- Can a local company issue stock options/restricted units in your jurisdiction?
- If yes, is it a common practice to issue stock options/restricted units by local company in your jurisdiction?
- Is it allowed for the residents of your jurisdiction to receive stock options/restricted units from foreign companies?
- Is it common to use recharge mechanisms with local companies when the stock options/restricted units are issued by foreign company?
- Does your jurisdiction have special regulations applicable to stock options/restricted units granted to its residents from foreign companies?
- When stock options/restricted units are granted by foreign company, is it commonly required to have prospectus or other offering to be published in your jurisdiction?
- Whether the grant and/or vesting of stock options/restriced units are considered a notifiable event in your jurisdiction from the company’s (issuer) perspective?
- Are there any regulatory or other restrictions that could significantly limit an ability of the residents of your jurisdiction to participate in foreign stock option plans?
- Is it necessary to undergo any kind of registration of foreign stock option plan in order for the residents of your jurisdiction to participate?
- Does your jurisdiction have special taxation rules applicable to stock options/restricted units?
- Whether grant/vesting of stock option is considered a taxable event for participant in your jurisdiction?
- Whether spread between exercise price of option and market price of shares is considered taxable income for participant in your jurisdiction?
- Whether investment gain on sale of shares received upon exercise of option are subject to tax in your jurisdiction?
- Whether grant of restricted units is considered a taxable event in your jurisdiction?
- Whether vesting of restricted units is considered a taxable event in your jurisdiction?
- Whether there is a risk of double taxation upon sale of shares received under restricted units by participant in your jurisdiction?
- Whether there is separate securities tax applied to shares received under stock option/restricted unit in your jurisdiction?
- Whether social security taxes may apply to benefits received by participant under stock option plan?
- Is there a risk of double taxation for the residents of your jurisdiction in case of receiving foreign stock options/restricted units?
- Is there a possibility for stock option plan to benefit from any special taxation regime in your jurisdiction, in case if certain conditions are met?
- Whether the burden of tax reporting of taxable income received from stock options/restricted units issued by foreign company lies with the participant or the company (including local subsidiary in cases of recharge mechanisms)?
- Is it common in your jurisdiction to offer cash payout to the participants instead of shares as a result of stock options exercise/restricted units vesting?
- Is it necessary in your jurisdiction to have stock option plan documents translated into local language?
- Is it required for a participant of the plan to have a separate bank account in order to pay for vested shares?
- Whether there are any restrictions in your jurisdiction on granting stock options/restricted units to independent contractors?
- Does the company have consultation obligation towards employee representative bodies (e.g. works council) prior to launching a stock option plan in your jurisdiction?
- Besides having a plan, is it required/recommended in your jurisdiction to conclude a separate option/unit award agreement with the employee?
1. Can a local company issue stock options/restricted units in your jurisdiction?
Yes.
There are no specific legal provisions under Romanian Companies Law allowing Romanian entities to issue stock options/restricted units in Romania. However, in practice and as far as we are aware, there are a few joint stock companies that have issued stock options in Romania. Issuing restricted units is not regulated under Romanian law and we are not aware of any Romanian entities issuing restricted units.
2. If yes, is it a common practice to issue stock options/restricted units by local company in your jurisdiction?
No.
3. Is it allowed for the residents of your jurisdiction to receive stock options/restricted units from foreign companies?
Yes.
Based on our practice, it is more common for Romanian residents to receive stock options from foreign companies in the share capital of those companies than Romanian companies granting stock options to Romanian residents.
4. Is it common to use recharge mechanisms with local companies when the stock options/restricted units are issued by foreign company?
There is no consistent practice in this respect. Recharge mechanisms may be put in place and they need to be supported by the necessary documentation (e.g., recharge agreement).
5. Does your jurisdiction have special regulations applicable to stock options/restricted units granted to its residents from foreign companies?
No.
6. When stock options/restricted units are granted by foreign company, is it commonly required to have prospectus or other offering to be published in your jurisdiction?
No.
Offers of securities are subject to the requirements of the Prospectus Regulation (Regulation (EU) 1129/2017). Stock options are generally interpreted as being ‘non-transferable securities’ that fall outside the scope of the Prospectus Regulation, therefore no prospectus or information document is required. However, a more detailed analysis should be performed on a case-by-case basis.
7. Whether the grant and/or vesting of stock options/restriced units are considered a notifiable event in your jurisdiction from the company’s (issuer) perspective?
No.
There are no reporting requirements that are likely to impact a stock option plan.
8. Are there any regulatory or other restrictions that could significantly limit an ability of the residents of your jurisdiction to participate in foreign stock option plans?
No.
9. Is it necessary to undergo any kind of registration of foreign stock option plan in order for the residents of your jurisdiction to participate?
No.
No securities law restrictions, registrations or filings are required.
10. Does your jurisdiction have special taxation rules applicable to stock options/restricted units?
Yes.
A preferential tax regime is available for stock option plans/ restricted units. To qualify for tax benefits, the vesting period must be of at least one year.
11. Whether grant/vesting of stock option is considered a taxable event for participant in your jurisdiction?
No.
Provided that the plan qualifies for the preferential tax regime.
12. Whether spread between exercise price of option and market price of shares is considered taxable income for participant in your jurisdiction?
No.
Provided that the plan qualifies for the preferential tax regime.
13. Whether investment gain on sale of shares received upon exercise of option are subject to tax in your jurisdiction?
Yes.
Capital gains tax is due from the individual at 10%. In addition, a capped health insurance contribution is payable on such income. Both capital gains tax and the health insurance contribution are payable annually.
14. Whether grant of restricted units is considered a taxable event in your jurisdiction?
No.
Provided that the plan qualifies for the preferential tax regime.
15. Whether vesting of restricted units is considered a taxable event in your jurisdiction?
No.
Provided that the plan qualifies for the preferential tax regime.
16. Whether there is a risk of double taxation upon sale of shares received under restricted units by participant in your jurisdiction?
No.
17. Whether there is separate securities tax applied to shares received under stock option/restricted unit in your jurisdiction?
No.
18. Whether social security taxes may apply to benefits received by participant under stock option plan?
Yes.
A health insurance contribution is payable on the gain obtained further to sale of shares. In addition, if the preferential tax regime does not apply, any benefits will be subject to social security contributions.
19. Is there a risk of double taxation for the residents of your jurisdiction in case of receiving foreign stock options/restricted units?
No.
Provided that a double tax treaty is in place.
20. Is there a possibility for stock option plan to benefit from any special taxation regime in your jurisdiction, in case if certain conditions are met?
Yes.
Please refer to the response to Q9 above.
21. Whether the burden of tax reporting of taxable income received from stock options/restricted units issued by foreign company lies with the participant or the company (including local subsidiary in cases of recharge mechanisms)?
In principle the burden of tax lies with the local employer, except for the capital gains tax on a sale of shares, for which the participant is directly liable.
22. Is it common in your jurisdiction to offer cash payout to the participants instead of shares as a result of stock options exercise/restricted units vesting?
No.
As far as we are aware, there is no common practice established in this respect.
23. Is it necessary in your jurisdiction to have stock option plan documents translated into local language?
Yes.
All documents related to employment (including those granting benefits to an individual, while being an employee) need to be either bilingual or have a Romanian version.
24. Is it required for a participant of the plan to have a separate bank account in order to pay for vested shares?
No.
25. Whether there are any restrictions in your jurisdiction on granting stock options/restricted units to independent contractors?
No.
26. Does the company have consultation obligation towards employee representative bodies (e.g. works council) prior to launching a stock option plan in your jurisdiction?
No.
As a rule, local employment law does not require prior consultation or information before launching employment related benefits or bonuses, such as a stock option plan. However, such requirement could become mandatory if expressly provided in the individual employment agreement, collective labour agreement or any other internal regulations or internal policies.
27. Besides having a plan, is it required/recommended in your jurisdiction to conclude a separate option/unit award agreement with the employee?
No.
Under local employment law:
- employees need to be informed of the terms of the bonus/benefit policies to which they are subject; and
- the employer needs to hold evidence on such information (usually consisting of employees’ acknowledging signature on the information letter or on the related support documentation, such as the award documentation).
In the case of stock option plans, a separate instrument should be put in place for each employee subject to the award, because:
- it is evidence of the due communication of specific award terms for the employee; and
- it details the actual award terms and conditions of the stock option.
However, concluding a separate option/unit award agreement with the employee would be recommended from a tax perspective.
