LAW IN MOLDOVA

For a long period of time ships flying the Moldovan flag were seen as something exceptional. The country was landlocked, and the task of developing the area of maritime law was not a priority. However, certain agreements reached with Ukraine, under which Moldova has got the access to the portion of the Danube river allowing to start building the Giurgiulesti sea port, have changed the situation. In August 2007 the first sea vessel moored at the Giurgiulesti International Sea Port. The registration of ships under the Moldovan Flag had been carried out even before, but only recently there were clearly elaborated and adopted legal acts setting forth the regulations for the respective  procedure. There have been approved the regulations on the procedure of sea vessels registration in Moldova and the activity of the Giurgiulesti Port Harbour Master’s Service.

There is a number of benefits in registering the vessel in Moldova. Here I will just list some of them:

- International recognition of the Republic of Moldova as a member of the International Maritime Organization and a party to multiple international conventions on sea navigation.

- A de facto flag of convenience without being listed as such.

- Lower costs of registration.

- Less bureaucratic, flexible and speedy registration procedure. 

- No limitation on the age of registered ships.

In recent years the number of see vessels registered in Moldova has significantly increased. More details about the registration procedures, necessary documents and the way of calculating the costs of the registration you can learn from the respective page on our firm's web-site.

The law determines the order of entry and stay of foreigners in the territory of the Republic of Moldova, general conditions for issuing residence permits and visas for the entry to Moldova. This Law shall become effective from 24 December 2010

Here we are going to pay attention just to some aspects of the new law. Contact us for more details or any clarifications.

Article 19 of the new Law provides for the cases in which it is possible to issue long-term visas to foreigner. They can be issued for the following purposes:

-         carrying out entrepreneurial activities - for foreigners investing into the national economy which are or have the intention to become stock or shareholders with the right to conduct or manage commercial undertakings in the Republic of Moldova;

-         employment (however, in this case getting a working permit should be considered additionally);

-         studying;

-         family reunification (an application for a visa for this purpose must be accompanied by a confirmation from the Bureau for Migration and Refugees);

-         for carrying out humanitarian or religious activities;

-         for diplomatic or official purposes;

-         for medical treatment.

Long-term stay visas are granted for a period of not more than 12 months for one or more visits each of them not exceeding 90 days within the 6 months period from the date of the first entry into the country, and allow foreigners to apply for granting the right to reside in Moldova. 

The right to temporary residence in the Republic of Moldova, given to a foreigner may be extended by the competent authority for foreigners, if:

a) they continue to meet the conditions for the entry into the Republic of Moldova;

b) during the foreigner's stay in the Republic of Moldova there was not registered any of the circumstances that would not allow to enter the territory of the Republic of Moldova;

c) s/he has the documents for crossing the border, valid for the period for which an extension of the right to stay in the Republic of Moldova is sought;

d) they seek to extend the right to stay for the same purpose for which the visa was initially issued and the right to    stay granted;

e) the purpose for which the right to stay in the Republic of Moldova requested was observed;

f) the evidence of having living premises to stay at for the whole period for which the extension is requested and medical insurance is presented.

In general, the same aims are also provided for granting the right to temporary stay in the country with the issuance of a temporary residence permit. That is for in order to obtain a temporary residence permit the same requirements are set.

The right to permanent residence in the Republic of Moldova may be granted to a foreigner - the holder of the right to temporary residence if s/he meets all of the following conditions:

a) has stayed legally and continuously in the Republic of Moldova under the right of temporary residence for at least 3 years - for foreigners married to Moldovan citizens (or 5 years, if the duration of the marriage is less than 3 years);

b) has stayed legally and continuously in the territory of the Republic of Moldova for at least 5 years - for other categories of foreigners;

c) confirms availability of sufficient livelihood; this provision does not apply to persons married to citizens of the Republic of Moldova;

d) possesses living premises;

e) can speak the state language at a satisfactory level;

f) continues to meet the conditions for entry into the territory of the Republic of Moldova;

g) during the foreigner's stay in the Republic of Moldova there has not been registered any of the circumstances that do not allow to enter the territory of the Republic of Moldova;

h) did not had any criminal records over the past 3 years.

We should also indicate here the time periods for which foreigners are not allowed to enter Moldova in case they previously breached the time limits for staying in Moldova:

1 year - in the case of illegal residence for the period of 3 months to 1 year;

2 years - in the case of illegal residence for the period of 1 to 2 years;

3 years - in the case of illegal residence for the period of 2 to 3 years;

5 years - in the case of illegal residence for more than 3 years;

3 years - in the case of illegal employment;

5 years - for providing false personal information;

5 years - in the event of previous expulsion.

This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here.

On 3 September 2010 the new Law no. 163 of 09 July 2010 on permitting construction works came into force. The new law stipulates the procedure for permitting, coordinating and verifying design works, construction or demolition of buildings and elements of amenities in accordance with the documentation on urban planning and area development. A significant part of the provisions of the new law covers the procedures of issuing documents for construction, in particular, urban planning certificates and construction permits.

Until recently the issuance of these documents was regulated by the Regulation on urban planning certificate and construction permit or demolition of buildings and amenities (approved by the Government Decision no. 360 of 18 April 1997). And even though that Regulation has not been quashed yet, in fact the rules of the new Law that differ from the previous rules should apply.

As a general rule urban planning certificate and construction permit are issued by city halls of municipalities, towns, communes and villages. They are to be signed by mayors, as well as by local councils' secretaries and chief architects.

Urban Planning Certificate

Urban Planning Certificate used to be the basic document for elaborating construction design documentation. It contained information on real estate's regime at the respective address. The new law introduced the new notion of information urban planning certificate that differs from urban planning certificate for design purposes.

Information urban planning certificate is issued for familiarization with the regimes of the real estate/land plot established in the urban planning and territory development documentation in cases of selling, renting, splitting, consolidating, separating, inheriting real estate, etc. In other words, it is issued for information purposes only.

Urban planning certificate for design purposes is a regulation document permitting to start the elaboration of design documentation.

The new law provides for a limited number of documents that should be submitted in order to obtain an urban planning certificate for design purposes. The following documents should be attached to the application:

-         The extract from the real estate registry together with the cadastral plan and/or plan of the property;

-         Identity card (for natural persons) or certificate of registration (for legal entities);

-     Technical expertise report (in the case of reconstruction, restoration, alteration, or reinforcement of existing real estate objects);

-         Notarized consent of co-owners of the real estate property/land plot whose interests can be directly affected;

-         The draft design coordinated with the chief architect (in case of placing construction of buildings in the areas of special treatment).

The new law does not allow to demand from applicants to submit any other documents except for above mentioned. Thus, the new Law relieved applicants of the obligation to prepare and gather most of the documents necessary for the development of the urban planning certificate as it used to be before. That duty has now been entrusted to local public authorities themselves. They must, within the short period of time, to coordinate all necessary documentation on urban planning with all respective institutions and public bodies. The applicant should only submit certain basic documents proving his identity and lack of disputes with real estate's co-owners and a document from the cadastral office confirming the registration of his property rights.

The 20-working days term was clearly stipulated for issuing an urban planning certificate (30 working days in certain cases).

With regard to information urban planning certificate, it may be requested by any person upon presenting personal identity documents (or documents on legal entity’s registration).

The cost of urban planning certificate shall not exceed 50 lei.

Elaboration of design documentation

In order to elaborate design documentation it is necessary to obtain a set of documents and carry out certain works, which are issued and performed on the basis of the urban planning certificate:

Conclusion on the connection to utility networks (issued free of charge by network owners within 20 working days);

Plan of the networks laying (provided free of charge by local architecture and urban planning authorities within 10 working days);

Topographic surveying;

Geotechnical surveying.

On the basis of the above documents and works the elaboration of design documentation is carried out, which must then be coordinated with the chief architect and certified inspectors or inspection agencies.

Construction permit

For obtaining a construction permit an application together with the following documents should be submitted:

-         an extract from the real estate registry with the cadastral plan and/or real estate's plan;

-         the urban planning certificate for the design;

-         extract from the design documents;

-         findings on the project documentation verification;

-         identity documents - for individuals or certificate of registration - for legal entities;

-         field supervision contract between the applicant and the designer.

Requiring presentation of any other documents is not allowed.

The construction permit must be issued within 10 working days from the moment of filing all the above mentioned documents. Moreover, in cases when within the aforementioned period of time it has not been issued without providing any denial notices, the construction permit is deemed to be automatically granted. In this case, the applicant has the right to begin performing the respective works after having notified the official body that should have issued the permit and the State Inspectorate in Construction. After that, the permit must be issued within 3 working days.

The price for construction permit shall not exceed 100 lei.

Works that can be performed without an urban planning certificate and a construction permit

Article 14 of the new Law provides for a list of works that can be performed without an urban planning certificate and construction permit. These works are as follows:

repairing fences, roofs, surfaces or terraces if their form is not changed;

replacement and repair of floors, internal and external joinery items, if the shape and size of apertures is retained;

internal finishing works;

external finishing works in case the elements of the facade and the colour are not changed;

replacement or repair of furnaces, structures, systems, technical and sanitary equipment and devices inside the building;

repair or replacement of the points of connection of utility networks with the object with the property;

current repairs of communication lines, access roads, parking lots, pavements and stares;

works on maintenance, current repair of the communication lines infrastructure if the tracing, functions, areas and volumes are kept unchanged;

surface and underground burial works at cemeteries;

installation of small architectural forms;

arrangement of areas adjacent to existing buildings;

auxiliary and accessory buildings of private houses with the built-up area up to 15 square metres situated on the land plots that are privately owned.

Meeting deadlines for beginning and performing construction works

The start of construction works is stipulated in the construction permit and cannot be more than 6 months from the date the permit is issued. If the construction works do not start within the respective period the permit is considered void and getting a new construction permit is required.

In addition to the moment for starting the works the construction permit also states their duration. It is determined basing on the construction works design and the regulatory documents.

The public authorities that have issued the construction permit and the State Inspectorate in Construction should be notified 10 days in advance before the start of construction works. If a respective notice is not submitted then the works are considered to have started on the next day after receiving the construction permit.

Conclusions

The new Law on permitting construction works should streamline the procedure for issuing documents for construction. There has been introduced the notion of information urban planning certificate which can be obtained by any person to familiarize with the urban planning regime of particular real estate properties.

An important feature of the law is that it simplifies the procedure for coordinating necessary documentation for construction and shifts most of the respective obligation onto local public authorities.

In addition to that, it is now clearly provided that if a respective application was submitted for obtaining a construction permit and no answer is received within the due period of time than the construction permit is deemed granted automatically. Thus, local authorities will either have to provide, within the limited time frame, a motivated denial that can be subject to a judicial contest or the applicant will have the right to start the works as the permit will be deemed granted.

This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here.

A number of modifications were introduced into the Labour Code aiming to eliminate discrimination in the workplace by various criteria.

Besides, there was extended the confidentiality period, that is employees' and employers' obligation not to disclose the information acquired while the individual employment contract between them was effective from three months up to one year.

There have been increased the allowed periods of suspension of employment contracts with persons engaged in long-term care for sick children and children with disabilities. Likewise, the period of possible technical idle time during which the employment contract may be suspended has been increased up to 6 months.

From para. (1) art. 85 of the Labour Code, which provides for the right of employees to resign on their own volition, has been excluded the mention of contract concluded for an indefinite period. Thus, the right to terminate at any time the employment contract was also given to employees with whom fixed-term contracts are concluded.

There have been lifted the restrictions to get women with children under three years involved in overtime work, work on weekends and holidays and shift work.

The obligation of employees who have undergone professional training or internship to work for a certain period of time for the respective undertaking has been excluded from the Labour Code.

One of the most significant modifications concerns the possibility of dismissals of pregnant women. It is worth reminding that previously dismissals of pregnant women were forbidden, except for the cases of liquidation of the enterprise. On the one hand, it gave them an additional safeguard against possible abuses by employers who were trying to get rid of them. On the other hand, it has often served as the ground for multiple abuses (sometimes quite serious) on the part of pregnant women themselves who neglected their duties and lacked discipline being under protection of the labor legislation provisions. This situation was decided to be changed. Now, pregnant women can also be dismissed on common grounds in case of infringements committed by them that relate to the discipline and observance of law in the workplace.

Finally, some significant changes have been made with respect to the time limit within which an employee can lodge a claim with the court in case of violations of his rights. This term has been reduced from one year to three months. Now the employee, in case of dismissal, will not be able to wait for the whole year before applying to the court with a claim regarding reinstatement in the position.

This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here.

Certain modifications have been introduced into a number of normative acts, in particular, the Law on Financial Institutions, the Law on Police, the Law on the Centre for Combating Economic Crimes and Corruption, the Law on the Prosecutor's Office with respect to the access by the law enforcement bodies to commercial and banking secret. The adopted amendments have limited the access to commercial and banking secret for police officers, the Centre for Combating Economic Crimes and Corruption and the Prosecutor's Office. Previously, the access by these bodies to the information that constituted the secret of banking institutions and commercial companies was virtually unlimited and could be obtained even in the course of ordinary police inspections on matters not directly related to the subject-matter of the inspection. However, from now on they will only be able to request and receive such information in case of criminal investigation proceedings launched and with the permission of a criminal prosecution judge. There have been increased the penalties for disclosure of commercial and banking secret. In particular, the penalty imposed on public officials that disclose commercial, banking or tax secret will now amount to 8,000 to 10,000 lei. Article 22 of the Law on Financial Institutions has been adopted in the new version and now provides for a clear list of cases in which the bank must provide the information constituting banking secret, as well as situations in which the provision of information by the bank does not infringe its duty to preserve banking secret. This post is part of the newsletter prepared by our law firm. You can download its full text in .pdf from here. 

Recently I wrote about registering a limited liability company in Moldova. It was said then that LLC is the most common form of companies in Moldova. Today’s post is dedicated to another form of companies that are less spread, however, very important - joint-stock companies (JSC). Under art. 2-(1) of the Law on Joint-Stock Companies JSC (societate pe actiuni, or SA) is a company whose share capital is divided up into stock shares and whose obligations are secured with its property. The main peculiarity of joint-stock companies comparing to other types of companies (limited liability companies in the first place) is the right to issue securities that can be traded at stock exchange - stock shares and bonds, though there is a number of other differences. Although JSCs are less spread than LLCs, certain types of companies can only be registered under this form like, for example, banks, insurance companies, investment funds. Likewise, limited liability companies that have more than 50 shareholders should be reorganized into JSCs within 6 months period (or consolidated to reduce the number of shareholders, or liquidated). 

A JSC can be founded by one or more natural persons or legal entities. Constituent documents are: constituent agreement (in case of founding by 2 or more persons; or declaration on the foundation of the company in case of one founder) and articles of association. The first document stipulates the conditions during the establishment of a new company whereas articles of association are company's basic document providing for all major conditions of company's activity and structure.

The minimum share capital of a JLC should not be less than 20 000 (twenty thousand) Moldovan lei (about 1270 euro), what determines the minimum volume of company's net assets.  

One of the most important stages in creating a joint-stock company is the initial stock placement. The stock shares of a newly created company is divided between its founders. The money paid for stock shares is introduced into the temporary bank account. After the money is introduced the constituent meeting may take place in which all founders should take part. During the meeting all necessary decisions on the company registration, election of its managing bodies, etc. should be taken. After the meeting the respective documents (bylaws, decision on the registration and so on) are submitted to the State Registration Chamber which adopts the decision on JSC's registration. 

The company is considered created from the moment of its registration. However, unlike in limited liability companies for which all major constituent proceedings are finished at the moment of its registration, in case of joint-stock companies some further actions are required.

Within 15 days a package of respective documents should be submitted to the National Commission on Financial Market for the state registration of stock shares placed when creating the company. Failure to perform this obligation gives rise to the right of any stockholder to lodge a claim with the court for the dissolution of the company. 

In case no inaccuracies are revealed the state registration of stocks is carried out, what includes declaring the stock subscription valid, conferring a state registration number to each class of stocks placed and introducing the respective records into the state securities registry. 

After that, within 15 days from the state registration of stocks, the company must ensure the formation of stockholders registry, provide first records therein on stockholders, their legal representatives and nominal stockholders.

In the end of June a new law ammending the Law on Entrepreneurial Activity and Enterprises entered into force. It modified the provision of article 10 of the aforementioned Law setting the limits for cash payments (as opposed to bank transfers) allowed to companies.  Before these modifications the maximum sum that a company had been allowed to pay to another company in cash was only 1 000 Moldovan lei for every single transaction. This provision set very significant boundaries to companies wishing to make cash payments as the violation of this rule entailed rather severe penalty of 10 per cent of the sums paid.  After the modifications had been adopted and came into force the limits for cash payments were set at the threshold of 100 000 lei a month. So, right now regardless of whether it is a single transaction or a series of operations the overall sum of money paid in cash in a month by one company to another should not exceed 100 000 lei. 

It is not an overstatement to say that a complex competition regulation is usually a feature of a country with the developed market economy. So, it is not a surprise that the rules on competition and anti-monopoly regulations in Moldova are still at their initial stage of elaboration. However, for the last several years competition law has become more apparant and feasible for many Moldovan companies. And with the lapse of time more and more complicated competition rules are likely to gain ground as compared to other branches of economy regulation. The first law in Moldova that governed the issues of monopolistic and anti-competitive behaviour was the Law no. 906-XII of 29 January 1992 "On the limitation of monopoly behaviour and the development of competition". It first introduced the definition of a dominant position in the market, provided for some rules designed to prevent the abuses of dominant position, etc. Though not formally anulled this law does not play any significant role in the market regulation any more since the Law on the Protection of Competition no. 1103-XIV of 30 June 2000 came into force in the end of 2000.  Basic principles of the Law on the Protection of Competition: The Law on the Protection of Competition is a basic legal act in the Republic of Moldova laying down the rules of competition between market participants in the Republic of Moldova. Competition as such is defined by this Law as a contest between undertakings in which their independent activities effectively limit each other's possibility to influence unilaterally the general conditions of goods turnover in the respective market. Unfair competition is defined as any actions performed by undertakings to gain unfair benefits what causes or can cause damages to other undertakings or harm their business reputation.  Articles 2 and 4 of the Law stipulate the principles of competition regulation in Moldova. They provide for the state to recognize fair competition as a key factor in developying the economy. The state implements the policy designed to ensure free entrepreneurship and protection of fair competition. It is forbidden to use one's rights for the purpose of limiting competition, abuse dominant position and infringe legitimate consumers' interests. The state should contribute to developing and protecting fair competition and protect undertakings and citizens (consumers) from monopolistic activities and unfair competition. The Law stipulates certain types of anti-competitive activities: 1. Monopolistic activity:    - abuse of the dominant position in the market;    - anti-competitive agreements.2. Unfair competition.3. Public authorities' activities limiting competition. These types of anti-competitive activities will be explained and considered in other posts. However, it is worth mentioning here the definition of dominant position which plays a pivotal role in competition regulations in all countries. The dominant position in the market is considered (by virtue of art. 2 of the Law) as an exclusive position of an undertaking in the goods market that enables it to influence decisively (solely or together with other undertakings) the general conditions of goods turnover in the respective market or to hamper the access to the market for other undertakings. For a company to be declared as holding the dominant position it should have a market share of not less than 35 %. At the same time the term goods should be interpreted broadly as the same art. 2 of the Law includes works and services into its definition. The main public authority created to implement the state's competition policy is the Agency for the Protection of Competition. And though the Law providing for the establishment of the Agency was adopted in 2000 it was only in 2007 when the Agency's board was approved and it started it activity. The Agency is entitiled to control the functioning of the markets, their structural modifications and the creation of transnational corporations and financial and industrial groups. It carries out supervision of certain types of mergers and acquisitions and also may, under certain cicumstances, lodge applications with the court for undertakings division. And it is the Agency that should intervene in cases of violations of competition regulations committed by undertakings. Coming back to the definition of the dominant position it is necessary to mention that beside the existence of the definition in the Law on the Protection of Competition, there has not been yet approved a clear methodology for determining it. The Agency elaborated the methodology and uses it, however, this methodology was not officially published as a legal act in the Official Monitor of the Republic of Moldova, and many lawyers claim it cannot have any enforceable legal power. In any case the methodology has been actively used by the Agency in order the dominant position of many companies in various markets.  So far, the competition regulation in Moldova lacks clarity and foreseeability. Representatives of many companies claims that the Agency's policy is inconsistent. This mostly happens because of 2 reasons: 1 - insufficiency and lack of clarity of existing acts governong the rules of competition, and2 - lack of necessary experience of the Agency, which only recently started to actively implement any competition regulations in Moldova. However, the situation is likely to change in the future, particularly under the influence of the EC competition policy and regulations that would be implemented in the Republic of Moldova.

One of the topics that is very often discussed is the rate of the income tax for companies in Moldova. However, its applicability is often misunderstood. This is why I decided to dedicate today's post to the way the 0 % rate is applied. The rate of 0 % is applied to incomes of companies that are Moldovan residents, individual entrepreneurs and farming entities (hereinafter - economic agents).  However, this rate of the tax is less likely to bring the benefits that could be expected by some owners of small companies that are seen by them as one of the major sources of their personal incomes, as this tax rate is only applicable to the incomes of economic agents themselves. In case the net profits of the company is completely or partially distributed among its founders (shareholders)  in the form of dividends, than this company should pay the income tax at the rate of 15 % of the  amount of distributed profits. So, the rate of 0 % should not be considered as an absolute exemption from the income tax.  Moreover, even in cases when the 0 % rate is aplied that does not mean that companies are exempted from the obligation to ensure full accountability of all the incomes received. If a company fails to fulfill this fiscal obligation and declare all data on its incomes and if later on in the course of a fiscal inspection these incomes are revealed than an income tax of 15 % is applied to the difference between the incomes revealed and the incomes declared (and of course, certain penalties can be imposed additionally to that).

xAn important issue that Moldovan companies (or their foreign partners) should take into consideration when carrying out international transactions is the existence of a number of rather strict rules on the repatriation of export proceeds, goods and services received as a result of foreign transactions. This issue is governed by the Law No. 1466-XIII of 29 January 1998 "On the regulation of the repatriation of money, goods and services received as a result of foreign transactions". The Law stipulates the obligation of companies registered in Moldova:to ensure the receipt of export proceeds or the return of advance payments for non-delivered import to their accounts in the banks in the Republic of Moldova;  to fulfil the import of goods and services after the performance of import payments; and to repatriate the proceeds or the assets received as a result of other foreign transactions. The general terms within wich the repatriation should be performed are stipulated as follows:in case of sales contracts, barter and export commission sales contracts - within the terms stipulated by the contracts, but not more than 1 year from the date of the goods dispatch or the date of the payment for goods or services (18 months for contracts of purchasing vine and fruit planting stock). for processing contracts - within 60 calendar days from the day of finishing the technological cycle indicated in the contract. for leasing contracts - within the terms established according to the contract but not less than once a year. The repatriation is controlled by the fiscal and customs authorities. The penalty for not complying with the rules on repatriation is 0.1 % of non-repatriated sums (costs) for every day of delay, but not more than the respective sum of money or the cost of goods or services that are due to be repatriated.

Under the general rules of commercial activities existing in Moldova any company may carry out any type of activity even if it is not stated in its bylaws, unless a particular type of activity requires licencing according to the law. The Law on Regulating Entrepreneurial Activity Through Licencing (no. 451-XV of July 30, 2001) provides a comprehensive list of all the commercial activities that require getting one. The conditions for every certain activity as well as the procedures of licence issuance and the amount of licence fees may vary. Bellow you can find the list of the activities that require getting a licence: auditing; real estate valuation and/or goods expertise; commodity exchanges activities; operations with precious metals and precious stones; pawnshops activities; gambling activities: organizing and carrying out lotteries, casinos operation, operation of slot machines with cash winnings, betting on sports events; import and wholesaling of imported ethyl alcohol, alcoholic beverages and beer; production and/or storage and wholesale trade of ethyl alcohol, alcoholic beverages and beer; import and wholesale trade of tobacco products; import and industrial processing of tobacco and/or wholesale trade of fermented tobacco; designing of fruit and berry crops and vineyards plantations, production and/or sale of seeds, seedlings and seeds materials; production, storage and sale of pedigree biological materials (animals, seeds, embryos, ova, roes and fish larvae, birds eggs and silk worm eggs) intended for reproduction; veterinary and pharmaceutical activities and/or veterinary care (except for activities carried out by the State Veterinary Service); import and/or selling of fitosanitary remedies and means of improving soil fertility; passengers transportation by public motor transport, international carriage of goods by road; designing all types of buildings, urban planning, engineering structures and networks, reconstruction and restoration works; construction of buildings and/or engineering constructions, engineering structures and networks, reconstructions, consolidation, restorations; mining operations and/or production and bottling of mineral and natural drinking water; drilling works (except for technological research in construction); topographic and geodesic activities; the collection, storage, processing, selling and export of scrap and wastes of ferrous and nonferrous metals, used batteries, including those in processed form; nuclear and radiological activity with the use of radioactive sources of the categories I-III; import and/or manufacture, warehousing and wholesale trade of toxic chemical substances and materials, as well as products and other household chemical products; manufacturing, import and/or export, re-export of substances that deplete the ozone layer, as well as equipment and products containing such substance; manufacture and destruction of seals; private detective or security activity; installation and/or adjustment, maintenance of automated systems for fire detection and extinguishing, smoke protection systems for buildings and fire warning systems; import and/or export, trade in arms and ammunition, repair of service and staff, sports and/or hunting, training, award, collection and self-defense weapons; import, storage and/or use of explosives (including pyrotechnics); conducting blasting operations; import, export, development, manufacture and sale of cryptographic and technical means of protection of information, special equipment for secret gathering of information, providing services in the field of cryptographic and technical protection of information (except for the activities carried out by public authorities vested with such powers under the law); pharmaceutical activitis, including the ones with the use of narcotic and/or psychotropic drugs, carried out by pharmaceutical companies and/or institutions, import and/or production of perfumery and cosmetics; manufacture, selling of, maintenance, repair and verification of medical equipment and optics; health care and medical assistance provided by private health institutions; the activities in the field of genetics, microbiology and the activities included in the risk groups III and IV carried out with the use of genetically modified organisms; employment-related activities withinthe country and/or abroad; tourism activities; activity of private educational institutions of all levels, stages and forms of education; additional (extra-curricular) education and/or adult education, except for the education funded by the national public budget; activity on storage of grain with the issuance of warehouse certificates for grain; duty free shops activities, including for the provision of the diplomatic corps; the activities of customs brokers; the operation of banking institutions and money exchange offices; insurance and reinsurance activities; asset management of non-state pension funds; the activities of savings and loan associations; professional activities in the securities market; the activities of credit agencies; import and wholesale and/or retail trade of petrol, diesel-fuel and/or liquefied gas at petrol stations; production of electric energy; transmission and/or central dispatching of electric energy; distribution of electricity, the supply of electric energy at regulated or unregulated tariffs; production and/or storage of natural gas; transmission of natural gas; distribution and/or supplies of natural gas at regulated or unregulated tariffs; use of radio frequencies or radio channels and/or numbering resources in order to supply networks and/or services of telecommunications; development, maintenance and implementation of software products, information equipment and systems of national significance; design, development, implementation of automated information systems and resources of national importance (the creation of databases, their operation and providing services for the provision of information), as well as the services to ensure their functionality; broadcasting program complexes through the ground radio electronic equipment and/or thorugh the communication means other than ground electronic equipment.

One the first major things that many foreigners have to work out when starting a business in Moldova is getting the right to come and stay in Moldova. The issues of getting a residence permit and to stay legally in the territory of Moldova become a problem for many. This post will cover some of these issues. Visas and visa prolongation Moldova established the visa regime for visitors from most of the countries. Only representatives of certain states may enter Moldova without a visa. These are most of the CIS countries, EU members and some other European countries (Iceland, Norway, Swiss Confederation), US and Canada and Japan. Recently it was announced about lifting visa requirements for Israeli, Andorra, Monaco and Liechtenstein citizens from 01 March 2010 (see the full list of countries of which citizens may enter Moldova without a visa as well as the list all Moldovan Consulates abroad on the web site of the Ministry of Foreign Affars). In any case, even the citizens of those countries that do not require a visa to Moldova have a limited right to stay in Moldoa for a long period of time. Without getting a residence permit you can only stay in Moldova for not more than 90 days (overall) during 6 months period. In case you're in Moldova on a visa and you need to prolong it for certain reasons you should address the Ministry of Information Technologies and Communication. There are no strict and clear criteria for visa prolongation, hence this issue is totally left at the authorities' discretion. The application for visa prolongation should be submitted no later than 72 hours before your visa expires. Labour migration and residence permits for business owners. Starting a business and registering a company in Moldova provides you with addtional possibilties to get a residence permit to stay in Moldova for longer periods of time. However, various legaislative acts have provided differing rules for same categories of persons in terms of stipulating clear criteria for granting residence permits. As we say particularly about the persons who registered a company in Moldova in order to carry out certain business activities here, the latest official act regulating this issue is the Law on Labour Migration (No. 180-XVI of 10 July 2008; in force - since 01 January 2009). Though owning and managing a company may not necessarily fall under the term "labour" in its literal sense, business owner are regarded by this Law as labour migrants. As a general rule labour migrants in Moldova may undertake their labour activity on the basis of the work permit and the temporary residence permit. The work permit is granted by the Nationl Employment Agency, and the decision on granting the right to stay temporarily in the territory of Moldova is taken by the Ministry of Home Affairs on the basis of the work permit issued by the National Agency. Following the positive decision of the Ministry of Home Affairs on providing the right to stay in Moldova the Ministry of Information Technologies and Communication issues the temporary residence permit for working purposes. In order to hire foreign employees the employer should ask the National Agency for the approval. However, in case of foreign citizens who have founded a company in Moldova may receive the work permit without such an approval by the Agency. The followig documents should be presented to the Ministry of Home Affairs in order to get the work permit and the right to the temporary residence: 1) Company's application to the National Agency and to the Ministry of Home Affairs to issue working and residence rights;

2) The migrant's application form/questionnaire;

3) Company registration documents (the company's registration certificate, the extract from the State Legal Entities Registry, and the respective licence - if relevant);

4) Documents confirming the company's activity (the State Principal Fiscal Inspection on the lack of debts to the public budget, a copy of the financial statements for the recent period, if this period exceeds three months);

5) Individual labour contract (if relevant);

6) the copy of the foreign citizen's national ID (passport) with the respective stamp of the Border Service on crossing the border of Moldova;

7) Medical certificate from the respective Moldovan medical institution confirming that the applicant is not AIDS/HIV positive;

8) Documents about the applicant's living conditions (e.g. renting contract);

9) two recent photos (50x60 mm);

10) the certificate on the lack of previous criminal records from the applicant's country of origin (apostilled or legalized). The general term of the temporary residence rights granted to companies owners is 1 year - with the right to prolng it (the decision on granting the right to reside in Moldova should be taken by the authorities within 30 days period). Some categories of persons that made the investments for the sums that follow may be provided with the residence permits for longer periods of time (with the right of prolongation): - USD 10 000 - 100 000 - up to 2 years;

- USD 100 000 - 250 000 - up to 3 years;

- more than USD 250 000 - up to 5 years. For these categories of persons the decision is taken within 15 days.

As I regularly receive inquiries on how to register a company in Moldova, I decided to make a separate post on that issue describing some major procedures.

Choosing the legal form of your company

Fist of all, before starting your business you should choose the form of your future company. Two most popular forms of companies in Moldova are limited liability company (Societate cu raspundere limitate - SRL) and joint-stock company (societate pe actiuni - SA). As the second type (SA) is subject to a very complex regulation that deals with the securities market (as it issues stocks and bonds) and is subject to strict control of their activity by the National Commission on the Financial Market the vast majority of companies in Moldova are registered in the form of a limited liability company. SAs also require to disclose to public a lot of information about the company's activity. You must register an SA only in case you have more than 50 founders or you want to pursue certain kinds of activities like banking or insurance activity, for instance. 

LLCs (SRL) are much easier to register and easier to operate. And that is why this form is the most preferable choice for newly registered companies. And in this post I will concentrate exclusively on them.

There are no restrictions for foreign private persons and companies to register a company in Moldova. They can be registered in common with Moldovan co-founders (joint ventures) or exclusively by foreign founders (companies with foreign capital). In order to do that they need to present a number of documents to the State Registration Chamber (Camera Inregistrarii de Stat). The procedure usually takes 1 to 5 days.

Documents that must be presented:

For founders - natural persons:

- Identification documents of the company's founders and of the future administrator (director). In case of foreign citizens temporarily staying in Moldova (up to 90 days) - valid national passports with the stamp of the Border Service on the entrance to the territory of Moldova. The ones permanently residing in Moldova should present a valid residence permit.

The administrator cannot work in that capacity in two different companies unless he/she is their (co)founder.

For founders - legal entities (companies):

- the extract from the commercial registry of the investor's country (containing all major information on the founding company).

- foreign company's bylaws.

Additional documents:

- Decision on registering a company (in case the founder is another company).

- Confirmation document on the payment of the registration fees.

- Certificate of the administrator's lack of criminal records (both from his/her country of origin and from Moldova).

- documents confirming the address of the company's seat.

All the documents in other languages should be translated into Romanian, the copies should be authenticated by a notary and apostilled (or legalised by a Moldovan Consulate in case the country of origin that has issued the documents is not a party to the 1961 Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents).

There are no requirement to present apostilled or legalised copies of the notarized documents from the CIS (the Commonwelth of Independent State) countries, Lithuania, Latvia, Czech Republic and Turkey, with which Moldova signed bilateral agreements.

All the documents should be presented by the founder or his/her representative (in the latter case the representative should present an authorised power of attorney).

The administrator of the company can be a Moldovan or a foreign national with no previous criminal records.

The seat of the company

The founders of the company should present the document that confirms the address where the company will have its registered seat. This can be premises either in the ownership of the founders or rented by them. In case of owned premises documents on ownership should be presented (e.g., contract of sale), in case of rented premises the renting contract should be provided (or a written statement by the owner by which he/she gives consent to register a company at the indicated address).

Some companies in Moldova render services of providing premises for companies registeration, like this one, for example:

http://www.welcome.md/eng/virtual_office 

Minimum share capital:

The minimum share capital for a limited liability company is just 5 400 MDL (circa 307 euros/439USD)

In case the share capital is constituted in kind (when certain property, e.g. technological equipment or real estate, is introduced as the contribution into the share capital) than the valutation act signed by an authorised valuer should be annexed.

Costs and fees:

The cost of the registration in 5 days period is 544 MDL (about 31 euros/45 USD). That cost includes all the fees for the registration and concurrent services provided by the State Registration Chamber (checking the name of the company, drawing up standard bylaws, issuing the registration certificate and the extract from the commercial registry, publication in the official bulletin of the Chamber). In case of 1 day registration the costs are 965 MDL (about 55 euros/79 USD).

Bylaws

The company's bylaws is the main constituent act of the company. It should include the following data:

- the name of the company;

- the data on the company's founders;

- purposes of the company's activity (5 purposes should be indicated in the bylaws, though any company can carry out any other types of activities even they are not indicated in its bylaws unless it requires a separate licence);

- the amount of the share capital;

- the amount of the founders' shares and the order of the contribution.

- the cost of the property - in case the share capital is constituted in kind.

- the company's seat address.

- the structure, competence, formation and the order of functioning of the managing bodies.

- the way of company's representation.

- data on branch and representative offices - if relevant.

- the grounds and the order of the company's reorganisation or liquidation.

- other data that do not contradict the legislative requirements.

Usually, the State Registration Chamber provides services on elaborating standard bylaws for newly registered companies. However, you may resort to a private lawyer or a law firm in case you wish some particular requirements and wishes to be introduced into the bylaws. Otherwise there's almost no necessity in independent legal services in the process of a company registration as all major assistance is provided by the Registration Chamber.

Opening a temporary bank account and introduction of the share capital

After submission of all necessary documents the Registration Chamber issues a certificate with which the founders can open a temporary bank account. The temporary bank account is needed to introduce the share capital. After the necessary sum of the capital is transfered to the account the bank issues a certificate confirming the introduction of the capital. This certificate serves as a basis for the finalising of the company registration.

After the company is registered the money is transferred from the temporary banking account to the permanent one that is to be opened under the general rules for opening banking accounts in Moldova.

Completion of the registration

After you present the certificate from the bank the registrator of the State Registration Chamber  checks all the documents presented. In case the documents meet all the legislative requirements the Chamber issues the Registration Certificate which is the main company's document confirming its registration and the exctract from the legal entities registry.

From that moment your company is considered registered and can start its activity.

It's now more than two years passed since this blog had been last updated. There were many different reasons for that. 

However, I've decided to re-start it, though with certain changes. I want to change the topics that this blog will focus on. From now on there will be very few general discussions on legal system of Moldova and the blog will mostly concentrate on Moldovan business law issues.  I really want it to be useful for the readers containing the information on various issues of business activities, "how-to's", legal requirements for companies, etc.

I have changed the name of the blog (as you have probably mentioned) and deleted a lot of old posts (leaving just some of them). 

So, I do hope that you find this blog in its new format more interesting and hopefully really useful for you.

Just a follow-up to my previous post.Viorica Carare, the General Director of the Agency, told to journalists that within half a year during which the Agency exists it received 60 claims and there have been decisions taken on 31 of them.What regards the most famous of them (Bomba supermarket and Sun Communications) she said that she had nothing to add to the information that had been previously communicated. So, this is the very problem that I told recently. We know absolutely nothing about the Agency's activity and the way how it takes its own decisions what has led to a number of very negative reactions in media. And the head of the Agency still considers that there's no necessity to provide any additional information...And yesterday (on October 30) there was a press-conference organized by the Foreign Investors Association of Moldova. It was stated during the press-conference that the Association had always stood for creation of the Agency for Protection of Competition. However, because of the lack of experience of the Agency's employees it has taken a series of illegal decisions and goes beyond its authority.For instance, in summer the Agency obliged all notaries to get its approvals when authorizing all contracts of sales of shares in limited liability companies what contradicted to legislation that required such control only over the companies with a dominant position in the market.The FIA also mentions that when determining a company's dominant position the Agency uses its own methodology that has no legal power because it has not been passed through an expert evaluation and published in the Official Monitor.* And the most serious is that the Agency tries to legalize those abuses by lobbying amendments into the Law on Protection of Competition...----------------------* the Official Monitor (Monitorul Oficial) - the official edition where all legal acts adopted by all public authorities in Moldova are published. Under Moldovan laws all legal normative acts should be published in the Official Monitor to enter into force.

Introduction.As my permanent readers know I periodically recur to the issues related to development of competition law in Moldova and activity of the newly created National Agency for Protection of Competition. A lot of different opinions have been expressed since February this year when the Agency's Board members were approved. For several months there were almost no information on its activity. However, autumn showed that the Agency is not going to remain a mystery anymore. In September-October period the Agency adopted several prominent decisions that have attracted significant attention and raised a lot of questions.Orange.The first decision that attracted media's attention was the declaration of Orange-Moldova as a mobile operator holding a dominant position in the market. The former Voxtel company renamed in spring 2007 into Orange - an internationally known brand name - according to the official data takes a market share of 64.5 % as to the number of clients and 70 % of the number of transactions.Further developments.After Orange it looked that the Agency was going to examine the cases of other companies that took dominant positions in their respective markets like Union Fenosa or Moldtelecom. However, this wasn't the case. Instead of being engaged in getting things put in order in noncompetitive market (fixed telephony, energy, etc.) in the end of October the Agency fastened its eyes on some other areas that resulted in a number of "loud" decisions and actions:1. Sun Communications.The Agency took a decision to fine the Sun Communications company, the largest cable TV operator in Moldova, to the sum of 2.5 mln lei (about USD 220 thousand). According to the General Director of the Agency (cited by the Infotag news agency) the Sun Communications with the help of the Acces-TV company intended to oust its competitor - the CTC-Alfa company out of the Chisinau market.A 30-thousand fine was imposed on Acces-TV. The amount of penalties was determined following the companies' profits.The Sun Communications' representative stated that the Agency's accusations harmed the image of the company. At the moment the decision is studied by lawyers and the Company reserves its right to appeal against it to a competent judicial authority.2. The supermarket "Bomba".The "Bomba" supermarket is one of the leading retail chains of electric household appliances. It was fined by the National Agency for Protection of Competition to the sum of 9 mln lei (about USD 780 thousand). According to the Infotag agency the ground for the Decision was the fact that the company having got the authorization to open only one outlet in Chisinau in fact has opened 7 shops in the capital and 1 in Balti thereby violating the Law on Protection of Competition. The Agency also mentions the lack of an agreement between the main shop, to which the authorization was granted, and other shops of the chain.The just mentioned decision was followed by some accusations in media that it had been "stimulated" by a big Ukrainian retail company being alleged to clear the market away.3. The Union of Sugar Producers of Moldova.Within the same period of time the Union of Sugar Producers of Moldova (hereinafter - the Union) accused the Agency of attempts to discredit the organization and put it under pressure, as well as of blockading the organization's activity for 5 months. According to the Union's statements the Agency has not examined since May 18 its application to review the new version of the organization's articles of associations.Despite the fact that the application was annexed with all documents provided by law the Agency required to present additional documents, financial and statistical reports that had nothing with the application's subject-matter. The Deputy General Director of the National Agency stated for the media that the Agency may demand the liquidation of the Union because the presented documents contain certain evidences of violation of fair competition rules, in particular, the amendments to the articles of association that provide creation of a special aid fund for enterprises.According to the Union the actions by the Agency are provoked by the Union representatives' participation in examination of the new version of the Law on Protection of Competition, who repeatedly pointed out that the amendments elaborated by the Agency do not conform to democratic and market principles.Reflections and Conclusions.So, as you see the activity of the Agency so far has been fairly controversial. And it has prompted a number of questions and ruminations about the prospects and problems related to the Agency's future activity:1. Lack of information.So far, I think the main problem about the Agency has been the lack of information about its activity and decisions adopted by it. The general public still knows very little about the above mentioned controversial decisions. No access to the texts of decisions, no information about the facts and grounds following which those decisions have been adopted and evidences that support the facts.The involvement of competition authorities into companies' activities may have a very significant impact upon the whole economy. This impact may be both positive and negative. Taking into consideration that the very notion of fair competition and antitrust regulation is very new and uncommon for Moldova any action of the Agency may have a deep resonance in society and cause very negative reaction even if the actions of the Agency would be legal and sound.And this is actually what has happened. The Agency's decisions were quite shocking both because of the amount of penalties imposed on companies (that are really huge for Moldova, and the Agency has not still explained why the penalties are so big and how they have been calculated) and because of the lack of information about the facts and evidences.Therefore, the Agency must explain in details almost every step it takes. Only in such conditions there will be enough confidence in legality of the Agency's actions and a high level of transparency will be secured. At the moment the transparency is probably the Agency's weakest point.2. Inconsistency.The second problem that follows the first one is inconsistency in the Agency's activity. After the declaration of the Orange's dominant position it could be expected that the Agency would attend to the natural monopolies' activities.As I previously stated it wasn't the case. Instead of this the Agency placed the emphasis on particular cases of alleged violations. I'm not saying it should not have done this. What I say is that it looks (at least for me) a bit inconsistent. And consistency is crucial at the moment for the Agency as it is only in the process of building its reputation. By the moment the Agency seems to have started with a series of scandals what is probably not the best way of creating a trustful image.3. The prospects for the nearest future.The way the Agency started its activity may lead to two different conclusions: it was either lack of experience (what is normal and can be changed in the nearest future) or their actions were a result of negligence and lack of professionalism (what is much worse).I'm not saying here about the allegations that the Agency lacked impartiality when adopting the above decisions. I cannot assert it without any strong evidence. However, the activity of the Agency must be improved in order to avoid such allegations in future (or at least to diminish grounds for them). I also hope that the Agency will not turn into another source of collecting funds for the public budget by imposing huge penalties. We do not need another "tax inspection".What is evident is that in the nearest future the role of the Agency may become very important in regulating the Moldovan market. The business community will face the necessity to follow the Agency's instructions that may be both complicated and strict. A number of disputes and litigations may as well arise as a result of the Agency's decisions. That will definitely send a challenge to lawyers working in the field of business law. The legal professionals in Moldova are not still used to notions and regulations of competition/antitrust law and the ones who will get used to them will definitely have certain market advantages...

... After that officials often decide to resign. Whether he should have done it or not, the reaction was not the one that should have followed...

Recently a big scandal in Moldovan judiciary and media erupted because of a dissent opinion of one of the European Court of Human Rights's judges. Judge Bonello presented his partly dissenting opinion in the case of Flux (No. 2) vs. Moldova, in which he severely criticized Moldovan judiciary system and the President of the Moldovan Supreme Court of Justice, judge Ion Muruianu. And although the Court in this case declared inadmissible the claims concerning the alleged lack of independence and impartiality of judge Muruianu the Bonello's dissenting opinion aroused a deep resonance in Moldovan media and shaked public opinion.

Most newspapers commented this opinion.

"The judge from Malta after studying several independent reports on the state of justice in Moldova draws a conclusion on the evident dependence of judges on political powers. In his opinion "the telephone justice" is widely spread in the Republic and courts often pronounce their judgments to please political conjuncture... This is the very case when critics cannot be disregarded... Certainly, Ion Muruianu is unlikely to be dismissed from his post, however, his professional reputation was stricken destructively. And in his person the whole judicial system that he is expected to reform and administer is under a blow" (Kishinevskii Obozrevateli)

In order to understand what is this scandal all about I would like to cite several paragraphs from judge Bonello's partly dissenting opinion (the whole text of the judgment in this case and the opinion may be found here):

1. In this case the Court could have voiced its views on the pathology of an administration of justice. It did not.

14. I would have expected the Court to pounce on this opportunity to give hope to the people of Moldova. To let out some timid whispers for justice politically untainted... . I would have been gratified had the Court asked how often judge I.M., and other candidates for the heroes of the resistance award, found against the ruling party or its exponents in politically sensitive lawsuits. It would seem that the administration of justice in Moldova respects a number of precepts. I looked for them in Article 6 and could find none of them there.*

15. All this alarms me profoundly. I have this old-fashioned prejudice against judges approximately impartial. I respond with inconstant passion to the credo of some politicians that judges fit nicely everywhere, but best of all in their pockets. I find bland, if not inconsequential, the doctrine that justice must not only be done, but should manifestly be seen to be done. Far more relevant, to me, is the doctrine that, for control-freaks to rule undisturbed, injustice should not only be done, but should manifestly be seen to be done.

16. Judge I.M.'s career crashed - from minor district judge to President of the Supreme Court in a span of time shorter than it takes to say 'the party is always right'. In an otherwise bleak panorama, it is comforting to note that the sacrifice of judges who align their energies with the welfare of the ruling political class, does not always cripple their careers.

"The situation is strange enough: usually the Strasbourg judges in their dissenting opinions and public discussions do not step beyond the limits of legal issues and aspire to avoid commentaries with political implications" (Logos press).

I do not make any assertions regarding the Supreme Court's President professionalism or impartiality or his political dependence. What I think is more important that an ECHR's judge makes a statement that any judge does in extremely seldom cases (if makes any). And this should be a major concern both for Moldovan justice and Republic's government. Instead, judge Bonello found himself under critics from the part of Moldovan judiciary.

The head of the Supreme Court's press-service Mr. Gutu stated that "a judge, a colleague cannot permit himself to criticize another judge. He is neither acquainted in person with Mr. Muruianu nor made any inquires about him. And as a result he takes for gospel what was presented to him by others" (TV7).

Meanwhile, judge Muruianu seems not to care about all these statements. In his interview to Kishinevsckii Obozrevateli he told:

"The judgment is pronounced by the Court and not by one person. If the European Court considers there was no violation and one judge does not agree with this he has the right to provide his dissenting opinion. Unfortunately, our media is not concerned with the common decision of the court and only presents a dissident opinion of a single judge. I do not care about this. I am strongly convinced that the judicial system in Moldova is absolutely independent, judges know their work and decisions are taken in strict conformity with law. We take care of our reputation and we have a sharp sense of honour and dignity.

The ECHR's decisions are obligatory for us. But these are the judgments that have a legal force but not dissenting opinions, in which the conclusions on dependence of Moldovan judiciary system and existence of so called "telephone justice" are made".

He was also supported by the Supreme Council of Magistrates that expressed its concern about "increased accusations of the judicial system of Moldova". In its statement, sent to Infotag, the Council recognizes the human right to freedom of expression and criticism of judicial instances. However, at the same time the courts must be protected from disrespect manifestations toward the justice.

The council is also concerned with the European Court of Human Rights judge Giovanni Bonello's statement that there is allegedly pathology in administering justice in Moldova.

The Council considers that the judge made this erroneous conclusion on the basis of certain essays in mass media, where the ЕСHR' decisions are interpreted in a speculative way. The allegations by the respectable judge are based on a superfluous impression and on fragmentary data and present a distorted and incorrect image of the Justice in Moldova. It spoke out in the defense of the justice image and the judicial corps, so that the right for freedom of expression should not offence the judicial system".

"Erroneous conclusion on the basis of certain essays in mass media", "a superfluous impression and fragmentary data that present a distorted and incorrect image of the Justice in Moldova".

Let see what judge Bonello speaks about these media essays and fragmentary data:

"11. I am attaching as an appendix brief summaries of several external reports on the state of the judiciary in Moldova, all highly negative and startling. For reasons of balance I wanted to include reports from other authoritative sources denying that the independence of the judiciary in Moldova is a stretcher case. I found none."

And what are those sources of fragmentary (according to the Supreme Council of Magistrates) data? As we can see from the Appendix to the dissenting opinion these are US Department of State, Council of Europe's Commissioner for Human Rights, International Commission of Jurists, International Helsinki Federation for Human Rights. Definitely, these are organizations that cannot be trusted in any way.

An interesting opinion about this situation was expressed by the actual ECHR's judge representing Moldova, Mr. Pavlovschi, in his interview to Logos Press. According to him, judge Bonello is a person of high moral and a highly qualified lawyer who has encyclopaedic knowledge. His opinion is respected and reckoned in the European Court. There exists an opinion that the present speaks with the language of judicial decisions and the future speaks with the language of dissenting opinions. They permit to open slightly a secret curtain of judicial deliberation.

"The national authorities must thank judge Bonello for such opportunity. Instead, I see how many of their representatives launched a large-scale campaign to discredit him. I find such an approach counter-productive. Moldovan authorities, as I think, have to show more tolerance to other people's opinions, especially when we talk about an European Court's judge. First of all this refers to the Supreme Council of Magistrates - the body, whose one of the main tasks is to protect legitimate interests of judges."

"I know very well and respect Mr. Muruianu. I have no doubts in his professionalism and impartiality as a judge. However, I need to make a remark. According to the European Court's practice impartiality can be subjective and objective. From subjective point of view Mr. Muruianu's impartiality raises no doubts. The Objective impartiality implies how an act of justice is perceived by people. And here judge Bonello found a problem that he decided to make public. Even if somebody did not agreed with him it would be impossible to disagree with his words that "justice must not only be done, but should manifestly be seen to be done". In his dissenting opinion judge Bonello used the documents that had not been argued or contested by the Government. And this sense, even though the majority of judges did not supported him, he had a full right to raise the issue of existing, in his opinion, shortcomings of Moldovan judicial system in the light of objective impartiality".

I think this is an excellent approach. Instead of trying to blame someone we all, and first of all the authorities, had to rethink the current situation in our judiciary. This dissenting opinion could have been a a starting point for changes. Unfortunately, it had not.

Citing again judge Bonello's opinion, "I thought this was the right time for the Court to start panicking. This a self-evident opportunity to detox an administration of justice. Instead I had to witness the Court allowing the Moldovan judiciary the widest margin of depreciation".

______________

All accentuations in the text of the post are mine - A.Ghertescu.

Support of foreign investors is a very good and useful thing. But can the measures of such support create an inequality and a favourable regime for certain investors without providing them to others? And are such measures legitimate?As you remember in my last post I told about the ECHR's judgment against Moldova basing on the Law on Foreign Investments that had already been abrogated at the moment of its pronouncement.

In 1992 the Law on Foreign Investments was enacted in Moldova. This law provided to foreign investors certain incentives and facilities. One of the guarantees of those facilities was stipulated in para. 2 of art. 43 of the Law providing the guarantees in case of changes in legislation. It stated that foreign investors and enterprises with foreign capital that had enjoyed customs, tax and other facilities were allowed to benefit from those facilities and after the new modifications having come into force.

And basing on this provision of the Law the European Court of Human Rights adopted its judgment in the case BIMER SA vs. Moldova that I wrote about.

In 2004 the Law on Foreign Investments of 1992 was abrogated by the newly adopted Law on Investments to Entrepreneurial Activity that is still in force. This law does not provide any particular incentives/facilities for foreign investors as the Law of 1992 did. And by abrogating that law it also repealed all those facilities contained in it. However, the new law contains a very interesting provision in para. 2 art. 25:

"Foreign investors that made their investments and enjoyed certain guaranteesand facilities under the Law on Foregn Investments of April 1, 1992, may stillenjoy in future all those guarantees amd facilities provided by that Law."

"So what?" - you may say.

Let me explain my view on this. Fisrt of all, I'm not sure that it is fair enough to provided certain benefits to a person without providing them to another simply because the first one started its activity earlier. And this is what actually happens. A foreign investor that made investments before the new Law has been enacted still enjoys the same privileges even after they have been abolished at the time when new-comers can't do this thereby being in a less favourable position.

Secondly, I doubt the fairness of providing to foreign investors more privileges and facilities than to the local ones. If a Moldovan company and a foreign one either make an investment of USD 1 mln, then what is the difference between these investments?

I understand an extraordinary importance of foreign investments for Moldovan economy. And I really support and welcome them. However, I suppose that the best way to attract foreign investments to Moldova is not to provide them any particular benefits, but to create the conditions for their stability and safety regardless of the political party being in power at any particular moment...

Epigraph.Friday's Logos Press Economic Review comes up with an article called "From whom to protect competition?" The article's author, Irina Covalenco, provided a review of opinions expressed during the round table organized on June 19 by the Economic Council attached to the Prime Minister jointly with the National Agency on Protection of Competition (hereinafter- the Agency).A lot of doubts were expressed regarding the prospects of the Agency's efficient activity. And it was told that puting aside all those douts we have to wait for the first serious case of anti-monopoly investigation...The beginning of the story...About a half a year ago or so the big campaign against software piracy started in Moldova. There were a lot rumors about massive inspections carried out by police and AGEPI (the Agency for Intellectual Property) representatives in order to reveal facts of illegal use of software products. It was also said that this campaign was initiated by the Moldovan representative office of Microsoft Corp. (read more in Russian here and here). And though the state officials stated that the goal was to check the legality of use of all software products, the main product to be controlled was considered MS Windows operating systems.The basic objection of business structures and individual users against this campaign was (and still is) the price of Microsoft products. It is told to be too high for Moldovan software market.The case to intervene?..And here it may seem to be the possibility to intervene for the newly created National Agency for Protection of Competition. There is almost no competition in the market of operating systems in Moldova. Microsoft products hold almost the total monopoly position. Certainly there are other products like Linux, for instance. However, very few ordinary users know about it and are ready to use it. Moreover, many important programs are compatible only with Windows. For example, at the beginning of the year we called to one of the Moldovan banks to know if their system "Client-Bank" (the system providing the possibility to make bank transfers through electronic network by using digital signatures; the system is widely spread among many moldovan companies) is compatible with Linux. The answer was: "No, the system was made only for Windows"...So, we have a product that takes almost a monopolistic position in the market. And we have a lot of complaints about its price (I'm not asserting whether it is expensive or not for our market, this is the issue to be decided by competent specialists and authorities).Now let's see what the law says.Under art. 20, para. (2)-a) of the Law No. 1103 of June 30, 2000 "On Protection of Competition" the Government has the right to regulate prices in order to prevent cases of abuses of the dominant position in the market.And this gives to the Agency the right to intervene in order to investigate whether there are the signs of an abuse of the dominant position by Microsft corp. or not by etablishing the current prices for its products...So, do you think this may be the first big case for the Agency, or not?...

I’m really sorry for such a long standstill in my blog. The reason of it you’ll know in the next post…In my last post I promised to continue and come up with ideas on how to resolve some employment-related problems. Alexander Culiuc and Alex Railean in their comments guessed precisely the topics that I was going to talk about further. That means that I’ve touched upon really significant issues both for employees and employers. So, let me continue…Insure your investments.In order to be successful in your business you usually need the employees around you that are highly competent and trained for achieving the goals you set before your organization. The present day reality is such that it’s not enough anymore to find a highly competent employees. Your team members need a permanent improvement of their skills. And wise employers always make investments in this process of raising the level of their employees’ skills and knowledge. But they also want to be sure that their investments won’t be spent in vain. You as an employer may want that either your trained employees to work for you for a certain period of time or to recover all money and efforts invested into them in case they leave you. Let’s find out how we can do it…Alexander Culiuc described in his comment to the previous post one of the most widely spread mechanisms: employers provide sponsorships for their employees so that they could pass the studies and gain certain knowledge and skills required by employers under condition that employees either work for their employers for a certain period of time or return back the costs of their studies paid by employers. A very attractive scheme, isn’t it? But we need clear legal frames for it.Art. 214 of the Labour Code provides the right of employees for professional training. It may be realized by signing additional contracts to a labour contract: a contract of professional qualification or a contract of continuing professional training.The contract of professional qualification (art. 215 of the Labour Code) is a special contract concluded in a written form under which an employee undertakes to pass a course of professional training organized by an employer in order to obtain a professional qualification. At the level of an enterprise such training may be carried out by an instructor or an instruction expert appointed by the employer from among the qualified employees having a professional experience and a permission received in accordance with procedures established by law.The law (paras. (3) and (4) of art. 216 of the Labour Code) does not provide a clear definition of the contract of continuing professional training. However, following the definition of the contract of professional qualification I consider that we may interpret the former one in the same way with a remark that a contract of continuing professional training is concluded for a longer period of time. At the same time we have to take into consideration certain limitations imposed by para. (4) of art. 218 of the Labour Code. In case of employees passing a continuing professional training the following is forbidden:- work in heavy, damaging or dangerous conditions;- overtime work;- night work;- detachments not related to the training.The legal provision that can be of the most interest for employers is contained in para. (2) of art. 214 of the Labour Code, which states that an employee who has passed a course of professional training or an internship can not resign during the certain period of time stipulated in the contract of professional training except for the cases specified in the contract.So, as we’ve clarified earlier you can’t simply retain your employees for a certain period of time, BUT if you provide some training to them you can agree that your employees have an obligation to work for you for a certain period of time. The law doesn’t say how long this period may be. It should be agreed upon between employer and employee in their contract. However, this period should be reasonable and commensurable with the training provided to employee. The last statement is not directly stipulated in the Labour Code, however, it is important and may be taken into consideration by court in case of a dispute.Then, the following question may arise: What if an employee after having got necessary training and signed an additional agreement that obliges him to work for the current employer for a certain period of time refuses to do this? Can any sanctions, penalties be applied in such cases? The law doesn’t give a direct and clear answer. At the same time it doesn’t prohibit to include a term into the contract under which the employee undertakes to recover the costs of training borne by the employer. As far as the Labour Code prohibits employers to charge the lost profit from employees and in order to avoid possible disputes regarding the amount of compensation I would advise to assess the costs of training in advance and to indicate the sum in the contract.Now let’s see if there are any other schemes of recovering the investments made into employees.Art. 214, paras. (3) and (4) provide that if the initiative of participation in any form of professional training organized outside of the enterprise with interrupting of the work comes from an employee, the employer may examine employee’s written request together with the employees’ representatives. And within the period of 15 days the employer takes a decision under which conditions he may permit the employee to pursue his professional training and whether the employer is going to cover (partly or in full) the related expenses and costs.At the same time the law doesn’t prohibit employers and employees to sign contracts of loan according to general provisions of civil law. In this case they would sign a loan contract for a specified purpose, and namely the loan provided by employer to employee on order that the latter one could pursue professional training.According to art. 871 of the Civil Code the repayment of loan is subject to the terms stipulated in the contract. As far as in case of a loan agreement the parties have a wider possibility to determine the terms of the contract it is more convenient for employers than a traditional professional training contract regulated by the Labour Code.In the loan agreement the parties are free to choose the terms of repayment, the obligation to pay interest in case of a breach of contract. Thus, it gives more flexibility than the means provided by the Labour Code. In order to ensure this mode it is recommended to ask for a request from an employee to provide him the possibility and necessary resources to pursue the professional training…Keeping secrets…Another aspect (different from the issues of training of the employees) that is of a great interest for many employers is how to preserve your secrets in case of an employee leaving for your competitors. I mean the issues that arise in regard to Non-Disclosure Agreements and Non-Compete Clauses. Let’s see if such agreements and clauses are enforceable under Moldovan labour law.Using a simple definition of a Non-Disclosure agreement contained in Wikipedia “it is a contract through which the parties agree not to disclose information covered by the agreement”. In Moldova the issues of trade secrets protection are governed by the Law on Commercial Secret (No. 171 of 06 July, 1994) and by the Labour Code.Art. 53 of the Labour Code stipulates that confidentiality as a contract clause means that the parties agreed within the labour contract validity period and not more than 3 months (not more than 1 year for employee that have occupied chargeable positions) after its termination not to disclose the data and information they knew during the execution of the labour contract in accordance with the rules of internal order, collective or individual labour contract.Para. 2 of art. 53 states that non-observance of confidentiality entails the compesantion of damages caused by the party in fault.The Code does not provide the definition of a chargeable position (functie de raspundere). Therefore, it should be determined in every particular case taking into consideration the employee’s position, his/her responsibilities and obligations and the level of access to confidential information.In order to bring a former or actual employee to responsibility for diclosure of confidential information it is very important to create a clear and effective mechanisms of protecting and accessing confidential information. This may imply the adoption of rules and instructions on evaluating the levels of confidentiality, procedures of ensuring the information protection, its transmission and non-disclure, etc. Without these mechanisms (the elaboration of which should be delegated to competent lawyers, either in-house or outsourced) the non-disclore agreements may be unenforceable…In what regards Non-Compete Clauses, or Covenants not to Compete (that represent a clause ”under which one party (usually an employee) agrees to not pursue a similar profession or trade in competition against another party (usually the employer)”) we face certain legal impediments.The reason to sign such agreements with employees is evident for employers. However, they encounter the same guarantees provided to employees by the labour legislation – the prohibition of limitation of employees rights (even if an employee agrees to such a limitation). The case of Non-Compete Clauses may be and are likely to be viewed by the courts as such a limitation of the right to the freedom of labour. And this circumstance will lead to unforceability of such clauses…PS. Certainly, the issues of employers’ “protection” from their employees are much broader. I touched upon only a couple of them (in order to consider all of them I’ll have to right a book) that I was asked about by the blog readers.If you are interested in other labour law related issues let me know, so that I could come up with new posts on them…

About 2 weeks ago or so I got an interesting e-mail from one of the readers of my blog who asked me about measures that could be taken by employers under the Moldovan legislation to protect themselves from “employees walking away from positions (normally of in-depth knowledge of confidential business information but also as straightforward as taking part of the customer-base with him out of the door) and taking up either employment with competing businesses or setting up a competing business”.I told him that this problem affected many companies (both local and international ones) and promised to touch upon this subject in my blog. And now (though with some delay) I decided to keep my word and to post on that issue and try to investigate it, even in a little broader context than we have discussed it.What is the essence of the problem?First of all, let me outline the main hot problems relating to the discussed issue. When you hire a person you usually do the following things (in different combinations and proportions, of course): teach him the way how the work is done (particularly, if you deal with the beginners), provide different training and study opportunities, i.e. you make investments into your employees hoping that those investments would bring certain benefits to your company after a time. And certainly you don’t want people being taught by you leave you immediately after this, for instance, being hired by a competitor company.Or we may take another example that represents a more serious problem. You’re left by an employee who had access to some insider information (no necessity to describe all possible consequences).In other words you don’t want to “cherish a snake in your bosom” (NB. Is this proverb has the same meaning as it has in Russian?)So, are there any ways to feel yourself protected in such situations or at least to diminish possible damage? This is the topic of my today’s post.Whose side does the law take?The modern Moldovan labour/employment legislation inherited to a considerable degree many Soviet traditions in providing to employees all possible and impossible means of protection of their rights. The laws (and most of all the Labour Code) regulating the labour relationships between employees and their employers set a row of very strict rules that all employers (regardless of type of ownership – the public or private one) must observe. And although the law stipulates certain provisions to protect employers from illegal actions and abuses of rights from the part of employees the general spirit of the labour legislation is likely to be called pro-employees.The same situation may be observed in courts. With all things being equal you have very little chance of winning a case if you are an employer.Anyway, you have to meet all these challenges and use all possible means provided to employers by law. Let’s look at some of them…Long-term retention of your employees: is it possible?One of the questions that are most frequently asked by employers is how to make their employees to work for them during the long periods of time. The question easy to understand but hard to answer.Articles 43 and 44 of the Moldovan Constitution provide to every person in Moldova the right to a free choice of labour and set the prohibition of forced labour. Many lawyers consider the employment contracts terms limiting the right of an employee to resign at any moment as infringement of the aforementioned Constitutional principles. Moreover, employees can’t relinquish their rights under art. 64 para. (2) of the Labour Code that declares invalid any agreement that is directed to renunciation or limitation of employees’ rights.According to art. 54 of the Labour Code the labour contracts are usually concluded for unlimited periods of time. This rule was stipulated in order to complicate ungrounded dismissals using the terms of contracts containing the period of their validity. So, this provision is intended to bring certain stability for employees and to make their position more secured in the face of changeable mood of their employers. Article 55 of the Labour Code provides a number of cases when the labour contracts are permitted to be signed for certain fixed periods of time (but for no more than 5-years terms) for carrying out the works that have a temporary character.But what if you wish to sign a contract providing that your employee would be bound to work for you not less than for a period of time stipulated in the contract (e.g., not less than 2 years)? Such situation is not foreseen in arts. 54 and 55 of the Labour Code mentioned above. The contract in this case is signed in fact for an unlimited term (because employees may work 5-10-20 years, BUT not less than 2 years) and provisions of arts. 54 and 55 are observed.Moreover, para. (3) of art. 6 of the Labour Code stipulates that nobody can be forced to work at a certain place of work during his entire life. Does this rule mean that it is permitted to set in employment contracts the obligatory terms for employees for the periods less than “entire life”? I’d like to think so, BUT…Article 85 of the Labour Code provides that an employee has the right to resignation that is the right to dissolve a labour contract signed for an unlimited period of time. And there are no exceptions to this rule. The only obligation for employees in this case is to inform the employer about the resignation 2 weeks in advance. This is the right of employees stipulated by the Code and as I have already mentioned they “don’t have the right to give up this right”.So, as we can see the Moldovan legislation does not provide a possibility for employers to hold their employees on their positions and to not let them go…If employers don’t have the right to retain employees for certain fixed terms can there be any other means to secure their interests? This is the question that I’m going to answer in the next post here in my blog. To be continued…

In November 2006 the Chamber of Accounts adopted the Report on financial revision carried out at the Supreme Court of Justice (SCJ) for the period of 2004-2005 (published in Monitorul Oficial on January 12, 2007; read the full text in Russian and Romanian).And I found an interesting paragraph there relating to the remuneration of the SCJ's personnel labour:"During the verified period the remuneration of labour of the Supreme Court of Justice's personnel was regulated by the Parliament's Decision # 453-XIII of May 16, 1995 "On the Remuneration of Labour of Judges, Employees of Courts and Prosecutors' Offices". In spite of the fact that the SCJ established the categories of labour remuneration according to the Annex 1 to the aforementioned Decision of Parliament, the rises in wages and bonuses were set in accordance with the Government's Decision # 139 of February 09, 1998 "On remuneration of labour of public employees and persons that carry out technical maintenance supporting the functioning of public authorities, on the basis of the Uniform Tariff Scale", the latter ones being than the ones stipulated in the aforementioned Decision of the Parliament # 453-XIII.Taking into consideration that according to para. 15 of the Government's Decision its provisions do not apply to public authorities for which the categories and conditions of labour remuneration are stipulated in special decisions, the Supreme Court of Justice ran up unjustified expenses on labour remuneration in 2004-2005 to the sum of 369.1 thousand lei and exceeded the expenses stipulated in the calculation of expenditures for the year 2005 for bonuses payments in the sum of 209.6 thousand lei and the rises in wages - for 26.8 thousand lei..." So, according to the Chamber of Account's data the Supreme Court of Justice overpaid to its staff more than half a million lei during 2004-2005. Quite interesting, isn't it?...

From Today, March 16, the Ministry of Justice finally starts to issue apostilles (you can read more news on this in Romanian and also to appoint the date for submitting documents to be affixed with apostille on the Ministry's official site). Last year the Moldovan Parliament adopted the Law on Joining the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (adopted in Hague). In February this year the Government adopted the Regulation on the Order of Apostille Issuance that stated that apostille should be issued and recognized from March 16 (the date when the Convention comes into force for Moldova).And that is a very good news I think. A couple of years ago I had to legalize a proxy issued by a Moldovan company to its representative in Turkey. And here's the row of actions that I had to undertake:1. Certification of the proxy by a notary.2. Translation of the proxy.3. Certification by the notary of translator's signature.4. Certification of the notary's seal and signature by the Ministry of Justice.5. Certification of the seal the Ministry of Justice by the Consular Department of the Ministry of Foreign Affairs.6. And finally - certification of the Ministry of Foreign Affairs' seal and legalization of proxy at the Consulate of Turkey.SIX (!!!!!) steps in order to send a very simple document to another country. Thankfully we won't need to do it again...

I can't believe it!!! What happened to the Moldovan Parliament? They finally decided to approve the top management officials of the National Agency for Protection of Competition (you can read more on the news in Russian here and here). The Law on Protection of Competition (the main legislative act in the field of competition and anti-monopoly regulation in Moldova) was adopted in June 2000 and entered into force on December 31, 2000. This Law provided the creation of the National Agency for Protection of Competition. But so far the Agency hasn't been created.I adverted to this issue in one of my first posts in this bog in November - "A competition authority: will it become a reality one day?" So, now it seems that the Agency is likely to start its work in the nearest future.But the fact is anyway stunning. We had to wait for more than 6 years, since the law had entered into force, for beginning of its realization.Well, potius sero quam nunquam - Later is better than never...

I recently came across the post by Aidan Ellis at The Barrister Blog called "The danger of specialisation" The name of the post says for itself. The author reveals some problems that may face too narrowly specialized practicing lawyers and describes the benefits of having a good basis of general legal knowledge:

Nevertheless the core skills of the lawyer apply to any area of law. Legal research, drafting and most importantly communication are substantially the same in any branch of the law. There is no substitute for a broad range of experience in terms of being able to offer a complete service to clients. Often clients have legal problems that are not easily pigeonholed into a particular specialism. Personal injury itself may overlap with employment, health and safety or criminal law.On a personal level, occasionally being thrust into the melee of an unfamiliar area of law is useful experience. It teaches, or perhaps reminds, how to research novel points swiftly and accurately. It is useful practice for the advocate to appear unflappable in any situation because even on home ground new points can occur.

Unfortunately these gentler benefits look set to be swamped by the onrushing tide of specialisation.And these ideas of a British lawyer led me to the thoughts on specialisation of practices among Moldavian lawyers. And here they are:In contrast to England facing the problem of overspecialized lawyers many Moldavian lawyers sometimes seem to be "specialists" in all areas of law. There are quite few law firms that have good specialists in certain particular fields (though many affirm they do). You'll hardly find a lawyer who would deal exclusively with M&As, personal injury, etc.OK, maybe I'm too categorical. Of course, there are specialist in certain areas of practice. But this doesn't seem to be a norm among Moldovan lawyers.But another question that arises is - will the tendency for specialization evolve among lawyers in Moldova?. I'm sure it will. BUT, not so fast as has to be. Here are some of the reasons that will impede the process, as I see it:1. (One of the most important) The quality of legal teaching at Moldavian Universities is still too low. In order to develop particular (and narrow) practices of law we need highly prepared teachers of law in such areas as corporate law, customs regulations, land law, personal injury, securities, etc. (the list can be very long indeed) who know not only the theory (though it is really important) but also practicalities of particular areas. Most of them do not tend to teach law at universities. And the ones who do are not always enough prepared to TEACH. And I see this as one of the top priorities for our universities to FIND and PREPARE such specialists.2. Another problem is the actual prospects for the specialists in some narrow niches of Moldavian legal "market". Let me explain what I mean. Moldova is a very small country. And let's speak frankly - not truly democratic. So, the prospective clientele is not large enough. And people don't really trust authorities in general and courts in particular. Moldova is not an "Overlawyered" country. So you can be a greatest specialist in an area where people do not tend to seek a legal advice (even when they need it)... I'm notgoing to develop this idea. I hope you've caught the point...3. (Related with the second issue). Law is too often "forgotten" about. Many things are done despite certain legal prescriptions. You can know law perfectly well and not be able to implement it. Because it's simply not observed...4. Inconsistency and vagueness of many laws. Many procedures (especially administrative ones) are carried out according to internal regulations that are adopted within certain administrative bodies. And nobody, except the employees of those institutions, know about the rules that are applied. There's a regulatory reform being implemented in order to eliminate such practices, the so called "Guillotine reform" (more on this read here and here), however it is still far from being finished (if ever will completely). Particularly, the situation is complicated at the level of local public administration. So, you can't always rely on law when there can be a set of unknown regulations that make a law useless or hard to implement...However, I am an optimist. Despite all the problems that exist I think that the process of specializing practices among Moldavian lawyers will continue, probably not too fast, but we definitely have to expect more and more narrow specialists to appear...