Investments & Capital Markets in Romania

Romania has emerged as one of Central and Eastern Europe's more accessible destinations for foreign direct investment and capital markets activity. The country operates under EU law, meaning that securities regulation, fund formation rules and investor protection standards align with the broader European framework - yet local procedural requirements, licensing timelines and enforcement patterns differ substantially from Western European norms. Investors who treat Romania as a straightforward extension of an EU market they already know frequently encounter avoidable delays and compliance gaps. This article covers the legal architecture governing investments and capital markets in Romania, the key regulatory bodies and their powers, the mechanics of fund formation and securities issuance, the most common pitfalls for international investors, and the strategic considerations that determine whether a market entry succeeds or stalls.

Romania's investment environment is anchored in several overlapping legal instruments. Law No. 332/2001 on the promotion of direct investments with significant impact on the economy, as amended, establishes the general regime for foreign direct investment and sets out the conditions under which state incentives may be accessed. The Companies Law No. 31/1990, as republished and amended, governs the formation, governance and dissolution of commercial entities, including the most commonly used vehicles for investment structuring - the limited liability company (societate cu răspundere limitată, SRL) and the joint-stock company (societate pe acțiuni, SA).

The capital markets sector is regulated primarily by Law No. 24/2017 on issuers of financial instruments and market operations, which transposed the EU Market Abuse Regulation and the Transparency Directive into Romanian law. This statute sets out disclosure obligations for listed companies, rules on insider dealing and market manipulation, and the procedural framework for public offerings. Alongside it, Law No. 126/2018 on markets in financial instruments transposed MiFID II, establishing conduct-of-business rules for investment firms, trading venues and systematic internalisers operating in Romania.

The regulatory perimeter also includes Government Emergency Ordinance No. 32/2012 on undertakings for collective investment in transferable securities (UCITS) and investment management companies, which implements the UCITS Directive. For alternative investment funds, Law No. 74/2015 on alternative investment fund managers (AIFMs) transposed the AIFMD and defines the licensing and operational requirements for managers of private equity funds, real estate funds and other alternative structures.

A non-obvious risk for international investors is the interaction between these EU-derived statutes and older Romanian civil and commercial law provisions that were not fully harmonised during transposition. Conflicts between the general civil code framework and sector-specific capital markets rules are resolved by the lex specialis principle, but the outcome is not always predictable without local counsel familiar with how Romanian courts and the regulator have applied these provisions in practice.

The Autoritatea de Supraveghere Financiară (ASF) - the Financial Supervisory Authority - is the single integrated regulator for capital markets, insurance and private pensions in Romania. Established by Emergency Ordinance No. 93/2012, the ASF absorbed the former National Securities Commission (CNVM) and now holds comprehensive supervisory, licensing and enforcement powers over all participants in the Romanian financial markets.

For investment firms and fund managers, the ASF is the primary point of contact for authorisation. An investment firm seeking to provide investment services in Romania must obtain an ASF licence before commencing operations. The application process involves submission of a detailed dossier covering the firm's ownership structure, governance arrangements, capital adequacy, internal controls and the qualifications of key personnel. The ASF has a statutory review period, but in practice the process from submission of a complete application to receipt of a licence commonly takes between four and eight months, depending on the complexity of the structure and the responsiveness of the applicant to information requests.

Passporting under MiFID II allows investment firms authorised in another EU member state to provide services in Romania on a cross-border basis or through a branch, subject to notification procedures. However, the ASF retains conduct-of-business supervisory powers over passported firms operating in Romania, and enforcement action by the ASF against a passported firm is not uncommon where local client-facing activity is found to breach Romanian implementation of MiFID II conduct rules.

A common mistake made by international groups is assuming that a MiFID II passport eliminates the need for local legal analysis. The ASF has taken enforcement positions on issues such as the classification of Romanian retail clients, the adequacy of Romanian-language disclosures and the application of local anti-money laundering requirements that go beyond what the home-state regulator requires. Engaging local counsel before commencing passported activity in Romania avoids regulatory friction that can otherwise result in formal warnings, fines or temporary suspension of activity.

To receive a checklist for investment firm licensing and passporting compliance in Romania, send a request to info@vlolawfirm.com.

Romania offers two principal regulated fund structures for collective investment: UCITS funds and alternative investment funds (AIFs). Both require an authorised management company or AIFM, and both are subject to ASF oversight. The choice between structures depends on the investor base, the asset class and the distribution strategy.

A UCITS fund in Romania is established as an open-ended fund (fond deschis de investiții) or as an investment company with variable capital (societate de investiții cu capital variabil, SICAV). The management company must hold an ASF authorisation and meet minimum capital requirements set out in the UCITS implementing regulations. The fund itself must have a depositary - a credit institution or investment firm authorised to perform depositary functions - and must publish a key investor information document (KIID) and a full prospectus approved by the ASF before marketing to retail investors.

For alternative investment funds, the AIFM regime under Law No. 74/2015 distinguishes between full-scope AIFMs and sub-threshold managers. A full-scope AIFM managing assets above the thresholds set by the AIFMD (EUR 100 million for leveraged funds, EUR 500 million for unleveraged closed-ended funds) must obtain ASF authorisation and comply with the full suite of AIFMD requirements, including depositary appointment, leverage disclosure and annual reporting. Sub-threshold managers benefit from a lighter registration regime but cannot use the AIFMD marketing passport.

In practice, many international private equity and real estate sponsors choose to establish the fund vehicle in Luxembourg or another EU jurisdiction with a more developed fund administration ecosystem, while using a Romanian subsidiary or special purpose vehicle (SPV) as the acquisition vehicle for Romanian assets. This structure separates the fund governance layer from the Romanian operational layer, reducing the regulatory footprint in Romania while maintaining compliance with the AIFMD at the fund level. The Romanian SPV is typically structured as an SA or SRL, with the choice driven by governance flexibility, share transfer mechanics and the requirements of Romanian real estate or corporate law applicable to the target assets.

A non-obvious risk in this structure is the application of Romanian thin capitalisation and transfer pricing rules to intra-group financing between the foreign fund and the Romanian SPV. The Fiscal Code (Codul Fiscal), as amended, contains provisions on deductibility of interest expenses and related-party transactions that can significantly affect the after-tax return on leveraged investments if not addressed at the structuring stage.

The Bucharest Stock Exchange (Bursa de Valori București, BVB) operates the main regulated market and the AeRO market, which is designed for small and medium-sized enterprises. Both markets are regulated by the ASF and operate under the EU Prospectus Regulation (EU) 2017/1129, as supplemented by Romanian implementing measures under Law No. 24/2017.

A public offering of securities in Romania requires either a prospectus approved by the ASF or, where an exemption applies, a simplified disclosure document. The prospectus approval process involves submission of a draft prospectus to the ASF, which has 10 working days to review a first submission and 5 working days for subsequent submissions following comments. In practice, the review cycle typically involves two to three rounds of comments, meaning that the total time from first submission to approval commonly falls in the range of six to ten weeks for a straightforward equity offering.

For issuers already listed on a regulated market in another EU member state, the EU passporting mechanism under the Prospectus Regulation allows the home-state approved prospectus to be used in Romania following a notification procedure. The ASF must receive the notification and the translated summary before the offering commences in Romania. This route is significantly faster than a standalone ASF approval and is the preferred approach for international issuers seeking to access Romanian retail investors as part of a broader European offering.

The AeRO market offers a lighter listing regime for SMEs. Admission to AeRO requires a simplified information document rather than a full prospectus, and the ongoing disclosure obligations are less burdensome than those applicable to the main regulated market. For Romanian companies seeking growth capital from institutional and retail investors without the full compliance burden of a main market listing, AeRO has become an increasingly used route. The costs of an AeRO listing, including legal, financial advisory and exchange fees, typically start from the low tens of thousands of EUR for a straightforward transaction.

Practical scenario one: a Romanian technology company with revenues in the low tens of millions of EUR seeks to raise growth capital through an AeRO listing. The company engages a Romanian investment firm as listing agent, prepares the simplified information document with legal and financial advisers, and submits to the BVB for admission. The process from engagement to first day of trading typically takes three to five months, with legal fees starting from the low tens of thousands of EUR.

Practical scenario two: a pan-European private equity fund acquires a controlling stake in a Romanian listed company through a mandatory tender offer triggered under Law No. 24/2017 when the acquirer crosses the 33% threshold. The fund must notify the ASF within one trading day of crossing the threshold, launch a mandatory offer within 35 calendar days of the notification, and maintain the offer open for at least 10 trading days. Failure to comply with these deadlines exposes the acquirer to ASF enforcement action and potential suspension of voting rights.

To receive a checklist for securities issuance and public offering compliance in Romania, send a request to info@vlolawfirm.com.

Romania implemented EU Regulation 2019/452 on the screening of foreign direct investments through Government Emergency Ordinance No. 45/2022, which established a national FDI screening mechanism. The mechanism applies to investments by non-EU investors in Romanian companies operating in sectors designated as sensitive, including critical infrastructure, energy, transport, communications, financial services, defence and dual-use technologies.

Under the screening framework, a non-EU investor acquiring a qualifying interest in a Romanian company in a covered sector must notify the Romanian Government's FDI screening body before completing the transaction. The screening body has 45 calendar days from receipt of a complete notification to conduct an initial review, with the possibility of extending the review by a further 45 days where a more detailed assessment is required. Transactions completed without the required notification, or in breach of a screening decision, are void under Romanian law and may attract administrative sanctions.

For EU investors, the screening mechanism does not apply in the same mandatory form, but Romania retains sector-specific restrictions in areas such as agricultural land ownership, media and certain regulated financial activities. The Agricultural Land Law (Legea nr. 17/2014) imposes pre-emption rights in favour of co-owners, lessees, neighbouring landowners and the Romanian state on transfers of agricultural land outside built-up areas. International investors acquiring Romanian agribusiness assets frequently underestimate the procedural complexity and timeline implications of these pre-emption procedures, which can add two to three months to a transaction timeline.

A common mistake is treating Romania's FDI screening and sector restrictions as a formality. The screening body has issued conditional approvals requiring structural remedies - such as ring-fencing of sensitive data or appointment of a security officer - and has blocked transactions in a small number of cases involving critical infrastructure assets. Early engagement with Romanian legal counsel to assess screening risk before signing a transaction agreement avoids the situation where a deal is signed subject to a screening condition that the parties have not adequately assessed.

The energy sector deserves specific mention. Romania's energy market is regulated by the National Energy Regulatory Authority (Autoritatea Națională de Reglementare în domeniul Energiei, ANRE). Investments in electricity generation, transmission, distribution and supply, as well as in natural gas infrastructure, require ANRE licences in addition to any ASF authorisation that may be required where the investment vehicle is a regulated entity. The licensing process at ANRE is separate from and parallel to the ASF process, and the two regulatory timelines do not automatically align.

Romania is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and to the Washington Convention establishing the International Centre for Settlement of Investment Disputes (ICSID). Romania has also concluded a network of bilateral investment treaties (BITs) with a significant number of countries, although the intra-EU BIT landscape has been affected by the Court of Justice of the European Union's jurisprudence on the compatibility of intra-EU investor-state arbitration with EU law.

For commercial disputes arising from investment transactions, Romanian courts have jurisdiction under the general rules of the Civil Procedure Code (Codul de Procedură Civilă). The Bucharest Court of Appeal has a specialised commercial chamber that handles complex corporate and capital markets disputes. First-instance proceedings in complex commercial matters before the Bucharest Tribunal typically take between 18 and 36 months, with appeals extending the timeline further. International investors with significant assets at stake should consider whether contractual arbitration clauses - referring disputes to ICC, LCIA or Vienna International Arbitral Centre (VIAC) arbitration - provide a more predictable dispute resolution mechanism than Romanian court litigation.

The ASF has administrative enforcement powers including the ability to impose fines, suspend licences, require disgorgement of profits and refer cases to criminal prosecutors. Administrative fines under Law No. 24/2017 for market abuse and disclosure violations can reach significant amounts relative to the size of the Romanian market. The ASF's enforcement activity has increased in recent years, with particular focus on insider dealing, late disclosure of inside information and failures to comply with mandatory offer obligations.

Investor protection in the context of collective investment schemes is provided in part by the Investor Compensation Fund (Fondul de Compensare a Investitorilor, FCI), established under Law No. 297/2004 as subsequently amended. The FCI compensates retail investors of authorised investment firms that are unable to return client assets, up to a statutory limit. This mechanism does not cover investment losses - it covers the failure of the firm to return assets - and its scope is limited to clients of ASF-authorised firms.

Practical scenario three: a foreign institutional investor holds a significant minority stake in a Romanian listed company and believes the controlling shareholder has engaged in a related-party transaction that was not disclosed in accordance with Law No. 24/2017. The investor has two parallel routes: filing a complaint with the ASF seeking regulatory enforcement action, and bringing a civil claim before the Bucharest Tribunal for damages caused by the breach of disclosure obligations. The two routes are not mutually exclusive, but the strategic sequencing - and the evidentiary value of an ASF finding in subsequent civil proceedings - requires careful analysis before committing to either path.

We can help build a strategy for protecting minority investor rights and navigating ASF enforcement procedures in Romania. Contact info@vlolawfirm.com for an initial assessment.

What are the main risks for a foreign investor entering the Romanian capital markets for the first time?

The primary risks cluster around regulatory compliance and procedural timing. Romania's capital markets framework is EU-aligned, but the ASF applies its own interpretations of MiFID II and the Prospectus Regulation that do not always match the approach taken by regulators in Western European markets. Licensing timelines are longer than in some EU jurisdictions, and the consequences of commencing regulated activity before authorisation is granted - or before a passporting notification is properly completed - can include enforcement action and reputational damage. A second significant risk is the interaction between capital markets rules and Romanian corporate law, particularly in the context of shareholder agreements and governance arrangements that work well under English or Luxembourg law but may not be fully enforceable under Romanian law without adaptation.

How long does it take and what does it cost to list a company on the Bucharest Stock Exchange?

For a main regulated market listing, the process from initial preparation to first day of trading typically takes between six and twelve months, depending on the complexity of the issuer's structure and the state of its financial reporting. Legal and advisory fees for a main market IPO start from the low hundreds of thousands of EUR for a mid-sized transaction. An AeRO listing is significantly faster - three to five months is a realistic target for a well-prepared issuer - and less costly, with total professional fees starting from the low tens of thousands of EUR. In both cases, the issuer must have audited financial statements prepared in accordance with IFRS or Romanian GAAP, and the quality of the financial reporting is frequently the factor that determines whether the timeline is met or extended.

When should an investor choose international arbitration over Romanian court litigation for a capital markets dispute?

International arbitration is generally preferable where the dispute involves a counterparty with assets outside Romania, where the governing law of the contract is not Romanian law, or where the investor requires a neutral forum and a predictable procedural timeline. Romanian court proceedings in complex commercial matters are thorough but slow, and the enforcement of a Romanian court judgment against assets located outside Romania requires recognition proceedings in the relevant foreign jurisdiction. An ICC or LCIA arbitral award, by contrast, is enforceable in over 170 countries under the New York Convention without re-litigation of the merits. The trade-off is cost: international arbitration in a mid-sized dispute typically costs more in procedural fees and legal expenses than Romanian court litigation, and the upfront financial commitment is higher. For disputes involving purely Romanian assets and a Romanian counterparty, Romanian court litigation - potentially combined with interim injunctive relief - may be the more economically rational choice.

Romania's investment and capital markets framework is substantively EU-compliant but operationally distinct. The ASF's licensing and enforcement approach, the BVB's market structure, the FDI screening mechanism and the interaction between EU-derived statutes and Romanian civil law create a regulatory environment that rewards preparation and local expertise. International investors who engage Romanian legal counsel at the structuring stage - rather than after a compliance issue has arisen - consistently achieve faster market entry and fewer regulatory complications.

To receive a checklist for structuring and executing an investment or capital markets transaction in Romania, send a request to info@vlolawfirm.com.

Our law firm VLO Law Firm has experience supporting clients in Romania on investment structuring, capital markets regulation, fund formation and FDI compliance matters. We can assist with ASF licensing applications, prospectus preparation, FDI screening notifications, transaction structuring and dispute resolution strategy. To receive a consultation, contact: info@vlolawfirm.com.