
CMS | Romania passes law allowing authorised individuals, sole proprietorships and family enterprises to become companies
09 Octombrie 2024
CMS RomaniaFor more information on this draft law, contact your CMS client partner or these CMS experts: Rodica Manea and Rebeca Vladislav.
![]() |
On 2 October 2024, the Romanian Parliament voted to adopt Draft Law No 274/2024 for the completion of Government Emergency Ordinance No 44/2008 on the conduct of economic activities by authorised individuals, sole proprietorships and family enterprises. This draft legislation is currently awaiting promulgation by the President of Romania and publication in the Romanian Official Gazette in order to go into force.
The draft law introduces important amendments to the current applicable legal framework, providing Authorised Natural Persons (PFAs), Sole Proprietorships (IIs), and Family Enterprises (IFs) the possibility to transform, under certain conditions, into limited liability companies (SRL) or other types of commercial companies (i.e. joint-stock companies, general partnership companies, limited partnership companies and limited partnership limited by shares companies) as regulated by Romanian Companies Law No. 31/1990. This legislative initiative was launched to facilitate the transition of small individual entrepreneurs to commercial companies after a surge in natural legal persons professionals was noticed in the Romanian market beginning in 2022.
The draft law introduces important amendments to the current applicable legal framework, providing Authorised Natural Persons (PFAs), Sole Proprietorships (IIs), and Family Enterprises (IFs) the possibility to transform, under certain conditions, into limited liability companies (SRL) or other types of commercial companies (i.e. joint-stock companies, general partnership companies, limited partnership companies and limited partnership limited by shares companies) as regulated by Romanian Companies Law No. 31/1990. This legislative initiative was launched to facilitate the transition of small individual entrepreneurs to commercial companies after a surge in natural legal persons professionals was noticed in the Romanian market beginning in 2022.
The draft law was considered essential after many PFAs, IIs, and IFs had grown to a level requiring double-entry bookkeeping and diversification of the relevant NACE codes. Current legislation, however, restricted their transformation, leaving dissolution as the only option, which results in the loss of tax and banking history and business relationships. A legal framework allowing their conversion into legal entities like SRLs is expected to ease administrative burdens, streamline procedures, and support efforts to reduce bureaucracy and simplify processes.
The mechanism for the transformation
The draft law introduces a clear and simplified procedure for the conversion of PFAs, IIs, and IFs into SRLs or other types of commercial companies. The key regulations include:
► Eligibility: PFAs, IIs and IFs may apply for transformation into a SRL or other type of commercial company, provided that they meet certain conditions stipulated by law, namely that they were established for a minimum of one year prior to the transformation.
► Required documentation: The transformation process involves submitting an application to the Romanian Trade Registry, along with a few supporting documents, which include:
→ the registration certificate obtained by the PFAs, IIs or IFs;
→ the company's articles of incorporation and evidence of subscription of the share capital, except for limited liability companies;
→ evidence of a registered office;
→ the tax certificate;
→ the VAT registration code, where applicable.
► Share capital: In the case of transformation into a SRL or another type of commercial company, the entrepreneur must ensure the minimum share capital required by law for the entity type.
► Tax regime: A PFA that transforms into an SRL will switch from single-entry to double-entry bookkeeping and will be able to add new and different areas of NACE activity. The SRL resulting from the conversion of the PFA will keep its tax identification details and VAT registration code, and its tax and banking history, as well as the old business relationships developed over time by the PFA.
► Patrimonial responsibility: A major advantage of transforming into a SRL is the asset protection offered by this legal form. Entrepreneurs will no longer be personally liable for the entity’s debts, but only limited to the subscribed share capital amount.
► Continuity of grants: Another major benefit of this legislative amendment is that entrepreneurs who have accessed grant funds for their projects and choose to convert from PFAs/IIs/IFs to SRLs will no longer be obliged to return the full amount received, including penalties, if they chose to dissolve the entity during the monitoring period of the project. By transforming into commercial companies, they can maintain the economic viability of these companies, ensuring that the objectives of the funded projects are effectively achieved.
Challenges and considerations
While the transformation of PFAs, IIs and IFs into SRLs or other type of commercial companies offers many advantages, there are also challenges to consider:
► Initial costs: Transforming into a SRL or other type of commercial company may involve certain initial costs, such as the minimum share capital and legal fees associated with the transformation process. Moreover, the accounting and legal management of a SRL or other type of commercial company can be more complex than of a PFA, II or IF.
► Compliance with legal requirements: SRLs are subject to stricter legal and administrative requirements, such as the preparation of annual financial statements, holding general meetings, and filing financial reports.
► Tax regime: Although SRL’s taxation can be advantageous in certain cases, it is important for entrepreneurs to assess the overall tax impact of the transformation, considering the specifics of their business and the applicable tax regime.
Despite these challenges, the draft law presents PFAs, IIs and IFs with the valuable opportunity to transform into SRLs or other forms of commercial companies. In the long run, this legislative initiative can contribute to strengthening the entrepreneurial environment in Romania and stimulating sustainable economic development by encouraging entrepreneurship and the growth of small and medium-sized enterprises.
For more information on this draft law, contact your CMS client partner or these CMS experts: Rodica Manea and Rebeca Vladislav.
Publicitate pe BizLawyer? |
![]() ![]() |
Articol 147 / 4504 | Următorul articol |
Publicitate pe BizLawyer? |
![]() |

BREAKING NEWS
ESENTIAL
Women Lawyers | Ileana Nicolescu (Managing Associate) a simțit că BACIU PARTNERS va fi mediul în care va evolua înconjurată de oameni ce o vor inspira nu numai profesional. ”E important pentru fiecare dintre noi să simțim că suntem în locul potrivit pentru etapa din carieră în care ne aflăm, loc care să ofere și premisele să continuăm să creștem”
Studiu Refinitiv | Piața tranzacțiilor de M&A a continuat să crească în Q1 ̸ 2025 pe piețele emergente și la nivel nivel global. CMS își menține poziția fruntașă la nivel global și în Europa de Est, regiune în care și RTPR întră în Top 3
LegiTeam: Zamfirescu Racoţi Vasile & Partners recrutează avocat definitiv | Consultanță
OMV Aktiengesellschaft a mers pe mâna avocaților de la ZRVP într-un alt arbitraj ICC cu statul român și a câștigat încă 47 mil. €, plus dobânzi. Pretenții de alte 50 mil. € la orizont, într-o procedură nouă, inițiată în decembrie 2024, în care lucrează deja aceeași echipă de avocați
Women Lawyers | Femeile avocat redefinesc succesul în avocatura de business. De vorbă cu Irina Picoș (Managing Associate, BSMP) despre leadership feminin, provocări profesionale și lecțiile învățate în carieră: ”Am ales această echipă datorită figurilor feminine ce reprezintă pentru mine adevărate modele în plan profesional și uman și care îmi oferă, zi de zi, inspirația, încrederea și determinarea de a continua munca în profesia de avocat”
PNSA, alături de ALD Automotive la fuziunea cu LeasePlan în Ayvens
Women Lawyers | De vorbă cu Andreea Bende, Partener BACIU PARTNERS și unul dintre fondatorii firmei: ”Femeile avocat joacă un rol important în promovarea eticii și a responsabilității sociale în afaceri, având un impact pozitiv asupra comunităților și societății în ansamblu. Ele aduc perspective diverse și abilități unice în negocieri și strategii legale”
LegiTeam | Voicu & Asociații is looking for Junior level Business Lawyers
Țuca Zbârcea & Asociații aniversează 20 de ani de activitate
ZRVP, alături de dezvoltatorul imobiliar Hagag Development Europe la deschiderea primului hotel Radisson RED din România
NNDKP dezvoltă una dintre cele mai solide practici locale de Dreptul Mediului, cu mandate de impact în industrii cheie, consultanță sofisticată și reprezentare în litigii complexe, gestionate de o echipă specializată | Mădălina Vasile, coordonatoarea practicii: ”Oferirea de asistență personalizată, adaptată realităților juridice și identificarea unor soluții practice și fezabile pentru problemele clienților vor rămâne prioritare”
Women Lawyers | Adela Nuță, Managing Associate BACIU PARTNERS, spune că un loc este modelat de oamenii care îl compun, la fel cum oamenii sunt influențați de spiritul locului. „Iar atunci când această dinamică este construită pe curaj, agilitate și dorința de a atinge excelența, profesia devine mai mult decât o carieră, devine o modalitate de a înțelege, influența și transforma realitatea din jur”
Citeste pe SeeNews Digital Network
-
BizBanker
-
BizLeader
- in curand...
-
SeeNews
in curand...