New rules regarding investment screening in Romania

Investments made by European investors in Romania will be subject to screening before implementation, according to the new legal provisions. A EUR 10,000 examination fee is implemented.

By Roxana Roșca (associate), Sergiu Păun (associate), Filip & Company

The regime applicable to investments’ screening in Romania has undergone important changes through an emergency ordinance published the night of 6th of December 2023. The main changes include the extension of the investment screening in Romania to investments made by European investors and the introduction of a EUR 10,000 examination fee.

Targeted investors

As of April 2022, foreign investments in Romania are subject to screening by the Commission for the Examination of Direct Foreign Investments (“CEISD“) prior to implementation. Upon initial publication, the only investments subject to screening by the CEISD were investments made by non-EU investors.

Following amendments, investment screening in Romania no longer takes into account the nationality of the investor. In this respect, investments made by investors from outside the European Union as well as by investors from a Member State (including Romania) will be subject to CEISD’s screening.

Investments under scrutiny

The new provisions also bring important changes to the types of investments subject to screening.

Upon initial publication, foreign direct investments (defined as investments that give the non-EU investor control over the management of the local enterprise that undergoes the investment) and new (greenfield) investments were subject to screening.

Following amendments, direct investments (irrespective of the nationality of the investor) have been defined as investments made for the purpose of establishing or maintaining lasting and direct links between the investor and the entrepreneur or the enterprise subject to the funds that are intended for the purpose of carrying out economic activities in Romania, including investments which enable the investor to participate in the management or control of the enterprise.

The scope of the legal landscape thus appears to be extended also to investments that do not confer control over the local entity. Moreover, the new provisions also bring to the fore relations between investors and other natural persons (entrepreneurs) who are to carry out economic activities in Romania.

Greenfield investments remain subject to screening.

The economic sectors concerned by the prior screening procedure are:

(i) security of citizens and communities,

(ii) border security,

(iii) energy security,

(iv) transport security,

(v) security of vital resource supply systems,

(vi) security of critical infrastructure,

(vii) security of information and communication systems,

(viii) security of activities concerning the financial, fiscal, banking and insurance sectors,

(ix) security of production and circulation of arms, ammunition, explosives, toxic substances,

(x) security of industry,

(xi) protection against disasters,

(xii) protection of agriculture and the environment,

(xiii) protection of privatisation operations of state-owned enterprises or their management.

In order to be submitted to the CEISD for approval, the value of the investment shall exceed a threshold of EUR 2 million. There may be exceptions to this rule in case of investments likely to affect national security or public order.

New provisions regarding the notification process – examination fee

The new provisions introduce an examination fee of EUR 10,000 to be paid at the time of application for authorisation. If the CEISD finds that the investment did not meet the FDI screening conditions, the examination fee will be refunded.

Risks in case of non-notification

The implementation of a foreign direct investment without obtaining prior approval from the CEISD, as well as non-compliance or breach of commitments undertaken in case of conditional approval, shall be sanctioned by fines of up to 10% of the total worldwide turnover in the financial year preceding the sanction.

In addition, investments implemented in breach of the investment screening regime in Romania may be cancelled if they are subsequently found to affect the security or public order of Romania or to affect projects or programmes of EU interest.