CEE Legal Matters

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  • Brandl Talos and Nomos Advise Springtime on Investment from Scottish Equity Partners

    Brandl Talos has advised Springtime Technologies on a growth equity investment from Scottish Equity Partners. Nomos advised Springtime as well.

    Springtime Technologies is a provider of AI-driven accounts payable automation software.

    Scottish Equity Partners is a European growth equity firm.

    The Brandl Talos team included Partner Roman Rericha, Attorney at Law Adrian Zuschmann, and Associates Joseph Gstoettner and Daniel Habich.

    The Nomos team included Partners Mirjam Sorgoand and Hartmut Schmidtmayr.

    Brandl Talos did not respond to our inquiry on the matter.

    Nomos could not provide additional information on the matter.

    Editor’s Note: After this article was published Cerha Hempel announced that it advised Scottish Equity Partners. The firm’s team included Partners Clemens Hasenauer, Harald Stingl, Anna Wolf-Posch, and Christopher Peitsch, Senior Attorneys at Law Tobias Tangl, Philipp Schaubach, and Matthias Noedl, and Associate Sophie Stock.

  • Dentons and Clifford Chance Advise on CEC Bank’s EUR 300 Million Bond Issuance

    Dentons has advised CEC Bank on a EUR 300 million issuance of eligible senior non-preferential securities, intended to be classified as MREL-eligible instruments. Clifford Chance advised joint bookrunners and co-arrangers Erste Group Bank and ING Bank and co-manager BT Capital Partners.

    The euro-denominated bonds were issued under CEC Bank’s EUR 1.5 billion medium-term note program, approved by the Commission de Surveillance du Secteur Financier Luxembourg. The securities will be admitted to trading on the Luxembourg Stock Exchange and the Bucharest Stock Exchange.

    In 2023, Dentons advised on CEC Bank’s EUR 162 million note tap (as reported by CEE Legal Matters on November 27, 2023) as well as on the initial establishment of its EUR 600 million EMTN program and first two issuances in early 2023 (as reported by CEE Legal Matters on February 17, 2023). Moreover, the firm advised Raiffeisen Bank, BCR, and BRD on the City of Bucharest’s RON 555 million bond issuance (as reported by CEE Legal Matters on May 10, 2024).

    The Dentons team included Romania-based Partner Loredana Chitu, Associate Robert Alin Roca, and Paralegal Bogdan Galatanu as well as further team members in Germany.

    The Clifford Chance team included Partners Cristina Freudenberger and Madalina Rachieru-Postolache, Senior Associate Gabriel Toma, Associate Paulina Fecht, and Lawyer Felicitas Fischer.

  • A New Economic Policy Action Plan Arrives With Tighter Conditions for Airbnb Apartments

    On 16 October 2024, the Hungarian Government decided on a new economic policy action plan consisting of 21 measures, which also addresses the situation of short-term housing in the capital. The Government intends to tighten conditions for providing private accommodation services, i.e. Airbnb, to solve the worsening housing crisis in Budapest.

    Short-term rentals (“Airbnb”) have become increasingly common in the Hungarian capital in recent years, creating a critical housing situation. This is alarming to the extent that, according to the Ministry of National Economy, given the current situation, the share of monthly incomes devoted to rent in Budapest can reach 50-60%. Nearly 18% of the 800,000 households living in the capital, i.e. 140,000 households, live in long-term rented accommodation, which is a high figure by international standards. By contrast, private accommodations host guests in nearly 26,000 rooms, which has also contributed to rising property prices in Budapest, pushing residents out of the rental and property markets in the inner districts. In addition, another prominent reason for tightening the conditions was that Airbnb’s constant stream of guests also restricts the privacy rights of residents in condominiums. The groups most affected by the Airbnb housing crisis are in fact workers, students and young families who wish to move to the inner districts.

    According to the proposed law, from 2025, the annual flat tax on Airbnbs in Budapest will increase fourfold, from HUF 38,400 to HUF 150,000. Furthermore, a two-year moratorium will be placed on Airbnb-type rentals, thus no new registrations will be allowed in 2025 or 2026. This latter decision aims to restrict the entry of new market players in the specified years. However, these restrictions only apply to accommodations in Budapest. Airbnbs outside the capital will not be affected, and the new regulation under development will not impact their activities in any way.

    The need to regulate the housing crisis is underscored by the fact that house prices and rents in Budapest have risen by more than 40% since the Covid-19 pandemic. The Government expects the new economic policy action plan to deliver economic growth of between 3-6% by next year.

    By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm

  • Factoring in Hungary: A Liquidity Solution and Regulatory Challenge

    Factoring has emerged as an essential financial solution for businesses in Hungary, offering a fast and flexible way to maintain cash flow and bridge liquidity gaps, especially for those with extended payment terms in sectors like agriculture, manufacturing and logistics. However, navigating Hungary’s complex regulatory landscape can pose challenges for companies seeking to use factoring to its fullest potential. With options like silent factoring available to help preserve client relationships and a need for thorough understanding of local laws, businesses can benefit significantly from a strategic approach. This article explores the advantages of factoring in Hungary, along with key regulatory considerations to ensure compliance and stability in companies’ financial operations.

    As a financial solution, factoring and other receivables financing options are gaining strong momentum in Hungary – and it’s easy to see why. As a flexible and fast solution, factoring enables businesses to manage liquidity effectively, particularly those with extended payment terms of 30, 60 or even 90 days, which is common in the aforementioned sectors of agriculture, manufacturing and logistics. Factoring allows companies to secure revenue in advance while still offering favourable payment terms to clients, providing a crucial competitive advantage. Furthermore, many factoring firms take on debt management and legal proceedings for clients, thus reducing administrative burdens and helping businesses run smoothly.

    Factoring can be utilised as a one-time solution, but its true benefit lies in long-term partnership. Regular, ongoing factoring agreements ensure a business’s liquidity remains stable. As a result, companies often engage in long-term contracts with factoring firms to safeguard their financial stability over time.

    How factoring works in Hungary: Open and silent options

    In factoring, the core transaction involves the assignment of receivables, usually with related securities and rights, to the factoring company. Typically, clients are notified of this arrangement and directed to pay the factoring firm directly. However, when maintaining confidentiality is crucial, “silent” or “undisclosed” factoring is available. In such instances, clients continue to pay the original business, which then forwards a portion of these funds to the factor based on the agreed upon terms. This structure helps businesses maintain strong client relationships by keeping the factoring arrangement discreet.

    Hungarian law provides various definitions of factoring, though slight differences exist. The Civil Code defines factoring as an assignment of receivables with recourse, meaning the factor can demand payment from the seller if the client defaults. Conversely, regulations governing credit institutions define factoring as a form of receivables purchase, whether it’s a true sale or not.

    This lack of uniformity can lead to regulatory confusion, creating challenges for both factoring firms and businesses trying to comply with Hungary’s financial and regulatory framework. It is important for companies engaging in factoring to be aware of the regulatory requirements associated with receivables purchase. Failure to comply with regulatory requirements may expose the company to potential penalties and fines.

    The Hungarian regulator’s unique approach to factoring

    The Hungarian regulator has developed particular practices to manage factoring activities, especially silent factoring. Businesses that engage in silent factoring may be required to:

    • handle client payments separately and remit these funds to the factoring firm at specific intervals;
    • issue written reminders to clients if payment is delayed; and
    • legally pursue unpaid receivables if clients fail to meet their obligations despite written reminders.

    In these cases, the regulator interprets the company’s role as that of an intermediary. Since debt collection is indirectly carried out by the factoring firm and instead handled by the business, the latter must comply with intermediary regulations, which many businesses are unable to do. Many companies, however, are unaware of these requirements, which can result in inadvertent non-compliance.

    Structuring factoring agreements for success in Hungary.

    Careful planning and a well-defined factoring agreement can significantly mitigate regulatory risks. By adhering to the guidelines and regulations set by the regulator, businesses can confidently leverage cashflow without risking regulatory violations.

    By Gergely Szaloki, Senior Associate, and Noemi Csiki, Associate, Wolf Theiss, Wolf Theiss

  • Harassment – The Impact of Legislative Updates on Romanian Workplaces

    Recent legislative developments in Romania, such as the Methodology for Preventing and Combating Harassment Based on Gender and Moral Harassment in the Workplace (October 12, 2023) and the ratification of Convention No. 190/2019 on Violence and Harassment in the World of Work, have created a robust framework to address workplace harassment. These changes reflect an international push for safer, more inclusive work environments, but their implementation raises questions about practical challenges and long-term impact.

    The Immediate Impact on Employers and Employees

    • For employers: The legislative updates impose significant new responsibilities. Beyond drafting policies and updating internal regulations, companies must provide mandatory trainingto all employees, especially those in leadership roles, to ensure compliance. The cost of non-compliance, including potential fines and reputational harm, can be high, particularly for SMEs.
    • For employees: These measures empower workers by providing mechanisms for complaints and clear legal recourse. Employees are likely to feel safer reporting harassment, but challenges remain in addressing fears of retaliation or stigma.

    Trends for 2025

    In the coming year, we expect:

    1. Increased Reporting: Awareness campaigns and legal clarity will likely lead to a rise in complaints of harassment. Employers should prepare by strengthening HR teams and legal support structures.
    2. Cultural Shifts: Businesses that proactively embrace the new rules will set a precedent, shaping an organizational culture that values respect and inclusion.
    3. Sector-Specific Challenges: Industries with less formalized employment relationships (e.g., hospitality or gig economy) may struggle to implement the necessary measures.
    4. Enhanced Inspections: Authorities are expected to intensify inspections, focusing on how companies have implemented the methodology and whether the policies are effective.

    Strategic Advice for Employers

    Companies that embrace these changes as an opportunity to foster better workplace relationships rather than a compliance burden will gain an edge. Training programs, anonymous reporting systems, and regular employee feedback mechanisms can ensure both legal compliance and employee satisfaction.

    By Alex Teodorescu, Managing Partner, Teodorescu Partners

  • Havel & Partners and KSB Advise on Rohlik Group and J&T’s Formation of EUR 120 Million Rohlik Growth SICAV Investment Fund

    Havel & Partners has advised Rohlik Group on the formation of the EUR 120 million Rohlik Growth SICAV investment fund with the majority investor being Tomas Cupr and the remaining shares being held by JTFG Fund I SICAV from the J&T Group. Kocian Solc Balastik advised J&T Group.

    Rohlik Group was founded by entrepreneur Tomas Cupr. According to Havel & Partners, the new Rohlik Growth SICAV investment fund is expected to exceed EUR 120 million in value. It will focus exclusively on Rohlik Group shares and is intended for qualified investors, allowing the general investing public to participate in the project’s development.

    The Havel & Partners team included Partners Jaroslav Baier and Jan Topinka, Counsel Roman Svetnicky, Managing Associate Josef Bouchal, and Senior Associate Martin Rott.

    The KSB team included Partner Vlastimil Pihera, Attorney at Law Jana Guricova, and Lawyer Josef Kriz.

  • Divjak, Topic, Bahtijarevic & Krka Advises EBRD on EUR 80 Million Portfolio Guarantee to Zagrebacka banka

    Divjak, Topic, Bahtijarevic & Krka has advised the EBRD on providing Zagrebacka Banka with an uncapped unfunded portfolio guarantee of up to EUR 80 million under the European Union’s InvestEU Program.

    Zagrebacka Banka is a member of the UniCredit Group.

    According to DTB, the financial instrument is designed to cover a newly generated portfolio of loans, bringing the total value of the project to EUR 100 million. 

    The DTB team included Senior Partner Damir Topic, Attorneys at Law Lorena Micik and Ivo Mikulic, and Associate Valeria Kirac.

  • Dentons and Linklaters Advise on Zabka Property Fund’s Sale and Leaseback with W.P. Carey

    Dentons has advised Zabka Property Fund on the sale and leaseback transaction involving a portfolio of 123 Zabka convenience stores in Poland to W.P. Carey. Linklaters advised W.P. Carey.

    Zabka Property Fund is part of the Zabka Property Group.

    W.P. Carey is a real estate investment trust.

    According to Dentons, “the project consisted of two phases: the first stage covered the sale of 114 stores in July and the final tranche – the disposal of the remaining nine stores in September 2024.”

    The Dentons team included Partner Jakub Sobotkowski, Senior Associate Kornelia Borowiec, and Associates Aleksandra Kepas, Szymon Grzeszyk, and Piotr Bazydlo.

    The Linklaters team included Managing Associate Tomasz Trystula and Associates Bartosz Boenigk, Joanna Roman, and Maksymilian Hau.

  • Schoenherr Advises Enery on Virtual Power Purchase Agreement with Nokian Tyres

    Schoenherr has advised Enery on signing an 11-year virtual power purchase agreement with Nokian Tyres for the supply of zero CO2 emission energy to Nokian Tyres’ new passenger car tire factory in Oradea, Romania.

    Enery is an independent renewable energy provider dedicated to supplying customers with reliable, affordable, long-term green energy. The company currently generates almost 700 gigawatt/hours of clean electricity from 490 megawatts of capacity and is involved in development projects totaling more than 8 gigawatts in 11 countries. According to Schoenherr, the long-term contract will enable Enery to build a new solar power plant in Southern Romania, further supporting Europe’s green transition.

    Nokian Tyres develops and manufactures premium tires for passenger cars, trucks, and heavy machinery. The company employs 3,400 people and is listed on Nasdaq Helsinki.

    Earlier in 2024, Schoenherr advised Enery on a ten-year renewable energy VPPA with Dreher Breweries (as reported by CEE Legal Matters on February 20, 2024).

    The Schoenherr team included Partner Monica Cojocaru, Managing Attorney at Law Vlad Cordea, and Attorney at Law Cristina Olariu.

  • TGS Baltic Advises LPKS Latraps on EUR 8 Million Bond Issue and Listing on Nasdaq Riga First North

    TGS Baltic has advised Latvian agricultural cooperative LPKS Latraps on the EUR 8 million issuance and listing of bonds on the Nasdaq Riga First North alternative market with Signet Bank as the arranger.

    According to TGS Baltic, “the purpose of the agricultural cooperative bond issue is to raise funds for the establishment of SIA ASNS Ingredient, the most modern production plant for pea protein isolate in Northern Europe. The production process of pea isolate is technologically very complex and investment intensive. In addition to the construction of the plant, the external partners of ASNS Ingredient will also develop heat and energy supply, water treatment, and biogas production, which will be as outsourced services. Thus, the total investment in the project will reach more than EUR 150 million.”

    The TGS Baltic team included Partner Inese Hazenfusa and Associate Martins Galzons.