shall have to approve. Cross border leasing contracts shall have also to be approved by the central bank. Leasing contracts are concluded for a minimum one year term with 20% residual value.
- Romania likes to tax such activities which are considered national, i.e. they take place within Romania?s borders.
- There is a large number of treaties on avoidance of double taxation, for businesses and individuals as well
Debt collection
- We provide legal debt collection services for our customers through our skilled associates.
- The debt collection process is done under strict supervision of our partners and strictly according to Romanian legislation.
- We also use our partners company databases and court registers, including information from the chamber of commerce. Should you only need documents or information from the chamber of commerce please contact us.
- All this in order to recover as much as we can.
- The costs of the process wil be established based on a case by case analysis.
- Usually we charge an initial fee of 200 USD and then 5% of the recovered amount.
| | Choosing a form of enterprise
For a foreign investor coming to Romania to set up business, choosing a form of company, as provided by Romanian legislation, represents the first step of the investment. The most frequently used forms of companies are:
a. Limited liability company (SRL) В– the shareholdersВ’ liability is limited to the amount subscribed as participation to the companyВ’s share capital. The share capital of an SRL must be at least RON 200, app. EUR 60 (calculated at the EUR/RON exchange rate of EUR 1/RON 3.5), divided into shares with a par value of at least RON 10 each. An SRL may be formed by a minimum of one shareholder and a maximum of 50 (fifty). These shareholders may include individuals and/or legal entities. A person, either natural or legal, cannot be the sole shareholder of more than one SRL. If a person intends to form several companies, it would be necessary for a minimum of one share to be held by another person or entity. Moreover, an SRL cannot have, as sole shareholder, another limited liability company that is also owned by a single shareholder.
b. Joint-stock company (SA) В– the shareholdersВ’ liability is limited to the amount subscribed in the companyВ’s share capital. Further to the latest amendments introduced by Law no. 411/2006 to the Romanian Companies Law, the minimum statutory capital for a joint-stock company shall be RON 90,000, app. EUR 25,715 (calculated at the RON/EUR exchange rate of EUR 1/RON 3.5). Shares must be held by a minimum of 2 (two) shareholders, individuals and/or legal entities (there is no maximum limit), and can be open to either public or private participation. The par value of 1 (one) share shall not be less than RON 0.10.
Pursuant to the recent amendments, the shareholders may empower the administrators to increase the share capital of the company with a specified amount (the Authorized Capital). Such Authorized Capital may not exceed half of the value of the share capital.
For the administration of joint-stock companies two alternative systems may be elected: the unitary and the dualist system.
1. The unitary system - the company shall be managed by one or several administrators, organized as a Board. The Board can assign the management of the company to one or several directors.
2. The dualist (two-tier) system В– the management of the company is ensured by a Directorate and a Supervisory Board :
− The Directorate carries out exclusively the activity and management of the company and reports to the Supervisory Board;
− The Supervisory Board exerts the permanent control over the Directorate of the company and reports to the General Meeting of the Shareholders.
According to the latest amendments, the administrators, the members of the Directorate or of the Supervisory Board may not conclude a labor agreement with the company. A services provision agreement (management agreement) is required instead.
c. Representative office В– usually set up by foreign companies in Romania to carry out non-commercial activities such as advertising and market research on behalf of the parent company. Representative offices cannot conduct commercial activities in Romania. In order to register a representative office, company officials should apply to the General Department of Commercial Policies in the Ministry of Economy and Trade and pay an annual fee of USD 1,200 for the license.
d. Branch of foreign company В– does not have its own legal personality or share capital. Being a unit of the parent company, branch activities cannot exceed the scope of activity of the parent company.
e. Consortium В– domestic legislation allows for the conclusion of a joint venture agreement (В“contract de asociere in participatiuneВ”). Under this agreement, parties act together for the accomplishment of a common business goal. This form of doing business in Romania does not create a legal entity. Generally, one party is in charge of the bookkeeping of the joint venture.
Limited liability companies are the most popular vehicles among local and foreign investors for carrying out business activities in Romania because they have fewer administrative requirements and greater flexibility in operations than other types of companies. They also have a low initial capital requirement. However, the number of joint-stock companies in Romania is increasing because of their attractiveness to investors interested in equity investing. An SA must be set up whenever:
a. the company wants to carry out certain types of activities (e.g. insurance, banking activities, etc.);
b. the entrepreneurs foresee any advantage or necessity with respect to the acquisition of its own shares by the company (for instance, offering them to the managers);
c. the entrepreneurs plan to list the company on a stock exchange or on the OTC market;
d. the entrepreneurs contemplate financing the company through issue of bonds or other financial instruments;
e. the entrepreneurs intend to allow receivables towards third parties to be subscribed as participation in the company.
The other forms of doing business are not common among foreign investors in Romania. However, foreign investors still use representative offices if their activity involves only promoting one of their group companies in Romania. Branches are mainly used in cases where foreign investors plan for a short presence in Romania or if the investors decide, for capitalization (in the case of banks) or commercial reasons, not to legally separate the Romanian entity from the parent company.
Mergers and acquisitions
After completing the first investment stage В– establishing a Romanian legal entity В– foreign investors may, during the course of business, restructure their activities through mergers and acquisitions as stipulated by Romanian law.
Law no. 31/1990 (the Romanian Companies Law), as amended by the Law no. 411/2006, and the methodological norms approved under no. Order 1376/2004 (regarding accounting procedures for mergers, spin-offs, dissolution, liquidation of companies, withdrawal and exclusion of shareholders, as well as the fiscal regime of such operations) represent the general legal framework for mergers and acquisitions in Romania. The Romanian Companies Law regulates both merger by absorption (whereby one or more existing companies are absorbed by another existing company) and merger by fusion (whereby a new company is created by integrating two or more existing companies), as well as spin-offs. The merger/spin-off should be decided separately, by each participating company voting in the General Meeting of Shareholders. Following this, a merger/spin-off plan is prepared and registered with the Trade Registry in order to be examined by an expert and to get the approval of the delegated judge and published in the Official Gazette.
Regarding the completion of the merger/spin-off operation two situations may arise:
a. where pursuant to the merger/spin-off new companies resulted, the operation takes effect upon the incorporation date of the new company or the last of the new companies.
b. for the other cases (e.g. merger by absorption, spin-offs where the transfer is made to already existing companies), the operation takes effect on the date when the resolution of the last company approving the operation is registered with the Trade Registry, save where the participating companies jointly agree on a different date. However, such date cannot be prior to the end of the last budgetary year of the company/companies that transfer its/their assets and liabilities and cannot be later than the end of the current budgetary year of the absorbing or the beneficiary companies.
With regard to acquisitions, Company Law regulates the acquisition of shares in a limited liability company or in a joint-stock company. The acquisitionВ’s procedures are different as shares in a limited liability company are not freely transferable to third parties (a special quorum and a majority in the General Meeting of Shareholders are required), while shares in a joint-stock company are not subject to specific restrictions regarding their transferability to third parties, if not otherwise provided for.
There are also some instances where companies involved in a merger or acquisition are subject to certain competition regulations. However, as a general rule there are no competition issues to be considered when companies participating in a merger and/or acquisition are part of the same group of companies. Mergers and acquisitions involving at least one public company must be done in accordance with Capital Market Law 297/2004 and by observing the regulations issued by the National Securities and Exchange Commission (CNVM).
Real Estate
Pursuant to RomaniaВ’s joining the EU, as of 1 January 2007, foreign investors interested in real estate acquisitions should note that EU nationals and entities, as well as stateless persons domiciled in any EU state, can acquire land in Romania, under the same conditions as Romanians, provided that they reside in Romania. The above terms do not apply to buildings, which may be owned by any individual or legal entity irrespective of its nationality or residence status in Romania (such individual or entity will not, however, own the land on which the building is situated).
Moreover, Law no. 312/2005, which regulates the conditions under which EU citizens and entities, stateless persons and other foreigners may acquire land in Romania, provides that EU persons that do not reside in Romania may acquire land here only after the expiration of a 5-year period since RomaniaВ’s accession to EU.
With respect to agricultural and forestry lands, please note that there is a 7-year term during which no EU national (save for Romanians) or other foreigner may acquire such type of land. However, farmers carrying out independent activities and who are: (i) citizens of member states or stateless persons domiciled in a EU member state, who have established their residence in Romania, or (ii) stateless persons domiciled in Romania - may acquire agricultural and forest land under the same conditions as any Romanian citizen commencing with 1 January 2007, without the possibility for such persons to change the specific purpose of such land.
For foreign citizens, stateless persons and legal entities from non-EU states, ownership over land may be acquired in accordance with the provisions of international treaties, based on reciprocity terms.
Investment incentives
Foreign and domestic investors are offered equal opportunities to invest in Romania. In general, incentives are intended to boost economic development of the country, particularly the acceleration of industrialization in underprivileged zones, as well as the development of small and medium enterprises (SMEs), oil and gas sectors and micro enterprises.
However, a foreign investor should be careful when planning business on the basis of the current incentives granted by Romanian legislation due to the frequent amendment of laws in this field during the recent past.
Large investments with significant impact on the economy
Law 332/2001 provides incentives for direct investment in the equity of a Romanian company exceeding USD 1 million (or the equivalent in RON or other convertible currencies) and which contribute to the development and modernization of RomaniaВ’s infrastructure, creating new employment.
Under Law 332/2001, no customs duties are imposed on В“new goodsВ” (e.g. technology and automation equipment, installations, measuring and control devices, software products, etc.). In order to benefit from this incentive, these assets have to meet two requirements: (i) must have been manufactured a maximum one year before entry into Romania, and (ii) must not have been used before.
Small and medium enterprises
Law no. 346/2004 provides incentives for private investors who set up or run small and medium-sized enterprises (SME).
Domestic legislation defines an SME as a company that (i) has an annual average number of employees below 250 and (ii) whose net annual turnover does not exceed EUR 50 million, or whose value of the total held assets does not exceed EUR 43 million, according to the latest approved financial statements, and (iii) fulfills the independence criterion: it should not hold more than 25% of the shares or voting rights of another entity and not more than 25% of its share capital or voting rights should be held by other entities. The term entity refers to companies or natural persons that are authorized to independently carry out commercial activities.
Regarding the independence criterion, the following exception is allowed: enterprises owned by public investment companies, venture capital companies, institutional investors, business angels (on condition that the total investment amount of such investor into the same company does not exceed EUR 1,250,000), universities and non-profit research centers, local public administration authorities.
Banking companies, insurance and reinsurance companies, companies managing investment funds, financial investments companies (i.e. security trading companies) and companies which have foreign trade as sole object of activity, cannot qualify as SMEs.
Romanian legislation provides for certain financing incentives to SMEs such as state assistance and loans guaranteed by the state.
Micro enterprises
The Fiscal Code establishes the taxation regime for micro enterprises. To qualify for this regime, the following conditions should be met by Romanian legal entities by 31 December of the previous year:
- over 50% of the total revenues obtained derive from other activities than consulting and management services;
- they have at least 1 (one) employee but not more than 9 (nine);
-their annual turnover is less than EUR 100,000; and
- the share capital of the micro enterprise is owned by natural persons or legal entities, other than the state, or local authorities and public institutions.
Micro enterprises are required to pay 2 % tax on any income, except certain items of revenue specifically provided (e.g. income from stock variations, income from provisions, etc.). The tax is paid quarterly, by the 25th of the first month following the reporting quarter.
Companies complying with the above conditions and taxed under the general profits tax legislation may opt for the 2% tax regime for the year 2007. In such cases, companies should submit a declaration exercising their option by 31 January. Newly set-up companies may indicate their option with respect to the applicable tax regime within the registration application lodged with the Trade Registry.
Preferential economic zones
According to Government Emergency Ordinance 24/1998 for setting up preferential economic zones in underprivileged areas, as further amended, these zones may be determined by Government Decision for a period of at least three years, but no more than 10 years. Law 507/2004 abolished the provision granting the possibility of extending the 10-year period.
Currently, there are 28 underprivileged zones in Romania located mostly in the mining centers of the country.
Investments in preferential economic zones benefit from tax exemption for profits on new investments, for the period during which the preferential economic zone status exists and only for legal entities that obtained the permanent certificate of investor in preferential economic zones before 1 July 2003.
The incentives granted under this law are subject to the limitations imposed by state aid regulations.
Industrial parks
Industrial parks, regulated by Government Ordinance 65/2001, as further amended, are considered strictly delimited areas where economic, research and technological development activities are performed. An industrial park may be set up only by a joint venture (В“asociere in participatiuneВ”) between the public authorities, legal entities, research and development institutions and/or other interested partners, as applicable. The industrial park must be managed by a Romanian company established in accordance with the Company Law, and whose shareholders can be the above-mentioned members of the partnership.
The incentives granted to industrial parks have undergone cancellations and/or amendments during the recent past, and more recently through the Fiscal Code.
The following incentives currently apply to the establishment and development of an industrial park:
- exemption from taxes due on conversion of agricultural land to be used for industrial parks;
- buildings, constructions and land located inside industrial parks are respectively exempt from building tax and land tax;
- other incentives which may be granted in compliance with the law by the local administration.
Free trade zones
Law 84/1992, as further amended, regulates the free trade zones regime.
Free trade zones are characterized by a specific customs regime: the customs supervision is limited to the borders of such areas.
Means of transport, products and other goods are admitted into the free trade zones regardless of their country of origin or destination. However, import of goods subject to prohibition under domestic law or under international agreements to which Romania is a party, is forbidden.
Mineral resources
Romania is rich in natural resources, especially oil, gas, salt, gold and silver ore and non-ferrous metals. Recent geological and geophysical studies have shown there are many mineral deposits (gold, silver, lead, zinc, copper, iron and manganese) and oil reserves (both on land and offshore) with considerable potential for exploitation. These offer substantial opportunities for foreign investors interested in these sectors.
Mining Law 85/2003, as further amended, regulates mining activities in Romania. Its defined scope is to ensure maximum transparency in mining activities and fair competition without discrimination between operators, depending on the property type and the origin of the capital.
Subterranean and aboveground mineral resources located within Romanian territory, within the continental shelf and in RomaniaВ’s Black Sea economic area are part of the stateВ’s public property.
Mining is carried out through a mining license granted by the National Agency for Mineral Resources for a maximum period of 20 years, and the right to extend it for successive five-year periods in exchange for an annual mining royalty and surface tax.
Each mining license is established by Government Decision, and its provisions will remain valid throughout the license period, except when possible legal dispositions favorable to the license-holder might come into effect.
Foreign operators should set up a permanent subsidiary in Romania within 90 days of obtaining the mining license to be maintained throughout the period of operation.
Petroleum Law
Petroleum Law 134/1995, regulating all operations involving oil and gas reserves within Romania, was abolished and replaced by Law 238/2004.
Oil resources located on Romanian territory are exclusive public property of the Romanian state.
The Romanian stateВ’s interests in the mineral oil sector are represented by the National Agency for Mineral Resources. Through its representative authority, the state can grant a Romanian or foreign legal entity the right and the obligation to perform oil operations, based on an oil concession. The concession period may not exceed 30 years.
The oil operations can be conducted through exploitation licenses or exploration permits only within some perimeters, as delimited by the NAMR. Titleholders of an oil license are liable to pay a petroleum royalty in accordance with the provisions of Petroleum Law 238/2004.
Foreign operators should create a permanent establishment in Romania (i.e. a branch or company) within 90 days of obtaining the oil and gas license to be maintained throughout the period of activity.
Unlike Law 134/1995, Law 238/2004 does not grant any incentives to the holders of an oil license.
Tax litigation
When doing business in Romania, investors may not only encounter investment incentives but also the disadvantages of tax payments and tax inspections.
With a view to harmonizing legislation in the field, a Fiscal Procedure Code (further to the Fiscal Code) was enacted in December 2003 through Government Ordinance 92/2003 and has been subsequently amended several times. The Fiscal Procedure Code regulates, among other matters, the procedures for appealing against the action of the fiscal authorities.
Such contestations may refer to the reduction and/or cancellation В– depending on the case В– not only of taxes, dues, customs debts, contributions to special funds, late payment increases, penalties, or other amounts recorded and imposed, but of any other actions of the fiscal authorities.
The appeal must be filed with the fiscal authority issuing the respective action within 30 days from its communication to the petitioner.
The competent fiscal authority rules over the appeal by issuing a decision. The decision has to be communicated to the petitioner through the means specified by the Fiscal Procedure Code.
The petitioner may appeal such decision in the relevant court of law while observing all legal terms and formalities. After this, the judgment can be appealed at the superior law court.
Another important aspect related to such a dispute is that beginning an appeal does not suspend the execution of the contested action issued by the fiscal authorities. Therefore, a separate appeal to suspend the execution of the action should be filed with the competent fiscal authority, which may suspend the execution on condition that the petitioner provides valid reasons. PRACTICE AREAS
The Bucharest Office of COSTI NEACSU Law Office has wide experience of providing legal services in the following areas:
CORPORATE LAW
Advice on company formations and on the provisions of the Company Law, every day business (shareholders meetings, applications to Trade Register etc.), through to liquidation and insolvency; mergers & acquisitions, joint ventures, etc.
COMMERCIAL LAW
General commercial practice; terms of trade; every contract you need for your business, equipments leasing, franchising.
BANKING and FINANCE LAW
Administrative banking law, general banking operations.
LABOUR LAW
Labor relations; labor disputes; drafting of employment contracts and related agreements; terminations of employment contracts; disputes related to labor matters including litigation work.
INTELECTUAL PROPERTY LAW
Filing and prosecuting of trade marks and designs; licensing; konw how contracts;
PROPERTY AND ESTATE LAW
Acquisition and purchase contracts, construction contracts, related warranties and guaranties; lease agreements; real estate administration (buildings maintenance, collecting rents, pursuing leases in default, etc.
TAX LAW
Corporate taxation; capital taxation; international tax planning; incorporating offshore companies all over the world;
PRIVATE CLIENTELLE
General practice on private clients matters; advice on administration of property (house and home ownership); assets holding; | LITIGATION, ARBITRATION AND DEBT COLLECTION |
Litigation in all areas; collection of debts, international commercial arbitration and representation of parties to disputes.
PARALEGAL SERVICES |
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Intellectual Property Protections in Romania
| The legislative basis for the protection of intellectual property in Romania are Articles 44 and 136 of the Romanian Constitution, as amended, which represents the fundamental law for the protection of the inviolability of private property in Romania. With Romania’s accession to the European Union, all of the relevant legislation has been harmonized to EU standards. Indeed, the legislation is expansive in its protection of intellectual property and includes protection for such properties as data bases, artist’s rights regarding the resale of their works, certain aspects of authorship in the IT field, and even satellite and cable transmissions. Therefore, the legal regime for the protection of intellectual property in Romania is in line with international and European standards, although with piracy and counterfeiting still rampant in Romania, enforcement of intellectual property rights remains a serious concern. The application of the relevant legislation represents a major challenge for the Romanian authorities that have yet to mount a serious effort at combating widespread counterfeiting of intellectual property. |
| Inventions, Patents and Utility Models
| In order for an invention to be protected in Romania it must first be registered with the State Office for Inventions and Trademarks (the “OSIM”) by the grant of a patent under the terms and conditions provided by Law 64/1991.
A patent can be granted for any invention of a product, creation, or procedure in all the fields of knowledge, provided that it observes the following conditions: (i) novelty – the invention must not be comprised in the present technical development level; (ii) it entails an inventive activity – it is not an obvious result of knowledge on the basis of existing technical developments; and (iii) it is susceptible to industrial application. Patents cannot be granted for inventions that breach the public order, morals, detrimentally affect the health and life of humans, animals or plants or which gravely affect the environment by their commercial exploitation, for any species of plants and breeds of animals, essentially biological procedures for obtaining plants and animals, and inventions that have as their objective the human body or organs, cells, genes and so on. Moreover, ideas, discoveries, scientific theories, mathematical methods, computer programs, economic or organizational solutions, flow charts, educational and training methods, city planning systems, plans and methods, physical phenomena, culinary recipes, and aesthetic creations are not considered inventions and therefore are not patentable.
The right to the patent belongs to the inventor or to his successors in title. Where two or more inventors have created an invention jointly, each has the status of joint inventor and the rights belong to them jointly. As an exception, the right to the patent may belong to the inventor’s employer under certain circumstances.
The Application procedure for the patent
In proceedings before OSIM, an attorney-at-fact, on the basis of a proxy submitted to OSIM, may represent the applicant, assignor or owner or any other interested person. Foreign applicants may submit a file for a patent only through a patent attorney holding a power of attorney. Inventions created by Romanian natural persons on Romanian territory may not be patented abroad until a patent application has been registered at OSIM. An invention for which a patent application has been submitted to OSIM may not be disclosed without the consent of the applicant, until its publication. The submission of a patent application confers a priority right with regard to other possible claims regarding the same invention or similar ones. The priority period starts from the date of the submission or from the claimed and recognized priority date for a previous submission, in relation to any other submission regarding the same invention having a later date or recognized priority date.
Patent applications are published as soon as possible after the expiration of a period of 18 months from the date of the submission, or 12 months if an emergency fee is paid. The publication grants only temporary protection to the applicant’s right to the patent. This protection becomes final with OSIM’s decision to grant the patent. If OSIM decides not to grant the patent, this protection is considered never to have existed.
OSIM examines and then either grants or refuses to grant the patent within 18 months from the date of the submission. An excerpt of the decision is published in the Official Bulletin of Industrial Property (hereinafter referred to as “BOPI”) within 60 days and becomes effective on that date. OSIM may revoke its decisions ex officio for failure to comply with the conditions laid down by law or for any clerical errors until the decision is made public. The applicant may withdraw his application in writing. The date of the publication in BOPI is considered the date of the issuance of the patent. The owner has an exclusive right of exploitation throughout the term of protection of the invention (20 years). The owner also has the right to waiver of the patent. If the patent is the subject of a license agreement, the waiver is possible only with the consent of the licensee. Third parties may freely exploit the invention or a part of such invention. The waiver is registered with OSIM and comes into effect on the date of its publication in BOPI. Any interested party may challenge OSIM’s decisions directly at OSIM within 3 months from the communication of the decision. Claims having as their object only clerical errors or omissions are not subject to any fees. Any interested party is entitled to ask OSIM, in writing and on valid grounds, for the revocation of the patent decision within 6 months from its publication. The claim for revocation is settled within 6 months of the registration thereof at OSIM.
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| Trademarks
| Trademarks are symbols capable of being graphically represented which serve to distinguish the goods or services of a natural or legal entity from those belonging to other persons. A trademark is an essential element of the strategy, public relations and marketing of many businesses. It serves to distinguish between the goods and services of one company from those of its competitors.
Geographic indications are designations which serve to identify goods originating from a country, region or locality if a given quality, reputation or any other characteristic could be essentially attributed to that geographical area.
The rights deriving from a trademark or geographic indication are acquired and protected by the registration with OSIM in accordance to Law No. 84/1998 on trademarks or geographic indications. Most significantly, notorious trademarks even if they are not registered in Romania are acknowledged and protected on the territory of Romania. Trademarks are capable of being registered if they observe the following conditions: (i) fit for graphic representation - the symbol chosen to become a trademark must be fit for graphic representation by full lines, colors, designs, on a tangible medium; (ii) distinctive- the trademark must be capable of identifying a product or a service in a manner that should allow consumers to recognize and acknowledge it as such; (iii) available - the trademark must not affect any prior intellectual property right; and (iv) lawful - the trademark must not consist of elements which are contrary to public order and morals, bear false or deceiving indications, defamatory signs to the representative symbols of the state, to international organizations or things having the value of universal symbols.
Trademarks can be individual, when used by one company, or collective or certification marks. A certification mark indicates that the goods or services it represents are certified by the trademark owner in respect of the quality, material, manufacturing process or manner of service, accuracy or any other characteristics. The rights of the trademark owner are confirmed by the certificate of registration of the trademark which is issued by OSIM. The registration of the trademark confers upon the owner the right of exclusive use of the trademark for the goods and/or the services that have been registered, for a period of 10 years from the date of the submission as well as the right to prohibit others from the use of that particular trademark or a fraudulent imitation of it. If the trademark owner requests, the registration can be renewed after the period of protection expires for another period of 10 years. The rights deriving from a registered or renewed individual trademark may be transferred in whole or in part, in exchange for a fee or free of charge. Collective trademarks may not be transferred. |
| Geographic Indications
| | Geographic indications for goods are protected in Romania by registration with OSIM. They may be used only by persons manufacturing or selling the products designated by the registered indications. Any association of producers carrying out a manufacturing activity in the geographic area for the goods specified in the application must apply for the registration of a geographic indication. OSIM registers geographic indications and grants the applicant the right to use them provided that the Ministry of Food and Agriculture or other competent authority from the applicant's country of origin certifies: the geographic indication to be registered; the goods that may be sold under this indication; the geographic production area; and the characteristics and the manufacturing standards to be met by such goods in order to be sold under this indication. If the application satisfies the terms of the law, OSIM requests the registration of the geographic indication in the National Register of Geographic Indications and grants the applicant the right to use it. |
| Industrial Designs and Patterns
| Industrial designs are the designs that have been granted a certificate of registration by OSIM in accordance with Law No. 129/1992 on Industrial Design. This confers to their owner an exclusive right of exploitation in Romania. Patterns are also subject to registration with OSIM in order to be acknowledged and protected as such on Romanian territory. Industrial designs or patterns, where the exterior appearance of a product is concerned, may be registered if they have the following characteristics: (i) novelty - the industrial design or pattern must not have been made public prior the registration date; and (ii) individuality - the image impact of the industrial design or pattern on the common viewer must be different than the impact on such a viewer of any other industrial design or pattern which has been made public before the date of the registration.
An industrial design and pattern is protected for a period of 10 years from the date of the submission of the application with OSIM and is capable of being renewed for 3 successive periods of 5 years each. During the period of its validity, the registration certificate grants to its holder an exclusive exploitation right for the industrial design or model, as well as the right to forbid the performance by third parties, without the holder’s approval, of any acts, such as: reproduction, manufacturing, commercialization of a product incorporating the industrial design or pattern or where such industrial design or model applies. |
| Topographies of Semi-Conducting Products
| | The topography of an integrated circuit (hereinafter referred to as "topography") represents a three-dimensional disposition –in whatever way it may be expressed- of certain elements of an integrated circuit, at least one of which is active, and with all or some interconnections of the integrated circuit or such a three-dimensional disposition realized for the manufacturing of the integrated circuit. The rights over semi-conducting products’ topographies are subject to registration with OSIM for such topographies to be acknowledged and protected as such in Romania in accordance with Law No. 16/1995 on the protection of topographies of semiconductor products. Semi-conducting products topographies can be protected if that they are original. An original topography is one that is the result of an intellectual effort of its creators, and that, when it was created, was not usual for topography creators or for semi-conducting products manufacturers. The rights over protected circuits will not be applicable to concepts, procedures and devices nor to the pieces of information stored on the topographies. |
| Copyright
| Copyright is governed in Romania by Law 8/1996 regarding copyright and related rights. Copyright is granted to original works of an intellectual creation in literature, art or science. Therefore the main condition for their protection is originality. The works also have to take a concrete form of expression and be susceptible to be made public. The protected work may be unfinished and it may not have been made public yet, as the right is born from the moment of its creation. Furthermore, the copyright is independent with regard to any other form of registration with concern to that particular work.
Copyright protection applies to works: (i) whose authors are Romanian citizens or have a residency in Romania, even though such works have not been publicized yet; or (ii) represent architectural works, located on the Romanian territory. Foreign holders of a copyright benefit from the protection granted by a relevant international legal convention or treaty to which Romania is party. In the absence of such enactments, foreigners will benefit from the same treatment as do Romanians, based on the principle of reciprocity. Protected works can be original or derivates and individual, joint or collective.
The main holder and the primary subject is the author of the work, the one who has directly created it. He can only be a natural person. The secondary subject is the person who has been assigned some prerogatives from the copyright. This can be either a natural person or a legal entity. Patrimonial copyrights are, as a matter of principle, protected during their author’s lifetime plus another 70 subsequent years after his/her death. In certain cases, the period of protection is shorter: collective works are protected for 70 years from the date they are made public, or from the date of their creation, as the case may be. After the protection ends all such works enter the public domain. The personal non-patrimonial or moral rights, such as the right to claim the authorship of the work and work integrity, and to oppose any amendment that may harm the author’s reputation, are transmissible by way of succession for an unlimited period of time. Copyright is a personal right of the author and has a patrimonial side and a moral one. The moral rights are: the right to make the work public, the right of authorship, the right to the name, the right to its integrity and the right to withdrawal. There are more patrimonial rights, out of which the most common are: the right of use and exploitation, the right to consent to its use and exploitation by other persons and the right to receive a percent of every sale.
Copyright related rights
There are several rights which are related to copyright. They protect the interpretations, acting and shows of the artists, sound recordings and the phonograms of the producers of such recordings and their TV and radio broadcasts.
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| Conclusion
| | Simply put, Romania’s legislative scheme for the protection of intellectual property is similar to that of other EU member states. The issue in Romania is not the scope or nature of the the law protecting IP, but in its less than stellar enforcement. |
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