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Buy a Shelf Company in Romania

Buy a Shelf Company in Romania

by Vlad Cuc

There is a significant number of investors interested in buying a shelf company in Romania rather than incorporating a new one.

This could be intended for a number of reasons, ranging from offering additional confidence to business partners or a presumed easier procedure for entering the Romanian market.

Our team of Romanian lawyers can present the main benefits of buying a shelf company and can provide legal representation during the purchase of this company type. 

The procedure of purchasing shares in a Romanian company, even if this company did not have any activity in the past (a so-called “shelf company”) has its specifics when compared to the same procedure abroad, respectively:

The procedure automatically implies the following changes in the company structure:

  1. change of shareholders;
  2. change of company headquarters;
  3. change of directors (administrators);
  4. issuance of a new Certificate of Registration;
  5. it requires a Share Assignment Contract which has to be signed by both current shareholders and future ones.

All changes in the company must be registered with the Trade Register in order to be considered valid.

The procedure requires the following documents:

  1. a Company Resolution drafted in a certain format;
  2. a new version of the Articles of Association;
  3. a Share Assignment Agreement;
  4. affidavits and Specimen Signatures for the future shareholders and directors and of course, the documents necessary for the new company headquarters.

There are also the following aspects to be taken into consideration when looking to purchase a Romanian ready-made company: there is no such concept as nominee directors per the Romanian legislation and there is no real method to verify in what type of transactions/operations the company has been involved in the past, therefore a diligent approach is recommended.

What does a Romanian shelf company offer?

As said above, the main advantage the shelf company has is that is has already been incorporated following the national laws, and this means that the investors will not have to spend time with the incorporation formalities.

A standard shelf company will always have a set of characteristics and our team of Romanian lawyers have prepared a short list regarding this matter, so that investors will be informed if they want to purchase this company type

  • it benefits from a registered address, which represents a compulsory requirement for all company types in Romania;
  • it is incorporated based on the articles of association, which can be modified in accordance with the needs of the investors, but which cannot overpass the limits of the law;
  • it benefits from the required minimum share capital that is necessary for the respective company type (usually, shelf companies are incorporated as limited liability companies due to the fact that this business structure is very popular in Romania);
  • it is registered with the local institutions – the Trade Register and the local tax authorities;
  • it already has a value added tax number (VAT) and it can also have a corporate bank account. 

As a general rule, a shelf company has never had commercial activities and it was registered for the sole purpose of being sold to another party, such as investors who want to start their business operations here as soon as possible.

However, there is also the possibility of having shelf companies that used to have commercial activities somewhere in the past. 

Considering that the latter may impose more complicated legal procedures, such as doing a background check on its financial transactions, debts and others, it is advised to select a shelf company that was registered solely for being purchased, as this option will imply fewer measures.

Regardless, our Romanian law firm remains at your disposal for legal representation and advice.

Why select a shelf company in Romania?

A shelf company can become a suitable vehicle for doing business in Romania in various circumstances. One of them is the easy access to owning a company in Romania and avoiding the registration procedures imposed under the local law, regardless of the business form selected. 

Due to various factors, the registration procedure can be delayed – for instance, when the investors do not have all documents that they have to submit for the registration, or when they have not properly completed various documents.

Another advantage of the shelf company is that it provides credibility on the local market, due to its age. 

Although the company did not have any business operations, the years of activity will be measured from the moment when the company was registered with the Romanian institutions.

Its age can also open the possibility of applying for a bank credit with more easiness, as the Romanian banks will generally prefer to enter business contracts with companies that have been registered for several years, as opposed to newly founded companies, which can obtain a credit only in certain conditions, but generally, they will have more issues in this sense.

What do shelf companies in Romania provide?

When buying a shelf company in Romania, investors will directly benefit from certain elements that are necessary for all companies, regardless of their type. During the process of company formation in Romania, companies must acquire certain elements that are imposed under the Romanian law.

The same applies to the shelf company, which must include these elements as the legal entity has completed the process of incorporation, even though the purpose of the incorporation was the incorporation itself and not the development of commercial operations.

As such, when buying a shelf company in Romania, investors will automatically benefit from the following:

  • a company name;
  • full registration with the Romanian institutions (additional registrations may be necessary based on the business activity of the company);
  • a corporate bank account (not all shelf companies have an active bank account);
  • articles of association, which can be modified to a certain degree;
  • registration for tax purposes (VAT number, etc.).

Please know that during the ownership transfer, the investors will also receive all the financial documents of the company, its records and financial statements that show the financial situation of the company and the fact that it did not have any current financial activities.

Our team of lawyers in Romania can handle all the legal procedures to verify the accuracy of these documents through specific procedures. Investors are advised to receive the necessary legal support during the purchase of a shelf company, considering that a background check is highly recommended.

What types of shelf companies can investors find in Romania?

There are 2 main criteria that are important for the classification of shelf companies. The 1st refers to the company type under which the company was incorporated (in most cases, investors will find limited liability companies or joint stock companies) and the age of the shelf company.

For the 2nd characteristic, there are 2 types of shelf companies shelf companies recently incorporated (and by that, we refer to legal entities that have an age of maximum 1 year) and shelf companies that were incorporated for more than 1 year.

The latter are known as aged shelf companies. The decision to select a newly incorporated shelf company or an aged one relies on the business plans of the investor.

Thus, for those who simply want to open a company in Romania by avoiding the standard incorporation procedure, a newly founded shelf company can be a suitable option.

Investors who want to start a business here and consider the idea of obtaining a bank loan may be more interested in an aged shelf company, which can have an age of minimum 1 year and up to 10 years.

It is important to know that the price at which shelf companies are sold is highly influenced by the 2 criteria presented above.

Here, we mention that newly incorporated shelf companies are generally sold at the same price as it would be the basic investment for the standard process of company formation in Romania (adjusted to type of company investors opted for – there are different capital requirements based on the legal entity).

In the case in which foreign investors will buy a shelf company in Romania that is an aged shelf company, then it must be noted that this company will be more expensive compared to the newly founded shelf company or compared to incorporating a new legal entity.

This happens because the aged shelf company provides certain advantages that the investors will directly benefit from once the purchase is completed (credibility based on the age, bank loans, etc.), advantages which are not applicable in the case of new businesses.

What is the tax system applicable to a shelf company in Romania?

A shelf company in Romania will be taxed following the same tax system applicable to local companies, as there will not be any difference between shelf companies and companies incorporated following the basic incorporation system in terms of their tax obligations.

Differences can appear based on the legal entity of the company. Below, our Romanian lawyers have prepared a short list of the main taxes that are charged to local companies:

  • the corporate tax in Romania is currently charged at the standard rate of 16%;
  • if you will develop gaming and gambling operations through the shelf company, you will be charged with a corporate tax of 5% of the revenue;
  • for the latter situation, the investors may have to pay a tax of 16% of the taxable profit (the tax system that will be chosen for gaming and gambling businesses will be selected based on whichever calculation yields the highest tax charge);
  • the withholding tax on dividends is charged at a standard rate of 5%;
  • other taxes charged to companies in Romania, including to shelf companies, are prescribed by the Romanian Fiscal Code, which implements the rules of the European Directive no. 2011/96/EU

For more details on the process of buying a shelf company in Romania, you can contact our Romanian law firm. You can benefit from professional consultancy services and information regarding any inquiry you may have on the process of purchasing the shelf company

Purchasing a shelf company has many benefits for investors who want to start their business activities as soon as possible, this being the main advantage for an investor who wants to open a business in Romania.

There isn’t any other legal distinction between the shelf company and a company that is founded by the investor (the age of the company is also of relevance).

The process of company formation in Romania can take a longer period of time compared to the simple purchase of the shelf company, but the investors will still have to complete certain registration steps.

This is necessary as certain data of the company will be modified and the competent institutions must be notified in accordance with the applicable legislation.

If you plan to relocate here on a long-term basis, our Romanian lawyers can help you buy a property in Romania for residential purposes.

Foreigners are free to buy apartments or houses and our lawyers can complete the due diligence procedures before actually initiating the purchasing procedure (verify the condition of the property, its financial situation, the registration documents, etc.).