It is a busy time of the year in Romania, according to Bancila, Diaconu si Asociatii Managing Partner Radu Diaconu, with interesting reports of regulatory updates on the ESG, tax, and companies front.
“This period is quite busy for us and is coming at the end of a very vibrant 2022,” Diaconu begins. “This was not something that we can say we expected for sure, especially given the geopolitical context of rising inflation, the war in Ukraine, supply chain disruptions, and bearish investors.” However, even with such strong activity levels right now, Diaconu says things may change soon. “I believe that we might experience a slowdown next year on account of the impending economic downturn,” he explains.
Turning to the regulatory landscape in Romania, Diaconu shares that “the ESG wave is starting to become more and more relevant. We are increasingly witnessing ESG-related inquiries in relation to agreements and non-financial reporting endeavors,” he explains. “I would definitely believe this to develop and expand further as the sectors get more educated on the subject,” Diaconu says.
Additionally, Diaconu reports that the country is yet to implement the new EU whistleblowing directive into national law. “Much like ESG until recently, so is whistleblowing a kind of a buzzword across the markets,” Diaconu says. “However, with the directive not yet making its way to being introduced into local legislation, there aren’t that many projects related to whistleblowing so as to warrant highlighting it in any particular way.” He shares that he believes this area to become more relevant “when multinational corporations begin altering their behavior and way of doing business because of it; that is sure to impact the market and incentivize more thinking about whistleblowing.”
Moreover, commenting on “the yearly developments,” Diaconu reports that there have been certain changes made to the company law framework. “The Companies Law was updated so as to remove the requirement of courts being involved in merger and demerger procedures,” he says. “This is an important positive development because it will surely speed up M&A transactions and the associated processes. It sometimes takes quite a long time for a judge to issue a decision, so I expect a significant speed-up in this vein,” Diaconu explains.
Finally, Diaconu reports that there might also be certain amendments to the tax framework, but it is not yet clear when. “Last year, we saw certain tax framework amendments being introduced on December 31 and entering into effect on January 1,” he says. “I would not be surprised if we were to see a similar development around the New Year now as well, especially given the way that the regulators have approached this subject area in the past,” Diaconu points out.