International standards and best practices: benefits and risks The Romanian legal angle

1. International standards and best practices: benefits and risksThe Romanian legal angle • Andrei BurzPinzaru • Partner

2. We are supporters of transposing international best practices at local level as a basis for increasing effectiveness in business

3. Benefits of standardization Best practices as the starting point = • More time to focus on the stringent commercial aspects • Less time spent on technicalities Increased efficiency

4. Risks: downsides of “importing” best practices • Size and complexity • Turning a “template” into a “bible” • Pragmatic approach and specific tailoring required • Improper dealing by local laws with foreign concepts • The “security agent” concept incompletely covered by law no. 71/2011 • Mandatory applicable local law principles • Voting rights to the agent in case of default vs. revocable mandate under Romanian law

5. Properly consider the use of the new LMA recommended form of facility agreement for real estate finance in Romania

6. Mandatory applicable local law?

7. Real estate financing vs. Creditulipotecarpentruinvestitiiimobiliare Lenders and their counsel to consider: • Applicability of the Romanian mortgage lending law no. 190/1999 • Mandatory provisions of the Romanian mortgage lending law • Costs of funding for the borrower • Rules in case of variable interest • Contract termination and procedure – depending on type of default occurred • Enforceability towards insurer

8. Applicable law

9. English law vs. Romanian law Freedom of choice is the rule When there is a conflict of laws

10. Enforceability

11. Recent case law • Alternative solutions

12. Transferability

13. Transferability of the claim • Regulated by the law governing the claim • English law or Romanian law specific aspects to consider • New instrument for transfer under the New Civil Code: assignment of contract • Impact on the security • If English law governed facility agreement, impact depends on solution chosen for security structure • Romanian law specifics • Notarized form mandatory to ensure publicity for transfer of Mortgage receivables • Incomplete regulation of the security agent’s mandate

14. Bespoke, not ready made: LMA recommended version should be tailored to suit the commercial specifics of each transaction

15. Customizing the standard LMA response to highly negotiated clauses in commercial real estate finance – not “one size fits all” • Operations of accounts “The Security Agent has sole signing rights in relation to the Rent Account.” • Lease covenants “No Borrower may without the consent of the [Agent/Majority Lenders]: • Enter into any Agreement for Lease • Agree to any amendment, supplement, extension, waiver, surrender or release in respect of any Lease Document • Exercise any right to break, determine or extend any Lease Document” • Negotiable character • Commercial sense and negotiation positions

16. Reff & Associates is the correspondent law firm of Deloitte Romania, integrated with the global Deloitte multi-disciplinary advisory practice. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.