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Legal developments

Insolvency of natural persons. A new law22 on insolvency proceedings relating to individuals will enter into force on 26 December 2015 (the Insolvency Law). The Insolvency Law sets out the legal framework for a procedure which seeks to assist the financial recovery of indebted individuals acting in good faith, by means of covering their liabilities and providing for the possibility of residual debt discharge.

The Insolvency Law provides for several types of insolvency proceedings to be brought against an individual: (i) the administrative insolvency procedure based on a debt reimbursement plan; (ii) the judicial insolvency procedure by means of asset liquidation which may be filed by the debtor or by his creditors, in the case of failure of the debt reimbursement plan; and (iii) the simplified insolvency procedure, which may be filed by the debtor only in limited circumstances. For financial institutions operating in Romania and/or for businesses doing business with individuals the prospect of a prolonged and more difficult recovery process looms.

The Insolvency Law is applicable to any debtor meeting certain conditions prescribed including that it had its domicile, residence or usual residence in Romania for at least six months prior to filing for insolvency; it is essentially bankrupt and there is no reasonable probability that, within the following 12 months, it will become capable of fulfilling its obligations and of maintaining a reasonable living standard for itself and its family; and that relatively small amounts are due.

Implementation of the Bank Recovery and Resolution Directive – status update

A draft law implementing the Bank Recovery and Resolution Directive (BRRD)23 was approved by the Romanian Parliament in September 2015 (the BRRD Draft Law). In its current form, it aims at fully implementing the BRRD. The BRRD Draft Law will be voted upon first by the Senate and then by the Chamber of Deputies. The BRRD Draft Law may then be the subject of a constitutional review by the Constitutional Court of Romania if an interested party (eg members of the Parliament) challenges its compliance with the Constitution.

If no objections are made, the BRRD Draft Law will be sent to the President of Romania for promulgation. After promulgation, the BRRD Draft Law must be published in the Official Gazette of Romania in order to enter into force. The BRRD Draft Law should enter into force three days after its publication in the Official Gazette, save for certain exceptions as regards liabilities which do not observe prudential requirements in order to be considered as own funds, as well as eligible liabilities and the provisions regarding government financial stabilisation tools. Assuming that the entire approval process, including publication in the Official Gazette, is finalised by 29 December 2015, the "bail in" provisions will enter into force on 1 January 2016.

Under the BRRD Draft Law, the resolution authorities and the competent authorities are: (1) the National Bank of Romania (the NBR) (as regards credit institutions); and (2) the Financial Supervisory Authority (the FSA) (as regards investment firms) and the NBR is designated as the contact authority. Both the NBR and the FSA are empowered to issue secondary legislation in order to implement the provisions of the BRRD Draft Law.

New legal framework for individual investors

A new law24 entered into force on 17 July 2015 (the Business Angels Law) creating a legal framework offering several fiscal incentives, subject to certain conditions, to individual investors investing amounts between EUR 3,000-200,000 in small businesses. The investor will not pay tax for the dividends it receives for the first three years and will not pay tax on the profit made as a result of the transfer of its shares in the company, if such transfer happens after a three year period since the acquiring of shares.


22 Law No 151/2015.

23 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council.

24 Law No 120 of 2015.

Legal and Regulatory Risk Note