Romania’s foreign direct investment (FDI) landscape offers immense potential, but its screening regime under Government Emergency Ordinance (GEO) 46/2022—aligned with EU Regulation 2019/452—adds layers of complexity. Unlike many jurisdictions, Romania screens both EU and non-EU investments, casting a wide net to protect national security and public order. With fines up to 10% of global turnover and the risk of deal prohibitions, navigating this process demands precision. This blog post unveils key strategies to conquer Romania’s FDI screening, highlighting why legal expertise is your cornerstone for success.
What Is Foreign Investment Screening in Romania?
Romania’s FDI screening regime, governed by GEO 46/2022, evaluates investments that could impact security or strategic sectors. It applies to:
- Investments Over €2 Million: Any FDI exceeding this threshold in sensitive sectors triggers mandatory screening.
- Sensitive Sectors: These include critical infrastructure (energy, telecom), defense, financial systems, and media, as outlined by the Supreme Council of National Defense (CSAT) Decision 73/2012 and Article 4 of the EU FDI Regulation.
- Control or Influence: Investments enabling control or significant participation in a Romanian entity or asset are in scope, including greenfield projects and internal reorganizations.
The Commission for the Examination of Foreign Direct Investments (CEISD) oversees screening, with the Romanian Competition Council (RCC) issuing clearance decisions for non-problematic cases.
Why Foreign Investment Screening Matters in Romania
Romania’s FDI rules aim to balance economic openness with security. Non-compliance can lead to:
- Fines: Up to 10% of global turnover for failing to notify or breaching rules.
- Delays or Bans: Investments may be conditionally approved or prohibited if risks are identified.
- Reputational Risks: Violations can harm your standing in Romania’s growing market.
Proactive compliance ensures smooth market entry and protects your investment.
Key Strategies for Navigating Romania’s FDI Screening
1. Assess Your Investment Early
Before proceeding, determine if your investment falls under Romania’s FDI screening scope:
- Value Check: Is it above €2 million? Even smaller investments may be screened if they pose risks.
- Sector Analysis: Does it involve critical infrastructure, technology, or other listed sectors?
- Control Test: Will it grant you control or influence over a Romanian entity or asset?
Early assessment helps you anticipate filing needs and timelines.
2. Prepare a Thorough Filing
Submit your FDI authorization request to the CEISD with:
- Detailed Documentation: Include investment value, ownership structure, and sector details.
- Investor Profile: Disclose ultimate beneficial owners (UBOs) and any foreign government ties, as these are closely scrutinized.
- Fee Payment: Pay the €10,000 filing fee (refundable if screening isn’t required).
Incomplete filings can delay the process, which take, on average, 8 weeks for clearance in non-problematic cases.
3. Engage Local Legal Expertise
Romania’s FDI rules are nuanced, with variations for EU versus non-EU investors and evolving enforcement trends. Legal experts can:
- Clarify Requirements: Interpret GEO 46/2022 and CSAT sector definitions.
- Mitigate Risks: Advise on structuring deals to avoid surprises.
- Advocacy: If conditions or prohibitions loom, skilled counsel negotiates your path forward.
5. Monitor Sensitive Sectors and Risks
Stay vigilant about:
- Strategic Areas: Investments in telecom, energy, or media face heightened review.
- Indirect Control: Changes in ownership outside Romania (e.g., parent company shifts) may trigger screening if linked to a Romanian entity.
- Public Order Concerns: Investments below €2 million can still be called in if they affect security.
Proactively address these factors to avoid surprises.
Handling an FDI Screening Review
If your investment is screened:
- Cooperate Fully: Respond promptly to CEISD requests.
- Negotiate Conditions: If risks are flagged, work with the CEISD on terms to secure conditional clearance.
- Prepare for Oversight: The Romanian Government steps in for conditional or prohibition decisions, escalating the stakes.
Cooperation can lead to faster resolutions and potential leniency.
Benefits of FDI Screening Compliance
Mastering Romania’s FDI screening process offers:
- Market Access: Tap into a growing market with confidence.
- Investor Trust: Build credibility with regulators and partners.
- Risk Mitigation: Avoid fines and ensure long-term stability.
Conclusion
Romania’s foreign investment screening regime reflects its commitment to security while welcoming FDI. By assessing your investment, preparing diligently, leveraging EU advantages, consulting experts, and monitoring risks, you can navigate the process effectively. Ready to invest in Romania? Start planning today to ensure compliance and unlock opportunities in this dynamic EU market.
For those seeking a trusted ally, firms like 360Competition bring the insight and elegance to turn compliance into opportunity. Ready to invest? Start with the right strategy—and the right team—today.
