Migration Rules for Business Owners

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.

Registering a company in Moldova

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.

Blog Relaunch

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.