The country's EU candidate status and grave security concerns gave rise to far-reaching legislative reform in Moldova, with IPOs and digitalization in full swing, according to ACI Partners Partner Cristina Martin.
"2022 wasn’t just a difficult, but an unprecedented, historical year for Moldova," Martin begins. "Since February 24, 2022, we’ve constantly been in a state of emergency. There are huge challenges related to conflict, energy security, inflation, and providing shelter for refugees, as well other economic ramifications." On the other hand, Martin points out that on June 23, 2022, Moldova and Ukraine were granted EU candidate status.
"All of these issues generated a huge wave of legislative reforms," she explains. "The hot topic in the business community is the impact of those reforms on the business side – how the government will facilitate the transitions, and how businesses will weather all these challenges."
According to Martin, "there haven’t been any major changes in corporate law, however, due to recent requirements on the minimum amount of the share capital of a JSC, 40 IPOs took place on the Moldovan market in the first nine months of 2022 – over ten times more than in previous years. Taking into consideration that the minimum amount is increasing, we might again see a large number of IPOs in Moldova for 2023." According to her, "some companies went the way of reorganizing into limited liability companies, but banks and insurance companies cannot make that switch, which is why IPOs seem more likely."
"Currently, one of Moldova’s largest commercial banks, Moldova-Agroindbank, is intending to list its shares on the Bucharest Stock Exchange as well, to attract foreign funds," she says, adding that this is the second foreign-listed company after the Purcari Wineries Group.
"Starting with 2022, the mechanism for the issuance of bonds by LLCs was put in place," Martin points out. "By the end of 2022, we had a draft law providing that companies and local public authorities can issue bonds in foreign currency. This would allow attracting foreign currency through subscriptions by non-residents."
Another piece of legislation, set to enter into force in June 2023, according to Martin, "provides that foreign securities could be admitted to placement and trading on the regulated market in Moldova if certain conditions are met: the issuers were incorporated at least three years prior, registered a profit for at least two years, and there aren't any trading prohibitions imposed by the operator of a foreign or Moldovan regulated market."
Additionally, Martin highlights reforms in digitalization. "The government already started the program for the digitalization of business activities. From November 2022 Moldovan entities can request online documents from the company registers without the requirement of physical presence within public authorities," she notes. "The goal of the government is to digitalize all business processes in the nearest future." According to her, "another impediment – not being able to grant a personal identification number to foreign investors unless they travel to Moldova – is set to be removed as well. Electronic KYC and mobile-sign services should become available externally as well, for example for the Moldovan diaspora."
Finally, Martin says that the digital format of notary services should be possible soon. "The language barrier would broadly be eliminated by providing all the drafts in English as well," she notes.