Starting a company is, for most entrepreneurs, the first step they make towards the business environment. One of the most common and reliable forms of legal entities is SRL (limited liability company), which is also the safest for shareholders.
Safety in this type of companies resides in the fact that individuals (shareholders) are not personally liable in the event of insolvency. The shareholder might only lose the company’s assets and the initial capital he brought into the company. However, the law limits the number of shareholders in a SRL to 50, but it is not uncommon for a Limited Liability Company to have a sole shareholder.
Moreover, the versatility of this type of legal entity makes it possible for the state to grant certain tax breaks. If the SRL has annual revenues under 65 000 Eur, it will be considered a microentreprise. This means that the usual 16% profit tax will be replaced with a 3% income tax.
If the shareholders have never previously owned shares in a company in Europe, they have the right to establish a SRL-D. This option is most often preferred due to some significant advantages: free establishment, 10 000 Eur non-refundable grant, exemption from social contributions for four employees, up to 80% state guarantee for a 100 000 credit.
A SRL-D also has, however, a number of obligations: mandatory reinvestment of 50% of the profit, having at least 2 employees for a 3 year determined period. Otherwise, a SRL-D can be administrated as any other SRL.
We will further explain what are the steps of setting up a SRL and the documents needed for starting a business. These steps are similar for establishing a SRL-D as well.
The setting up of a SRL is regulated by Law 31/1990 and has four mandatory steps: gathering the necessary documentation, submitting the file at the Trade Register, court hearing and retrieving the company documents.
However, before these stages, the applicant has to go through a few other steps: choosing the main activity of the business (according to CAEN code classification), choosing a legal entity (SRL, SRL-D), checking availability and reserving the desired name, establishing a registered office, registering a bank deposit of minimum 200 Lei.
Step 1: Gathering documentation
The establishment file includes a number of mandatory documents for setting up a SRL. This file will end up in court, therefore certain strict conditions must be met in order to avoid rejection or postponing of the file. It is highly recommended that some of these documents be drafted by specialists.
The required documents needed for the establishment of a SRL are, as follows:
- Copy of ID/ Passport of the sole shareholder/ shareholders;
- Copy of ID/ Passport of the administrator/ administrators;
- Documents for the registered office, in copy;
- Proof of reservation of company name;
- Bailment/ Lease contract granting the right to use the registered office space;
- An agreement signed by the Executive Committee of the Owners’ Association, as well as the neighbours that have common walls, in case that the new office is part of an apartment building;
- The Constitutive Act;
- Authenticated declaration of shareholder;
- Specimen signature/ signatures of the sole shareholder/ shareholders;
- Proof of the initial capital;
- Establishment application;
- Annex concerning the tax registration certificate;
- Declaration to obtain permits.
Step 2: Submitting the file at the Trade Register
The documents gathered in the first stage will be submitted at the Trade Register in order to remedy any deficiencies before the file reaches court. The applicant also receives a registration receipt, pays the registry fees and will be issued a spreadsheet and receipt. These shall be submitted to the Registry.
Step 3: Court hearing
The hearing session takes place at the Trade Register where the company has the registered office. It will be scheduled after submitting the application, and, based on the receipt he received, the applicant will be present as required.
There is a fair possibility that the applicant will have to present its case in front of a judge. This usually happens if the documentation has uncertainties. Any delay can last between two and five weeks.
Step 4: Retrieving the company documents
The final fine can be retrieved from the Trade Register, the Bureau of Releases. Under Law no. 31/1990, the Trade Register issues the company documents within 3 to 5 days.