Episode 4 of the Business Optimism Review series, is labeled Legaless, Miriam Constantin’s witty play on words between legalese and legal less.
No fines, public procurement easiness & postponement of monthly loan payments – by Miriam Constantin
No complex tender process & extended deadline for the final company beneficial owner statement
There are several pain points that the current emergency state determined the Romanian government to rethink. This helps especially small and medium enterprises, as well an independent service providers.
It also relieves administrative burden on the employees of big companies and also on the public sector.
The obligation to submit the controversial statement regarding the ultimate beneficial owner of a company (deadline was 15 days after submitting the financial statements) was suspended until the end of the state of emergency, and extended with another 3 months after such situation ends. So, no fines for submitting it later than March, as initially envisaged. Also, it has made the legislators come up with the solution for this statement to be submitted online or via postal office, when the time for it will come (it wasn’t possible before to do it online).
Easier public procurement
During this time, simpler public procurement procedures can unfold – negotiated and direct award procedures. This means no more lengthy auctions (i.e. public award procedures in legalese) and the possibility to sign public contracts more rapidly, with no delays by litigation. Equally important, there are no penalties arising from obligations delayed by contractors under public contracts because of the pandemic.
All direct and negotiated procedures can be tracked on the website e-licitatie.ro/pub, so smaller business have now better chances to actually win contracts they would’ve never been accessible to them due to harsher public auction requirements which generally favor more price over technical abilities to perform a project.
Also, authorities can be approached through official unsolicited proposals, if there are companies able to provide what these authorities need faster.
The European Commission itself stated in its pandemic-dedicated guidance that public buyers are fully empowered under the EU framework to engage with the market and in matchmaking activities (my note: which was very unclear, and poorly used, paradoxically, by good intentioned buyers, because of illegitimate influence fears). There are various ways to interact with the market to stimulate the supply and for the medium term needs, the application of urgent procedures could prove a more reliable means of getting better value for money and wider access to available supplies.
What about FIDIC contracts, which are not governed by Romanian law?
For the construction business, FIDIC contracts comprise an exceptional events clause, which could be triggered to either suspend or halt the contract without it being considered a contractual fault. Below, international British-founded Osborne and Clarke law firm explains how it works. My note, simply put, during this time, you aren’t supposed to bleed cash for a public project if you can delay it.
What if your biggest pain is the loan you can’t pay?
During the emergency period, and, according to Romania’s Bank Governor and the newest piece of emergency legislation, for a period lasting up to 9 months, banks will allow the suspension of payments and extend the credit period.
Why is this so good?
Because you and other businesses or professionals as well have more money to keep business running (instead of paying the monthly loan installments), by either paying employees or keeping supply chains standing. Also, there are no late penalties to your loan, and, very important, when this period ends, you won’t have to pay the deferred loan installments all at once, you’ll start paying the monthly sum you were used to.
Though heartily put together by a lawyer and an EMBA student, it does not amount to a specific, legal, financial or tax advice.
It is meant only to present facts, legal provisions, opinions, and data from the optimistic point of view, the kind of details the author and her team wish you to be aware of during this time too.
Should you feel the need to know more or apply some of the ideas presented herein, you should head to your most trusted advisor for a deeper view and a safe travel towards opportunity.