The end of July brings much-anticipated news, as the FDI Guidelines were published on 30 July and have now entered into force. We previously examined the draft Guidelines proposed by the authority back in February (see here) and are now analysing the changes introduced by lawmakers in the final version that are particularly relevant for practitioners.
What remains unchanged
The extensive scope of covered investments has remained unchanged. This likely reflects the standing of policymakers in the current geopolitical context.
Changes in control or effective participation in the management of the target trigger a filing obligation. The concept of control remains unchanged and follows the definition under competition law (aligned with the EU Merger Regulation). However, there is still no clear definition of what constitutes participation in the management of the target. In the authority's practice to date, the ability to appoint executives who may have access to commercially sensitive information has been considered sufficient to establish nexus.
Likewise, the authority will continue to accept filings based on signed MoUs or LoIs, provided they include at least details on the parties, the scope of the investment, pricing and funding.
Changes and clarifications to the investment value
The Guidelines include several welcome clarifications on the determination of the investment value, relevant for the de minimis threshold of EUR 2m, summarised below:
Share deals
Initial definition of the investment value: Price paid for the shares and/or additional capital brought by the investor to the target company.
Changes and clarifications: None.
Share capital increases, share capital contributions or debt-to-capital conversions
Initial definition of the investment value: Value of the entire contribution (including any initial contribution, follow-on contributions already known and applicable premiums).
Changes and clarifications: It is now clarified that this applies only to the entry of new shareholders or changes of control or management.
In-kind (non-cash) investments
Initial definition of the investment value: Fair market value, evaluation made by the investor.
Changes and clarifications: In addition to fair market value, the accounting (book) value or the value used for tax purposes can be factored in (in this sequence). Valuation reports can be used.
Loans / financing by the investor
Initial definition of the investment value: Principal and interest.
Changes and clarifications: Loans / credit facilities provided by financial institutions in the ordinary course of business are out of scope, provided the lender does not gain decision-making or control rights over the borrower.
Multi-step transactions
Initial definition of the investment value: Cumulative value of all prior acquisitions or contributions until a filing is triggered.
Changes and clarifications: None.
Multi-jurisdictional deals
Initial definition of the investment value: If a specific local deal value (price) is not allocated for the Romanian undertaking or assets, the valuation provided by the parties will be factored in; otherwise, the global deal value will apply.
Changes and clarifications: The global deal value applies if the parties do not allocate or do not provide their evaluation for the Romanian undertaking or assets.
Publicly traded securities
Initial definition of the investment value: Investment value determined based on the stock exchange price the day prior to submitting the filing (or the latest publicly traded price).
Changes and clarifications: None.
More legal certainty
In practice, determining the investment value has proven to be a thorny issue. The Guidelines are a welcome step toward greater legal certainty and help safely exclude certain routine, day-to-day transactions, such as financing provided by professional lenders.
By Georgiana Badescu, Partner, Cristiana Manea, Managing Attorney at Law, and Mihaela Anghel, Attorney at Law, Schoenherr
