Business Guide to Romania* - Bayern - Europa

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Chapter 4 - Banking, Finance and Insurance Building Societies The general legal framework for building societies has been in place since 2002, but there is only one building society currently operating on the Romanian market. Similar regulations for banks currently apply to building societies, but adjustments are expected. Institutions Issuing Means of Performing Electronic Payments The new Banking Law has introduced the possibility that an institution, other than a bank, may issue means of performing electronic payments. The minimum share capital for such institutions is ROL 120 billion. 4.2 Specialised Financial Institutions Specialised financial institutions in Romania are still developing and, at present, the range of services offered is quite limited, especially in relation to factoring operations. Brokerage houses have been established and many of these are linked to banks. Also, mortgage companies may now operate in accordance with a new specific regulatory framework. Also, a new specific regulatory framework in line with EU legislation was introduced in 2004 to regulate consumer lending activities performed by entities other than banks and more recently by entities linked to banks. 4.3 Leasing Government Ordinance no. 51/1997, revised at the beginning of 2000, and further amended in December 2004, provides a more stable framework for leasing operations in Romania. However, we expect that there will soon be changes in the leasing legislation in order to harmonise it with EU legislation. As in many countries, leasing operations are split into finance leases and operating leases. Currently, there are over 7,000 companies that qualify as leasing companies, but only 100 are actively operating on the Romanian leasing market. They offer both financial and operational leases and various types of assets to be leased for flexible periods of time. Minimum share capital for a leasing company is ROL 500 million. Effective from 1 January 2004, the Fiscal Code brought a new definition of a financial lease, recognised for tax purposes. A financial lease is a leasing activity that fulfils at least one of the following conditions: 22 PricewaterhouseCoopers - Business Guide to Romania 2005 1. the risks and benefits related to the ownership over the leased asset are transferred to the lessee from the signing date of the contract; 2. the lease agreement clearly states that at the end of the lease period the ownership over the leased asset will be transferred to the lessee; 3. the leasing period exceeds 75% of the asset's useful life. Thin capitalisation rules are not applicable to leasing companies for leasing operations. For accounting purposes, the definition provided by IAS needs to be observed by companies applying IAS rules. Details of customs and VAT implications of leasing are included in Chapter 10 - Indirect Taxation. 4.4 Capital Markets In 2003, the Bucharest Stock Exchange and the Electronic Stock Exchange RASDAQ drafted a merger plan to be in line with EU markets. The merger procedure started in 2004 after the new consolidated capital market legislation was approved. The main changes brought by the new consolidated capital market law are: ■ change in the legal status of BSE from a public interest institution to a private company; ■ merger of BSE with the OTC market; ■ new market architecture regarding relationships between regulatory, trading and settlement institutions; ■ creating the legal framework for new trading instruments (e.g. bonds, derivatives); ■ increased safety for investors owing to the creation of the Investors Compensation Fund. Under the new capital market legislation, banks are allowed to act directly as intermediaries with previous authorisation in this respect. One Romanian bank has already taken the first step to trade on the capital market. The supervisory body is the National Securities Commission (which also regulates, supervise and controls the OTC market and institutional investors). The National Securities Commission was established after the initial Securities Exchange Law was passed in 1994. In 2002, the Government issued a new legal framework for securities transactions, regulated markets, brokers, investment funds and derivatives. This legal framework
tried to bring more transparency and accuracy of the transactions and participants on the capital market. A new consolidated capital market legislation in line with EU Directives was approved in 2004. All institutions under the supervision of the National Securities Commission are required to apply IAS rules, starting from financial statements for 2003. Bucharest Stock Exchange The first Bucharest Stock Exchange (BSE) opened in 1882, although in subsequent years most securities trading took place outside the market. The existing Stock Exchange opened in July 1995 with Canadian and British technical assistance. Currently 67 brokers are active members of the BSE. BSE is open for trading during each working day. Trading is stopped on Easter and between 22nd December and the first working day of the following year. The exchange's trading system encompasses both order-driven and block trade markets and is fully automated, with all transactions matched and reported immediately. The BSE lists 60 companies divided into two categories (17 being listed in the first tier and 43 in the second). There are also 21 bonds listed on BSE (20 issued by municipal entities and one by a private company). Certain criteria need to be fulfilled in order for a company to be listed on the BSE (transparency included). Also, there are certain restrictions for trading and price fluctuation. The level of transactions on BSE has significantly increased in the previous years from EUR 1,852.47 million in 2000 to EUR 27,049 million in 2004 and this upward trend is expected to continue in 2005. Listing of municipal bonds, some mutual funds and development of derivatives instruments together with more-strict trading and transparency rules, contributed to the increase in the level of transactions. The BET (Bucharest Exchange Trading), the official index, measures BSE performance. It is a synthetic indicator based on the 10 most liquid shares traded on the BSE. The index increased by 127% (EUR denominated) in 2004. BET-C and BET-FI measuring the performance of all traded stocks on BSE and, respectively, the performance of five financial investments companies with special statute under Romanian law, increased by more than 110% during 2004. RASDAQ The RASDAQ trading system opened in October 1996 as part of a USD 20 million capital market development project run by the US Agency for International Development (USAID). RASDAQ is modelled on America's NASDAQ system. RASDAQ is an exchange market that trades all the companies initially privatised through the Government Mass Privatisation Programme. It has less rigorous requirements than the BSE. A RASDAQ index (composite) based on all transactions began as a benchmark of activity in 1998. There are currently 3,890 companies listed on RASDAQ in three categories (two top categories and a base category for most of the companies). New regulations have been issued for the purpose of tightening supervision and increasing transparency of transactions in this market. Following the approval in 2004 of the consolidated capital market law, the BSE and RASDAQ started a merger process, which is expected to be finalised in 2006. As a result, 109 companies have passed from the trading system of RASDAQ to the BSE trading system. The merger is intended to form a unified capital market, also incorporating the Sibiu Monetary Financial and Commodity Exchange (BMFMS). Futures and options whose underlying assets are commodities, currencies and stocks traded on BSE are traded on the Bucharest Commodities Exchange and the BMFMS, but the volume is still low. 4.5 Insurance The Insurance Surveillance Commission (ISC) regulates and controls the activity of insurance companies and insurance brokers. A council formed by a president, a vice-president and three members nominated by the Parliament heads the ISC. The prime functions of the ISC are: Chapter 4 - Banking, Finance and Insurance ■ to supervise insurance companies' financial standing in order to protect the insured persons' interest; ■ to ensure that insurance companies observe prudential norms specific to insurance activity; ■ to issue norms for enforcement of Insurance Law 32/2000, to help elaborate the chart of accounts, PricewaterhouseCoopers - Business Guide to Romania 2005 23
Page 1 and 2: Business Guide to Romania* 2005 Edi
Page 3 and 4: Contents Chapter Page 1. Romania: a
Page 5 and 6: ■ Unions 30 6.2 Working Condition
Page 7 and 8: ■ VAT Compliance 48 10.2 Customs
Page 9 and 10: Chapter 1 Romania: a Profile ■ Ro
Page 11 and 12: upgrades made by Moody's and Fitch
Page 13 and 14: All visitors to Romania require pas
Page 15 and 16: nearly one-third of Romania's banki
Page 17 and 18: Mortgages are created under authent
Page 19 and 20: allowance of 20% of the value of th
Page 21 and 22: Chapter 4 Banking, Finance and Insu
Page 23: ■ Taking deposits; ■ Making loa
Page 27 and 28: Chapter 5 Corporate and Business La
Page 29 and 30: EUR 25,000 by 31 December 2005). Pa
Page 31 and 32: Chapter 6 Labour Relations and Soci
Page 33 and 34: employment contract with an occupat
Page 35 and 36: Chapter 7 Accounting and Audit Requ
Page 37 and 38: Chapter 8 Taxation of Corporations
Page 39 and 40: exempt from paying profit tax throu
Page 41 and 42: ■ Other salary and/or similar exp
Page 43 and 44: - revenues obtained from management
Page 45 and 46: Income Subject to 16% Flat Tax Rate
Page 47 and 48: ■ Income from sale of movable and
Page 49 and 50: similar function, cinema tickets, a
Page 51 and 52: guarantee import duties could be ob
Page 53 and 54: are transported between tax warehou
Page 55 and 56: also stipulates the elements that s
Page 57 and 58: elationships with key contacts, inc
Page 59: Appendices
Page 62 and 63: Appendix II Appendix II Major Banks
Page 64 and 65: Appendix III Restaurants Phone ■
Page 66 and 67: Appendix IV 481- 482 Internal Settl
Page 68 and 69: Appendix VI Appendix VI Accountants
Page 70 and 71: Appendix VII (b) Appendix VII (b) W
Page 72 and 73: Appendix IX Appendix IX Customs Dut
Page 74:
Appendix XI Appendix XI Excise Tax
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Business Guide to Romania* - Bayern - Europa

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