Last week the Romanian Government approved some changes to the old law of commercial companies. I say old not because of its age (its first version appeared in 1990) but because it is entirely overpassed by the evolution of our society. The same happens with similar laws in many other European countries, but the Romanian one (Legea 31/1990) established several limits that, somehow, made the economic initiative and growth complicated and the country less competitive.

Foreign investment can come to Romania or can go to other destinations. The world is very wide. It will depend, among other factors, on how easy it is to establish and operate a company in a particular land. Even the local population can decide to start a business or not, depending on how demotivating it could be to face bureaucracy. For this reason, it is good news that the abnormality of some limits that have restrained the entrepreneurial evolution of the Romania is gone.

These are the changes now adopted:

1. A physical or juridical person can be the sole partner in more than one company. 
2. The ban on having more than one company social site in one space is lifted.
3. It will not be necessary anymore to ask for neighbours agreement to set up a firm’s social site in an apartment.

I have lived these inconveniences for many years and, thou I am happy that they disappear, I wonder if it is not too late. Too much damage has resulted from these stupid regulations.

Imagine, for instance, that you are a young eager student who lives in Romania. You own a one-room apartment. You think of opening a company to buy and sell clothes online. It would be normal to establish the company’s site there where you live. You do not have much money and do not know if your project will work. The available resources cannot go into paying rent; you need them to develop your webpage, stationery and do some advertising.

Before the changes that were approved last week, you needed to go to all the neighbours sharing sides with you, to ask for their authorisation. You needed to go to the guy on your right, on your left, above and below. Plus the final signature of the administrator of the building. This obligation was one of the most stupid things that I have seen in Romania. What if one neighbour did not want to approve? They could oppose without giving explanations. Then you could not create your company. Some neighbours wanted money; some did not like you; some were never there; some hate signing and do not trust you. You were in their hands. So imagine how many projects could not even start. 

Let’s imagine that you made it and opened your online firm. You did well, and you gained experience. You believe that there is another market niche that you would like to explore: great Romanian tees, herbs, medical plants, sirups and other vegetable produces that you could order to local producers and send on demand all around Europe. Of course, you do not want to use your same webpage, and probably you do not want to mix the activities, you need another company for the food. Well, you live in a small one-room apartment, and according to the law, you could not have more than one firm in that space. So you needed to find another place. Maybe a friend let you settle the social site in their small apartment, or maybe you had to pay someone to give you that right, but you needed, agian, the authorisation of all the surrounding neighbours in the new site. “What for? A food company? No, I am not letting you open a restaurant here” – “No, I am not opening any restaurant, all will be online” – “I am sure you will start stocking food here, and the food will bring pests and smell bad, and I do not want delivery people coming up and down the building to get the orders, and…”. – “No, none of this will happen, I do not even intend to work here, I will manage from…” – “NO” clacking the door.

Finally, you found a valid place for your new company social site, but then you also needed a partner. As you already were the sole partner in one firm, you could not be it in another. So go and ask among your family and friends who would like to join you, even if only with 1%. What a bother. Why a person could not assume the sole responsibility of their acts is something that blows my mind.

All the above could also happen to foreign capital. Sometimes the investors just want to have several firms in one office. This situation is normal abroad, but they could not do that in Romania.

So, all this nightmare is over. It will make things a little better. Still, several other aspects could be improved. Romania is yet very far from countries like Estonia in which a company can be created in a few hours and entirely online. They show the way to follow.

Administrative burdens are one of the main deterrents of economic development. They work against the competitiveness of a country. It is surprising to see how states, with all their very well paid political class up-front, do not work to reduce that burden to the minimum instead of issuing new overwrought procedures. I wonder what is in their head.