Why corporate governance matters for Romanian SMEs
For many small and medium-sized enterprises (SMEs) in Romania, corporate governance may appear to be a concern reserved only for large corporations. Yet in practice, it plays a crucial role in the stability and growth of smaller businesses as well. Governance provides a framework for how decisions are made, how directors are held accountable, and how transparency is ensured.
Without clear structures, many Romanian SMEs operate informally, with authority concentrated in one or two individuals. This can work in the early stages but quickly becomes a weakness when disputes arise, new investors enter the business, or regulatory scrutiny increases. Proper governance helps avoid these risks, provides a safety net for directors, and demonstrates professionalism to outside partners. In a competitive environment, governance is not just a compliance requirement, it is a strategic asset.
Establishing effective decision-making structures in SMEs
A recurring challenge for SMEs is the lack of formal procedures in day-to-day operations. Decisions are often taken quickly, without minutes, approvals, or records, which can cause serious problems when legal disputes arise or when shareholders have conflicting views.
To address this, SMEs should adopt shareholder agreements that clearly define voting rights, approval thresholds, and responsibilities of each party. Even when the management team is small, documenting decisions in board minutes and introducing internal approval processes creates accountability and reduces uncertainty. These steps do not add bureaucracy, they provide clarity, ensure fairness, and strengthen trust among business partners.
Strengthening boards and advisory roles in Romanian SMEs
Romanian SMEs often operate with minimal involvement from formal boards of directors. Founders or family members take on most decisions, which can limit perspective and slow down growth. Establishing a functional board of directors or, at the very least, bringing in external advisors can make a significant difference.
Independent voices help businesses avoid conflicts of interest and bring expertise in areas where the company may lack experience, such as finance, technology, or compliance. For SRLs (limited liability companies), where boards are not legally mandatory, creating an advisory board can still signal professionalism and reassure investors that decisions are made with long-term sustainability in mind.
In addition, boards play a role in succession planning, ensuring continuity when founders step back or when generational transitions occur. This is particularly relevant for Romania, where many SMEs are family-owned and planning for leadership change is essential.
Compliance and risk management for Romanian SMEs
Compliance is often perceived as a burden by small companies, but in reality, it is a shield against both liability and reputational damage. Romanian SMEs must meet basic legal obligations, including preparing accurate financial statements, holding annual general meetings, and maintaining shareholder records. Failure to comply can expose directors to fines or even personal liability.
Beyond these statutory obligations, companies should adopt risk management practices tailored to their sector. For example, businesses dealing with sensitive customer data must focus on GDPR compliance and cybersecurity policies, while those in financial services, gambling, or construction should strengthen anti-money laundering, anti-bribery, and fraud prevention mechanisms. Even simple internal policies -covering employee conduct, data handling, or conflict resolution- signal to regulators and investors that the company takes compliance seriously.
Attracting investors through strong corporate governance
Investors and lenders pay close attention to governance structures during due diligence. A company with transparent financials, clear decision-making rules, and an independent oversight mechanism is far more attractive than one that relies only on informal arrangements.
For Romanian SMEs seeking access to venture capital, private equity, or bank financing, improving governance can make the difference between securing funding and being rejected. Investors want to know that their capital will be managed responsibly, that disputes can be resolved fairly, and that the company has mechanisms to prevent misuse of resources. By implementing best practices in governance, SMEs can position themselves as credible and trustworthy partners, opening the door to growth opportunities both in Romania and internationally.
Building sustainable SMEs through governance
Corporate governance in Romanian SMEs is not about unnecessary formality, it is about building a culture of accountability and resilience. By formalising decision-making, strengthening boards, and embedding compliance into daily operations, businesses can reduce liability while enhancing their reputation with clients, partners, and regulators.
Strong governance also plays a role in long-term stability. It prepares SMEs for generational succession, helps them withstand financial challenges, and ensures they remain attractive to outside investors. In an increasingly competitive Romanian market, governance is not a luxury. It is a foundation for sustainable success.