Legal & Fiscal Due Diligence in Romania: What Every Foreign Investor Should Verify Before Acquiring a Company or Assets

Introduction

Romania has become one of the most dynamic M&A destinations in Central and Eastern Europe. Its strategic location, access to the EU single market, and competitive costs render it an attractive jurisdiction for foreign investors.

However, each successful transaction begins with an extensive legal and fiscal due diligence process.

In Romania, local regulations, ownership structures, and tax compliance can hide risks that are not immediately visible only from financial statements.

This guide outlines what every investor should examine before acquiring a Romanian company or assets — and how to ensure legal safety and deal value.

1. Understanding the Type of Acquisition: Share Deal vs. Asset Deal

Romanian law distinguishes clearly between:

• Share deals – acquisition of ownership in the company itself (including all assets and liabilities); and

• Asset deals – acquisition of specific assets or business lines, without taking over the legal entity.

Legal implications

Under the Romanian Civil Code and Companies Law no. 31/1990, a share deal transfers the legal personality along with its rights and obligations, including any debts. In contrast, an asset deal requires separate transfer procedures for each asset (e.g., land registration formalities, assignment of contracts, IP transfer).

Further details about the differences between the two mentioned above can be found in the following article: Share deal or Asset deal? How do you prepare yourself for a succesfull deal in M&A?

Main considerations:

• In share deals, the buyer takes on historical liabilities — tax obligations, environmental duties, commercial or employment contracts.

• Asset deals may trigger VAT, transfer taxes and may require notification or consent from third parties (such as lessors, licensors, public authorities).

  
  

2. Corporate Structure and Shareholding

In case of share deals, foreign investors need to confirm:

• The shareholding structure (listed with the Romanian Trade Register – Oficiul Național al Registrului Comerțului).

• Any pledges of shares, encumbrances or restrictions on transfer.

• Compliance with the ultimate beneficial owner (UBO) regulation (Law no. 129/2019 on anti-money laundering).

• Current shareholder agreements or veto rights that may affect the corporate control.

A transparent corporate structure guarantees that there are no hidden shareholders or cross-ownerships that might complicate the closing process.

3. Legal Liabilities and Ongoing Disputes

During legal due diligence, attention should be paid to:

• Legal and arbitration proceedings, enforcement actions, or bankruptcy risks.

• Inspections by regulatory authorities from ANAF (tax authority), ANPC (consumer protection), ANSPDCP (data protection authority), ITM (labour inspectorate).

• Potential environmental liabilities, particularly in industrial or real-estate deals.

The goal is to assess both actual and potential liabilities and their possible financial impact post-closing.

4. Real-Estate, Urban Planning and Environmental Considerations

In Romania, land ownership can be complex due to historical title gaps or restitution claims. Key checks should be:

• Property deeds and land registry (through the Land Book / Carte Funciară).

• Urban planning certificates, building permits, and zoning (granted under Law no. 50/1991). It is important to verify the validity of the permits and any additional restrictions imposed by the authority.

• Environmental permits for industrial or energy-related projects.

For renewable-energy investors, due diligence must confirm grid connection rights, land classification (intravilan or extravilan) and any construction restrictions.

For more insights about renewable energy projects please check: Legal Guide for Renewable Energy Producers in Romania

5. Employment and Labour Law Compliance

Buyers should be more careful with:

• Existing employment agreements, collective bargaining contracts and potential legal proceedings in relation to it.

• Compliance with Romanian Labour Code (Law no. 53/2003) and GDPR for all employee data.

• Any non-competition or retention agreements with key staff.

In case of transfer of undertaking (Directive 2001/23/EC), employees are automatically transferred to the new employer with their rights preserved.

6. Fiscal and Tax Due Diligence

Tax exposure may significantly affect the actual value of a transaction. The checklist includes:

• Review of compliance with corporate income tax, VAT, and local taxes compliance.

• Status of tax audits and open fiscal years (in Romania, the statute of limitations is 5 years).

• Transfer pricing documentation and related-party transactions and documentation.

Romanian tax authorities are increasingly focused on substance over form, particularly concerning cross-border structures. A legal review should be accompanied by a tax audit risk assessment.

7. Contractual Framework and Key Business Relationships

All material contracts should be reviewed for:

• Termination clauses or change-of-control provisions.

• Limitations on assignments or necessary approvals.

• Terms of payment, penalties, exclusivity or geographical restrictions.

• Ownership and licensing rights of intellectual property.

In Romania, contracts become valid once signed, but they may require notarisation or registration for matters involving real estate, intellectual property or secured lending.

8. Data Protection, IT and Cybersecurity

Romania applies the EU General Data Protection Regulation (GDPR) directly, as a part of the EU. Due diligence need to include:

• The company's data-processing agreements and privacy policies.

• Security measures and the history of breaches.

• Registration with the Data Protection Authority (ANSPDCP), if the case may be.

Investors from abroad, especially in the tech and healthcare sectors, evaluate if the target has implemented GDPR compliance programs to avoid penalties.

9. Transaction Structuring and Closing Documentation

Once risks are mapped, the legal advisor typically assists in:

• Drafting the Share Purchase Agreement (SPA) or Asset Transfer Agreement, including representations and warranties, indemnities, and price adjustment mechanisms.

• Negotiating conditions precedent (regulatory approvals, corporate consents) - CPs.

• Preparing closing deliverables, including updated Trade Registry extracts, corporate resolutions, and certificates of fiscal compliance.

According with Romanian law, the majority of corporate filings are electronically registered with the ONRC a few days after signing.

10. Post-Closing and Integration

Foreign investors frequently overlook the steps required after closing a deal.

• Updating corporate and tax registrations.

• Aligning accounting systems with Romanian reporting standards.

• Coordinating HR, compliance, and governance processes.

A legal advisor can assist in ensuring that all post-closing obligations are properly fulfilled to protect the investment.

Conclusion

Conducting a legal and fiscal due diligence in Romania is not just a formal step — it’s the foundation of a successful acquisition. Aligning with the local legal environment, from corporate and tax regulations to ownership and labour rules, helps foreign investors mitigate risks, negotiate better terms, and achieve long-term value.

For foreign investors planning to acquire a Romanian company or assets, seeking professional legal advice make the difference between a high-risk deal and a well-structured investment.

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Need tailored assistance for your acquisition in Romania? As a Romanian lawyer experienced in corporate and M&A transactions, I assist foreign investors perform comprehensive due diligence, assess risks, and structure transactions securely.

📩 Reach out to me at office@cristinatudor.ro to discuss about your project.