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Financial Participation

As the employee financial participation in Romania is mainly a result of the privatization process, the laws on this topic emerged in the more general context of the privatization legislation.


The most important form of employee financial participation in Romania, employee ownership, emerged from the overall process of privatizing Romania’s state-owned companies, which started in 1990. This took place in three major phases:


1. conversion of state-owned enterprises into commercial companies;


2. allocation of a 30% interest in the capital of commercial companies to eligible Romanian citizens;


3. sale of the unallocated 70% interest to Romania and/or non-Romanian investors.


These phases have been pursued by means of two distinct programmes: the mass privatization programme and the privatization programme following the MEBO method.



Mass Privatization Programme


The first step, the conversion of state enterprises into commercial companies with share capital and autonomous administrations (regii autonome) was undertaken by the Law on the Restructuring of State-Owned Enterprises (Law No. 15/1990). Commercial companies were estimated to be 53% of the total value of all enterprises, with autonomous administrations representing the other 47%. In total, about 6,300 commercial companies and 390 autonomous administrations were established. The autonomous administrations were supposed to consist of only strategic sectors of the national economy, including defence production, rail and urban transportation, energy, natural gas and mining. While these sectors are currently designated to remain as state property, the enterprises included in this category are subject to review.


The second step, transferring a 30% ownership share to eligible Romanians, was also addressed in Law No. 15/1990. This legislation provided for all eligible Romanian citizens to receive, free of charge, bearer ownership certificates (vouchers) in five Private Ownership Funds (POFs) representing the unallocated 30% holding of the share capital of commercial companies. The law also created the National Agency for Privatization (NAP), the entity responsible for preparing, organizing and coordinating the overall privatization process and the ownership certificate programme. The third step, the sale of the 70% interest in commercial companies not distributed to Romanian individuals, is the responsibility of the State Ownership Fund. This step was comprised in Law No. 58/1991.


The first issue of certificates (vouchers), which were in bearer form, could be sold to anyone, as they were freely tradable, or could be exchanged for shares of any (or more) optional commercial company. Vouchers from the second issue in accordance with Law 55/1995 (the “Law on the Acceleration of the Privatization Process”) were for those persons who did not use their vouchers from the first issue. These could no longer be traded. They could only be exchanged for shares in just one company, which could be chosen from a list of “suitable enterprises” issued by the privatization agency. The aim of these limitations was to give a real incentive for employee financial participation. The Law 55/1995 opened the possibility for certain groups to buy shares also in non-listed companies, in exchange of their vouchers. These groups were the employees and management of these companies, as well as former employees (pensioners and unemployed) and, in the case of companies from the agricultural sector, farmers having continuous economic relationships with the companies but not actually employed by them.



The MEBO Privatization Programme


The MEBO privatization method (“Management Employee Buy-out”) was implemented in several steps. Although already mentioned in the1991 law, this law did not provide enough incentives for the MEBO method. A second step was made with Rule 1/1992, which defined MEBO as the standard privatization method for small enterprises, and Law 77/1994, which provided regulations required for a widespread use of the MEBO method. These included the sale of either all or at least a majority of shares to employees. These could not acquire them directly, but through an incorporated association of shareholders – the so-called “management and employee associations”. The membership in the association was voluntary, but was a precondition of making use of certain advantages offered by the association. The association was the one to buy and administrate the shares for its members. Besides full- or part-time employees of the enterprise, there was also another category who could become member in the association: former employees, both pensioners and unemployed. The associations were granted special rights in the privatization process, like access to all relevant information of the enterprise, special credit facilities (maximal interest rate of 10%, while the inflation rate was partly over 100%) and advantageous instalment options for share purchases. The associations are to disappear once the shares have been paid for by members.


The voucher privatization process came to an end with the Law 55/1995 (no more vouchers have been issued since then and the tradability of the old vouchers was restricted by several legal deadlines), while the MEBO legislation is still in force for the most part. As there still are some companies, most of them autonomous administrations, to be privatized, this part of the legislation is still needed.





The legal framework regarding cooperatives was fundamentally changed in 2005. The new “Law on Cooperatives” (1/2005) freed them from bureaucratic limitations and created two types of cooperatives: “type I” cooperatives, which consist exclusively of physical persons, and “type II” cooperatives, which provide a legal structure for the merger of “type I” cooperatives into larger legal entities. Looking back, this law has had negative repercussions for cooperatives in Romania because the monitoring system that previously existed between type 1 cooperatives and type 2 cooperatives was abolished business by it.1



There is no special regulation of profit-sharing in Romanian companies, except for the case of state or municipal enterprises where the state is the single or majority owner, and the case of autonomous administrations. For such companies there is a regulation, the Ordinance 64/2001 on the Repartition of Profits Obtained by State and Municipal Companies with the State as Single or Majority Owner, which stipulates the details of profit distribution and the coverage of losses from previous years.



Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.