The Legal Transition Team will continue to assist the Bank’s reform efforts in Moldova by facilitating improvements in the corporate governance framework that will create enabling conditions for private sector development; promoting European standards and regional integration by helping to improve the legal framework for electronic communications, PPPs and Procurement; and enhancing commercialisation and sustainability of municipal enterprises by assisting with development of the energy framework, developing energy efficiency and renewable energy programmes.
- Access to Finance
- Capital Markets
- Contract Enforcement and Judicial Capacity
- Corporate Governance
- Debt Restructuring and Bankruptcy
- Electronic Communications
- Energy Regulation
- Public Procurement
The key legal instruments comprising the framework for access to finance include the Law on Pledge No. 449-XV of 30 July 2001, Regulation on the Registry of pledge of movable property, No. 849 of 27 June 2002, Law on Mortgage No. 165-166/603 dated 02 September 2008, Law on Leasing No. 59-XVI of 28 April 2005, Law on Credit History Bureaus, No. 122-XVI of 29 May 2008.
EBRD Legal reform projects
Mortgage Law and Mortgage Securitisation in Moldova - Phase II
The project, completed in 2009 provided assistance to the Ministry of Economy on reforming the current mortgage legislation and relevant regulations in order to provide an attractive and coherent regime with proper implementing mechanisms for the primary mortgage market (and laying down foundations for the secondary market). The law has been adopted and came into force on 2 September 2008. A dissemination programme included a conference organised with the Ministry of Economy, the publication of a Practical Guide and other products.
Mortgage Transactions Reform (Phase I)
The EBRD undertook this project to support the government’s efforts in developing the real estate housing market by, in particular, examining the legal regime underpinning mortgage transactions. The project was exploratory in that it consisted in preparing a comprehensive assessment of the existing legal, regulatory and institutional framework for mortgage transactions, and initiating policy dialogue with the Ministry of Economy and the Government of Moldova on the assessment’s conclusions and recommendations for their implementation.
Improving Leasing Transactions related Legislation in Moldova
At the request of the Government of Moldova, the EBRD undertook a project to assist Moldova to improve its legal framework governing leasing transactions. A new law on leasing was approved by the Parliament in July 2005. The new law broadens the range of goods that can be offered for lease; allows all citizens, not just entrepreneurs as before, to acquire leases for equipment ranging from factory tools to simple domestic washing machines; and removes a tax loophole that earlier placed an unnecessary burden on entrepreneurs who opted to lease rather than buy equipment. The project was completed in 2005.
In 2014 the EBRD conducted an assessment on secured transactions which examined the availability of collateralising different types of assets regardless of the underlying legal instruments used to achieve the establishment of secured creditor’s rights. In addition to the classic security interests (pledges and mortgages the assessment also covered usual types of quasi security, such as sale and lease back transactions. The assessment also covered related issues such as enforcement and syndicated lending. The links below take you to the assessment results for Moldova.
The principal laws governing securities markets in Moldova are the Law on the Securities Market (“SML”); the Law on the Joint-Stock Companies (“JSC Law”); and the Law on the National Commission of Financial Market (“NCFM Law”).
The Moldovan judiciary comprises courts of general jurisdiction at first and appellate instances, as well as a Supreme Court of Justice and a Constitutional Court. Specialised courts exist with jurisdiction over economic matters; a first instance economic court hears matters concerning commercial matters, broadly defined, whether involving corporate entities or individuals. Appeals go to the Economic Court of Appeal in Chisinau, and thereafter cassation appeals may be heard by the Supreme Court of Justice.
Judicial administration is conducted by the Superior Council of Magistracy (SCM), an independent body with responsibility for nominations for judicial appointments, disciplinary matters and the preparation of a draft court budget. The majority of the SCM’s members are judges, although the number of judges on the SCM has recently been reduced. Most judges are appointed by the President based on recommendations by the SCM for an initial term of five years, at the end of which they are eligible to be reappointed to serve until they reach the mandatory retirement age. Judges undergo compulsory initial training through an 18 month programme, as well as 40 hours a year of continuing judicial education.
- Article on Phases 1& 2 of the Judicial Decisions Assessment [see annex 1.2, page 18]
Corporate governance in Moldova is mainly governed by the Law on Joint Stock Companies (No. 1134-XIII of 2 April 1997); the Law on Securities Market (No. 199-XIV of 18 November 1998), the Law on Business Investment (No. 81- XV of 18 March 2004) and the Law on Entrepreneurship and Enterprises (No. 845-XII of
1 January 1992), all as amended. The 2007 EBRD Corporate Governance
Assessment showed “medium compliance” of the quality of the corporate governance legislative framework in Moldova compared to the OECD
Principles of Corporate Governance, with lowest compliance in the area of disclosure and transparency, responsibility of the board and the rights of shareholders.
Insolvency proceedings for legal entities and entrepreneurs in Moldova are governed by the Insolvency Act No. 149 dated 29 June 2012 (the IA). A few provisions regarding insolvency office holders (IOHs) continue to be regulated by the previous Insolvency Act No. 632 dated 14 November 2001 and the Civil Procedure Code of 2003.
Based on the results of the assessment, a partial legal framework exists for the IOH profession in Moldova. Nevertheless, this would benefit from further improvements to address certain key areas of weaknesses and thus further improve IOH capacity and performance.
- Assessment of Insolvency Office Holders – country profile
- Assessment of Insolvency Office Holders – country results
The main legal basis for electronic communications regulation in Moldova is the
Electronic Communications Act of 2008. A range of multi-sector laws including administrative procedures, licensing, consumer protection and criminal law also impact the sector. Moldovan legislation for electronic communications is broadly aligned with the European Union (EU) 2003 framework, and there are also plans to adopt the 2009 framework, particularly in the area of implementation of competitive safeguards. The 2012 EBRD Electronic Communication Sector Comparative Assessment showed a rather high compliance of the legal framework for telecommunications in Moldova with international practice, with the most significant issues being in the area of universal service and spectrum management.
EBRD Legal reform projects
Communication Regulatory Development
The Bank provided assistance to the regulator (ANRCETI) in implementing the new Electronic Communications Law. The project was completed in 2012.
The key legislative acts governing energy efficiency and renewable energy sectors in Moldova include Law “On Energy” (19 February 1998) (as amended), Law “On Renewable Energy” (12 July 2007) (as amended) and Law “On Energy
Efficiency” (2 July 2010) (as amended). In addition, the National Program on Energy
Efficiency 2011-2020, National Renewable Energy Action Plan for 2013-20203 and Energy Strategy till 2030 were adopted. In line with its mandate to promote EE through sound banking mechanisms, EBRD has launched the Moldovan Sustainable Energy Financing Facility (“MoSEFF”) whereby the EBRD provides, through local banks, financing to the EE projects based on the established eligibility criteria. Current partners to the initiative include the EU and its EE portal, INOGATE. At the same time, recognising that the existing legal framework does not provide
sufficient incentives and guarantees to investors for development and implementation of EE projects in the residential sector, the Bank
continues its technical assistance programme to support improvement of the framework, including in the field of energy performance of buildings and
housing. The project is being developed in cooperation with the Ministry of Construction and Regional Development of Moldova. The most immediate objectives of the project are adoption of a new Condominium Law and the entire legislative
package for harmonisation of the Moldovan legislation on energy performance of buildings with the EU.
EBRD Legal reform projects
Improving Energy Efficiency in Residential Buildings
Working with the Ministry of Construction and Regional Development, this project, completed in 2011, analysed the overall legal, institutional and operational framework of urban housing stock in Moldova. The findings from this analysis will be used for assisting the Ministry in drafting primary legislation and secondary legislation, and amendments to the housing codes with a view to improving energy efficiency.
Moldova has developed its regulatory framework, restructured its markets with
disaggregation of its former vertical monopoly, and achieved partial privatisation, and appears positioned to continue its path toward best practices with transition from observer to Energy Community member. The challenges it faces include resource limitations and few infrastructure and technical links towards the west, including a lack of synchronisation with its neighbour, Romania. The 2010-2011 energy law reform dimensions assessment carried out by the EBRD showed that regulatory independence and autonomy, transparency and tariff structure are the key strengths of the country’s electricity framework, whereas public service obligations and private sector investment appear to be its key weaknesses.
PPP in Moldova is governed by the Public-Private Partnership Law of 10 July 2008 (the “PPP Law”) complemented recently with the Government Decision 245/2012 on National Council for Public- Private Partnership and Government Decision 476/2012 on private partner selection. Concessions are governed by the Concessions Law 534/1995. In addition The Law on Administration and Privatisation of Public Property 121/2007 and a range of other pieces of legislation, including laws and Government Resolutions. During the 2011-2012 EBRD PPP/Concessions Laws Assessment the quality of PPP/Concessions legal framework of Moldova was rated as being in “High compliance” with international best practices. At the same time, the practical implementation of the legal framework received a “Very low effectiveness” rating largely due to its underdeveloped institutional infrastructure.
Public procurement in Moldova is regulated by the Law on Public Procurements No. 96-XVI of 13 April 2007 (hereinafter PPL). The EBRD assessment conducted in 2011 shows intermediate compliance, with particular issues related to enforceability and proportionality. The practical implementation scored better overall (in particular as regards flexibility and uniformity), however, even lower as regards proportionality.
- Public Procurement Sector Assessment 2010
- EBRD UNICTRAL Public Procurement Initiative – summary of reforms