Using an Agent or Distributor

Selecting a local partner can be very advantageous for U.S. firms wishing to do business effectively in Moldova, though some large, established American firms work without a local partner.  Gaining access to the market and collecting meaningful information can be difficult without local representatives who have contacts and a solid understanding of the business environment, legislation, and market.  Local companies are usually willing to become agents and distributors for American firms.  Before a U.S. firm makes any commitment, it is strongly recommended that a third-party evaluation be conducted on the prospective partner.

Distance interaction, such as simply sending catalogues, is usually not as effective as making direct personal contacts.  As with other countries in the former Soviet Union, personal relations still play a very important role in building business partnerships.  In an economy where the rule of law is not yet firmly established, the quality and depth of key business relationships are often the best protection against loss and are the key to market access.

The local partner may require significant support from the U.S. business in building a distribution network and reaching out to clients.  Expecting a local distributor to be proactive and do everything on its own is not a safe assumption.  A distributor could be representing other companies with products that could be in direct competition with the products and services of a U.S. company seeking to work with that particular agent or distributor.  Before selecting a local partner, it would be wise to explore other products the potential partner distributes.

Business associations are a good resource of information about local companies, distributors, wholesalers or retailers. The American Chamber of Commerce in Moldova (AmCham Moldova), the Chamber of Commerce and Industry, European Business Association (EBA), and the Invest Moldova Agency are available to assist prospective investors.  American companies may also contact local law firms to assist them with finding a partner.  A list of English-speaking lawyers is available on the US Embassy’s  website. Embassy regularly fields inquiries from U.S. companies.  

Establishing an Office

The U.S. Embassy can provide only basic counseling on registration requirements and procedures.  The U.S. Embassy strongly recommends that interested U.S. companies seek legal advice on business registration.  The U.S. Embassy can provide contact information for local consulting firms that offer professional legal advice in this area.

Every company doing business in Moldova must be registered with Moldovan authorities.  The following laws regulate the registration and activities of companies in Moldova: the Civil Code, the Law on Enterprises and Entrepreneurship, the Law on Joint-Stock Companies, the Law on State Registration of Legal Entities and Individual Entrepreneurs, the Law on Limited Liability Company, and the Law on Joint-Stock Companies.

According to Moldovan legislation, a foreign company may be registered as one of the following entities:

• sole proprietorship,
• general partnership,
• limited partnership,
• limited liability company,
• joint stock company,
• cooperative, or
• representation or branch of

The limited liability company is the most popular form of legal registration among foreign businesses operating in Moldova.  Joint-stock companies are a distant second.  In choosing the registration mode, companies must consider the advantages and disadvantages of each type.  For example, under  Moldovan law, a foreign company registered as a representation or branch office does not have a legal entity status and cannot engage in economic activities. 

Business registration is done with the Public Service Agency.  The registration takes 24 hours in a standard procedure or four hours in a high-speed procedure, and both are done in two stages.  The first stage involves submission of an application and a set of documents, the type of which may vary depending on the legal form of the business (LLC, joint-stock company, sole proprietorship, etc.)  At the second stage, the Public Service Agency issues a registration certificate and a unique identification number for the business conferring full legal capacity to the entity.  In 2010, the government introduced the “one-stop-shop” principle, which removed the requirement for businesses to register separately with fiscal, statistical, social security, and health insurance authorities.

For the purpose of registration, a foreign company must provide the following documents:

• application for registration;
• resolution of establishment of the local company (indicating the senior manager and person authorized to sign constitutive documents);
• constitutive documents (articles of incorporation, charter, etc.); and
• excerpts from the commercial register of the foreign company’s home country.

Any foreign citizen who founds a new company or acts as a senior manager must provide a copy of her/his foreign passport, any residence permits, and criminal records from her/his country of origin and Moldova.  Foreigners have also to submit copies of their passports.

The regular procedure requires foreign companies to notarize copies of constitutive documents with the Consular Office of the Moldovan Embassy in Washington D.C. and have them translated into Romanian.

In March 2006, the Moldovan Parliament ratified the 1961 Hague Convention on Abolishing the Requirement for Legalization for Foreign Public Documents.  Acceptance of U.S. apostilles applied on official documents simplifies the legalization of official documents.

Following registration, certain types of business activities require the issuance of a license.  While most businesses are licensed via a one-stop shop procedure, certain specialized activities require other regulating agencies to issue licenses: the National Bank, the National Financial Market Commission, the National Energy Regulatory Agency, the National Electronic Communications and IT Regulatory Agency, and the Audiovisual Coordinating Council.

To get a license, a business must file an application and provide a copy of the business registration certificate as well as additional documents, the number and type of which will vary by business activity.  Aside from licenses, businesses may be required to obtain other authorizations and certificates, which will differ by business activity and product.  Such documents may deal, for example, with sanitary, environmental, fire hazards, and safety compliance issues.

For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.

Franchising

Moldova is among a few countries in the world that have separate legislation dealing with franchising. Franchising is gaining popularity in fast food and retail of consumer goods, cosmetics and apparel.  The number of sales outlets carrying internationally recognized brands in the capital city of Chisinau is growing and the presence of vendors of foreign-made goods and the opening of large shopping malls further suggest that franchising provides business opportunities in retailing and services.  U.S. companies such as McDonalds, KFC, Marriott, Best Western Hotels, and Coca Cola have operated franchises in Moldova for several years.

Direct Marketing

The use of direct marketing has been in growing in Moldova.  Such traditional direct marketing channels as catalogs and regular mail are used along with digital marketing through social media platforms, mobile applications, and email messages to existing or potential customers.  Major, well-known U.S. direct marketers such as Amway, Herbalife, Avon, and Mary Kay have been present in Moldova for quite some time.

Joint Ventures/Licensing

Moldovan legislation treats domestic and foreign businesses in the same manner and does not restrict foreign ownership in companies or subject such companies to any special licensing requirements.  U.S. firms may enter the market by partnering with Moldovan counterparts or operating 100 percent foreign-owned companies.  In the most common, joint-venture approach, a foreign company provides capital, equipment and merchandise, while the local company provides buildings, warehouses, office space, personnel, and channels of distribution.  Before making financial or legal commitments, U.S. firms should thoroughly explore whether potential partners are reliable and share their priorities and expectations.  Special attention should be also given to a review of the viability of potential domestic partners.

Express Delivery

All major express delivery companies are present in Moldova: FedEx; TNT, UPS, and DHL.  Posta Moldovei is the national mail operator with a nationwide network of mail delivery, offering courier and delivery services domestically and internationally, and is part of international Express Mail Service (EMS).

U.S. to Moldova deliveries usually take two to four business days, but length may vary depending on type of dispatch, type of shipment and destination.  Moldovan customs regulations treat mail orders and goods sent for personal use differently.  Also, a number of restrictions apply for international mail.  Operators can provide information on the type of delivery restrictions and taxation conditions. \

Due Diligence

Contacting potential agents or distributors from a list at long distance without an introduction or third-party evaluation makes it very difficult to assess a prospective business partner.  Basic information about companies is not always readily available.  Under such circumstances, the need for conducting due diligence cannot be overemphasized.  The U.S. Embassy can provide a list of legal consulting firms and recommends contacting the American Chamber of Commerce in Moldova.  Legal advisers are retained for the usual work of incorporation, obtaining permits, IPR registration, contract preparation, collection and commercial disputes, but can also be an excellent resource for identifying potential problems based on their experience in the market. Embassy Chisinau is a Partnership Post with the Department of Commerce.  The Embassy offers the International Company Profile (ICP) services in collaboration with the Commercial Service at U.S. Embassy Bucharest.  ICP includes:  introductions to local legal counsel interviews with target companies and suppliers; background investigations; financial status investigations; referrals to Moldovan firms; and recommendations regarding the subject’s potential reliability as a business partner.