ONRC V2.0 - Open Letter

In recent weeks, ONRC has launched the ONRC V2.0 platform, designed to enhance access to key registry services, reduce completion times, and bring registry activities into the 2030 decade.

However, the reality could not be further from the plan on paper. The "digitalization" through the launch of the new platform was hampered by development failures, poor or even nonexistent testing prior to launch, and ultimately, the construction of a platform without a solid technical foundation upon which to build in the future.

What issues does the ONRC V2.0 platform have?

From the information released in the public domain regarding the ONRC V2.0 platform, we have the following details about the platform:

Ongoing errors

There is a clear prevalence of significant errors in completing forms through the public platform MyPortal.ONRC.ro.

Moreover, the same issues seem to affect the back-office systems used by ORCT staff, who are understandably frustrated by the system's unavailability. Although it is not their fault, they become the targets of the legitimate frustrations and dissatisfaction of beneficiaries, whether they are entrepreneurs or professionals.

As a result, the case resolution speed has decreased by 77% since the implementation of ONRC v2.0. With this resolution speed, more cases remain pending the next day than are resolved, thus increasing the backlog of cases, along with the postponement terms.

While we might expect the opposite, performance seems to have declined in the second week since launch, which may reveal several insights:

• Employee fatigue at ORC, resulting in reduced performance.
• Accumulation of more system issues than those resolved.
• Demonstrate that the adaptation to the new platform does not cause inefficiency, as this would imply a gradual improvement in performance from day to day, which is not statistically confirmed.

It is noteworthy that files submitted outside the MyPortal.ONRC.ro platform (e.g., via email, prior to publication) do not seem to be resolved frequently, as requests submitted through the platform are prioritized. Therefore, they are not processed chronologically, likely due to the difficulty of entering data into the system. As a result, the average resolution time does not appear to have increased significantly.

Cumbersome and non-intuitive UI/UX

Digitalization involves analyzing business requirements, meaning all mandatory regulatory documents of the institution, and then building an application based on direct needs.

Digitalization does not mean a direct 1:1 replication of the procedure from the physical counter.It does not imply the implementation of physical limitations in the digital world, because if we implement exactly the elements that create friction and additional effort at the counter, what are we solving through it?

1. A specific example would be name reservations, where you can use a maximum of 3 name attempts, although the platform allows for LIVE availability checks. If you don't find a name within 3 attempts (perhaps you're trying to come up with an interesting or original name), start over, entrepreneur, and re-enter all the information.
2. A good example would be the ENORMOUS length of the company registration process on myportal.onrc.ro, where the amount of information required is vast. What is the purpose of having such a lengthy process to establish censors, exception clauses, etc., when these situations are relevant for less than 1% of companies, yet it extends the completion time by 10% for all entrepreneurs except those?
   
   It's pointless to save 50 minutes for one person out of 100 if you burden the other 99 with an additional 5 minutes each. On average, you have wasted 7 hours of busy people's lives.

System with difficult scalability (technical issues)

Even from the analysis of the publicly accessible component - MyPortal.ONRC.ro, it is clear that the system cannot be scaled; it is likely much more cumbersome on the ONRC systems, and this is due to poor development.

1. Instead of storing request information in the local memory of the client's computer, the MyPortal.ONRC.ro platform saves and retrieves all data from the cloud for each request. This means that the ONRC network is heavily burdened, and the decision to implement this has increased network pressure by at least 3-4 times.
2. The naming reservation system is not optimized, which means it takes too long to check the availability of a name. Normally, the availability of the name should be verifiable in real-time, on a system similar to that used by Incorpo.ro. The operational method of Incorpo.ro has already been explained to ONRC in hopes of facilitating the technical team.
3. There are evident errors in document generation, with formatting being terrible, the generated incorporation documents being problematic, and validations being poorly executed. Due to the legal risks arising from such issues, subsequent difficulties will emerge that will require damage control efforts rather than improvements to the platform.

Long-term plans, which are expected to grow:

According to an analysis of the latest data from BERC, as of 06.08.2024, the response time for requests through BERC has decreased by no less than 77%.

This means that registrars who were already working overtime to meet legal deadlines now have no hours in the day to extend their schedule in order to increase resolution performance by 300%, thus maintaining the deferral threshold of 20-30 days.

In other words, not only is the new system unable to recover the downtime during the migration to the new platform, but it also increases the number of requests that need to be postponed day by day. Out of approximately 2200 requests submitted daily in the country, only about 520 are resolved.

As the chart indicates, Even if ONRC manages to improve its resolution performance by 30% each month, the estimated average resolution time for file submissions will rise to 2 months.for depositors who submit their applications in September or October.

However, if in practice the number of submitted files decreases, misleading us into thinking the situation has been resolved, this aspect only proves that the new platform has discouraged business formation, either through its cumbersome UI/UX or the colossal delays caused by updates.

The situation is as severe as it can be, violating the rights of ONRC service beneficiaries to have their requests resolved within a working day, due to system dysfunctions. No matter how much a registrar wishes to achieve resolution in a day, it is impossible from every perspective.

Secţiunea a 7-a Procedura în fața registratorului, Articolul 105, Legea 265/2022

(1) Cererea de înregistrare în registrul comerțului se soluționează de către registrator, pe bază de înscrisuri, în termen de o zi lucrătoare de la înregistrarea cererii.

Let us not say that even with the initial decision to "close" the essential services of the trade register, a decision was made that affected resolution times, due to the implementation method chosen by the provider.

This type of migration is done on-site, within a few hours, not weeks, and the result, which initially seemed promising, proved to be unable to excuse anything at all.

To make things even better, Romania is at risk of entering infringement proceedings, as Directive 2019/1151which was introduced into domestic law by Law 265/2022The deadline was clearly violated by extending the processing times for requests beyond the stipulated period of 5 days:

7)   Statele membre se asigură că constituirea online este finalizată în termen de cinci zile lucrătoare, în cazurile în care societatea comercială este constituită în mod exclusiv de către persoane fizice care utilizează formularele-tip prevăzute la articolul 13h, iar în celelalte cazuri în termen de zece zile lucrătoare, de la ultima dintre următoarele date:

(a) data îndeplinirii tuturor formalităților necesare pentru constituirea online, inclusiv primirea tuturor documentelor și informațiilor care sunt conforme cu dreptul intern de către de o autoritate sau de către o persoană sau un organism autorizat în temeiul dreptului intern să gestioneze orice aspect al constituirii societăților comerciale;

(b) data plății unei taxe de înregistrare, a plății în numerar a capitalului social sau a vărsării capitalului social sub formă de aport în natură, îndeplinirea procedurilor prevăzute de dreptul intern.

În cazul în care nu este posibilă finalizarea procedurii în termenele prevăzute la prezentul alineat, statele membre se asigură că solicitantul este informat în legătură cu motivele întârzierii.

No one has been informed about the real reasons for the delay, the status of the platform, the status of the IT system, or the measures being implemented to rectify these issues, contrary to the directive.

Infringements of GDPR principles:

In accordance with banking regulations, banks must complete KYB/KYC procedures for the onboarding of each client, and part of these processes involves obtaining the well-known certificate of registration from the ONRC.

This procedure is a generic one, applicable to all business clients of banks, and makes banks a major "client" of ONRC services.

Banks, like any entity, operate through employees whose private lives must be protected. Therefore, why must a bank employee declare where they live, what their personal identification number is, and how does this relate to the Principle of Data Minimization?

What legitimate interest or reason can ONRC invoke? The GDPR regulation clearly states that the data collected must be adequate, relevant, and limited to what is necessary, but the reality is that the complex and cumbersome process requires information that is not at all relevant to the registration process and merely serves as a forced method of document collection, without a legal basis, given the position of being the sole provider of such services.

Public institutions often refuse to provide employees' CVs because disclosing job positions (and the experience of public servants) could be problematic and violate GDPR, yet they freely provide citizens' data, which is treated under a different standard, often in violation of the law.

Articolul 5 - Principii legate de prelucrarea datelor cu caracter personal

(1) Datele cu caracter personal sunt:

[...]

(c) adecvate, relevante și limitate la ceea ce este necesar în raport cu scopurile în care sunt prelucrate („reducerea la minimum a datelor”);

[...]


Articolul 25 - Asigurarea protecției datelor începând cu momentul conceperii și în mod implicit

(1)   Având în vedere stadiul actual al tehnologiei, costurile implementării, și natura, domeniul de aplicare, contextul și scopurile prelucrării, precum și riscurile cu grade diferite de probabilitate și gravitate pentru drepturile și libertățile persoanelor fizice pe care le prezintă prelucrarea, operatorul, atât în momentul stabilirii mijloacelor de prelucrare, cât și în cel al prelucrării în sine, pune în aplicare măsuri tehnice și organizatorice adecvate, cum ar fi pseudonimizarea, care sunt destinate să pună în aplicare în mod eficient principiile de protecție a datelor, precum reducerea la minimum a datelor, și să integreze garanțiile necesare în cadrul prelucrării, pentru a îndeplini cerințele prezentului regulament și a proteja drepturile persoanelor vizate.

The Impact of ONRC Issues

As frustrations and tensions rise among entrepreneurs, professionals, and ONRC employees, issues are piling up, and even in an ideal situation, a solution does not seem to be identified and announced.

Until the issues are resolved, let us analyze the actual damages incurred by the Romanian state:

Unrealized Budget Revenues

Unregistered entrepreneurs will not cease their activities because the ONRC is not moving quickly; instead, they will choose to operate in the underground economy, failing to declare their income and pay their taxes.

Since it is the state's fault for the encountered problems, Romanian entrepreneurs are now motivated to defy the law, as it is not their fault that the system is poorly managed. Although the state has issues, people need to live, and to meet our living needs, we must work. The necessity to work and be productive cannot be halted by delays of dozens of days, possibly even months, at the ONRC, because the need for money to secure our existence does not disappear.

Assumptions to Establish an Estimated Figure of State Losses

1. We have a similar number of legal forms of operation that would have been registered in 2024 using the values from 2023 (to avoid more complex calculations).
2. The values in the ONRC statistical reports are accurate, and the fluctuations between weekly trends are negligible.
3. 40% of entrepreneurs will choose to work informally temporarily, while 20% will persist in this behavior due to inertia. We will focus solely on the 20%.
4. The problem extends from July 19, 2024, to September 29, 2024, providing sufficient time to resolve the backlog in a realistic situation.

Effective calculation

Calculation of the daily number of registrations for each month:

\[ \frac{10727}{31} \approx 346.03, \quad \frac{11487}{31} \approx 370.55, \quad \frac{12097}{30} \approx 403.23 \]

Determining the total number of affected days for each month:

[ \quad 31 \text{ days for July}, \quad 31 \text{ days for August}, \quad 29 \text{ days for September} \]

Calculation of the total affected registrations:

\[\left(346.03 \times 13\right) + \left(370.55 \times 31\right) + \left(403.23 \times 29\right) = 4498.42 + 11487.00 + 11693.77 \approx 27679.19\]

The percentage of entrepreneurs who will choose to continue working in the informal sector:

\[27679.19 \times 0.2 = 5535.84\]

Therefore, it is almost certain that thousands of entrepreneurs in Romania will not register their legal form of operation with the ONRC, while people continue to work "off the books".

The budgetary impact caused by such conduct is difficult to estimate accurately; however, the figure is certainly not negligible. If we assume that all companies contribute similarly to the state budget, an erroneous premise but useful for a preliminary estimate, we conclude that the entire fiasco will cost the state budget 445 million RON (0.3337% of total VAT and corporate tax revenues).

While the actual amount will likely be somewhere around 50,000,000-100,000,000 million RON, as many will register eventually once the obtained amounts increase, such a significant loss to the state budget cannot be overlooked.

The losses of good faith entrepreneurs and the rule of law

For other entrepreneurs who choose to take the right path, the time spent can mean losing a business opportunity. It is well-known that opportunities are time-sensitive, and in practice, delays will result in a genuine penalty for integrity and the desire to operate legally in the country.

We are discussing a difficult-to-quantify subject, but it is easier to identify the losses we face as a society due to corruption, a lack of trust in others, and tax evasion, which becomes increasingly tempting for honest people who see their problems exacerbated by a dysfunctional state that makes reckless decisions and never admits to being wrong.

This certainly indicates that the blow will drive more entrepreneurs to flee abroad or to engage in illegal or discretionary legal activities. And when the law becomes an option and is only sometimes applicable, can we still talk about a democratic state?

So do we hope that the courts, made up of people who have also become accustomed to circumventing the system's issues through only partially legal means, will decide not to empathize with a culprit so similar to themselves and will punish him severely? Do they not foresee the same situation for themselves?

What is certain is that the string of frustrations with public space will lead to even less team spirit, more hatred, and division in a society that is already suffering greatly in this regard.

The causes of the problem

While we do not have all the necessary information to reach a definitive conclusion, as this analysis should come from the ONRC, we can use publicly available information to form an idea about the reasons why the launch was a failure and draw some conclusions from this.

Incompetence of the service provider

The budgets used were significant, with the project being evaluated at enormous sums compared to the amounts necessary for such a platform, and the quality of the final product left much to be desired. The platform is a failure from an architectural standpoint, and the implementation method indicates a lack of competence on the part of the service provider, as well as a lack of a monitoring system for progress and rectification of issues during the project's execution.

ONRC Management

Instead of collaborating with their employees, civil society participants, and entrepreneurs to identify the issues that need to be addressed in the new service, the management of ONRC does not seem to have engaged the beneficiaries in any way, resulting in a precarious outcome.

Moreover, the decision to launch the platform prematurely, without a canary release (pilot project), did not allow for the identification of errors in a way that would minimize their negative impact. During any launch, the initial versions have bugs/issues. Although they are rarely on the current scale, they do occur, so the first few days after a launch are almost certain to come with problems, especially if they have not been tested internally.

However, if the launch was in a canary system, then the impact of errors was minimal, affecting only a few registers hosting the pilot project, allowing ONRC to focus on resolving the issue without the pressure of the entire system's dysfunction.

While we cannot attribute the lack of technical skills to the CEO/Legal Director, we believe that the management of their technical team, and The information technology department needed to establish clear guidelines for the launch..

The lack of involvement from a significant team of technical personnel at ONRC in decision-making either demonstrates a failure of effective delegation by ONRC management or indicates dysfunction within the entire IT department.

Since we do not have information to determine who is at fault, we can only conclude that either the ONRC management did not consider the viewpoints presented by the Information Technology Department, did not request them, or that these viewpoints were inadequate and lacking substance.

Employees of the Regional Transport Organizations

Except for the ICT department and the ONRC management, which may bear some responsibility, we do not believe that the employees of ONRC/ORCs are at fault regarding the launch and they also seem to be affected by it.

First of all, the poor implementation of the new functionalities cannot in any way be attributed to the employees of the ORCTs, who are predominantly legal professionals and have themselves been significantly affected by the lack of intuitiveness and stability of the ONRC.

Moreover, it seems that the employees' unions within ONRC are making significant efforts to facilitate the resolution of the issue, as well as actively requesting that ONRC management take action.

In a time of crisis, collaboration between institutions and their service beneficiaries is essential, rather than building a wall that intensifies the frustrations of both parties.

We see that the vast majority of ORCT teams promote such measures, which is commendable.

We do not consider it justified in any way for professionals/service beneficiaries to cast blame on the ORCT for errors of the institution that cannot be attributed to them.

While we understand and sometimes share the frustrations of our professional colleagues in the field, the means of addressing grievances is through communication, not through hate, frustration, and attacks on officials.

We believe that the level of transparency and communication with service beneficiaries needs to be improved, but this topic is distinct from the current issues and will be addressed in a separate publication.

Proposed solutions for issues

Although the issue is substantial, it is relatively simple to resolve:

1. Return to the old platform (Rollback): The ONRC Platform V1.0 was not perfect, but it was functional. It was useful, stable, and with experience, one could register a company in 15 minutes. Moreover, the registrars were familiar with it, and requests were resolved quickly.
   
   Returning to the old platform should be achievable within a single weekend, and the data from the new platform can be processed either manually or automatically migrated back to the old platform. Migration is not a technically challenging procedure, and two days are sufficient for the data to be migrated back.
   
   Although this option may seem like a step back, it could provide a quick solution for unblocking operations and reducing frustrations for all parties involved, until the issues with the ONRC V2.0 platform are resolved.
   
   We believe that the most ideal cost-benefit ratio is achieved through the implementation of this solution; otherwise, the daily losses amount to hundreds of thousands of RON in unrealized budget revenues.
2. Implementation of an AI processing system to assist registrars: In a crisis situation, the development of AI tools that simplify the verification of data accuracy on the platform is justified. Such a platform can be developed pro bono and made freely accessible to the trade register. This system can enable registrars to consult and analyze files more thoroughly, automatically identifying completion issues, discrepancies between data, as well as other time-consuming information that does not require the legal expertise of the registrars.
   
3. Salary bonuses for motivating ORC employees in clearing the backlog of files: It is neither fair nor efficient to force people to work overtime, at a significantly higher stress level, for the same compensation.
   
   First of allThere is a strong correlation between employee satisfaction and their productivity; therefore, it is in the organization's best interest to establish a fair compensation system proportional to the amount of work.Source 1, Source 2).
   
   SecondlyThe average number of files per registrar already reveals vulnerabilities in the system, as it does not allow registrars to conduct effective and in-depth analysis of the files.
   
   In the absence of a system to alleviate these issues (solution #1), it is necessary to motivate attention and effort in another way, specifically through salary bonuses that justify work beyond regular hours. No one on the planet can resolve a file of dozens of pages in 10-20 minutes without making mistakes.
   
   Although the law regarding the remuneration of public institution staff somewhat limits creativity and the remuneration system, we can at least see the following measures that can help clear the backlog and reduce the amount of effort required from employees:
   1. Bonuses for overtime worked. Remuneration can even be made retroactively, given that BERC stores all details regarding the registrars' decision dates, allowing for easy identification of employees' check-in/check-out periods and establishing fair compensation accordingly. Fair and proportional remuneration to effort is directly correlated with employee efficiency, and therefore, such an initiative would lead to an increase in efficiency in clearing the backlog.
   2. Building a system for standardizing the workload per registrarA system to be implemented gradually (canary deployment), which will have a dual impact: standardizing the workload within the ORCTs and, secondarily, allowing for more efficient management of periods when the volume of requests significantly increases.
   3. Hiring additional staff on a temporary basisso that the issue of delays is resolved by no later than 01.10.2024.
4. Conducting an After Action Review (AAR) analysisthrough which ONRC can identify the causes that generated the issues, take the necessary measures, and continue the development of the ONRC V2.0 platform once it clearly understands why things went wrong and has an effective plan to implement the platform correctly and safely. If necessary, ONRC must take action against the responsible entities, whether they are ONRC staff or contractors, and hold them liable for civil tort. Furthermore, upon completion of the AAR, which must be achievable within a maximum of one month, the conclusions and analysis methodology will be published on the website www.onrc.ro.
   
5. Progressive launch of the ONRC version 2.0, with all issues fully resolvedonce this is ready for an effective launch, without severely affecting entrepreneurs' ability to legally start their activities in Romania and without blocking the necessary changes to maintain the legal status of professionals.
   
6. Implementing a system that informs and promotes civic engagement in enhancing ORC activitiesfrom the implementation of systems that allow for monitoring satisfaction, to a chat support system through the portal (new or old), as well as other measures that enable the identification and rectification of friction points in the collaboration between the beneficiary and the ORC.

Conclusions

We believe that a solution can only come through the involvement of all stakeholders, from the relevant ministries (MCID, MJ), ONRC (from unions to individual employees to management), to civil society (professionals, beneficiaries).

Without effective collaboration and prior consultation on any long-term plan, the results will be disappointing.

Thus, we request decision-makers to implement an effective plan for addressing the issues, which should subsequently be officially published on the website www.onrc.ro.

We also request the consultation of the proposed solutions, which arise from the analysis of all information in the public domain, from banking service providers to labor unions, and up to the beneficiaries of the services in question.

Although the plan cannot be implemented without a more detailed analysis and customization based on the actual situation, we believe that our requests deserve to be considered and addressed.

Please share your perspective with us.

We are open to any feedback regarding this letter and invite you to send us your own requests, which we will attach below. You can contact us at the email address office@incorpo.ro.

Only through collaboration and open communication can we find viable and effective solutions to the challenges we face. Together, we can build a better, more transparent system that is focused on the needs of the beneficiaries.

Points of view received:

Loss of documents submitted on the old platform

For many professionals, the portal platform portal.onrc.ro also served as a cloud where they stored documents related to registered companies. Since many did not expect their data to be lost after migration, several professionals lost their originals of multiple documents, especially those managing a larger number of companies.

We hope that ONRC has a backup of the old versions of the site, and perhaps, indifferent whether or not to make the correct rollback decisionto transmit these documents to the members of the public.

Interesting old statistics

Statistics that can assist in the analysis and deeper understanding of ONRC issues.

Cases resolved per day, per registrar

The number of cases resolved per working day by registrars has significantly decreased, and in most counties, this indicates that the issue is unlikely to be due to the registrars' fault, as if there were training problems, an improvement in performance would have been expected in the second week following the launch of ONRC V2.0.

Work done at the National Trade Register Office

Unlike the period prior to the launch of ONRC V1.0, 90% of the cases resolved daily are now distributed over 9 hours instead of 8, which can be justified by overtime work.

We observe that a significantly higher percentage of cases are resolved during late hours (increases of over ~30%, ~110%, ~117%, ~161% between 4:00 PM and 7:00 PM), which suggests that the number of people working overtime between 4:00 PM and 7:00 PM has likely increased by similar percentages as described.

It is noteworthy that many people have stayed beyond their scheduled hours, including until 9:00 PM to 10:00 PM. these represent a minority from a statistical point of view.