A foreign company may do business in Romania through either subsidiary or a branch. While a subsidiary has a legal status and is considered a Romanian entity, the branch is just an extension of the parent company and therefore has no legal status and no financial independence.

Legally, the branch has no separate status from the foreign company itself, but merely carries out its business in Romania. The foreign company is held liable to any creditors of the branch, employees included, as well as for any debts and obligations undertaken by its managers and agents on behalf of the branch. Branches can only carry out the activities for which the parent company has been authorized. Unlike branches, a Romanian subsidiary of a foreign company is a Romanian legal entity and, consequently, subject to Romanian law.

In practice, subsidiaries must fulfil the same registration formalities as companies, i.e. registration of the Articles of Incorporation with the appropriate office within the Romanian Trade Registry. A subsidiary must comply with the minimum capital requirements set out in the Romanian Companies Law.

Advertisements