Doing Business 2019 Romania Economy Profile Romania Page 1 Doing Business 2019 Romania Economy Profile of Romania Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Romania About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Romania Ease of Doing Business in DB 2019 Rank Region Europe & Central Asia 190 1 Romania Income Category Upper middle income 52 DB 2019 Ease of doing business score Population 19,586,539 0 100 City Covered Bucharest 72.30 DB 2019 Ease of Doing Business Score 0 100 76.10: Czech Republic (Rank: 35) 73.54: Moldova (Rank: 47) 72.34: Regional Average (Europe & Central Asia) 72.30: Romania (Rank: 52) 72.28: Hungary (Rank: 53) 71.24: Bulgaria (Rank: 59) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Romania 1 1 17 22 28 44 49 52 55 64 82 Rank 111 109 136 146 154 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Romania 100.00 100 83.90 80.00 80.30 80 74.96 72.25 58.20 60.00 59.87 Score 60 53.53 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Romania Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Romania Starting a Business - Romania Standardized Company Legal form Societate cu rãspundere limitatã - Limited Liability Company Paid-in minimum capital requirement RON 200 City Covered Bucharest Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Procedure – Men (number) 6 5.2 4.9 1 (New Zealand) Time – Men (days) 35 12.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 0.4 4.6 3.1 0.0 (Slovenia) Procedure – Women (number) 6 5.2 4.9 1 (New Zealand) Time – Women (days) 35 12.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 0.4 4.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.5 2.3 8.6 0.0 (117 Economies) Figure – Starting a Business in Romania and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 95.55: Moldova (Rank: 14) 90.02: Regional Average (Europe & Central Asia) 87.89: Hungary (Rank: 82) 85.38: Bulgaria (Rank: 99) 83.90: Romania (Rank: 111) 83.56: Czech Republic (Rank: 115) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Romania Figure – Starting a Business in Romania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 35 0.35 30 0.3 Cost (% of income per capita) 25 0.25 Time (days) 20 0.2 15 0.15 10 0.1 5 0.05 0 0 1 2 3 4 *5 *6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Romania Details – Starting a Business in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Evidence of verification of company name availability and reservation 1 day no charge thereof Agency : Commercial Registry of the Trade Register Office According to the Methodological Norms on keeping the trade register, making reservations and release of information: - The reservation of a company name is requested at the trade register office by application and is checked and made at national level so that company names are protected at national level as well. A company name shall not include words like: ”științific”, ”academie”, ”academic”, ”universitate”, ”universitar”, ”școală”, ”școlar” or their derivatives. - A company name including words like ”național”, ”român”, ”institut” or their derivatives or words or phrases characteristic of the central or local public institutions or authorities may be used only with the approval of the General Secretariat of the Government or the Prefect. Such certificate is valid for a period of 3 months. While the application can be done online at https://portal.onrc.ro , the approval documents must be obtained in a physical form from the Trade Registry, or sent by post directly to the applicant. 2 Deposit funds in a bank and obtain a document confirming bank deposit of 1 day no charge sufficient funds Agency : Bank The company's administrator or an authorized person must deliver certified copies of: (i) the name availability certificate, (ii) Articles of Incorporation, (iii) proof of the registered offices and (iv) the power of attorney (if applicable). Some banks, depending on their policy, may request originals of the documents mentioned above. Additionally, according to the specific internal rules of each bank, the bank may request a corporate excerpt evidencing the shareholder, headquarters and director(s) of the new company's shareholder, as well as other documents attesting the beneficiary. After the documents are being reviewed by a bank's representative, the deposit is granted and the administrator/authorized person will receive a document confirming the deposit of sufficient funds. The bank may charge the solicitants a commission, which may range from zero to 0.5% of the capital, in accordance to the internal regulations of each bank. The share capital payments will be made within a share capital account. No payments can be made from the share capital account, thus, upon completion of the incorporation formalities, an operational account will need to be opened; alternatively, the share capital account can be converted into an operational bank account. 3 Company registration at the Commercial Registry 3 days RON 122 Agency : Commercial Registry of the Trade Register Office In order to register at the Commercial Registry, the founders of the company shall have to prepare the articles of incorporation. Within 15 days from the establishment of the articles of incorporation, the founders or their mandates shall be under the obligation to register the company at the trade register in the area of the company's registered office. The articles of incorporation shall include, inter alia, the amount of the capital, which shall be fully subscribed by the founders. The trade register office also obtains electronically the fiscal record certificates. Registration at the trade register office is finalized by issuance of the certificate of incorporation ensures the following: - company incorporation - fiscal registration (for profit, wages, health, pensions, unemployment taxes) by obtaining the unique registration code from the Ministry of Public Finance - authorization, based on statements of own responsibility, in the field of food safety and sanitary-veterinary protection, environment protection and labor protection - publication in the Official Gazette of Romania as legal publicity (publication fee in amount of RON122 per page applies). Registration for VAT purposes is made at the Fiscal Administration Authority directly. Based on Government Emergency Ordinance no. 116/2009 instituting certain measures regarding the activity of registration in the trade register, in order to simplify the registration procedures, the final approval for incorporation is no longer given by a delegated judge, but by the director or the appointed person of the territorial trade register office in the county where the company is incorporated, Bucharest in our case study. Page 8 Doing Business 2019 Romania 4 Acquisition of the company's Unique Registry for Controls 1 day RON 31 Agency : National Agency of Tax Administration (local office) According to the law, all legal entities registered in the Trade Registry have the obligation to purchase such a Registry for each of their seats (primary or secondary seats). The Registry must be purchased within 30 days after the company is registered at the Trade Registry. If not, the company may be subject to penalties. The registry can be purchased the same day with no previous application requested, from the local offices of the Tax Administration. The company tax registration certificate is needed for the acquisition of the Registry and a copy of the lease for the space in which it operates. In addition, in order to purchase such a Registry it is necessary to fill in an application in this respect and also provide a copy of the identity card of the person who lodged the application. The Registry is used to record all inspections carried out by different control bodies: financial, consumer protection, urban planning, labor, fire protection etc. The Unique Registry for Controls is numbered, sealed and kept by the legal representative of the verified company or by its replacement. The Registry shall be kept at the registered office and at each secondary office for which there have been issued permits/licenses and/or operating agreements. 5 Register for VAT 30 days no charge Agency : National Agency of Tax Administration (simultaneous with Starting from January 1st, 2017, a new procedure for VAT registration purposes previous procedure) was introduced. If a company requests the VAT registration at the moment of incorporation, Form 098 "Application for VAT registration purposes" must be submitted to the Tax Authorities on the same day when the documents for incorporation with the Registry of Commerce are submitted. If a company is already incorporated but decides to opt for VAT registration, then Form 010 must be submitted to the Tax Authorities. If a company's turnover exceeds the threshold of RON 220,000 it is mandatory to request the VAT registration. In this respect, the company must submit Form 010 along with a copy of the trial balance for the month in which the exemption threshold was exceeded. The above forms must be submitted in-person to the Tax Authority's registry or by post. Starting from October 1, 2017, taxable persons who request the registration for VAT are subject to a risk assessment procedure. The criteria for assessing the fiscal risk are set out in the Order of the Minister of Public Finance no.2856/2017. The new criteria are divided into 15 components, including: - the head office of the company; - information regarding associates and administrators, particularly with regards to their involvement in companies under insolvency or bankruptcy, tax inactivity, temporary inactivity at RECOM (Trade Register online service), or with cases of rejection or cancellation of VAT registration; - information regarding outstanding tax liabilities, contraventions, offenses, income, tax residence both for the company and its associates and administrators; - information regarding the bank account, business activity, accounting services and the number of employees at company level. Each set of criteria is assigned a corresponding negative score, and the summation of these scores is subtracted from initial 100 points that taxpayers is deemed to have. Companies with scores of less than 51 points are considered to have a high fiscal risk. 6 Register the employees contracts with the Territorial Labor Inspectorate 1 day (simultaneous no charge (TLI) online with previous Agency : Territorial labor inspectorate procedure) Each employer shall be under the obligation to settle an internal general register record of all of his employees, in electronic format, which shall be transmitted to the Territorial Labour Inspectorate in the jurisdiction the employer has its registered office or domicile. The registration of the employees' labor contract can be done online, after a representative of the employer visits in person the Territorial Labour inspectorate to obtain a password for operating the online registry. This is based on the Government Decision no. 905/2017 on the general register of employees record, applicable starting with December 19, 2017. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Romania Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2019 Romania Dealing with Construction Permits - Romania Standardized Warehouse Estimated value of warehouse RON 2,133,482.50 City Covered Bucharest Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 24 16.0 12.7 None in 2017/18 Time (days) 260 170.1 153.1 None in 2017/18 Cost (% of warehouse value) 2.1 4.0 1.5 None in 2017/18 Building quality control index (0-15) 13.0 12.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Romania and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 75.46: Bulgaria (Rank: 37) 69.02: Regional Average (Europe & Central Asia) 66.71: Hungary (Rank: 110) 58.20: Romania (Rank: 146) 56.20: Czech Republic (Rank: 156) 52.19: Moldova (Rank: 172) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Romania – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 1.2 250 1 Cost (% of warehouse value) 200 0.8 Time (days) 150 0.6 100 0.4 50 0.2 0 0 1 2 3 4 *5 *6 *7 *8 *9 * 10 * 11 * 12 13 14 * 15 * 16 17 18 19 * 20 21 22 23 24 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Romania Figure – Dealing with Construction Permits in Romania and comparator economies – Measure of Quality 15 14.0 13.0 13.0 12.0 12.0 Index score 10 8.0 5 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Details – Dealing with Construction Permits in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain topographical documentation 7 days RON 2,000 Agency : Private company To obtain the urban planning certificate, BuildCo must submit up-to-date topographical documentation. This will be drafted by an authorized engineer. 2 Obtain approval of topographical documentation and land registry excerpt 15 days RON 220 from the Office for Cadaster and Real Estate Registry (OCPI) Agency : Office for Cadaster and Real Estate Registry (OCPI) The information excerpt provides information regarding the legal status of the land. Topographical plans executed by authorized engineers must be approved by the Office for Cadaster and Real Estate Registry (OCPI). 3 Obtain urban planning certificate 30 days RON 14 Agency : Department of Urbanism of the local City Hall Pursuant to Order No. 839/2009 issued by the Ministry of Regional Development and Housing (“Order 839”), approving the Methodological Norms to the Construction Law, the following urban planning documents are required: • The general urban plan (PUG) and the related local regulation • The (zone) urban plan (PUZ) and the related local regulation • The detailed urban plan (PUD) The urban planning certificate provides information on the ownership, the public utility service availability, the location within (intravilan) and outside (extravilan) the city limits, the urban planning requirements, the land use at the time, the allowed uses, and so forth. From a technical point of view, the certificate shows the percentage of land occupation, the coefficient of land use, the minimum and maximum dimensions of the plots, the allowed built-up area, utilities, and access, necessary parking, alignment of the land and buildings with the adjacent streets, and the maximum and minimum construction height allowed. This certificate does not grant the right to build. Its validity period varies but cannot exceed 12 months. Construction must start during that 12-month period. The urban planning certificate enumerates all the necessary project clearances applicable to the warehouse case considered here. The municipality has the right to decide which project clearances are needed. 4 Obtain project clearance from Bucharest Regional Environmental 21 days RON 500 Protection Agency Agency : Bucharest Regional Environmental Protection Agency According to the Order of the Ministry of the Environment and the Climacteric Changes no. 865 / 2014 regarding the amendment of certain regulations in the environment protection field, the cost in case the application requires no assessment (the project can be built without environmental permit) is of Ron 100. In this case, the application will be responded in 10 days; If a preliminary assessment of the project is found necessary by the Environmental Protection Agency (highly probable for our case study) the tax is of Ron 500 and the application will be responded in 21 days. 5 Obtain project clearance from water supply and sewerage authority (Apa 18 days RON 72 Nova SA) Agency : Apa Nova SA By law, the project clearance from the water supply and sewerage authority (Apa Nova S.A.) must be issued within 15 days, but, in practice, it can take up to 18 days. Page 12 Doing Business 2019 Romania 6 Obtain project clearance from the electric power supply authority (Enel 15 days RON 95 S.A.) Agency : Enel S.A. According to Order No. 48/2008 on the Approval of the Methodology Regarding the Issuance of Clearance Permits by Network Operators, BuildCo must obtain a project clearance from Enel S.A. prior to beginning construction. The electric power authority will clear the electrical plans, by confirming that the plans are in compliance with regulations and standards. An approval from the electric power supply authorities is required for all construction projects implying the use of electricity. 7 Obtain project clearance from General Inspectorate for Emergency 15 days no charge Situations Agency : General Inspectorate for Emergency Situations The relevant legal provisions in force are Methodological Norms for the Endorsement and Permitting regarding Fire Security and Civil Protection, approved by Order no. 3/2011 of the Ministry of Administration and Interior. According to the amendments to the Construction Law, if the 15-day term provided by the law for issuing the clearance is not observed by the General Inspectorate for Emergency Situations, the legal provisions referring to tacit approval shall be applied. 8 Obtain project clearance from Health Department 7 days RON 250 Agency : Bucharest Health Department The maximum term to respond to the application for project clearance from the Heath Department is 20 working days by the Order no. 251/2012 issued by the Ministry of Health, published in the Official Gazette Part I, no. 196/2012. In practice, the term to obtain the clearance is normally 15 days. However, there is a possibility to fast track this procedure, which allows BuildCo to complete it in 5 days for RON 250. To apply for approval at the Bucharest Health Department, several documents must be submitted: - urbanism certificate with annexed plans - technical memorandum drafted by the architect - ownership title - incorporation certificate 9 Obtain updated land registry excerpt from the Office for Cadaster and Real 2 days RON 20 Estate Registry (OCPI) Agency : Office for Cadaster and Real Estate Registry (OCPI) An updated land title excerpt is needed to attest that no legal changes have occurred. The land title excerpt obtained at the beginning is only valid for 30 days and so the initial one can't be used. OCPI issues the land title excerpt in 2 business days. Sign contract with the solid waste authority (REBU SA) 1 day RON 2,667 10 Agency : REBU SA Through the certificate of urbanization the municipality requests that a contract be signed with a waste disposal company to clear construction debris from the construction site. There are two companies that provide services in this area: ROSAL S.A. and REBU S.A. The latter is a larger player with a wider network. The fees are RON 93 (RON 75.00 + 24% VAT) per cubic meter of waste (although VAT is not taken into account in the Doing Business case study). Additionally, for the surface of the land in question, a tax of RON 42.00 would also be applicable. The minimum of 35 cubic meters must be contracted according to the requirements of company. Notarize statement about nonexistence of land disputes 1 day RON 15 11 Agency : Notary BuildCo must obtain a notarized statement stating that there are no disputes related to the land. This procedure is not a standard requirement by law but is often requested in practice. Each notary charges a different fee, but the fee cannot exceed RON 30.00, the maximum notary fee established by the National Notaries Union. Page 13 Doing Business 2019 Romania Register project with the Order of Architects and pay architecture stamp 1 day RON 1,117 12 duty Agency : Order of Architects Pursuant to Government Decision 932/2010 regarding the methodological norms for the application of Law 184/2001, the local branch of the Order of Architects (OAR) issues an attestation to their members confirming their right of signature on projects that are submitted for obtaining the building permit and other types of similar authorizations. The fee for this attestation cannot exceed RON 50 and constitutes revenue for the local OAR. Pursuant to Law 121/2002 regarding literary, cinematographic, theater, music and visual arts stamp duty and Order 2823/2003, architecture stamp duty is added to the value of the investment. The stamp duty represents 0.05% of the value of the investment and is applied to all plans designed by architects. It can be paid directly at the OAR or via bank transfer. The collected amount is transferred to the Order of Architects or the Architects Union based on the option of the architect in charge of the plans. 13 Obtain building permit 30 days RON 21,335 Agency : City Hall BuildCo must apply for a building permit by submitting the following documents: • City-planning certificate • Property title on the land (there are no requirements as to how recent the title must be) • Technical documentation which replaced former plans for the authorization of construction • Necessary approvals, as required by the city-planning certificate • Environmental approval • Proof of payment of the legally required taxes (receipts from the tax authorities) • Legalized copy of the title to the real estate or the updated cadastral plan and land registry extract for informative purposes The building permit is issued by the City Hall. For Bucharest, the construction permit is issued by the General Mayor of Bucharest if the construction is outside the buildable area or if it exceeds a district area; or by the relevant district mayor if the construction is located in one of the six districts of Bucharest. The cost of the building permit is 1% of the value of the construction work. 14 Notify the City Hall of the start of construction works 1 day no charge Agency : City Hall According to Law 50/1991 on Approval of Construction works, the investor must notify the building permit issuing authority, the City Hall, of the date on which construction work will begin. Notify Bucharest Construction Inspectorate of commencement of 1 day RON 12,801 15 construction and submit the schedule of inspections Agency : Bucharest Construction Inspectorate According to Law 50/1991 on Approval of Construction works, the investor must notify the Bucharest Construction Inspectorate of the date on which construction work will begin. Notify the Bucharest Labor Inspectorate of the start of construction 1 day no charge 16 Agency : Bucharest Labor Inspectorate The investor or the project manager of the construction project must notify the local Labor Inspectorate if (i) the extent of the works is estimated to be over 30 days and there are at least 20 workers on the site simultaneously or (ii) the estimated workforce is greater than 500 workers/day. The notification must be submitted at least 30 days prior to the commencement of the construction works. Otherwise, the Labor Inspectorate will impose a fine. This is prescribed in Government Decision No. 300/2006 on minimum health and safety requirements for temporary construction sites. 17 Receive foundations work inspection 1 day no charge Agency : Bucharest Construction Inspectorate The schedule of inspections is described in the building permit. By law, BuildCo must pay 0.1% of the authorized value to the competent territorial inspectorate for construction. In addition, the investors or owners must pay the State Inspectorate for Construction a monthly payment equivalent to 0.70% of the value of the expenses incurred in that month for the execution of the construction work. 18 Receive frame inspection 1 day no charge Agency : Bucharest Construction Inspectorate Page 14 Doing Business 2019 Romania 19 Notify City Hall of completion of construction and request final assessment 1 day no charge Agency : Department of Urbanism of the local City Hall BuildCo notifies the local public administration and other relevant authorities of the date of completion of construction so that the Acceptance Commission may be convened and a final assessment can be carried out. Notify Bucharest Construction Inspectorate of completion of construction 1 day no charge 20 and request final assessment Agency : Bucharest Construction Inspectorate At the end of construction works BuildCo must notify the State Construction Inspectorate and submit a request for the convening of the Acceptance Commission. Together with the notification, BuildCo must also submit proof of the actual value of construction works and a tax adjustment form. 21 Receive final inspection and obtain final assessment from the Acceptance 15 days no charge Commission Agency : Acceptance Commission The final acceptance commission will analyse: (i) the protocol(s) signed upon completion of the works, (ii) the manner the remaining works [mentioned by the initial protocol(s)] were performed and (iii) the report on the construction performance in time. Although prescribed by the law, in practice, the final inspection hardly ever takes place (especially in cases where the investor is also the construction company). 22 Obtain water and sewage connection (Apa Nova SA) 75 days RON 2,300 Agency : Apa Nova SA According to the water and sewage authority (Apa Nova S.A.), this procedure takes approximately 2 -- 3 months due to a significant increase in demand and backlog. Inspections for utilities occur at the same time as the connection. 23 Obtain certificate attesting the existence of the construction from the City 30 days no charge Hall Agency : Department of Urbanism of the local City Hall According to Order 700/2014 of the National Agency for Cadaster and Real Estate Registry the City Hall will issue a certificate attesting the existence of the construction, which, together with the final assessment, is necessary for registering the building with OCPI. 24 Register the building with the Real Estate Registry 30 days RON 1,127 Agency : Real Estate Registry Before obtaining the certificate attesting the existence of construction and registering the building with the Office for Cadaster and Real Estate Registry, BuildCo needs to hire a cadastre/topographical engineer to update the cadastre plans with the construction. The building can be registered once it has been completed and approved. Pursuant to Order No. 700/2014 for the approval of the regulation regarding the endorsement, the reception and the registration with the Real Estate Registry, the standard registration time is 15 business days but if the applicant pays an additional fee, the registration time will be reduced to 5 business days. According to Order No. 39/2009 on the approval of fees for performing services by the National Agency for Cadastre and Land Registration ("Order 39"), the standard fee for registering the building upon reception is RON 60 plus 0.05% of the value of construction. For the fast-track process, the fee is the standard fee plus 4 times the standard fee. The fees can be found at the following link: http://www.OCPI.ro/images/documente/prima_inregistrare_imobil.pdf. Takes place simultaneously with previous procedure. Page 15 Doing Business 2019 Romania Details – Dealing with Construction Permits in Romania – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Passing a certification exam. Page 16 Doing Business 2019 Romania What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 17 Doing Business 2019 Romania Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 18 Doing Business 2019 Romania Getting Electricity - Romania Standardized Connection Price of electricity (US cents per kWh) 5.9 Name of utility e-distribuție Muntenia City Covered Bucharest Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 9 5.3 4.5 3 (25 Economies) Time (days) 174 110.3 77.2 18 (3 Economies) Cost (% of income per capita) 449.7 325.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 7 5.5 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Romania and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 95.36: Czech Republic (Rank: 10) 74.88: Moldova (Rank: 81) 71.66: Regional Average (Europe & Central Asia) 63.29: Hungary (Rank: 122) 54.93: Bulgaria (Rank: 147) 53.53: Romania (Rank: 154) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 19 Doing Business 2019 Romania Figure – Getting Electricity in Romania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 500 160 Cost (% of income per capita) 140 400 120 Time (days) 300 100 80 200 60 40 100 20 0 0 1 2 3 4 5 6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Romania and comparator economies – Measure of Quality 8 8 7 7 7 7 6 6 5.5 Index score 5 4 3 2 1 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 20 Doing Business 2019 Romania Details – Getting Electricity in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to the utility and await site inspection 5 calendar days RON 215 Agency : e-distribuție Muntenia The client submits the request for the technical connection approval (TCA). E- distribuție Muntenia analyses the submitted documents (town planning certificate, placement permit, construction permit etc.) and makes a site inspection, and if the connection solution is unique („obvious”) it issues a Solution Sheet and then the TCA. If there are several connection solutions, the customer must contract e- distribuție Muntenia to make the solution study. After e-distribuție Muntenia finishes the solution study, it submits it to the beneficiary and the beneficiary chooses the solution. Afterwards, e-distribuție Muntenia issues the TCA based on the solution chosen by the beneficiary. The TCA comprises all cost estimates for the connection works. 2 Receive site inspection and await a proposal study, a study solution and 25 calendar days RON 0 technical connection approval Agency : e-distribuție Muntenia The utility visits the site to visualize possible solutions for connection and also confirms the technical information provided by customers at the time of application. 3 Sign a declaration of easement in front of a notary 1 calendar day RON 80 Agency : Notary Because the transformer is located on the customer's private land, the customer must sign a declaration of easement in front of a notary, through which he conveys easement to e-distribuție Muntenia. This declaration is part of the file that has to be submitted to the utility to receive the connection contract. 4 Submit documents for connection contract and receive contract 10 calendar days RON 189,438 Agency : e-distribuție Muntenia After receiving the TCA, the client has maximum 12 months to submit the request for the connection contract. The customer can pick an ANRE certified electrical contractor to prepare design of works/perform the connection works, with whom he signs an assignment agreement ("convenție de atribuire"). Within 10 days after the request is received, e-distribuție Muntenia prepares the contract (based on the costs estimated in the TCA and correlated with the prices in the assignment agreement). 5 Sign an easement contract in front of a notary and notify the property 1 calendar day RON 2,140 easement to the Cadastre and Land Registration office Agency : Notary/Cadastre and Land Registration office (OCPI) The customer must sign an easement contract in front of a notary, through which s/he conveys easement to the utility. The notary notifies the Cadastre and Land Registration office (OCPI) about the change in the propriety rights on the plot of land. The OCPI updates the land registry. 6 Obtain construction permit for connection works 30 calendar days RON 0 Agency : Municipality The electrical contractor prepares the design of the connection works. At the same time, the contractor applies to the municipality for a Town Planning Certificate for the connection works. The application must include topographical and cadastral plans issued by the Cadastre and Land Registration office. The Town Planning Certificate indicates all the approvals that the contractor must obtain for the new connection (environment approval, fire safety, approvals from other utilities). The contractor obtains such approvals and applies to the municipality for a construction permit. In order to obtain the construction permit, a fee equal to 1% of the construction works value has to be paid. 7 Conclude execution contract between e-distribuție Muntenia and the 90 calendar days USD 0 electrical contractor, await connection works, and submit internal wiring file Agency : Electrical contractor After the construction permit is issued, e-distribuție Muntenia concludes the execution contract with the contractor chosen by the consumer by direct entrusting. Through the contractor, the utility obtains an excavation permit from the municipality. After the excavation permit is issued, the works can begin. The customer can send in the internal wiring file. 8 Receive final inspection by ENEL, submit internal wiring file and receive 10 calendar days RON 0 connection certificate Agency : e-distribuție Muntenia When the construction works are finished, the electrical contractor notifies e- distribuție Muntenia and e-distribuție Muntenia will send a team for accepting the works. After accepting the works, e-distribuție Muntenia issues the connection certificate. At this time it is mandatory that the internal wiring file is sent to e- distribuție Muntenia. Page 21 Doing Business 2019 Romania 9 Sign supply contract and receive meter installation by ENEL 2 calendar days RON 0 Agency : e-distribuție Muntenia The consumer signs a supply contract with any supplier that operates in Bucarest. 48 hours after the signing of the contract, e-distribuție Muntenia comes to the warehouse to install the meter and electricity starts flowing. In some situations, it can be necessary to interrupt the overall grid of the neighborhood. Takes place simultaneously with previous procedure. Page 22 Doing Business 2019 Romania Details – Getting Electricity in Romania – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 7 Total duration and frequency of outages per customer a year (0-3) 2 System average interruption duration index (SAIDI) 2.1 System average interruption frequency index (SAIFI) 2.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.enel.ro/ro/ clienti-oferte-em.html Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 23 Doing Business 2019 Romania Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. • Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 24 Doing Business 2019 Romania Registering Property - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 6 5.3 4.7 1 (4 Economies) Time (days) 14.5 20.3 20.1 1 (New Zealand) Cost (% of property value) 1.3 2.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 17.0 19.6 23.0 None in 2017/18 Figure – Registering Property in Romania and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 82.62: Moldova (Rank: 22) 80.09: Hungary (Rank: 30) 79.74: Czech Republic (Rank: 33) 75.57: Regional Average (Europe & Central Asia) 74.96: Romania (Rank: 44) 69.32: Bulgaria (Rank: 67) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Romania – Procedure, Time and Cost Time (days) Cost (% of property value) 0.8 14 0.7 12 Cost (% of property value) 0.6 10 Time (days) 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0 1 *2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 25 Doing Business 2019 Romania Figure – Registering Property in Romania and comparator economies – Measure of Quality 30 25.0 26.0 25 22.0 Index score 19.0 19.6 20 17.0 15 10 5 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Details – Registering Property in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain information from the Cadastre 8 days RON 160; (1. Agency : Cadastre and Real Estate Publicity Office Consultation of The seller obtains information drafted by an authorized expert from the Cadastre archives on the spot - and Real Estate Publicity Office. This information includes: technical memorials, cost: 10 RON for 15 coordination inventory, analytical calculation of the land, topographical minutes. description, area plan on a scale of 1:500; and on the scale of 1:2000, 2. Land Book description of property, the plan of the real estate, and a property statement information excerpt - regarding the identification of the limits of the measured real estate. cost: 20 RON per The documentation shall include: property. • Application form 3. Certified copies of • A copy of the identification documents of the owner documents from the Order no. 700/2014 provides the deadlines for obtaining technical information document files and from the Cadastre which differ by taking into account the relevant requested land books - cost: 5 document and vary between two (2) days and three (3) days in the normal RON per page (3 Procedure and one (1) day in the expedited Procedure. Order no. 700/2014 pages). provides the relevant taxes to be paid which also vary from RON 15/hour to RON 4. Certificate for the 30/sheet or even RON 150 for certain technical data. Order no. 39/2009 was identification of the repealed and replaced by Order no. 700/2014 since August 30, 2014. In addition, topographic/cadastre any document having a public character (e.g., location layouts, cadastral data) can be obtained by any person and not only by the owner of the property. number and land book number Cost: according to the 1. Consultation of archives on the spot - cost: 10 RON for 15 minutes. name of the owner - 2. Land Book information excerpt - cost: 20 RON per property. cost: 100 RON per 3. Certified copies of documents from the document files and land books - cost: 5 owner/land book RON per page. office. 4. Certificate for the identification of the topographic/cadastre number and land 5. Cadastre plan book number according to the name of the owner - cost: 100 RON per excerpts - cost: 15 owner/land book office. 5. Cadastre plan excerpts - cost: 15 RON per property RON per property) Time: 1. Consultation of archives on the spot - time: on the spot. 2. Land Book information excerpt - ordinary Procedure: 2 days; emergency Procedure: 1 day. 3. Certified copies of documents from the document files and land books - ordinary Procedure: 2 days; emergency Procedure: 1 day. 4. Certificate for the identification of the topographic/cadastres number and land book number according to the name of the owner - ordinary Procedure: 3 days; emergency Procedure: 1 day. 5. Cadastre plan excerpts - ordinary Procedure: 3 days; emergency Procedure: 1 day. 2 Obtain the fiscal certificate from the direction for public taxes of the 4 days no charge Municipality Agency : Municipality The Seller obtains a clearance certificate from the direction for public taxes of the Municipality from the district were the real estate is located attesting that the property is not owned by someone else and that there are no unpaid taxes. This fiscal certificate is required for completion of a transfer of ownership. The fiscal certificate is valid for up to 30 days for legal entities (90 days for individuals). The documentation shall include: • An application from the owner • A copy of the identification documents of the owner • The last accounting records of the company • The power of attorney for the company's representative Page 26 Doing Business 2019 Romania 3 Obtain the Land Registry extract (non-encumbrance certificate) from the Less than one day, RON 200; Land Registry office online (Authentication Agency : Cadastre and Real Estate Publicity Office excerpt - 40 RON in For the notarization of the transfer deed of an immovable, the notary public regular Procedure (2 requests an authentication excerpt from the Land Registry online. The business days), authentication excerpt may only be obtained by a notary public. 200 RON in The validity of the authentication excerpt is of 10 business days, starting with the expedited Procedure day when the request application form was requested. During the 10-business (1 day);) days validity period, the Land Registry office clerk is not entitled to register any other operation in the relevant Land Registry, save for the one for which the excerpt was required; the Land Registry is blocked during the aforementioned period, in order to ensure the security of the real estate transactions. However, if during the validity term, the notarial deed for which the excerpt was requested is submitted to the Cadastre and Real Estate Publicity Office for registration or if the notary public made an express request in this sense, the validity of the excerpt expires. 4 The notary authenticates the transfer deed 2 days RON 11,827.32; Agency : Notary Public (RON 5,080 + 0,44%, The notary public verifies the fiscal certificate and the Land Registry excerpt and of the transaction notarizes the sale purchase agreement. Without these documents, the notary value exceeding RON public may not notarize the agreement. According to the actual legal provision, 600,001 (notary fees) the sale purchase agreement shall be drafted only by the notary public.The costs For transactions with related to the procedure could be paid either directly to the notary public, or via bank transfer. Though it is not mandatory, a lawyer may conduct a due diligence the value of the before this procedure, by perusing the previous successive transfers and owners transaction (in RON): of the property. The notary public is obliged to verify all encumbrances and relief • Below RON 15,000 measures instituted over the immovable to be sold in the public records and it is - the fee is 2,2% but liable for the failure to specify in the notarial deed the encumbrances and the no less than RON relief measures over the immovable - see also 2.1.3., above. The documentation 150 for the notarization of the transfer deed includes, among others, the following: • From RON 15,001 (i) the property title in original, to RON 30,000 - the (ii) the cadastral documents of the property (obtained in Procedure 1), fee is RON 330 + (iii) the Fiscal certificate from the local taxes office (obtained in Procedure 3), 1,6% for the amount (iv) identification certificates/documents for the signatory parties (identity cards, exceeding RON passports, registration certificates, etc), 15,001 (v) documents attesting the capacity of the signatories to sign the sale purchase agreement (power of attorney, shareholders' decision, articles of incorporation, • From RON 30,001 etc.). to RON 60,000 - the The Seller - legal entity has to pay an income tax of 16% applied on the profit fee is RON 580 + resulted in the company's balance sheet, including this transaction. 1,3% for the amount exceeding RON 30,001 • From RON 60,001 to RON 300,000 - the fee is RON 970 + 0,9% for the amount exceeding RON 60,001 • From RON 300,001 to RON 600,000 - the fee is RON 3,130 + 0,65% for the amount exceeding RON 300,001 • Over RON 600,001 - the fee is RON 5,080 + 0,44% for the amount exceeding RON 600,001) Page 27 Doing Business 2019 Romania 5 Register the title with the Land Registry Office 3 days RON 15,667.41; Agency : Land Registry office (0.5% of the property The same public notary applies for registration of the property title at the Land value without VAT Book Office, by sending the application and the original notary deed, directly or (regular Procedure); by fax, to the district Land Book Office where the real estate is placed. Therefore, 2% of the property the registration is performed ex officio by the notary, based on the authenticated value without VAT sale purchase act. An expedited option is available given that an extra fee of 4 times the normal fee will be added. The extra fee can not be more than RON (expedited 5,000. Registration fees are 0.5% of property value with a minimum of RON 60 Procedure). according to Order no 39/06.04.2009, for a Procedure that takes 9 days. An expedited Procedure is available (3 days) for an additional fee of 2% of property The extra fee paid for value. According to the article 1 paragraph 6 of Order no 39/2009, this additional the expedited fee cannot exceed RON 5000. Only when the real estate is registered in the Procedure cannot Land Book for the first time a tax of RON 120 should be paid for this registration. exceed RON 5,000.) In case the owner registers his/her property for the first time (i.e. following the reconstitution of the ownership for which the cadastre is made for the first time) the terms for registration are 21 days (regular Procedure) or 7 days (expedited Procedure). The documentation shall include: • Sale-purchase contract (notarized in Procedure 4) • Fiscal certificate (obtained in Procedure 2) • Cadastre certificate (obtained in Procedure 1) • ID of the buyer • A registration application • The property title, all the originals, plus a legalized copy from a public notary • Proof of total payment 6 File the fiscal declaration confirming the acquisiton of the property 1 day RON 10 Agency : Local Tax Department The fiscal declaration concerning the immovable acquisition should be filled in by the purchaser at the Local Tax Department within a 30-day term since the notarization of the transfer deed. The documentation shall include: tax statement for the immovable, the property title, in original and a copy, accounting documents (invoice, analytical balance, balance sheet, etc.), cadastral documents, copy of the registration certificate of the company. Takes place simultaneously with previous procedure. Page 28 Doing Business 2019 Romania Details – Registering Property in Romania – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 5.0 What is the institution in charge of immovable property registration? Bucharest Cadastre and Land Registration Office ("Oficiul de Cadastru si Publicitate Imobiliara Bucuresti") In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Bucharest Cadastre and Land Registration Office ("Oficiul de Cadastru si Publicitate Imobiliaria Bucuresti") In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 6.0 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.ocpim m.ro/ocpi_web/fo rmular/ACTE.pdf Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.ocpib. ro/fisiere/tarife_M of_253_o39.pdf Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://www.ocpib. ro/fisiere/termene .xls. Also available at the local district Cadaster and Land Registration Offices. Page 29 Doing Business 2019 Romania Is there a specific and separate mechanism for filing complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Contact information: http://ancpi.ro/pa ges/legea544.ph p?lang=ro Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 82,477 Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the official fee Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: http://www.ocpib. ro/fisiere/tarife_M of_253_o39.pdf Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://www.ocpib. ro/fisiere/termene .xls Is there a specific and separate mechanism for filing complaints about a problem that Yes 0.5 occurred at the cadastral or mapping agency? Contact information: http://www.ancpi. ro/index.php/infor matii-publice- 3/interes- public/solicitari- conform-legii- 544-2001 Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 6.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 Page 30 Doing Business 2019 Romania For a standard land dispute between two local businesses over tenure rights of a property The Bucharest worth 50 times gross national income (GNI) per capita and located in the largest business Tribunal city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a Between 1 and 2 2.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 31 Doing Business 2019 Romania Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 32 Doing Business 2019 Romania Getting Credit - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Strength of legal rights index (0-12) 9 7.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.6 6.7 8 (42 Economies) Credit registry coverage (% of adults) 18.3 25.3 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 55.7 43.4 65.3 100.0 (25 Economies) Figure – Getting Credit in Romania and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 80.00: Romania (Rank: 22) 75.00: Hungary (Rank: 32) 70.00: Czech Republic (Rank: 44) 70.00: Moldova (Rank: 44) 68.70: Regional Average (Europe & Central Asia) 65.00: Bulgaria (Rank: 60) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Romania and comparator economies 9 8 9 8 8 7 7.2 7 6 Index Score 5 4 3 2 1 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 33 Doing Business 2019 Romania Details – Legal Rights in Romania Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and Yes enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Romania and comparator economies 8 7 7 7 6.6 6 6 6 Index Score 5 5 4 3 2 1 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 34 Doing Business 2019 Romania Details – Credit Information in Romania Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? Yes Yes 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 7,295,000 2,084,018 Number of firms 0 308,348 Total 7,295,000 2,392,366 Percentage of adult population 55.7 18.3 Page 35 Doing Business 2019 Romania Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 36 Doing Business 2019 Romania Protecting Minority Investors - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Extent of disclosure index (0-10) 9.0 7.3 6.5 10 (13 Economies) Extent of director liability index (0-10) 4.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 5.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 6.0 7.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 5.0 5.6 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 7.0 7.5 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Romania and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 68.33: Bulgaria (Rank: 33) 68.33: Moldova (Rank: 33) 65.29: Regional Average (Europe & Central Asia) 60.00: Romania (Rank: 64) 58.33: Czech Republic (Rank: 72) 50.00: Hungary (Rank: 110) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Romania and comparator economies – Measure of Quality Romania 7 4 9 5 6 5 Bulgaria 9 2 10 4 8 8 Czech Republic 5 6 2 7 6 9 Hungary 7 4 2 5 6 6 Moldova 9 4 7 5 8 8 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Europe & Central Asia 7.6 4.6 7.2 5.6 7.3 6.8 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 37 Doing Business 2019 Romania Details – Protecting Minority Investors in Romania – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6 Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 4.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if negligent 1.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 6.0 Extent of shareholder rights index (0-10) 6.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Page 38 Doing Business 2019 Romania Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 5.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 7.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the No 0.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 39 Doing Business 2019 Romania Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 40 Doing Business 2019 Romania Paying Taxes - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Payments (number per year) 14 16.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 163 214.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 40.0 32.3 39.8 26.1% (32 Economies) Postfiling index (0-100) 76.82 64.41 84.41 None in 2017/18 Figure – Paying Taxes in Romania and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 84.55: Moldova (Rank: 35) 81.42: Czech Republic (Rank: 45) 80.30: Romania (Rank: 49) 75.80: Regional Average (Europe & Central Asia) 73.81: Hungary (Rank: 86) 72.00: Bulgaria (Rank: 92) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Romania and comparator economies – Measure of Quality 100 90.75 90.79 80 76.82 71.02 63.94 64.41 Index score 60 40 20 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 41 Doing Business 2019 Romania Details – Paying Taxes in Romania Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 82.0 15.8% gross salaries 17.82 paid - Social security contributions Corporate 1.0 online 25.0 16% taxable profit 12.27 income tax Health 0.0 online and 5.2% gross salaries 5.87 insurance jointly contributions Building tax 2.0 1% building value 0.98 Medical leave 0.0 online and 0.85% gross salaries 0.96 jointly Environmenta 1.0 RON 2 per weight of 0.89 l taxes kilo of packaging packaging Unemployme 0.0 online and 0.5% gross salaries 0.56 nt contribution jointly Accident risk 0.0 online and 0.15-0.85% gross salaries 0.29 fund jointly Guarantee 0.0 online and 0.25% gross salaries 0.28 fund jointly Vehicle tax 2.0 varies fixed fee 0.03 depending on type of vehicle Land tax 2.0 various rates land area 0.02 Stamp duty 0.0 various rates type of 0.00 small amount on contracts contract Urbanism tax 1.0 surface 0.00 Value added 1.0 online 56.0 19% value added 0.00 not included tax (VAT) Employee 0.0 online and 16.5% gross salaries 0.00 withheld paid - Social jointly security contributions Firm tax 2.0 A fixed The surface 0.00 amount per of the lighting square meter panel of lighting panel Fuel tax 1.0 included in 0.00 small amount fuel price Totals 14 163 40.0 Page 42 Doing Business 2019 Romania Details – Paying Taxes in Romania – Tax by Type Taxes by type Answer Profit tax (% of profit) 12.3 Labor tax and contributions (% of profit) 25.8 Other taxes (% of profit) 1.9 Page 43 Doing Business 2019 Romania Details – Paying Taxes in Romania – Measure of Quality Answer Score Postfiling index (0-100) 76.82 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 22.5 55 Time to obtain a VAT refund (weeks) 27.5 53.18 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 2.0 99.08 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 44 Doing Business 2019 Romania Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual • Covers all documents required by law and in procedure took 24 hours. practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 45 Doing Business 2019 Romania Trading across Borders - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Time to export: Border compliance (hours) 0 22.1 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 0 157.5 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 1 24.3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 0 97.9 35.2 0 (20 Economies) Time to import: Border compliance (hours) 0 21.1 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 0 162.3 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 1 24.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 0 93.9 24.9 0 (30 Economies) Figure – Trading across Borders in Romania and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 97.41: Bulgaria (Rank: 21) 92.32: Moldova (Rank: 35) 86.17: Regional Average (Europe & Central Asia) 100.00: Czech Republic (Rank: 1) 100.00: Hungary (Rank: 1) 100.00: Romania (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Romania – Time and Cost Time (hours) Cost (USD) 1.2 1.2 1 1 1 1 Time (hours) Cost (USD) 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0 0 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 46 Doing Business 2019 Romania Details – Trading across Borders in Romania Characteristics Export Import Product HS 85 : Electrical machinery and HS 8708: Parts and accessories of motor equipment and parts thereof; sound vehicles recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Germany Germany Border Romania- Hungary border crossing Romania- Hungary border crossing Distance (km) 610 610 Domestic transport time (hours) 9 9 Domestic transport cost (USD) 650 650 Details – Trading across Borders in Romania – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 0.0 0.0 by customs authorities Export: Clearance and inspections required 0.4 0.0 by agencies other than customs Export: Port or border handling 0.4 0.0 Import: Clearance and inspections required 0.0 0.0 by customs authorities Import: Clearance and inspections required 0.4 0.0 by agencies other than customs Import: Port or border handling 0.4 0.0 Page 47 Doing Business 2019 Romania Details – Trading across Borders in Romania – Trade Documents Export Import CMR waybill CMR waybill Commercial invoice Commercial invoice Packing list Packing list Intrastat Intrastat Page 48 Doing Business 2019 Romania Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 49 Doing Business 2019 Romania Enforcing Contracts - Romania Standardized Case Claim value RON 75,107 Court name Bucharest Court of First Instance City Covered Bucharest Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Time (days) 512 496.3 582.4 None in 2017/18 Cost (% of claim value) 25.8 26.3 21.2 None in 2017/18 Quality of judicial processes index (0-18) 14.0 10.3 11.5 None in 2017/18 Figure – Enforcing Contracts in Romania and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 72.25: Romania (Rank: 17) 70.98: Hungary (Rank: 22) 67.04: Bulgaria (Rank: 42) 65.65: Regional Average (Europe & Central Asia) 60.87: Moldova (Rank: 69) 56.38: Czech Republic (Rank: 99) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Romania – Time and Cost Time (days) Cost (% of claim value) 800 40 Cost (% of claim value) 700 678 33.8 35 605 585 28.6 582.4 600 564 30 Time (days) 496.4 26.3 512 25.8 500 21.2 25 400 18.6 20 15.0 300 15 200 10 100 5 0 0 Bulgaria Czech Europe Hungary Moldova OECD Romania Republic & high Central income Asia Page 50 Doing Business 2019 Romania Figure – Enforcing Contracts in Romania and comparator economies – Measure of Quality Romania 3 4 2 5 Bulgaria 2.5 2.5 2 3.5 Czech Republic 2 3 3 1.5 Hungary 3 4 2.5 3 Moldova 2.5 3 2 2 OECD high income 2.5 3.1 2.3 3.6 Europe & Central Asia 2.1 3 1.4 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Romania Indicator Time (days) 512 Filing and service 52 Trial and judgment 365 Enforcement of judgment 95 Cost (% of claim value) 25.8 Attorney fees 7.7 Court fees 8.1 Enforcement fees 10 Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 Case management (0-6) 4.0 Court automation (0-4) 2.0 Alternative dispute resolution (0-3) 3.0 Page 51 Doing Business 2019 Romania Details – Enforcing Contracts in Romania – Measure of Quality Answer Score Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 2.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 52 Doing Business 2019 Romania 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 53 Doing Business 2019 Romania Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 54 Doing Business 2019 Romania Resolving Insolvency - Romania Indicator Romania Europe & OECD high Best Regulatory Central Asia income Performance Recovery rate (cents on the dollar) 35.8 38.6 70.5 None in 2017/18 Time (years) 3.3 2.3 1.7 0.4 (Ireland) Cost (% of estate) 10.5 13.2 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 13.0 11.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Romania and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 80.05: Czech Republic (Rank: 15) 59.87: Romania (Rank: 52) 57.52: Bulgaria (Rank: 56) 55.58: Regional Average (Europe & Central Asia) 55.03: Hungary (Rank: 65) 54.12: Moldova (Rank: 68) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Romania – Time and Cost Time (years) Cost (% of estate) 3.5 3.3 17.0 3.3 18 14.5 2.8 15.0 16 Cost (% of estate) 3 13.2 14 Time (years) 2.5 2.3 2.1 2.0 10.5 12 2 9.0 1.7 9.3 10 1.5 8 6 1 4 0.5 2 0 0 Bulgaria Czech Europe Hungary Moldova OECD Romania Republic & high Central income Asia Page 55 Doing Business 2019 Romania Figure – Resolving Insolvency in Romania and comparator economies – Measure of Quality Romania 6 2.5 2 2.5 Bulgaria 3 2.5 4 2.5 Czech Republic 5.5 2.5 3 3 Hungary 5 2.5 2 0.5 Moldova 4 2.5 3 2.5 OECD high income 5.3 2.8 2.2 1.9 Europe & Central Asia 4.5 2.6 2.3 1.8 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Romania and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 67.4 60 44.2 35.8 37.2 38.6 40 30.9 20 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 56 Doing Business 2019 Romania Details – Resolving Insolvency in Romania Indicator Answer Score Proceeding liquidation (after According to the Romanian Insolvency Code (Law no. 85/2014), the procedure will start with an an attempt at observation period, followed by reorganization and, if the reorganization fails, it will be followed by reorganization) liquidation. Article 66 para (1) of the Insolvency Code establishes the obligation for Mirage management to file for insolvency within 30 days of the occurrence of insolvency. At first, Mirage might propose a reorganization plan in order to benefit from the moratorium of all ongoing judicial proceedings involving its creditors and to renegotiate payment with creditor. However, reorganizations in Romania are rare and banks prefer liquidation to return its money faster. Given this context, according to Article 143 para. (1) of the Insolvency Code, if the debtor fails to comply with the reorganization plan or its activity brings losses, the judicial receiver or any of the creditors may request the syndic judge to approve the commencement of liquidation procedure against the debtor. Outcome piecemeal sale The hotel will continue its current activity only during the observation period (art. 87 of Law 85/2014) and in the reorganization procedure according to the reorganization plan (art. 141(1) of Law 85/2014). If Mirage enters the liquidation procedure, then the hotel will stop operating, as it is unlikely that a buyer can be found willing to purchase the hotel as a going concern and continue operating it. Time (in years) 3.3 Insolvency proceedings last on average 3-5 years due to a large number of cases filed and delaying tactics used by the debtors to avoid liquidation of the company. Most statutory deadlines cannot be complied with in practice. The main procedural steps for the completion of the insolvency process for Mirage are: (i) the observation period (as of the opening of the insolvency proceedings and until the reorganization plan is approved or the liquidation proceedings are initiated) may take a maximum of 12 months (art. 112(3) of the Insolvency Code); (ii) reorganization may take 4 years after the confirmation of the plan, but this period may be extended (art. 139(5), Insolvency Code). After one year to one year and a half, the course of proceedings becomes apparent: either successful completion of reorganization (in very few cases), or the liquidation proceedings are initiated, (iii) liquidation may take from 9 months to 2.5 years, depending on the nature and the quantity of the debtor’s assets to be capitalized on. Cost (% of 10.5 The cost of the proceedings will amount to approximately 10.5% of the value of the debtor's estate) estate. The major expenses will include fees of the insolvency representative (around 8%) and attorneys' fees (around 2%). Other expenses are minimal. Recovery rate 35.8 (cents on the dollar) Page 57 Doing Business 2019 Romania Details – Resolving Insolvency in Romania – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 6.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over 1.0 ordinary unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 2.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at Yes 1.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 2.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 58 Doing Business 2019 Romania Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 59 Doing Business 2019 Romania Labor Market Regulation - Romania Details – Labor Market Regulation in Romania Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 443.9 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 75.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 20.0 Paid annual leave for a worker with 5 years of tenure (working days) 20.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 20.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.0 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.0 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.0 Severance pay for redundancy dismissal for a worker with 1 year of tenure 0.0 Page 60 Doing Business 2019 Romania Severance pay for redundancy dismissal for a worker with 5 years of tenure 0.0 Severance pay for redundancy dismissal for a worker with 10 years of tenure 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 0.0 Job quality Equal remuneration for work of equal value? Yes Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 126.0 Receive 100% of wages on maternity leave? No Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 61 Doing Business 2019 Romania Business Reforms in Romania In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Starting a Business: Romania made starting a business more complicated by introducing fiscal risk assessment criteria for value added tax applications, thereby increasing the time required to register as a value added tax payer. DB2018 Registering Property: Romania improved the quality of land administration by digitizing ownership and land records. DB2017 Starting a Business: Romania made starting a business more difficult by increasing the time to register for Value Added Tax. DB2016 Paying Taxes: Romania made paying taxes less costly for companies by reducing the rate for social security contributions and the rate for accident risk fund contributions paid by employers. Enforcing Contracts: Romania made enforcing contracts easier by transferring some enforcement responsibilities from the court to the bailiff, by making it easier for the bailiff to obtain information from third parties and by making use of the electronic auction registry mandatory. Resolving Insolvency: Romania improved its insolvency system by introducing time limits for the observation period (during which a reorganization plan must be confirmed or a declaration of bankruptcy made) and for the implementation of the reorganization plan; by introducing additional minimum voting requirements for the approval of the reorganization plan; and by clarifying rules on voidable transactions and on payment priority for claims of post-commencement creditors. DB2015 Paying Taxes: Romania made paying taxes easier for companies, with the majority now using the electronic system for filing and paying taxes. DB2014 Starting a Business: Romania made starting a business easier by transferring responsibility for issuing the headquarters clearance certificate from the Fiscal Administration Office to the Trade Registry. Paying Taxes: Romania made paying taxes easier and less costly for companies by reducing the payment frequency for the firm tax from quarterly to twice a year and by reducing the vehicle tax rate. Enforcing Contracts: Romania made enforcing contracts easier by adopting a new civil procedure code that streamlines and speeds up all court proceedings. DB2013 Starting a Business: Romania made starting a business easier by reducing the time required to obtain a clearance certificate from the fiscal administration agency. Getting Credit: Romania strengthened its legal framework for secured transactions by allowing the automatic extension of security interests to the products, proceeds and replacement of collateral. DB2012 Starting a Business: Romania made starting a business more difficult by requiring a tax clearance certificate for a new company’s headquarters before company registration. Paying Taxes: Romania made paying taxes easier for companies by introducing an electronic payment system and a unified return for social security contributions. It also abolished the annual minimum tax. Resolving Insolvency: Romania amended its insolvency law to shorten the duration of insolvency proceedings. Labor Market Regulation: Romania increased the maximum duration of fixed-term contracts and also decreased the severance pay applicable in case of redundancy dismissal of employees. Page 62 Doing Business 2019 Romania DB2011 Dealing with Construction Permits: Romania amended regulations related to construction permitting to reduce fees and expedite the process. Paying Taxes: Romania introduced tax changes, including a new minimum tax on profit, that made paying taxes more costly for companies. Resolving Insolvency: Substantial amendments to Romania’s bankruptcy laws—introducing, among other things, a procedure for out-of- court workouts—made dealing with insolvency easier. DB2010 Dealing with Construction Permits: Romania made dealing with construction permits more costly by introducing a new fee. Registering Property: Romania speeded up property registration by introducing expedited procedures at the land registry and the cadastre. Paying Taxes: Romania made paying taxes more costly for companies by increasing labor taxes. Resolving Insolvency: Romania made resolving insolvency more difficult by requiring that a percentage of recovered amounts be transferred to a fund for reimbursing the expenses of insolvency administrators in cases where the debtor has no assets. DB2009 Paying Taxes: Romania made tax compliance more time consuming for companies by introducing mandatory accounting books—though at the same time it made paying taxes less costly by reducing the corporate income tax rate. Enforcing Contracts: Romania made the enforcement of judgments simpler and faster by eliminating the need for an enforcement order and allowing the attachment of credit balances and accounts receivable. DB2008 Starting a Business: Romania made starting a business more difficult by implementing several laws that added to the procedures and time required. Getting Credit: Romania strengthened its secured transactions system by introducing provisions allowing parties to a security agreement to agree to out-of-court enforcement of the security right when signing the agreement. Paying Taxes: Romania made paying taxes less costly for companies by reducing employers’ social security contribution rate. Labor Market Regulation: Romania increased the severance payments applicable in redundancy dismissals. Page 63 Doing Business 2019 Romania Page 64