Romania

In April 2022, Romania introduced an overhaul of its foreign direct investment (“FDI”) regime through Government Emergency Ordinance no. 46/2022 on measures for applying EU Regulation 2019/452 establishing a framework for the examination of foreign direct investment in the Union (the “EU FDI Regulation”) and amending Competition Law no. 21/1996 (“GEO 46/2022”). Secondary rules to GEO 46/2022 were approved later, in November 2022, leading to the new FDI screening body becoming operational. 

Filing criteria under the Romanian FDI regime

FDI screening in Romania is governed by GEO 46/2022 and is carried out by the FDI Screening Commission (the “CEISD”), which has taken over the role from its predecessor under the previous FDI regime, the Supreme Council of National Defence (“CSAT”).

Currently, following several amendments to GEO 46/2022, Romania’s FDI screening regime applies to investments by EU (including Romanian) and non-EU investors alike. Moreover, in addition to direct investments (which may for instance include share or asset deals), the screening regime also applies to greenfield investments, called “new investments” under the law.

An investment triggers a filing obligation under the FDI regime if it meets the following cumulative criteria:

• there is an investment of any kind by an investor aiming to establish or to maintain lasting and direct links between the investor and the entrepreneur to whom or the undertaking to which the capital is made available, including investments that enable acquiring control/effective participation in the management of the target, allowing the investor to carry out economic activities in Romania;
• the value of the investment exceeds a de minimis threshold of EUR 2 million. However, investments below the threshold could also be called in for screening if potentially impacting or raising concerns in relation to national security or public order; and
• the investment falls under a list of broadly defined sensitive sectors, whilst also considering the criteria under Art. 4 of the EU FDI Regulation.

New investments considered for the purposes of the FDI regime pertain to initial investments in tangible and intangible assets within the same perimeter related to (i) the start of the activity of a new undertaking (in a new location, technically independent from other existing units); (ii) the expansion of the capacity of an existing undertaking (in an existing location, due to unmet demand); (iii) the diversification of the production of an undertaking with products/services not available before (in the respective unit); or (iv) a fundamental change in the general production process of an existing undertaking.

Sensitive sectors covered by the FDI regime

FDI screening covers investments that fall under the following list of sensitive sectors put forward by CSAT Decision no. 73/2012 (which is the same as under the old FDI regime), while also considering the criteria under Art. 4 of the EU FDI Regulation:

1. security of the citizen and the communities;
2. border security;
3. energy security;
4. transport security;
5. security of vital resources supply systems;
6. security of critical infrastructures;
7. security of information and communication systems;
8. security of financial, tax, banking and insurance activities;
9. security of the production of arms, ammunition, explosives and toxic substances;
10. industrial security;
11. protection against disasters;
12. protection of agriculture and the environment;
13. protection of privatisation operations of state-owned undertakings or of their management;

Specific transparency rules apply to foreign investments in the media sector: for target companies holding an audio-visual license or running a periodical with an average circulation of at least 5.000 printed copies/day in the last calendar year or a website with at least 10.000 visits/month, the CEISD would run a market test for a 30-day period with respect to the mass-media target company.

Notification and screening process

GEO 46/2022 formally designated the CEISD as the new competent body for screening inbound investments in Romania, while the formal issuance of the clearance decisions for non-problematic cases was entrusted to the Romanian Competition Council (“RCC”), based on the opinion issued by the CEISD for each investment subject to screening. The Romanian Government would also get directly involved in the process in the event of conditional or prohibition decisions and issue Government decisions in this respect.

As regards timing for clearance, the law currently distinguishes between investments made by EU and non-EU investors, with a fast-track procedure in place for EU investors. 

As of December 2023, non-problematic EU investments, subject to phase I, are generally screened within a shorter time period than foreseen under the usual timelines for non-EU investors. The statutory deadlines to issue the clearance is up to 70 calendar days from receiving a complete filing. For EU investments, the law provides that the RCC will only issue a clearance letter, compared to a full-blown clearance decision as applicable for non-EU investors, which streamlines to a certain extent the process.

For a no-issues phase I clearance for investments by non-EU investors, the authorities have up to 135 calendar days from the moment the filing is deemed complete to issue and communicate the clearance decision. The steps are as follows: (i) up to 60 days for the CEISD to screen the filing and issue a clearance opinion; (ii) another 30 days for the RCC, which also acts as the CEISD secretariat (through its Foreign Investments Directorate), to issue a clearance decision based on the CEISD’s opinion; and (iii) up to another 45 days from issuance of the clearance decision for the RCC to communicate it to the investor. If the CEISD believes that remedies are necessary to approve an investment or that a proposed investment would affect national security, public order, or projects or programmes of EU interest, it would forward its opinion to the Romanian Government, which would issue a final decision on the matter. There are no applicable deadlines in case the Government becomes involved in the process.

As of December 2023, a filing fee of EUR 10,000 has been introduced, payable upon filing. The filing fee is to be returned to the investor in case the authorities conclude that the notified investment did not fall under the scope of the law.

With respect to sanctions, a clear standstill obligation is provided by the FDI law, meaning that inbound investments subject to screening cannot be implemented prior to their approval and significant fines can be imposed otherwise.

More specifically, fines can amount to up to 10% of the investor’s worldwide turnover in the financial year prior to the sanctioning decision for: (i) gun jumping the FDI clearance obligation, (ii) deliberately or negligently providing inaccurate, incomplete or misleading information during the filing process, (iii) failing to provide the necessary information for the screening and approval of the investment within the legal deadlines and in a complete and correct manner following requests for information from the CEISD, or (iv) breaching the remedies offered, in case of a conditional clearance.

In July 2024, additional amendments were made to the FDI law, providing that all agreements and contractual arrangements for carrying out a notifiable investment, where such investment was not duly filed for FDI clearance, are null and void.

Furthermore, the law provides that if a foreign investment was carried out in breach of the FDI rules and affected national security, public order, or projects or programmes of Union interest, the CEISD would issue an opinion proposing that the foreign investment be unwound. The CEISD opinion would also include any adequate structural or behavioural measures for unwinding the respective foreign investment. The final say would then vest with the Government, which would issue a decision to unwind the investment/re-establish the previously existing situation.

Open points and further clarification expected

Despite the new FDI screening regime applying for over two years already, there are still a number of open points. Secondary rules and guidelines are still expected from the RCC that will hopefully reduce uncertainty and narrow down what is generally seen almost as a ‘catch-all’ regime in the market.

As such, important questions remain (e.g., primarily with respect to the scope of the new regime in terms of sensitive sectors or type of (new) investments covered, the manner of determining the investment value, or the clearance timeline for more sensitive cases) and a case-by-case analysis is recommended to mitigate risks, especially given the high fines introduced by GEO 46/2022.