- General Information about Republic of Moldova
The Republic of Moldova is a former Soviet Union country which became an independent state on 27 August 1991. The country is located in the Eastern Europe in between Romania and Ukraine. As per official statistics, Moldovan population is approx. 2,6 million people. Unofficial statistics are different mostly because of migration and the lack of relevant data. Given that Republic of Moldova is mostly an agricultural country, most of its population of a working age is involved in agriculture. Public administration and services areas are the second most “popular” employment areas.
- International Aspects. Membership in Unions / Associations
Given the strategic location of the Republic of Moldova, it benefits from members in various regional associations and unions.
On 12 December 1991 the Republic of Moldova executed the Alma Ata Declaration and joined the Commonwealth of Independent States (CIS). CIS is a platform for cooperation between a series of former USSR countries in various areas, such as economic and social development, security and legal cooperation. Currently there are 11 countries members to the CIS, including the Russian Federation, Kazakhstan, Belarus and the Republic of Moldova.
Membership in the CIS offers the Republic of Moldova simplified procedures for recognition of various permissive documents. It is also a member of CIS’s Free Trade Treaty, 70 various committees and working groups. In addition, CIS platform offers to its members recognition of official documents issued by state authorities where no apostillation and/or supra-legalization is required.
Starting with 1994, the Republic of Moldova initiated its cooperation with the European Union. To this end, on 28 November 1994 the Partnership and Cooperation Agreement between the European Communities and their Member State and the RM was executed. This agreement entered into legal force on 1 July 1998 being valid for 10 years;
On 27 June 2014, the EU – RM Association Agreement was executed. The Agreement was ratified by the Parliament of the Republic of Moldova on 2 July 2014 and by the European Parliament on 13 November 2014. The Association Agreement (AA) is based on an innovative and ambitious approach, including the creation of a Deep and Comprehensive Free Trade Agreement – DCFTA. The Association Agreement includes binding provisions, regulatory norms and broader cooperation arrangements in all sectors of interest.
To this end, in the period of 2015 – 2018 total exports to the EU markets have increased by USD 1,5 mil. or by 34% in comparison with the first 4 years of implementation. The biggest share of the exports are food and agricultural products. The RM exported 52% more of these products in the period of 2015 – 2018 than in the period of 2011 – 2014. The balance of trade between the EU and the RM has improved from 47% in the period of 2011 – 2014 to 66% in the period of 2015 – 2018.
- Investments in the Republic of Moldova
The legal framework meant to regulate the investments activity in Republic of Moldova consist of Law on Investments in Entrepreneurial Activity no. 81 of 18 March 2004 and other applicable laws. Investment is defined as a totality of assets contributed to the entrepreneurial activity, including in a form of financial leasing or PPP. Foreign investment is defined as an investment made by a non-resident, including in a form of profits received and re-invested. Forms of investments include ownership over movable and immovable assets, license / permissive document, shares, IP rights and others.
The investments activity is guided by certain principles, as investment liberty, non-discrimination, transparency, compliance with the legal norms and provisions. These are meant to create a legal basis, that contributes to the development of investment activity in a business-friendly climate.
In addition to the rights granted by laws, the investor benefit from certain guarantees that come to protect the investments. Thus, the investments may not be abusively expropriated or subject to measures with similar effect that deprive, directly or indirectly, the investor of the ownership or control over the investment. The investors are entitled, in accordance with the legislation in force, to receive compensation for the damages caused by the violation of its rights, including by acts adopted by the public authorities (if such violates the investors rights) or by other illegitimate actions thereof.
In order to diminish the investment risks and establish the state support for strategic investment projects, the Government, within the limits of its competence, may conclude investment agreements on the implementation of these projects.
- Starting a Business
The most common form of company in Moldova is limited liability company (SRL). The law recognizes and provides for other forms as joint stock companies, partnerships, etc. Straightforward registration procedure that lasts up to 3 business days. For the purposes of registration standard form documents and procedures are used. In this regard is important to mention that, the applicants have the obligation to disclose the company’s UBO.
Registration costs are provided by the law (registration stamp fee is approx. EUR 100). The Moldovan legislation does not provide for a minimum share capital of the limited liability company.
The state authority competent to register the new companies is Public Services Agency. The registration is to be done at the Public Services’ territorial brunches. Unfortunately, online registration is still not available.
- Licenses and Permissive Documents
Until recent times, in Moldova there were more laws regulating licenses and permissive documents, later the Moldovan legislator has combined all these norms in Law on Regulation of Entrepreneurial Activity through Authorization no. 160 of 22 July 2011 (the “Licensing Law”). Licensing Law provide for 34 licenses, 82 authorizations and 36 certificates. The update Licensing Law has brought the one-stop-shop procedure for the issuance of the majority of the licenses.
Permissive documents are subject to regular review and revision by the Government. This process is called “Guillotine”.
- Getting a Credit. Banking
There are currently 11 commercial banks active in the Republic of Moldova that offer a wide range of bank services. Moldovan banking legislation is generally aligned with the EU standards and rules. Even if the banks provide digitized services, however, digital onboarding of the clients is still not available. Specific KYC and UBO disclosure rules and procedures.
From a practical perspective, the reticent of banks in granting credits to the newly established companies or pledge-free credits should be noted.
The Republic of Moldova can be “recognized” as a country with one of the most employee-protective legislation in the region. Employment or dismissal “on will” is neither recognized nor provided.
Employment of foreign workers is subject to work permit to be issued by the Moldovan Bureau for Migration and Asylum.