Opening a Textile Factory in Romania - a Legal Perspective

According to the data provided by the Romanian Ministry of European Integration the clothing textile sector is one of the dynamic sectors of the Romanian industry, mainly the clothing industry that managed to keep largely a high degree of competitiveness. This made the Romanian products represent 4.4% of EU imports (mainly in Germany and Italy).

In terms of competitiveness, there are differences between sub-sectors of the clothing and textile industry. Textile related products and stockings are competitive on the international and EU market, the production of knitwear has approx. 75% of competitive products, especially cotton, wool and silk with high complexity of processing. The production of woolen fabrics and silk for clothing has over 80% of competitive products.

A company thato perates in the textile industry, is a company that inserted in the Constitutive Act one of the following NACE Codes that define the its activity: 1310 Preparation and spinning of textile fibers, 1320 Production of fabrics, 1330 Finishing of textiles, 1391 Manufacture of knitted and corsetry, 1392 Manufacture of carpets and rugs, 1399 Manufacture of other textiles, 1411 Manufacture of leather clothes, 1413 Manufacture of wearing apparel, 1420 manufacture of articles of fur.

A company specialized in textile and clothing production is to obtain authorization for operation in terms of safety and health at work. This authorization is necessary in order to ensure the health and safety conditions at work and the prevention of accidents and occupational diseases; therefor employers are required to obtain it before the starting of any work.

For authorization in terms of safety and health at work, the employer shall submit an application to the Territorial Labor Inspectorate within whose jurisdiction they operate. This is necessary because when it comes to the activities developed in this domain there are certain special regulations to be followed.

These are a couple of obligations established by the laws regulating this particular domain:   Every type of machine will work on only by qualified and trained personnel on the functioning of the machine in question.Before commissioning the machine dangerous areas specific to each machine will be verified. Any technical work it is forbidden when protective devices are missing or when they are out of service or when flaws intervene. Any intervention to the machinery during its utilization is forbidden.  In case of technical equipment malfunctions or disturbances, the machine will be stopped and the head job will be announced. When it comes to tailoring while working to control the mechanical ramp it is prohibited for employeesto stay in range of the device for folding and / or the conveyor.  It is prohibited to crowd the clutter table with auxiliary devices.

Another step in order to start the actual activity of the company specialized in textile and clothing activity is obtaining an environmental authorization from the National Environmental Protection Agency.  According to the laws that regulate this domain these are some of the necessary documents for the obtaining the environmental authorization

a) Application for environmental authorization;

b) Sheet and statement presentation

c) Proof that the request has published in at least one of the methods of information approved by the law;

d) The Admission Plan in the target area;

e) the written statement of compliance with all conditions imposed by environmental agreement;

It’s important to take into consideration the fact that when it comes to the composition,labeling and marking of the fiber composition of textile products a producer needs to take into consideration the provisions of the relevant legislation. These are a couple of rules that need to be followed:

Only textile products exclusively composed of the same fiber may be labeled or marked as "100%" , "pure " or "all " .

A textile product containing 2% by weight of foreign fibers may also be treated as being composed of the same fiber, provided that this quantity is justified as being technically unavoidable in good practices production and is not added as a matter of routine.

A textile product which has undergone a carding process can also be treated as being composed of the same fiber if it contains less than 5% by weight of foreign fibers , provided this quantity is justified as the unavoidable technically in good manufacturing practice and it’s not added as a matter of routine .

A textile product shall be labeled or marked with the name and percentage by weight of all constituent fibers in descending order.

For textile products whose composition is difficult to specify the time of manufacture, labeling or marking may use the term "mixed fibers" or the term ' unspecified textile composition'.

The fibers that are not yet listed in may be designated by the term 'other fibers', immediately preceded or followed by the total percentage by weight.

Just like in the case of other industries the technical innovations made in the textile industry are protected by the Romanian law if registered at the State Office for Inventions and Trademarks.An invention is considered new if it does not fit in the prior technical evolution.

Starting a Tobacco Company in Romania

The tobacco industry is one of the most powerful industries in the world.  Romania exported raw and processed tobacco worth 155, 4 millions of Euros in the first 4 months of the year, an increased number compared to the same period of time last year. And these are only the values of exports this year.

For a Romanian company to operate in the tobacco industry it needs to have as object of activity the following NACE Code 1200 “manufacture of tobacco products”.

For the cultivation and marketing of raw tobacco, tobacco manufacturers can organize in producer groups. The producer group should include a number of members, individuals and legal entities, which can produce a minimum quantity of 25 tons of raw tobacco quota certificate, and in isolated regions a culture of a minimum amount representing 10 tons of raw tobacco quota certificates.

The state authority that recognizes producer groups is the Ministry of Agriculture Food and Forestry. This same authority is the one to authorize the first processors of raw tobacco. In order to obtain the authorization from the Ministry of Agriculture Food and Forestry the first processors of raw tobacco need to submit a number of documents including: request for authorization, copy of the certificate of registration at the Trade Registry, the estimate of contracts signed with tobacco growers farmers on different varieties and regions etc.

Once authorized the first processor of raw tobacco has number of obligations among witch: directly notify the authorities regarding tobacco policies on any change in the documentation submitted for authorization in within 15 days after the change, use the authorization only under the conditions and for the purposes for which it was issued and that the period of validity; respond to requests from the competent authority regarding the communication of information on tobacco to the European Commission; to comply with the conditions existing at the time of the granting of first processing, to allow access authority to perform official controls etc.

It is important to obtain the authorization because the sale of raw tobacco can only be made to authorized first processing units, based on a type of contract approved by the Ministry of Agriculture Food and Forestry.

The production of cigarettes is strictly regulated by Romanian law so: Cigarettes marketed or manufactured in Romania will have a content of 10 mgof tar / cigarette, 1 mg ofnicotine / cigarette, 10 mgof carbon monoxide / cigarette.

Manufacturers or importers of tobacco products shall compile a dossier of the product contains the following: a list of all ingredients used in the manufacture of tobacco products and their quantities, the list will be drawn up in order of decreasing amount of each ingredient in the product, statement as to why the use of ingredients in the  tobacco products listed with indication of the category and function, the manufacturer or importer available toxicological data on ingredients, and with special reference to their effect on health noting any effect of inducing addiction, the content of tar, nicotine and carbon monoxide, in the case of cigarettes.

Another thing that must be taken into consideration when it comes to the marketing of tobacco products is that all forms of advertising on tobacco products must carry warning inscriptions in Romanian;  the general warning will be  : "Tobacco seriously damages health".

When advertising tobacco products by advertisement the warning must meet the following conditions:

1. The text of the general warning will have to cover 50% of the screen and be written black, bold on a white background;

2.  The warning will have to appear on the screen for two seconds;

3. The warning will have to appear on the display at the end of the advertisement.

Any tobacco product imported from a Member State of the European Union in Romania is accepted if the product has been lawfully produced or marketed in the Member State of origin and provides an equivalent level of protection.

Starting a beverage business in Romania - Legal Issues

The production distribution and commercialization of alcoholic drinks constitutes an important industry all over the world and Romania is no exception. Romania is one of the most important producers and exporters of quality wine in Europe; the unusual grape varieties and very low prices seem to be the key to the success of Romanian wine varieties.

In order to start up a business in the beverages industry the first step is to register a company specialized in the production of beverages. In order to do so the company’s Constitutive Act must contain when defining the company’s activities the following NACE Codes: 1101 refining distillation blending of spirits, 1102 Manufacture of wine from grapes, 1103 Manufacture of cider and other fruit wines, 1104 Manufacture of other non-distilled fermented beverages, 1105 Brewing.
The Romanian legislation treats this industry in a stricter manner so producers, importers, retailers of alcoholicbeverage can operate only on the basis of the marketing authorization.
This marketing authorization is issued – only by the Ministry of Finances when it comes to         production of alcohol in Romania
-    By the territorial directorates of public finance and financial control of State County, for the commercialization alcoholic beverages.

Romanian fiscal code establishes special supervision system when it comes to the production of alcohol.This Surveillance system applies to all authorized producers of beverages and it consists of the surveillance execrated by the special representatives of the fiscal authority called financial supervisors.

In order to properly record the entire production of alcohol and distillates obtained each producer of alcohol and distillates must provide instruments referred to as counters, approved by the Romanian Legal Metrology Bureau necessary to determine the amount of ethyl alcohol anddistillates, as well as legal measuring means for determining the alcoholic strength for each type of alcohol anddistillates. Measuring instruments and measurements made with are the subject of state’s metrological control according to the law.

Alcohol, distillates and spirits can only be imported in bulk based on direct contracts with the foreign manufacturers or their representatives and only by the authorized producers of alcohol and beverages in Romania.
It’s important to keep in mind that when it comes to the production, distribution and commercialization of beverages the Romanian fiscal system applies special taxes named excises.
Economic operators wishing to distribute and sell alcoholic are required to register with the competent authority and meet the following conditions:
a) they need to have  an  adequate storage space detained  on the basis of a property act and  , loan agreement or any legal title ;
b)one of the objects of activity of the company are the ones comprised in the section 3 division 11 of the NACE Codes approved by the Government.
c) to equip itself with the means to detect forged or counterfeit marks in trade of goods that are subject of marking under this chapter.
 Alcoholic beverages supplied by the economic operators manufacturers distributors or will be accompanied by a copy of the manufacturer's brand, showing that the trademark belongs.
Selling in bulk and the use of raw ethyl alcohol and distilled alcoholic with a strength of 96.0% in volume is prohibited. Rubbing alcohol production by other producers than those authorized production of alcohol is also prohibited.

These are some of the  documents needed in order to obtain the marketing authorization: registration certificate issued by the Trade Register, tax registration certificate, certificate issued by the territorial fiscal authority  showing that applicants for licenses have no tax obligations to the state budget,  the applicant's statement declaring , the head office, branches , subsidiaries, workstations , desks , storage stations , shops and other places where activity of the company is being developed and their addresses, a statement on the provision of means for measuring the output ,approved by the  fiscal supervisor etc.

The next step in starting up a company in Romania that specializes in the production and/or distribution of alcoholic beverages is getting the permit from the competent Sanitary- Veterinary Authority.

It is important to know that the production and distribution of beer and wine are regulated differently by the Romanian law and this because these are considered food products.

When it comes to wine a Romanian producer and/or merchant must meet certain conditions imposed by the law such as: Practices and treatments applied in the production of musts, wines and other wine products must meet the exigency laid down in the rules for the application of the special law regulating this domain. It is forbidden to forge these type of products it’s considered a forgery : diluting wine with water, masking defects or alterations of wines or wine -based drinks, changing  flavor and composition of the natural product. It is also forbidden to present a wine under a false identity.

Samsung became biggest investor in a Romanian photovoltaic project

South Korean giant Samsung, a business of around 247 billion dollars, became the most powerful investor in solar parks in Romania after completing an investment of 100 million euros in the village freed from Giurgiu.

According to data published by Transelectrica, on 1/10/2013 largest photovoltaic project in Romania has a functional capacity of 45 MW, its management the company LJG Green Energy Source Alpha.

On average, for every megawatt solar park in required between 2.3 and 2.5 hectares, so the whole project covers an area of ​​approximately 112.5 hectares. A football field, for example, has about one hectare.

Buying a Forest in Romania and Conduct Forestry Activities

Since one of the most valuable resources of Romania are its woods our Law Firm located in Bucharest considered of importance to list some of the main legal requirements in order to buy a forest and conduct forestry activities in the country, including logging for instance.

It is not necessary to acquire ownership of forests and forestry land in order to set up a company that specializes in forestry activities but it is mandatory to undergo several steps in order for the company to function in accordance to the law.

The first step is to set up a company and register it at the Trade Registry; So when drawing up the company’s Constitutive Act these are the NACE Codes must be contained when defining the objects of activity of the company:0210 Silviculture and other forestry activities, 0220 forestry harness, 0230 collection of non-timber forest products from the spontaneous flora, 0240 forestry activities and other related services.

After the registration of the company at the Trade Registry in order to start the actual activity of the company, the company needs to be certified as an economic operator in the forestry harness activity by the Commission created for the certification of economic operators in the forestry harness activity.

According to the Ordinance no. 223/2008 in order to obtain the certification from this Commission the company needs to meet the following criteria:

a)      The economic operator is legal entity with activity in logging;

b)      The economic operator must employ the following technical staff depending on the mass volume of wood that will be harvested:

-         A forestry engineer for an operating capacity of 30,000 cubic meters of wood/year.

-         A master in forestry or forestry technician for an operating capacity of 10,000 cubic meters /year;

c)       The economic operator needs to have ensured specific equipment needed for  logging activities depending on the capacity:

a) An articulated forestry tractor for 6,000 cubic meters;

b) A universal tractor - 5,000cubic meters;

c) A multifunction machine - according to technical data;

d) A funicular - according to technical data;

                d) For the specific equipment capacity is calculated as follows:

a) when it comes to driving machinery (articulated forestry tractors,  universal tractors, multifunctional machines and funiculars)  in which the degree of wear exceeds 50%, the operating  capacity is determined by reducing 50% of the capacity provided in section c ;

b)when it comes to driving machinery (articulated forestry tractors,  universal tractors, multifunctional machines and funiculars), where the degree wear is between 1 and 50%, the operating  capacity is determined by diminishing the capacity percentage provided in section c with the percentage of  depreciation;

In order to obtain registration certificate / recertification, the companies are required to submit the following documentation:

a) The application for certification / recertification,as presented in annex. 1 to the Ordinance 223/2008

B) The Constitutive Act copy;

c)The act of registration of the company at the Trade Registry (decision of the designee of the Trade Registry) copy;

d)Thecertificate of registration with the Trade Register copy;

e) proof of ensuring specialized personnel employed on the duration of the registration certificate for the activity logging , signed by the director of the company revised  by the Territorial Labor Inspectorate, according to the model shown in Annex . 2 or copy individual employment contract revised by the Territorial Labor Inspectorate;

f)Copies of diplomas / degrees for the specialized personnel with secondary and higher education.

g ) proof of owning the necessary equipment to ensure the specific activity of logging for example multipurpose machines , saws , tractors, articulated forestry tractors, universal tractors, funiculars , according  to the  model set out in Annex . 3 to the Ordinance 223/2008, accompanied by certificate issued by the tax office, or sale documents authenticated , these are necessary for the economic operator to prove possession of equipment in order  to operate a minimum annual volume of 5,000 cubic meters /year;

I) the calculation of the annual capacity of logging;

The final step in order to start the actual activity of the company specialized in forestry activity is obtaining an environmental authorization from the National Environmental Protection Agency.  According to the ordinance of the Minister of Environment and Sustainable Development no.1798/2007 the necessary documents for the obtaining the environmental authorization are the following:

a) Application for environmental authorization;

b) Sheet and statement presentation, according to Annex no. 2 to the ordinance no.1798/2007;

c) Proof that the request has published in at least one of the methods of information provided in annex. 3to the ordinanceno.1798/2007;

d) The Admission Plan in the target area;

e) the written statement of compliance with all conditions imposed by environmental agreement drawn up according to the ordinance no. 135/2010 regarding the methodology for the application of environmental impact assessment for public and private projects;

In order to obtain the environmental authorization, the economic operator must obtain from the county environmental agencies an environmental approval according to Order no. 135/2010- approving the Methodology for the implementation of environmental impact assessment for public and private projects.

Obtaining environmental approval represents the initial evaluation stage in obtaining environmental authorization and is made by filing a notice of intention by the project manager, accompanied by a certificate issued under planning law authorizing the construction works, the sketch of the project and the evidence of payment of the fee for this step.

Start a Farm in Romania and/or buy agricultural land

Enescu & Cuc Law Firm is a law firm located in Bucharest, Romania specialized in granting legal assistance to foreign investors in the real estate and agricultural sectors. With this reason in mind we have approached the subject of starting or buying a Romanian farm and the legal procedures related to this matter.

It’s well known that Romania is one of the top European countries when it comes to the total amount of agricultural land that can be used .  According to the information provided by the Ministry of Agriculture and Rural Development Romania holds a total of 13,3 million hectares of agricultural land, of witch 8,3 million hectares in arable land.

This huge agricultural potential gives room to the development of different types of farms specialized in the cultivation of cereals, vegetables, fodder etc.  but also of the  livestock farms.
This area should be of interest to foreign investors because beginning 2014 the citizens of a Member State of the EU, stateless persons domiciled in a Member State of the EU or in Romania, as well as the legal entity formed under the laws of a Member State of the EU may acquire ownership of agricultural land, forests and forestry land in Romania. Foreign citizens belonging to states that are not members of the European Union can also acquire ownership of agricultural land, forests and forestry land in Romania as regulated by the international treaties on reciprocal basis.

It is also important to know that The Romanian Government in collaboration with the European Union supports the development of the agriculture by granting nonrefundable founds to farmers that operate in Romania.
These are different types of farms that operate in Romania
-    Family farms
-    Forestry farms
-    Rural farms
-    Agricultural farms
-    Agro-tourism farms
I.In order to set up a farm in Romania multiple steps need to be taken. The first step in order to set up a farm is the authorization of the legal form of association. Romanian law regulates different forms of association in order toconduct economical activities:
-    Individual enterprise
-    Family enterprise
-    Sole trader
-    Legal economic entities (as they are defined and regulated by the Law nr. 31/1991 regarding commercial entities) .
 It’s important to choose the legal entity best suited for the means and objectives of the shareholders or shareholder. Another thing that must be taken into consideration is the fact that in order to register your company as a farm the Constitutive Act of the legal entity  must include, when defining the objects of activity, agricultural activities as they are established  by de CAEN Codes in Section A. This section is composed of three divisions:

1.    Agriculture hunting and annex services .
This division of the CAEN Cods refers to two main activities: crop production livestock production.It includes activities regarding organic agriculture, but also the production of genetically modified crops and animals. It is not mandatory that a farm should have a sole activity, so a farm can have activities regarding the production of crops and also of livestock. Agricultural activity excludes any subsequent processing of agricultural productsfor their primary sale.
2.    Forestry and forest exploitations
This division includes production of logs and the collection of non-wood products and fruits of wild flora of forests. Besides the production of wood products and forestry activities refers to products that subsequently undergo minimal processing like firewood, wood chips, wood charcoal. Further activities in processing the wood are excluded beginning withsplitting and planning of wood.
3.    Fishing and aquaculture
This division refers to the exploitation of fishery resources in marine water and freshwater
II.The next step in setting up a farm, after the registration of the economic entity at the Trade Registry,is obtaining anenvironmental authorization from the National Environmental Protection Agency.  According to the ordinance of the Minister of Environment and Sustainable Development no.1798/2007 the necessary documents for the obtaining theenvironmental authorization are the following :
a) application for environmental authorization;
b) sheet and statement presentation, according  to Annex no. 2 to the ordinanceno.1798/2007  ;
c) proof that the request has published in at least one of the methods of information provided in annex. 3to the ordinanceno.1798/2007 ;
d)The  Admission Plan in the target area;
e) the written statement of compliance with all conditions imposed by environmental agreement drawn up according to the ordinance no. 135/2010 regarding the methodology for the application of environmental impact assessment for public and private projects;
In order to obtain the environmental authorization, the economic operator must obtain from the county environmental agencies an environmental approval according to Order no. 135/2010- approving the Methodology for the implementation of environmental impact assessment for public and private projects.
Obtaining environmental approval represents the initial evaluation stage in obtaining environmentalauthorization and is made by filing a notice of intention by the project manager, accompanied by a certificate issued under planning law authorizing the construction works, the sketch of the project(farm) and the evidence of payment of  the fee for this step.
III. The third step in setting up a farm in Romania is obtaining for the certain activities described in the CAEN Codes an approval from the Sanitary Veterinary Directorate according to the Ministers ordinance nr.216/2013.
The activities for witch this approval is necessary are the following (0141 cattle breeding, 0145 sheep raising goats,0143 raising horses asses,0146 raising pigs,0147 Poultry 0149 Raising of other animals bees, rabbits ,fur animals(production of honey and of leather ), 0150 Mixed farming activities of crops combined with farming of animals.

The necessary documents for obtaining this approval are the following
-    application form;
-    copy of the certificate of registration at the Trade Registry;
-    a certificate of acknowledgement by the Trade Registry;
-    Identification of the technological flux and utilities;
-    The environmental authorization obtained for the activities developed in the farm;
-    Property act;
-    A General and detailed sketch of the space in use;
-    The technical statement;
-    Urban Area Plan;
-    A service contract signed by the operator and a veterinarian for the provision of veterinary services for the animals of the farm.

IV. And finally if the farm owner wants to access subventions for the livestock and the land he owns from the Romanian Government or nonrefundable funds from the European Union he needs to register his farm in the Unique identification Registry (RUI) that is being kept by the Agency for Payments and Intervention in Agriculture, following a special procedure that we will elaborate in a further article.

Buying of Romanian Agricultural Land by Foreigners

There has been a lot of debate lately on the law that regulates the rights of EU residents to purchase Romanian agricultural land that is why our Law Firm has decided to make some clarifications on this issue. If you do not find our post sufficient please do not hesitate to contact our lawyers in Bucharest.

Law no. 312 of 10 November 2005 regulates the acquisition of private property by foreign nationals and by foreign legal entities .
According to the law above stated citizen of a Member State, stateless persons domiciled in a Member State or in Romania , as well as the legal entity formed under the laws of a Member State may acquire ownership of agricultural land, forests and forestry land in fulfillment a period of seven years from the date of accession to the European Union.
Before the deadline of 7 years foreigners can only join the local firms and thus exploit the Romanian lands .
However it seems that until the term limitation of 7 years, Romanian authorities are preparing a series of measures that will hinder foreign access to Romanian agricultural land.
Thus, a bill that will be debated in the fall of 2013 , to discuss the possibility of introducing measures that may consist in making the people who want to buy farmland prove to have experience in agriculture (in the State of origin), of 3-5 years.
Authorities are also going to introduce the bill and option to limit the sale to foreigners of areas of maximum 500 hectares . Moreover they show that there is a variable, namely granting the right of pre-emption to the Romanian state, as well as local and existing farmers to purchase land at the expense of foreigners who want to buy land in Romania .
Until a law is emitted in this sense by the Romanian authorities a stateless persons domiciled in a Member State or in Romania , as well as the legal entity formed under the laws of a Member State may acquire the right to ownership of agricultural land , forests and forestry land in Romania.

Foreign Investment in Romania on the Rise

As Enescu & Cuc is an international law firm with over 90% of the clients being foreign investors in Romania, we are keeping an eye out for news related to the level of foreign investment in the country. It seems that for the first time since 2008 foreigners have an increased interest in Romania, an article published in the Romanian press.

Net foreign direct investment in Romania last year rose for the first time since the crisis began, the advance was 18.7% to 2.138 billion euros, according to final data released by the central bank and the INS, while initial estimates showed a decrease of 11% compared to 2011.

Foreign direct investment reached late last year to 59.126 billion euros, of which 39.3 billion euros equity, including reinvested earnings (66.4%) and EUR 19.86 billion net credit received from investors foreign (33.6%).

The top activity which has attracted the funds was the industry sector. In addition to industry activities that have attracted foreign investments are financial intermediation and insurance (18.5% of total), retail and wholesale (11.4%), construction and real estate (9.2%), technology information and communications (4.8%).

The top four countries by the share of total investment are the Netherlands (22.4%), Austria (18.5%), Germany (11%) and France (8.9%), hierarchy unchanged from 2009.