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InfoBusiness Romania - online guide

Legal background

One of the main objectives for the ongoing reform and economic development process, which was launched in Romania after 1990, is the privatization of companies in which the state is a shareholder.

The legal framework for the privatization process has been modified and supplemented on various occasions, in view of achieving effective solutions for completing the privatization process, by means of implementing clear and accessible procedures, diminishing bureaucracy and increasing the attractiveness of the companies offered to sale.

The privatization process is governed by the provisions of Government Emergency Ordinance no. 87/1998 regarding the privatization of companies, with its subsequent amendments and additions.

Recently, in view of accelerating the privatization process, the Romanian Government adopted Law no. 137/2002 that modified and supplemented the provisions of Government Emergency Ordinance no. 87/1998.

The accelerated privatization of companies is to be achieved on the basis of the following principles:

securing transparency for the privatization process;

sale at market price resulting from the demand/offer proportion, taking into consideration all elements that make up the purchase offer;

implementing restructuring programs prior to the privatization, with a focus on externalizing certain activities and/or assets;

reconsidering the debts of the companies in order to increase the attractiveness of the privatization offer;

implementing a special administration during the privatization period.

Subjects of the privatization process


The provisions of the relevant normative acts in the field of privatization apply to companies in which the state or an authority of the local public administration is a shareholder or an associate, regardless of the normative act on the basis of which the company was established, as well as to the regies autonomes.


The buyer in the privatization process may be any individual or legal person, either Romanian or foreign.

The following entities may not acquire shares in companies subject to privatization:

Legal entities of public law or companies in which the Romanian State or an authority of the local public administration holds more than 33 percent of the total number of voting shares in the general meeting of the shareholders;

Individuals or legal entities, Romanian or foreign, who/which concluded a share sale-purchase contract with any of the involved public institutions, which contracts were terminated pursuant to the buyer's default, by a court or arbitration resolution that was deemed final and irrevocable or pursuant to the termination conditions stipulated in the shares sale-purchase contracts;

Persons who register outstanding budgetary debts.

Involved public institution

The public institutions with duties in the field of privatization of companies are the Authority for Privatization and Administration of State Participations (APAPS), the relevant ministries (the relevant field of which includes the main object of activity of the company, or under the authority of which the functions) or, as the case may be, the authorities of the local public institutions who have duties of privatization of a company.

The involved public institutions carry out the entire privatization process, and have the following duties:

Exercising the rights held by the state in its capacity of shareholder or by the authorities of the local public administration, taking measures for the effective administration of the companies in the portfolio and the liquidation of unprofitable companies;

Taking necessary measures to carry out the privatization process by setting the proper privatization method; publishing the list of companies subject to privatization, publishing the announcements or sale offers; drafting of the documentation related to the privatization process; initiating and completing the sale of the companies' shares, etc.

Privatization agents

Privatization agents are the legal entities, either Romanian or foreign, specialized in financial investments, mergers and acquisitions, such as banks, investment banks, investment companies and funds, financial companies, companies that render accounting and financial audit services, consulting, brokerage on the securities' market, as well as law offices and professional legal entities. Foreign legal entities may associate with a Romanian legal entity or firm included in the above-mentioned categories.

To accelerate the privatization process, the involved public institutions may delegate to privatization agents the exercise of certain rights and powers, based upon a mandate. The mandate is granted with respect to the privatization/restructuring/liquidation of certain companies/group companies for either the sale of shares or assets.

The recent modification of the normative background of privatization gives the privatization agents the opportunity to act in the name and on behalf of the involved public institutions as well as all of the rights related to the shares held by the same in the companies, including the exercise of the powers and the special benefits granted to the involved public institutions under the relevant law, on the basis of mandate granted, save for the right to dividends and any preferential right.

Privatization method

Involved public institutions are authorized to sell the shares of the companies that are subject to privatization, through one of the following methods:

Public offer;

Sale methods specific to the stock market;


Public auction or auction by envelope;

Deposit certificates issued by investment banks on the international capital market;

Any combination of the methods listed above.

Pursuant to the recent amendment of the legislative background, in view of increasing the attractiveness of the companies subject to privatization, the sale of the package of shares for certain state-owned companies may be undertaken at a symbolic price of EURO 1. The companies the shares of which shall be sold for EURO 1 shall be nominated by a resolution of the Romanian Government based on the criteria provided under the law.

Pursuant to the Government Ordinance no. 31/2003, the Authority for Privatization and Administration for State Participations (hereinafter referred to as APAPS or the Authority) is mandated to conclude additional acts to the shares sale-purchase contracts that include the clause of keeping of a golden share in the ownership of the state, with the purpose of converting the golden share into an ordinary share, which will be sold to the privatization agent for a price equal to the nominal value of this share.

Increase of the share capital by private capital contribution

The involved public institutions may decide upon the privatization of companies by increasing the share capital. To this effect, in the general meeting of the proposed privatized company's shareholders, the involved public institution may propose to decrease state participations by launching a public offer for the increase of the share capital in the respective companies.

The increase of the capital is made by either cash or in-kind contributions with highly developed, top-of-the-line technological tools according to the provisions of the feasibility study especially created for this purpose.

In the event that the increase of the share capital is decided, the existing shareholders shall have a preference right upon the subscribing of the new shares, which must be exercised within 10 days following the launch date of the offer.

Any of the interested investors, individuals or legal entities with private majority capital may acquire both the shares related to the capital quota held by the involved public institution and the shares related to the quota held by the shareholders who do not exercise their preference right.

Free of any charges transfer or the sale of the social assets

Companies in which the state or an authority of the public administration is a majority shareholder may decide to assign certain social assets, free of charge and with priority to the authorities of the local public administration, as well as to other public institutions and the sale of the same to any interested individual or legal entity.


Special administration

To properly manage and administer the companies in which the state or an authority of the local public administration holds the majority package of shares, during the privatization period of the same, the special administration is implemented. The special administration implies the administration of the company by a special administrator on the basis of a special mandate granted by the involved public institution. During the special administration period the involved public institution will also implement a financial supervision procedure.

During the special administration of companies, a number of exceptional measures shall apply, which measures are intended to increase the attractiveness of the companies in view of privatization.

Facilities upon the payment of budgetary obligations, granted under the presentation file

Involved public institutions and credit budgetary institutions, upon the request of the involved public institution, grant to the companies with majority state capital a number of facilities that are identified in the presentation file. The object of the facilities is the total or partial exemption from the payment of outstanding budgetary debts, of the delay increases and penalties, as well as phasing for the payment of the same. The amounts representing the object of the facilities are provided for in the budgetary obligation certificates.


Another concern of the Romanian Government is to make utilities efficient and profitable. To this effect, the recent amendment of the privatization legislation implemented the possibility for the involved public institution/the company subject to privatization to initiate public-private partnerships in view of attracting private capital in investments for the completion of unfinished investments and rendering certain economic objectives profitable.


The involved public institution may grant to the investors who signed share sale-purchase contracts compensation for the following:

any prejudice suffered as a result of settling certain liabilities due to environment pollution in the company's charge;

undisclosed obligations of the company to third parties, which may be prejudicial to the investors;

remedy of any prejudices caused by the enforcement of court resolutions that force the return of certain goods of the company, in kind, to their former owners.


The companies that were privatized under shares sale-purchase contract are subject to post-privatization control, during the carrying on of the contract. The control is to be performed by the Authority for Privatization and Administration for State Participations, and its main objective is to monitor the way the obligations undertaken by the buyer are fulfilled, and, in some cases, the evolution of the main economic and financial indicators.

The legal representatives of the said companies must provide the Authority, within 30 days from due date of each obligation under the privatization contract, a report regarding the completion of such obligations and copies of the financial reports.

The investment is considered completed if the buyer presents a certificate issued for this purpose by the company's auditors or by an audit firm, unless the privatization contract provides for otherwise.

The conclusion by the Authority of additional acts with respect to amendments of the investment agreements and/or the agreements for the payment of the share price is conditioned upon the establishment, in favor of the Authority, of a security covering the value of the unaccomplished investment and/or the unpaid price.

Should the contract be terminated by conventional resolution or by court settlement, the Authority will retain all the amounts paid by the buyer on account of the contract.

Should the contract be terminated by conventional resolution or by court settlement for prejudice caused to the Authority, the buyer will pay damages.


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