The state wants to make money off the plots of land of the companies it privatized

Companies have so far been spared from the raise in taxes, but the Parliament will soon deal them a blow that is just as dangerous.

The members of Parliament on Wednesday passed a bill by which the state will request cash compensations from the companies that it privatized for the plots of land which belong to them in which the state has joint tenancy.

Investors who have acquired state-owned companies, but who failed to incorporate the value of their respective plots of land into the share capital of their companies, in which the state still has stakes, will find themselves suddenly owing money to the state.

• The state doesn"t want shares

Essentially, the state is asking for money for its share of the lands owned by these companies, and rejects upfront the alternative of being compensated in stock for two reasons: the need for cash, as well as the need to become a majority shareholder again, in the event of a share capital increase (ed. note: if the value of the land contributed were to exceed that of the share capital).

The parliament claims that the new law will simplify the procedure for the sale of the plot of land, because share capital increases take too long to complete and are too costly. Also, the MP"s say that the implementation of the new law would allow the state to quickly bring additional funds to the budget: "By applying the simplified procedure for the direct sale of the plots of land owned in joined tenancy for which the deed of ownership has been issued or is still in the process of being issued, without first requiring a preliminary increase of the share capital (...), will help the state raise significant amounts within a short period of time" from "all the third parties involved".

• Payment in full or in installments

As a result, the plots of land in question will be appraised again, and within 30 days from the completion of the report, the authorities will determine the solution and the deadline for the payment by direct negotiation with the companies concerned.

According to the law, the payment will be made "in full or in installments".

Anything to make some money...

The MP"s didn"t stop to think about what is going to happen if the companies in question don"t have the money they need to pay the newly created debts.

• Business owners: This is going to bankrupt us

Business men and lawyers say that the initiative of the members of the parliament could cause these companies to enter bankruptcy.

"You can"t just pass a law by which you"re asking for compensation, you have to take into account the fact that the companies you"re asking for money from can"t give it to you, or else you"re going to have a bad law", considers Cristian Pârvan, the secretary general of the Association of Romanian Business People (AOAR).

Cristian Pârvan says that the new law shows the desperation of the state of making money quickly and warns that there is a risk of the companies that can"t come up with the money to pay this tax going bankrupt.

Attorney Gheorge Piperea accuses the state of the same "desperation", and says the state shouldn"t flat out reject the idea of receiving stock as compensation and thus become a majority shareholder in some of the companies in question.

Attorney Piperea warns that this action of the Romanian state intended to raise more money comes just as many companies are already insolvent.