What documents do you need to start a limited liability company?

The limited liability company (L.T.D.) is the most common form of organization of commercial activity in Romania. For starters I will briefly introduce to you some of its features:

– shareholders have no commercial quality and are liable for company’s debts only in accordance with limited contributions made to social capital;
– the company will be managed by the general assembly of shareholders, and the management activities and representation in relations with third parties will be held by administrators to which shareholders can distribute limited powers or not;
– a L.T.D. can be established with only one shareholder, the condition being that he would not be a sole shareholder in another company;
– first, all companies declare themselves as microenterprises. In case, during the fiscal year, a microenterprise exceeds 65.000 euro, it will pay income tax, taking into account the revenues and expenditures from the beginning of the fiscal year. You can choose if the company will pay VAT or not. You represent a non-taxable business owner if you expect to have a turnover of less than 65.000 euro.

Steps for setting up a company are:

1. Company name reservation – you need to fill an application form (you need to choose at least 3 names, in order of preference). The cost is 72 ron and the proof of name reservation takes about half an hour to obtain. Registering a company that contains words like: national, Romanian, institute or their derivates or words/phrases characteristic to central authorities and other public institutions are made only with the consent of the General Secretariat of the Government;

2. Choosing the object of activity for the company, according to CAEN Code; establish the main object of activity and you can choose after one or more secondary objects of activity. Sometimes a particular object of activity requires additional conditions like professional certificates, preliminary permits;

3. Establishing headquarter. Headquarter is established by contract of loan or rental, an agreement made between the landlord and the future company. The ownership right will be proven by the owner by case: contract of sale, donation, building permit and handover protocol. If we are talking about an apartment in a building block you will require the approval of neighbors and the owners’ association. Another viable option would be choosing headquarter at an attorney’s office for a period of 1 year;

4. Incorporation agreement. It must contain the following:
– The number of shareholders and their identification data, joint stock of each, their participation in profit and loss;
– Name of the company (including reservation number from NTRO);
– Headquarter;
– The main object of activity;
– Secondary objects of activity (if any);
– The name of the administrator, identification data, powers he holds and the period for which he will hold this position.

5. Affidavits shall be given by the administrator and shareholders, as proof they do not have a criminal record and meet the legal requirements for owning these qualities. They will be certified by a lawyer if shareholders/administrators are Romanian legal persons or natural persons;

6. Submission of the joint stock. Minimum joint stock necessary is in amount of 200 ron for an L.T.D.;

7. Specimen signature. The administrator will give a specimen of signature before a public notary or the Referrer of the Trade Registry;

8. Registration at the National Trade Register Office (NTRO). After the file is completed it can be submitted to the Trade Registry in order to perform registration. Additionally, you will need to complete several standard forms for your headquarter (affidavit for certain activities: model 1 or 2). Caution! The Trade Registry will check the tax record of shareholders. If you have facts written in this record (the most common example: you are the administrator of an inactive or insolvent company) you cannot be the associate in a new company;

9. Issuance. After 5 days the Trade Registry will issue the documents that will attest the founding of the new company;

10. Post-establishing L.T.D. After obtaining your documents from the Trade Registry confirming the establishment of the company, you still need:
– A company stamp (registration certificate of the company in original is required);
– Standard printed documents: for invoice issue, receipt issue.
– A statement of tax registration is failed at the Financial Administration with jurisdiction within 30 days after the company’s incorporation date.

Approximate costs for setting up a business are:
– Tax record fee in amount of 30 ron/shareholder or administrator;
– Company name reservation in amount of 72 ron;
– Trade Registry fees totaling about 560 ron;
– The specimen signature notary fee amounts between 60-120 ron;
– The company’s financial capital must be at least 200 ron.

The procedure for setting up a company can be time consuming, requiring an average of three trips at the Trade Registry and an investment of over 15 hours for drafting the documentation necessary.
If you opt for consulting a lawyer, your time invested in the procedure will be substantially reduced and steps will run smoothly.

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