Best Practices To Approach When Investing In Romania

Direct foreign investment in Romania has decreased recently, as noticed by the National Institute of Statistics. The top foreign investors in Romania have become Romanian immigrants who send money to their relatives in the country.

In this context, one of the most experienced foreign lawyers specializing in investing in Romania, Mr. Nicholas Hammond, shared his thoughts on best practices to approach and mistakes to avoid when investing in Romania as a foreigner. His firm, Hammond Partnership, was the first foreign law company to open an office in Bucharest, and this was quite an adventure, as he remembers.

As a Romanian law firm with a wide range of clients from major industry leaders to small startups, we see our role as Romanian lawyers in Bucharest as to guide, lead, and sometimes contradict our clients and point out potential issues to be resolved.  As a solicitor fresh out of London, I came to Romania to open a Romanian law firm, and it was a new experience.  Opening the first foreign law office in Romana after 1989 was an adventure. To still be here some 30 years later is a success for my firm, and I am proud of it. There have been some missteps on the way, but as we emphasize to all our Romanian and international clients, Romania is still a wonderful place to do business.    

Nicholas Hammond, Senior Partner at Hammond Partnership

According to Nicholas Hammons, it is essential to understand the local laws and society and how Romanian business works before going into business. Romanian company law differs from company law in England and the United States. The ways of doing business are vastly different.

The legal liability of Romanian company directors (administrators) differs from that of an English company director. The responsibilities of a director are different, as are their powers. The structure and authority in business are different, as is the thinking behind the law. It would be best if you had a clear explanation of the liabilities of an administrator before taking on this responsibility. This is not to advise you not to become a director of a Romanian company but to emphasize that you need to understand what it entails. A Romanian company’s taxation rules appear straightforward, but again, take advice. 

Nicholas Hammond also approached one sensitive topic: why Romanian lawyers are not so successful in certain situations when foreign investors need advice on opening a business in the country.

There are many Romanian lawyers who, unfortunately, do not understand the thinking of a foreign investor and, therefore, misadvise them. Too often, assumptions are made regarding their client. It is natural for investors to assume that if someone speaks English, the Romanian lawyer or the Romanian law firm delivers advice in the same manner and with the same understanding as they would receive in England. Just like any other relationship, the relationship between a lawyer and his client is based on trust and clear communication. Still, often, there is a vast difference between what is said and what is understood. Words used by a natural English speaker often do not mean the same for a Romanian speaker. Context can produce disastrous miscommunication. For example, “I want“ in Romanian is a translation of “I would like.” This can have an entirely different impact in English and on a native English speaker.

Nicholas Hammond on why is better to choose an adequate law firm when investing in Romania

He advises that when you come to Romania to invest, write as many questions on paper as you can, ask your Romanian lawyer the questions, and seek to understand the answers. The price for fully answering their questions could save you higher fees. Do not choose your lawyer on price but on an evaluation of the advice that they give now and can give in the future.