Joint ventures (JVs) are a powerful strategic tool for businesses looking to expand into new markets, share resources, or combine complementary strengths. In Romania, both local and foreign companies increasingly use joint venture. They help leverage local knowledge, reduce risks, and navigate regulations.
However, a joint venture succeeds not only through commercial alignment but also through carefully designing legal structuring and governance. Businesses must address several legal issues from the outset, including corporate entity type, intellectual property rights, and exit mechanisms.
This article offers a practical guide to structuring a joint venture in Romania, focusing on legal, operational, and risk management considerations for both domestic and international partners.
Choosing the right legal structure for your joint venture
In Romania, a joint venture can be structured in different ways depending on the level of integration and risk-sharing the parties intend to establish. The two most common forms are contractual joint ventures and equity joint ventures.
The parties form contractual JVs through a cooperation agreement without creating a new legal entity. While flexible and fast to implement, contractual JVs are usually better suited for short-term or low-risk collaborations. They provide less legal protection in the event of disputes. Equity joint ventures create a separate legal entity, most commonly an SRL or SA. This structure offers more formal governance, better liability protection, and greater long-term clarity for more complex or capital-intensive partnerships.
SMEs and foreign investors generally prefer the SRL because of its flexibility and relatively simple setup, while an SA may be more appropriate for ventures that involve public listings or larger shareholder bases.
Drafting a joint venture agreement: essential clauses
The parties rely on the joint venture agreement as the legal backbone of the partnership. It defines the rights, responsibilities, and expectations of each party and helps prevent misunderstandings and disputes. Among the essential clauses to include are those that regulate capital contributions, voting rights, governance, profit-sharing mechanisms, and dispute resolution procedures.
For example, it is crucial to determine how much each party is contributing (in cash, assets, or know-how) and how this translates into equity. The parties should clearly outline decision-making processes, board composition, and any matters requiring unanimous consent in the agreement. Additionally, the parties must decide how to handle the ownership of intellectual property—particularly if any new IP is developed through the joint venture. You must also establish exit terms, buyout rights, and non-compete obligations early. Conflict resolution mechanisms, such as arbitration clauses, help protect each party’s interests throughout the venture’s life cycle.
Corporate governance and compliance in Romanian joint ventures
Once the joint venture entity is established, it must comply with Romanian company law and, when applicable, EU regulations. Governance best practices include setting up well-defined shareholder representation and clarifying the roles and responsibilities of directors. The directors and shareholders should schedule regular meetings and properly document them, including minutes and resolutions
In terms of compliance, joint ventures must maintain up-to-date financial records, file required documents with the Romanian Trade Registry, and submit timely tax declarations. If one partner is a foreign company, the partners should ensure that cross-border elements—such as capital transfers, licensing, or dividend payments—comply with Romanian and international regulations.
Regulatory and competition law considerations
Depending on its size and the sector in which it operates, a joint venture may be subject to merger control review by the Romanian Competition Council. This is especially relevant if the transaction involves partners with significant turnover or market share in Romania or the EU.
In regulated sectors such as energy, telecommunications, healthcare, or gambling, the joint venture partners may need to obtain specific authorisations or comply with sectoral legislation. Conducting legal due diligence at the planning stage helps identify whether additional approvals are needed and to avoid costly delays after the JV is formed.
Managing risk and preparing for exit
Even when based on shared goals, joint ventures are not immune to conflict. Business priorities shift, relationships change, and unforeseen events put the partnership under pressure. That’s why risk management and exit planning are essential components of a well-structured JV.
Before entering a joint venture, businesses should conduct thorough legal and financial due diligence on their prospective partners. During the drafting of the JV agreement, mechanisms for dispute resolution—such as mediation or arbitration—should be defined clearly. The partners must agree in advance on how a partner may exit the joint venture, under what conditions a buyout can occur, how to determine the business value, and how to distribute jointly held assets.
Final thoughts on setting up a joint venture in Romania
Forming a joint venture in Romania can offer strategic and financial advantages, but its success depends heavily on proper legal planning and risk management. From choosing the right legal form to drafting a comprehensive JV agreement, understanding governance obligations, and preparing for potential exits, every stage requires careful attention.
Whether you’re a Romanian business partnering with a foreign investor or an international company entering the local market, having experienced legal support ensures your joint venture is structured for long-term success and resilience.