Moldovan market overview
24.02.2020 | Roger Gladei, Dan Nicoară

Av. Roger Gladei

Av. Dan Nicoară

With a steady and energetic GDP growth of 4.8, 4.5 and 4.3 per cent for 2018, 2017 and 2016, respectively, Moldova is among the fastest-growing economies in Europe.

According to the World Bank’s data, in 2018 Moldovan real GDP growth outpaced many of other countries in its region.  According to the IMF, Moldova’s nominal GDP reached U.S.$11.44 billion in 2018 and U.S.$9.08 billion in 2017.

The inflation rate decreased from 9.7 per cent. in 2015 to 6.4 per cent. in 2016 and remained almost on the same level in 2017 at 6.6 per cent., according to the National Bureau of Statistics. The inflation rate for 2018 amounted to 3.0 per cent., according to the National Bank of Moldova.

With a moderate climate and productive farmland, Moldova’s economy still relies heavily on its agriculture sector, featuring fruits, vegetables, wine, and tobacco.  According to National Bureau of Statistics, the agricultural sector accounted for 13 per cent. and 14 per cent. of Moldova’s GDP in 2017 and 2016, respectively. The agricultural sector employed 33.7 per cent. of the domestic labor force in 2016.

Moldova relies on its traditional advantages, such as being at the crossroads of the major routes linking Europe, the Middle East and the Commonwealth of Independent States (CIS) and having competitive-skilled and inexpensive work force.  Recent years have witnessed a remarkable shift in the investment paradigm of the Moldovan authorities, with investment attraction policies aimed to improve the infrastructure (including the road network), reform the education process (to bring it in line with the business needs) and catalyze the technology spillover to Moldovan outlets of foreign investors, including multinational enterprises. Favorable tax and customs regime, transparency and predictability of regulation, relaxation of licensing and state control rules are among the tools that aim to streamline a steady flow of sound investments in the Moldovan economy.

On the political dimension, initially after the collapse of the Soviet Union, Moldova had considered its relations with Russia to be of strategic importance. The frozen international conflict in the eastern part of Moldova and sporadic Russian bans on imports of wine and other food products from Moldova, coupled with increased institutionalized support for Moldovan reform projects from EU and US have irrevocably changed the vector of the Moldovan foreign policy and integration effort.  A proof that Moldova is currently in a robust manner oriented towards the free, market-based, economy principles serves the recent February 2019 nation-wide elections, which for the first time since independence in 1991 resulted in the communist party being left out the from acceding the Parliament.

In June 2014 Moldova and EU signed the Association Agreement (enacted in 2016), which established a Deep and Comprehensive Free Trade Area (DCFTA) with the EU, including a zero levy export and import regime for agricultural products based on renewed quotas. This has been fueling both increased trade with the EU countries and the economic growth in Moldova, brining support for the agricultural sector, modernization of transport infrastructure and reform of government institutions.


Moldovan legislation has been fully revised after 1991 and it currently experiences the third wave of legal reform.  In 1998 Moldova has acceded to the New-York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, in 2011 it has ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and after enactment of the EU Association Agreement has embarked on a comprehensive process of reforming its legislation to bring it in line with the aquis communautaire.

Civil and Civil Procedure Code

The significant amendment of the Civil Procedure Code, enacted in June 2018, and of the Civil Code, enacted in March 2019, are generally aimed to modernize the legal framework and enable the sustainable development of the economy.

The amendment of the Civil Code is focused on ensuring the exactness and predictability of the civil legislation, protection of the validity of contracts, as well as turning more responsible the managers of private entities.  New legal concepts such as the trust, digital asset or sale of immovable assets under construction have been introduced, while many existing concepts have been developed and brought in line with the current stage of economy or technology evolution.

The amendments to the Civil Procedure Code are purported to equip better the Moldovan judges and good faith participants to discourage and curb the hindering and protracting of the proceedings.  Also, new concepts such as the written procedure for examining the low-value lawsuits was introduced.

Administrative Code

Following the enactment of the new Administrative Code in April 2019, all the regulations on the administrative non-contentious procedure and the administrative litigation have been structured so to ensure coherence and accessibility.  The new code has drawn inspiration mainly from the German law and clarifies the matters of enactment, validity, retraction and revocation of the administrative act as a central feature of the administrative process.

In terms of appealing state body decisions that could affect the rights and interests of individuals or legal entities, the recourse to administrative courts has been kept as a second step in the appeal process.

Employment and Migration Law

Recent years have witnessed a number of successive amendments to the labor laws, re-balancing the rights and interests of the employers and employees, and marking a definitive departure from the old employee-friendly legal regime. The grounds for employee dismissal have broadened, the legal powers of trade unions have shrunk and the administrative intervention in the employment relation have been reduced to the minimum.

Still, Moldovan laws grant employees a range of protections that create obligations for employers. These include among others:

– working under conditions which meet safety and health requirements, including the right to demand the same;
– limited working hours which are provided by the law (regular weekly working hours corresponding to regular daily working hours shall not exceed 40 hours);
– vacations and holidays established by law (regular vacations shall not be less than 28 calendar days);
– compulsory social insurance (voluntary though for the foreign employees of Moldovan business entities), which shall be paid mostly by the employer.

The Moldovan Code of Administrative Contraventions has introduced higher penalties for the prevention and stoppage of any breaches of the above-mentioned rights.


Albeit rather new, the 2011 Insolvency Law have already revealed a number of material flaws which determined a recent legislative reform, resulting in the draft amendment law, yet to be enacted. Reformed areas are related to direct access to instituting the insolvency proceeding (no need to obtain first a final court judgment), catalyzing to post-commencement financings, by clear priority and collateral creation rules, encouraging accelerated out-of-court restructuring, based on the pre-negotiated deals concept, and adequate protection for the secured creditors, including those not having pecuniary claims against the debtor in insolvency.

Renewable energy

The long and sometimes contradictory policy dialog have culminated in enactment, in March 2018, of the new Law on the promotion of the use of energy from renewable sources, transposing the EU Directive 2009/38/EC, followed by the secondary legislation regulating the procedure of auctions for determination of eligible producers, the capacity limits and determining the central supplier of electrical energy (Energocom JSC).

Under the National Renewable Energy Action Plan Moldovan authorities are committed to reaching a target of at least 10% of total electricity generation from renewable energy sources by 2020.

Foreign Investment Protection

The Moldovan legislative framework is favorable to FDI (see more below – ”Operating and Divesting from a Company”). Foreign investors are allowed to invest in any Moldovan assets (except for agricultural and forest land) and hold majority equity interests in any business area (with some limitations of investor’s jurisdictions in the financial industry and upon privatization). The law does not generally require foreign investors to partner with the state or state-owned enterprises before undertaking projects in Moldova.

Expropriation of foreign investment in Moldova is only permitted on “public interest” grounds. The Law on Expropriation for a Cause of Public Utility, enacted in 1999, has been over the course of 20 years tested for the observance of the explicit provisions containing the conditions and the procedure of expropriation. Affected parties are allowed to negotiate compensation with public authorities. In case an agreement is not reached, an experts’ committee is constituted by a court to determine the amount and timeframe for effecting compensation.

Intellectual property rights are protected by international and bilateral agreements as a type of investment.   Copyright is generally granted throughout the lifetime of the author and for 70 years after his death. As opposed to protection for the trademarks, patents, industrial designs or other intellectual property objects, there are no formalities required for protecting a copyright.  The former shall be registered with the State Agency on Intellectual Property (AGEPI) against a stamp duty.

Alternative Dispute Resolution

Arbitration and voluntary mediation are sufficiently regulated in the local law. Foreign court judgements are recognized and enforced on a multilateral or bilateral basis. National laws do not require the exhaustion of local remedies before recourse to international commercial arbitration.  Also, as a matter of general rule neither do the vast majority of the Bilateral Investment Protection Treaties have clauses to the end of the need to exhaust the local remedies for appealing to international investment arbitration.


Generally, Moldova’s regulatory setup is well-organized. To align with international best practices, the Government strives constantly at delineating the responsibility of state bodies, thus creating a good degree of separation between the regulatory and decision-making functions.

Public Services Agency

After a recent administrative reform, the State Registry of Legal Entities is held and maintained by the Public Services Agency, which shall ensure the publicity of various events – from registration to deletion – in the lifetime of business companies, certain freelancers (individual entrepreneurs) and other entities (see more below  – ”Types of Companies and Setting Up”).

Investors may find that the registrars from State Registry of Legal Entities tend to be rather formalistic and bureaucratic, especially when it comes to untested or complex operations. Hence, the registration documents shall be carefully prepared, taking into account also the local customs.

Ministry of Justice

Service abroad of trial participants and holding the Movables Charges Registry are some of the attributions falling within the ambit of the Ministry of Justice, which seem important for the foreign investors. Notably, ever since 2013, when Moldova acceded to the Hague Service Convention, the officers of the Ministry of Justice have significantly up-skilled their competences in the area.

National Bank of Moldova

Operating on various control levels and combining the monetary and FX policy drafting and promoting with the bank supervision, the National Bank of Moldova (NBM) has felt in the recent 5 years a significant pressure both form Moldovan policy-makers and IFIs to ensure restoring the confidence in the banking sector, undermined after the high-scale frauds involving major Moldovan banks with local capital (labelled as the ‘one billion dollars theft’).  Recent success stories include the 2018 sale of significant shareholdings in the largest Moldovan bank to an EBRD-led consortium and further 2019 sale of the controlling stake in the second largest bank to EU fit and proper investors, lifting the early intervention regime in the largest Moldovan bank and robust implementation of Basel III standards.

After putting in effect the new banking law in January 2018, the NBM has been focused on reshaping the secondary legislation, including on requirements to bank shareholders and governing bodies, adequacy of capital and transactions with related parties.

Competition Council

Since succeeding the National Agency for Protection of Competition in 2012, the Competition Council has gained momentum in actively promoting a competitive environment and compliance with antitrust requirements.  Although falling short of experience, the Competition Council is generally both feared and respected by the local companies primarily for its extensive powers, which include the ability to search companies’ premises without search warrants issued by a judge.  Notably, since the examination of the first foreign-to-foreign transaction in 2016, the Moldovan Competition Council shall be considered for obtaining clearance in foreign deals potentially affecting the local market.

Courts of Law

There is a three-tiered court system in Moldova – namely, there are District Courts, Courts of Appeal and the Supreme Court of Justice.  These all hear the cases based on hard-paper files.  Notably, the delivery of time bound judgments is only scarcely captured in the law, however, this is encouraged by the judge’s administration body, the Superior Council of Magistrates.

Because the country is a civil law jurisdiction, court judgments under Moldovan law have no official precedential effect. In the recent years, however, the lawmakers and judicial authorities have put more emphasis on the need to have a consistent and predictable case-law. To this end, judges may be disciplinary sanctioned for not observing or not obeying to the principle of uniform application of the law.

Pursuant to the measuring regulations of the Doing Business project, Moldova has generally, in the recent years, strengthened the procedure of enforcing rights; however, since courts are not stricto sensu bound by earlier judgments issued under the same or similar circumstances, this can sometimes result in the ununiformed application of the Moldovan law.


The question ”is investing in Moldova easy?” is perhaps the most borne in mind by the local law and policy makers.  Although no perfect gauge of investing exists, Moldova has been constantly, since 2010, trying to climb up the World Bank’s Ease of Doing Business ”ladder”. The country was ranked 47 in the 2019 ranking, moving up circa 50 positions in the last 10 years.

The Moldovan Government has long understood that providing attractive conditions for investors means working in the right direction.  The projection and the results of this is not always well reaching out of the Moldovan borders, as better attention should be given to efficiently communicating the country’s policies to investors and strengthening their robustness.

Types of Companies and Setting Up

As of 1 April 2019, out of the 165,449 companies registered with the State Registry of Legal Entities, most are the limited liability companies (LLCs) – 100,303, seconded by the joint-stock companies (JSCs) – 4,385.

Either an LLC or a JSC can be founded by one person, unless the JSC founder is another business entity having a sole shareholder, and an LLC can have maximum 50 shareholders (no limit for JSCs).  LLC’s social capital is divided into participatory interest (părți sociale), while JSC’s social capital is divided into shares (acțiuni). Both types of companies’ obligations are secured by the company’s property (patrimony).  Corollary, LLC’s members and JSC’s shareholders are not personally liable for the LLC’s and respectively JSC’s obligations.  LLC’s and JSC’s internal bodies are the general meeting of shareholders (the supreme body), the supervisory board (optional for LLCs; mandatory for JSCs if the number of shareholders is higher than 50) and the executive body (individual or collegiate). Notably, in banks the shareholder meeting is not anymore deemed as governing body and more powers are vested into the board of directors.

LLC has no minimum capital requirement, and can be incorporated in 4 to 48 hours.

Foreign companies may opt for the old model of opening a Moldovan subsidiary or the new (enacted in Mach 2019) model of operating in Moldova via branches.  The laws do not distinguish between companies incorporated in the European Union or elsewhere.

Operating and Divesting from a Company

Beside traditional operational requirements, referring to having a proper book-keeping and reporting, employment and labor immigration, complying with customer protection, product safety and competition requirements, the newer requirements the Moldovan companies have to pay proper care of refer to personal data protection (including registration as data operators), know-your-customer and other AML/TF requirements. Non-banking financial intermediaries (‘non-banking credit organizations’) have also to put in place internal control and risk management systems and have the well-designed administrative framework. Banks are to comply with the NBM prudential regulations inspired from Basel III, while insurance companies are on the way to adopt the Solvency II Directive.

Articles of association remain the core corporate document of any company, and its provisions are binding both upon the shareholders and the management. Shareholder agreements are not specifically regulated in the Republic of Moldova and are enforceable based on the freedom to contract principle. Shareholder agreements are binding for the shareholders involved but not for the company or third parties acquiring the shares in good faith, without knowledge of restrictions in the private agreement. Under banking regulations, shareholder and similar agreements are deemed to give rise to action ion concert and must be disclosed to the issuer and to the regulator.

Antitrust clearance is mandatory and non-compliance may result in severe sanctions.  Under the Moldovan law, an economic concentration exists where (i) the combined aggregate turnover of all the companies concerned is more than MDL 25 million (ca. EUR$1.3m) in the previous year, and (ii) there are at least two companies involved in the economic concentration which had separately a turnover greater than MDL 10 million (ca. EUR0.5m) in the previous year. The notification with the Competition Council shall be filed before the implementation of the share transfer or similar transaction, implementation meaning the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest.

Capital, payments and profits of foreign investors are freely transferable to their home jurisdictions. As of April 2019, Moldova has in place 50 Double Taxation Treaties which include among others countries from the European, Asian and the African continents.  These treaties provide for more favourable tax rates, including for withholding tax.

*This paper was published in Doing Business Magazine, provided by Legal 500, 2019.

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