The New Romanian Civil Code comes into force on 1 October 2011. It will for the first time regulate fiducia, a mechanism similar to some extent to the English common law concept of Trust.
Fiducia is the legal relationship by which one or more settlors transfer present or future rights to one or more trustees, with a maximum transfer period of 33 years. The fiducia must be expressly established by law or by authenticated contract (the “Contract”). The Contract is null and void, however, if its intention is to make an indirect donation to the beneficiary. The beneficiary may be the settlor, the trustee or an identified or identifiable third person. Any individual or legal entity may act as settlor.
- Trustees can only be credit institutions, investment management companies, investment companies, insurance and reinsurance companies, public notaries, or attorneys at law;
- the trustee has the right to be remunerated;
- in relation to third parties, the trustee will be deemed to have full proprietary rights over the patrimony (total assets and liabilities transferred through the fiducia;
- the Contract must indicate the terms under which the trustee will be held accountable for its duties to the settlor; •whenever a trustee deals with the fiduciary assets, it may expressly indicate it is doing so (unless otherwise indicated in the Contract);
- the trustee’s own assets may be at risk for loss caused by mismanagement of the fiduciary assets; and
- the trustee may be replaced by a legal action initiated by the settlor, a representative of the settlor or the beneficiary.
- in order to bind third parties, a fiducia must be registered at the Electronic Archive of Security Interests in Personal Property;
- where applicable, registration in the Land Book is also required; and
- within one month from its conclusion or date of amendment, the fiducia or its amendments must be registered with the competent fiscal authorities; otherwise it/they will be null and void;
- the opening of insolvency proceedings against the trustee shall have no effect over the fiduciary patrimony, but it will terminate the fiducia;
- unless expressly indicated in the Contract, the holders of claims against the fiduciary assets cannot benefit from insolvency action brought against the settlor’s and/or trustee’s assets;
- the fiducia will be terminated upon i) expiration of its term; ii) achievement of the fiducia’s envisaged scope; iii) all the beneficiaries’ withdrawal from the Contract; or iv) the opening of insolvency proceedings against the trustee;
- upon termination, all fiduciary assets transfer to the beneficiary or, should the beneficiary not be locatable to the settlor;
- the fiducia is governed by the law chosen by the settlor;
- if no applicable law has been chosen or the chosen applicable law does not regulate a trust-like operation, the fiducia shall be governed by the law of the state with which it is most closely connected.
Please note primary and secondary legislation will further regulate this matter. The aforementioned text is for information purposes only and must not be construed as legal advice, nor relied upon as enforceable legislation.