Recently, on the website of the Ministry of Economy, Trade and Relations with Business Environment, it has been launched for public debate a draft Ordinance amending and supplementing Government Emergency Ordinance no. 77/1999 on measures to prevent payment default, approved with amendments by Law no. 211/200, as subsequently amended (the “Draft Ordinance”).
What is the scope of the Draft Ordinance
According to the substantiation note published along with the Draft Ordinance, the main purpose is to facilitate the offset process, by switching to an online generation and management of the offset circuits.
What changes bring the Draft Ordinance?
The main amendments introduced by the Draft Ordinance are as follows:
Draft Ordinance also states that once approved, within 30 days from the date of entry into force, the Government will adopt decisions amending the regulations on monitoring outstanding debts and Rules for offsetting the outstanding debts.
What is the potential impact of this draft ordinance?
Firstly, it seems to confirm the fact that although Government Emergency Ordinance no. 77/1999 on measures to prevent default (GEO 77/1999) seemed to be outdated being issued in the context of financial blockage existing in the Romanian economy in that period, the lawmaker considers the GEO 77/1999 produces its effects even today. Therefore, the offsets of mutual payables and receivables are made using compensation orders, which represent the justifying documents for registering in the accounting books the settlement of the receivables and payables, which were the subject of the offset.
Although the substantiation note of the Draft Ordinance states that the usefulness of the offset process was proved when an offset circuit included three or more economic operators, the Draft Ordinance makes no limitation in this respect, therefore, it applies to any offset between two or more Romanian legal entities.
Moreover, by corroborating the provisions of the existing legislation, when the Romanian legal persons are seeking to enter in the offset system they have to communicate those invoices which are so settled (irrespective whether they are outstanding for less than 30 days and regardless of their amount) to the Offset Unit.
This article was written by Adriana Stoian and Luciana Tache.