Publication in the Official Gazette of Government Emergency Ordinance no. 46/2022 on measures to implement Regulation (EU) 452/2019 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the examination of foreign direct investment in the Union and for amending and supplementing Competition Law no. 21/1996

On 18 April 2022, Government Emergency Ordinance no. 46/2022 on measures to implement Regulation (EU) 452/2019 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the examination of foreign direct investment in the Union and for amending and supplementing Competition Law no. 21/1996 was published in the Official Gazette of Romania no. 379/2022 and it entered into force on the same date (“GEO no. 46/2022” or the “GEO”). The specific provisions of GEO no. 46/2022 regarding administrative offences will enter into force within 30 days from the date of publication of GEO no. 46/2022 in the Official Gazette. GEO no. 46/2022 aims to establish at national level a regulatory framework of authorisation as well as of examination of foreign direct investments, in order to urgently implement the provisions of Regulation (EU) 452/2019 (the “Regulation”). In a nutshell, GEO no. 46/2022 introduces specific provisions regarding the authorization by Romanian public authorities of certain categories of investments that investors from outside the EU wish to implement in Romania. GEO no. 46/2022 specifically: - does not apply to portfolio investments, as they are defined by Article 2 para. 1 let. b) of GEO no. 92/1997 on direct investment stimulation. The main provisions of GEO no. 46/2022 concern the following aspects:

(i) The broader description of the notion of foreign investor compared to the Regulation, including (i) the legal person, whose registered office is in a Member State of the European Union, which has made or intends to make a foreign direct investment in Romania, in which the control is exercised directly or indirectly by: a natural person who is not a citizen of a Member State of the European Union, a legal person whose registered office is not located in a Member State of the European Union or another legal entity, without legal personality, organized under the laws of a state which is not a member of the European Union and (ii) the fiduciary administrator without the nationality of an EU Member State of an entity without legal personality, which has made or intends to make a foreign direct investment in Romania or a person in a similar position who is not a citizen of an EU Member State, or of any nationality, if the entity without legal personality was established under the laws of a non-EU state;

(ii) The definition of foreign direct investment, by detailing the equivalent notion in the Regulation, as an investment of any kind made by a foreign investor in order to establish or maintain lasting and direct links between the foreign investor and the enterprise concerned or a separate organizational unit of an enterprise to which funds are made available or to which funds are to be made available for carrying out an economic activity in Romania, funds that allow the foreign investor to exercise control over the administration of the enterprise. A foreign direct investment is also made when there is a change in the ownership structure of a foreign legal entity investor, if this change in the legal person makes possible the exercise of control, directly or indirectly, by: (i) a natural person who is not a national of an EU Member State, (ii) a legal person whose registered office is not located in an EU Member State, or (iii) another legal entity, without legal personality, organized under the laws of a non-EU state;

(iii) The definition of the new investment as an initial investment in tangible and intangible assets within the same perimeter, assets related to the start-up of a new business, the expansion of the capacity of an existing business, the diversification of a company's production through products not previously manufactured or to a fundamental change in the overall production process of an existing enterprise;

(iv) The establishment of the Commission for the examination of foreign direct investments (“CEFDI��) in term of 30 days since the date of entry into force of this ordinance, defined as a collegiate body without legal personality, subordinated to the Romanian Government, which has the attributions of examining foreign direct investments, as well as issuing examination notices;

(v) The submission to the examination and approval of CEFDI of foreign direct investments and new investments, which fulfil the following cumulative conditions: · have as object the fields of activity provided in Article 2 of the Decision of the Supreme Council of National Defence no. 73/2012 (i.e., the security of the infrastructure in certain vital areas for the Romanian State); · whose values exceed the threshold of 2,000,000 euros, calculated at the exchange rate communicated by the National Bank of Romania and valid for the last day of the financial year prior to the operation. Foreign direct investments that do not exceed the threshold of 2,000,000 euros may be subject to examination and approval by CEFDI if, by their nature or potential effects (relative to the criteria provided in Article 4 of the Regulation), they may have an impact on public security or public order or if they represent a risk to them;

(vi) The clarification of the obligation to submit the application for authorization of a foreign direct investment to CEFDI based on this GEO in parallel with the submission of the notification file of the economic concentration, within the meaning of Competition Law no. 21/1996, when the foreign direct investment constitutes also a notifiable economic concentration;

(vii) The indication to submit the application for authorization to CEFDI’s secretary, both in Romanian and in English, on paper and in electronic format, together with the original documents submitted in support of the application or with their certified copies;

(viii) The prohibition of making a foreign investment that requires the approval of CEFDI prior to obtaining its approval and the criminalization of such a deed as an administrative offence;

(ix) The establishment of the possibility for CEFDI to notify itself or to be notified by public authorities if a foreign direct investment that should have been approved was made without obtaining the approval, with the possibility for CEFDI to request the parties involved to go through the approval procedure for that investment;

(x) The confirmation that the criteria on the basis of which CEFDI will solve the requests for approval of foreign investments are the ones from Article 4 of the Regulation;

(xi) The indication of the possibility for CEFDI to solve a request for approval by: (i) an unconditional approval, (ii) a conditional approval, respectively by (iii) an unfavourable opinion;

(xii) The indication that the unconditional approval has the nature of notice of conformity, this being sent to the Competition Council, which will authorize the foreign investment within 30 days;

(xiii) The establishment of the obligation to send the conditional approval or the unfavourable opinion to the Romanian Government (these having the legal nature of consultative opinions), which will decide on the authorization or non-authorization of the foreign investment by a government decision;

(xiv) Conferring on CEFDI the possibility to request an opinion from the Supreme Council of National Defence (SCND), that will have the legal nature of a notice of conformity, both for the Competition Council and for the Romanian Government;

(xv) The establishment of special provisions on foreign direct investments in mass-media;

(xvi) The criminalization of administrative offenses consisting of (i) the intentional provision of inaccurate, incomplete or misleading information in an application for authorization of a foreign direct investment, (ii) the enforcement of foreign direct investment without it being authorized, either intentionally or culpably, respectively (iii) the enforcement of the foreign direct investment in breach of the commitments entered into by the authorization decision issued on the basis of the conditional approval, the identification and sanctioning of these deeds being carried out by the Competition Council. A fine which may represent up to 10% of the total worldwide turnover in the financial year preceding the sanction may be imposed;

(xvii) The application of the GEO’s provisions also to foreign investments in progress, for which the intention to conclude an agreement has been announced or, in the case of a public offer, the parties have announced their intention to make such an offer;

(xviii)The adaptation of Competition Law no. 21/1996, by reference to the new attributions of the Competition Council, assigned by the GEO.

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Authored by:  Valentin Razvan and Bruno Leroy