The risk of conducting business operations involves the danger of engaging with an unreliable company that may turn out to be insolvent or otherwise cause losses to the entrepreneur. However, in the case of foreign entities, this risk increases as it is more difficult to verify the contractor in a foreign country. Currently, this verification is even more critical, mainly due to the penalties threatened for cooperation with companies subject to sanctions in connection with the armed conflict in Ukraine. How to check a company from Romania, a country located very close to the war zone, bordering Ukraine from the north and east?
Exercising due diligence in verifying the contractor
In today’s world, starting a company is very easy. In many countries, you can do it without even leaving your home, through the Internet. Therefore, you can never be certain who is really behind the created name and entry in the registry until you check it. Verification is carried out through actions commonly used in economic intelligence. First and foremost, it involves checking the credibility and up-to-dateness of the contractor’s documentation, including the National Court Register (KRS), tax identification number (NIP), statistical number (REGON), as well as permits and certificates necessary for conducting specific types of activities.
Verification can be done by obtaining information from relevant individuals and institutions, such as the commercial courts, Social Insurance Institution (ZUS), tax authorities, or national and international chambers of commerce. It is worth researching the history of the company and its owners, including opinions about the company, by searching the Internet or asking other entrepreneurs and contractors of this entity, as well as directly approaching the company in question. It is essential to remember that failing to exercise due diligence in selecting a contractor carries legal consequences, such as being accused of knowingly participating in irregularities and facing further tax and legal sanctions.
National and European sanctions
For over a year, Polish companies have been even more cautious about cooperating with foreign, including Romanian, business partners due to the Russian military aggression in Ukraine. By the end of 2022, the European Union had already imposed nine packages of sanctions on Russia. Poland also imposes its additional sanctions. These sanctions include key individuals in Russia, as well as companies originating from Russia and Belarus. Trade in goods and services with Russian and Belarusian companies is prohibited. Polish entrepreneurs face financial penalties of up to PLN 20 million and up to 15 years’ imprisonment for violating these sanctions. However, Russian and Belarusian entrepreneurs have learned to circumvent international bans by using, among other things, complex holding structures established in other countries, where the actual ownership structure is challenging to detect. Romania directly borders Ukraine from the north and east and also shares the Black Sea with Crimea, which was annexed by Russia by force in 2014, forming the Autonomous Republic of Crimea.
Economic cooperation with Romania
Since January 1, 2007, Romania has been a member of the European Union, which significantly facilitates the exchange of goods and services with companies from this country. It has also started the process of joining the Schengen area. The most important sectors of the Romanian economy in the first three quarters of 2022 were industry, wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, and the hospitality and restaurant industry. During this period, the mutual trade between Poland and Romania amounted to 8.16 billion euros. Poland exported goods to Romania worth 5.48 billion euros, while importing goods and services worth 2.68 billion euros. Therefore, Poland was the 6th largest supplier of goods to the Romanian market and the 5th largest recipient of Romanian goods in the world.
We primarily export to Romania: machinery and mechanical appliances, electrical equipment, products of the chemical and related industries, non-precious metals and metallurgical products, as well as plastics, rubber, and their products. In the opposite direction, the main exports are machinery and mechanical appliances, electrical equipment, land transport vehicles, non-precious metals and metallurgical products, as well as plastics, rubber, and their products.
Romania is a vital point on the economic map for Polish companies, and their number in the Romanian market continues to grow. In November 2022, 1494 companies with Polish capital were registered in Romania, compared to 1348 the previous year. In addition to regulations, directives, agreements, and other community legal acts, Polish-Romanian relations are significantly influenced by bilateral agreements: a) on the encouragement and mutual protection of investments dated June 23, 1994; b) on the avoidance of double taxation and the prevention of tax evasion regarding income and property taxes, dated June 23, 1994; and c) the Joint Declaration on strategic partnership from October 2009.
National and EU information sources
Detailed information on the type of economic transactions with Belarus and Russia covered by the EU ban can be found on the European Council’s website: https://www.consilium.europa.eu/. In the Official Journal of the EU at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721, there is a list of individuals and entities subject to sanctions. The Polish Ministry of Internal Affairs and Administration also maintains an updated register of entities subject to sanctions, where one can verify the contractor, their connections, reasons for inclusion in the register, and the applied sanctions: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
In the first step of checking a company from Romania, one can review whether it is listed in any of the above-mentioned registers. Another useful source of information is Regulation (EU) 2022/576 of April 8, 2022, amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilizing the situation in Ukraine.
Economic intelligence, or how to verify a Romanian contractor?
The verification of a contractor can be entrusted to a professional economic intelligence agency that specializes in carrying out such assignments. A private investigator in Warsaw, Poznan, Wroclaw, or other cities will know how to access the necessary information to verify the current or potential contractor.
The most important way to verify a contractor and their possible connections with Belarus or Russia is to determine the beneficial owner of the entity and then check if they are on the aforementioned sanctions list maintained by the Ministry of Internal Affairs and Administration. This information can be obtained from the Central Register of Beneficial Owners maintained by the Minister of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj.
Direct inquiry to the contractor
In case of difficulties in determining the ownership structure of a business partner through available registers, another method of verification in the context of economic intelligence is to directly request confirmation from the partner about who their beneficial owner is. Of course, to authenticate the response, one can ask the Romanian entrepreneur to provide documents confirming their statements.
Environmental intelligence
A publicly accessible way to obtain information about a contractor is to search the Internet resources. Verifying a company, checking if it has a website, what opinions exist about it, and perhaps coming across some publications about it can be done through this method. One can also request references from other companies that have dealt with this contractor.
If we don’t want to do this ourselves for certainty, we can entrust the research to a detective agency specializing in professional economic intelligence. Because there are many sources of information beyond the World Wide Web. For example, Polish-Romanian chambers of commerce or the Embassy of the Republic of Poland in Bucharest may provide information.
Polish and EU registers
In the Public Information Bulletin of the Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, a register of representations of foreign entrepreneurs is maintained. If we find our contractor’s representation in this register, we can assume that they still exist and conduct their business.
Another such register in which one can check a contractor is the European register of VAT taxpayers and the EORI register. Companies and individuals wishing to conduct commercial activities within the European Union must use an EORI number. EORI is an identification number necessary for all customs procedures. The VAT Information Exchange System (VIES), run by the European Commission, is a search engine that allows checking whether a given entity is registered as conducting intra-community transactions. This is essential, among other things, to apply a 0% VAT rate to a specific transaction. If VIES does not confirm the contractor’s registration, one can request verification from the tax office of the country where they are based. It is also worth checking whether the company has the necessary permits and certificates, if required in the respective country.
The Register of Insolvent Debtors allows checking whether a given contractor is listed. There are also economic information bureaus that have detailed information about business activities. BIK, the Credit Information Bureau, established by the Polish Bank Association. This register collects data on the credit history of bank customers, credit unions, and non-banking loan companies.
Romanian business registers
The most important register of companies in Romania (companies, national enterprises, public law entities, cooperatives, economic interest groups, European companies, natural persons conducting sole proprietorship, family businesses, and other natural or legal persons) is the state commercial register maintained by the Ministry of Justice – National Trade Register Office (Oficiul Național al Registrului Comerțului, ONRC, https://www.onrc.ro). Access to the register is free. It contains the documentation required from entities registered in the commercial register and the Central Register of Beneficial Owners. Furthermore, it includes all mentions and identification data of entrepreneurs that require registration by law.
On the portal of the National Trade Register Office Recom on-line (https://portal.onrc.ro/ONRCPortalWeb/ONRCPortal.portal), you can find free access to, among others:
- availability of company names;
- current information regarding the company’s past activities, statistical data;
- publications of information about various legal entities’ situations in the electronic bulletin of the commercial register (BERC);
- statistical data (actions performed in the central trade register, companies with foreign capital);
- statements about the beneficial owner of a legal entity;
- information from the Central Register of Beneficial Owners;
- the name of the economic entity entered in the commercial register;
- entry number in the commercial register;
- unique European identifier;
- Tax Identification Number (NIP);
- statutory headquarters/business location address;
- company status (e.g., active, dissolved, in liquidation, bankrupt, struck off the register, etc.).
After registration and for a fee, you can access the following information:
identification data (entry number in the commercial register, unique European identifier, unique registration code, statutory headquarters address or the address where the business is conducted, contact details of the enterprise – phone number, fax);
statutory headquarters address or the address where the business is conducted (certificate confirming the statutory headquarters address, date of commencement, and expiration of the validity of the document confirming the statutory headquarters address, the period during which the statutory headquarters served its function);
identification data of related natural and legal persons, management staff;
information about branches / subsidiaries / affiliates, additional offices, headquarters;
ownership data;
primary and secondary activities declared or authorized by the entity;
data on arrangements with creditors;
balance sheet data (turnover, average number of employees, gross profit from sales), if such data has been provided by the Ministry of Public Finance.
In the Recom on-line service, you can perform searches by: the name of the entity, entry number in the commercial register, Tax Identification Number (NIP), district where the statutory headquarters/business location is located.
Among other recommended Romanian registers, the Bucharest Stock Exchange should be mentioned. It provides basic information about companies listed on the stock exchange. The register can be searched by the company’s name.
It’s essential to thoroughly check a contractor
Before making transactions or establishing cooperation with a contractor from Romania, it is essential to conduct economic intelligence and thoroughly verify them. Particular attention should be paid to whether the contractor has any connections with Belarus or Russia. Violation of sanctions imposed on transactions with these countries may result in a financial penalty of up to PLN 20 million and imprisonment for 3 to 15 years. Aside from that, trade prudence and due diligence in selecting a contractor are always required. These are obligations that entrepreneurs must fulfill every day. Regardless of the current situation in Eastern Europe, they are imposed by law on companies as professional entities in commercial transactions, with specific sanctions for non-compliance.
Do you already know how to check a company from Romania? If not or if you need to find more detailed information, we can help. Contact us.
