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If timely assimilated by the business community and followed by detailed provisions, in particular on its fiscal and insolvency treatment, the newly regulated fiducia creates an opportunity of new business for certain actors and may lead to a more flexible structuring of secured finance-banking transactions.

On 17 July 2009 an important piece of new legislation was passed in Romania: the new Civil Code1. It aims to forge into one corpus (i) the principles set out in the old Civil Code and the Commercial Code (to the extent they reflect modern societal needs), (ii) various regulations that have been enacted in those fields throughout the past 140 years and (iii) additional new concepts (e.g. imported from continental statutes or the common law tradition).

The new Civil Code sets forth a series of changes to preexisting concepts that will most likely impact the way finance- banking transactions are shaped under Romanian law. It brings changes that may create the opportunity of new business for credit and financial institutions and change the structure of existing business. Among these changes is the concept of fiducia.

Fiducia – A Romanian version of the common law concept of "trust"

Articles 773-791 of the new Civil Code are the backbone of fiducia's statutory framework2. No guidance is given as to the mode d'emploi of this new legal concept. Only a remote indication is given in the recitals to the new Civil Code as to the fact that fiducia is modelled after a widely used common law concept that has already been adapted to and adopted into some continental legal systems3.

Fiducia is defined as the legal operation whereby one or more grantors (constituitori) transfers various patrimonial rights, present or future, to one or more fiduciaries (fiduciari), who administer those with a given purpose, to the benefit of one or more beneficiaries (beneficiari). These rights constitute an autonomous patrimony, separate from the other rights and obligations in the fiduciary's own patrimony. Therefore, in case insolvency proceedings are initiated in relation to the fiduciary, the rights transferred to the latter under the fiducia (masa patrimoniala fiduciara) are segregated from the insolvent's estate and transferred to the beneficiary or re-transferred to the grantor.

Fiducia must meet several formal and substantive requirements. Formally, if it is created by contract4, to be valid it must be set out as an authentic deed (act autentic) and registered with the fiscal authorities. To be opposable towards third parties, fiducia must be registered with a national register (yet to be set up) and in rem rights over real estate falling under its scope registered with the land book.

As regards substantive requirements, to be valid, the fiducia agreement must set out at least the (i) rights falling under its scope; (ii) term of the transfer5; (iii) grantor and fiduciary's identity; (iv) (at least) criteria for determination of the beneficiary's identity; and (v) fiducia's purpose and the extent of the fiduciary's administration and disposition powers.

Conceptually, fiducia should be viewed as an independent patrimonial set up separated from the grantor, fiduciary or beneficiary's patrimonies. Therefore, the rights and assets under a fiducia may only be used to cover claims born in relation to such rights and assets. Only in exceptional circumstances (e.g. fraud or priority in the context of secured transactions) may the fiducia patrimony be affected by claims of the grantor's creditors.

Although they touch upon the fiscal and bankruptcy implications of the fiducia, the provisions of the new Civil Code may have to be followed up by more detailed specific regulations in order to make it transparent and attractive.

New business opportunities for credit and financial institutions

Pursuant to the new Civil Code, any legal or natural person may act as a grantor or beneficiary, but only qualified entities may act as fiduciaries: credit institutions, investment firms, insurance companies, public notaries and lawyers.

Fiducia – The key to more flexible secured transaction structures?

Before the passing of the new Civil Code, the common law concept of "trust" was known to Romanian lawyers in particular in the context of syndicated financing, where it allows the creation of flexible security structures to the benefit of a single security agent, which may not also be a lender under the financing but acts as trustee for the lenders. It was unclear whether such structures would be enforceable under Romanian law, where security interests, as a matter of principle, are ancillary to the secured obligations and may only be created to the benefit of creditors.

To cross that bridge, Romanian lawyers followed in the footsteps of other continental lawyers and proposed the use of joint creditorships and parallel debt structures. It was, however, expected that once the Romanian legislator introduced a concept similar to that of "trust" this would function as a carve out to the ancillary character of security interests and allow for the implementation of the abovementioned flexible security structures.

The new Civil Code's provisions on fiducia, although a good starting point, do not contain enough detail. At least two things are needed for the creation of more flexible security structures aligned with those based on the concept of "trust" under the common law. First, additional, more precise legislation on fiducia. Second, scholarly writings and interpretations of such legislation pointing out how it may be put to good use.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit:


1 Published in the Romanian Official Gazette no. 511 of 24 July 2009. The new Civil Code will enter into force as soon as subsequent implementation legislation creates the institutional structure that the new Civil Code requires.

2 Cartea a III-a 'Despre bunuri'.

3 Tezele prealabile ale proiectului de lege – Codul Civil, published in the Romanian Official Gazette no. 213 of 2 April 2009.

4 Art. 774 of the new Civil Code sets out that fiducia may be created by statute or by contract, but to our knowledge there is no statutory provision that foresees the creation of a fiducia.

5 The term may not exceed 33 years as of its conclusion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.