CEE Legal Matters

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  • Serbia’s Big Money Moves: A Buzz Interview with Nikola Sugaris of ZSP Advokati

    Serbia’s capital markets are maturing, with bond issuances expected in 2025 and renewed interest in alternative investment funds following reduced thresholds, according to ZSP Advokati Partner Nikola Sugaris.

    “The Serbian capital markets have seen some notable activity recently,” Sugaris highlights. “A key development is the ongoing capital markets project, driven by the Serbian government and the World Bank, which aims to diversify the country’s creditor base. After months of preparatory work, including selecting advisors and setting up terms of reference, the project is moving into a more advanced stage. We’re now looking at concrete steps toward bond issuances, which are expected to debut in the first half of 2025.” Due diligence processes for these issuances should already be underway, he adds, “signaling that stakeholders are firmly focused on execution.”

    On a related note, Sugaris draws attention to alternative investment funds, “which have struggled to gain traction since their introduction under the 2019 legislative framework, are seeing renewed interest. Fewer than 10 funds and just 12 licensed management companies currently operate in Serbia. However, recent legislative changes have reduced investment thresholds for individuals investing in private funds, making these funds more accessible.” Sugaris notes that “for semi-professional investors, the threshold has dropped from EUR 50,000 to EUR 5,000, while for private equity investments, the minimum has fallen from EUR 250,000 to EUR 50,000. These changes aim to democratize investment opportunities and encourage broader participation.” Although no new funds have been launched yet, he says that “the market is starting to respond, with a growing awareness among investors and a shift away from traditional real estate-focused investments. The hope is that this renewed interest will eventually drive growth in the sector, despite the regulatory challenges that remain.”

    In the banking and finance space, Sugaris says that “activity picked up in the latter part of the year after a quieter first half. Borrowers are rushing to finalize financing deals before year-end, spurred by the ECB’s recent reduction in interest rates and the prospect of further reductions. This uptick includes various types of financing, but project financing appears particularly prominent.”

    From a legislative standpoint, “alongside the reduced thresholds for alternative investment funds, there have been amendments to the Energy Act,” Sugaris says. “These changes, enacted in November, introduce new concepts such as licensing aggregators to facilitate energy purchases for SMEs and promoting active participation in the energy market, particularly in renewables. The amendments seem to formalize trends that were already emerging, aligning the law with market realities.” Looking ahead, “the renewables sector remains a key focus, with hopes for increased M&A activity as the market matures,” he continues.

    Finally, “within the legal services market, we’ve noticed a shift in dynamics,” Sugaris points out. “The trend of partners leaving mid-sized or large firms to start their own practices seems to be slowing. Instead, there’s a growing sense that the market may see more consolidation, potentially through mergers. On the talent front, competition is heating up, prompting firms to rethink traditional mentorship models and consider how advancements in AI might reshape the profession.” Overall, “the legal market feels mature, with firms now focusing on marginal improvements and navigating an increasingly competitive landscape,” he concludes.

  • More Flexibility in Paternity Leave

    On 29 October 2024, the Hungarian Ministry of National Economy announced that new laws are submitted to the Parliament to increase the period available for requesting paternity leave.

    As of 2023, the number of paternity leave days was increased from 5 to 10 and the current proposal would go further and give fathers more flexibility in taking paternity leave, with options to split their leave days across different periods.

    Current legislation states that in the case of the birth of a child, the father is entitled to 10 days of paternity leave until the end of the second month following the birth of the child. This 2-month period would be increased to 4 as in many cases, this period is not enough to make proper use of the leave. Among other things, in the case of newborns requiring several months of hospitalization due to premature birth or for other reasons, or due to delays in court recognition of paternity.

    This change is aimed at better-supporting fathers in balancing family and work responsibilities by providing more adaptable leave options during the early stages of parenthood.

    By Borbala Maglai, Attorney at Law, KCG Partners Law Firm

  • Bulgaria’s Cybersecurity: Where NIS2 and a Government Are Both on Hold

    The European Union’s Network and Information Systems Directive (NIS2) was introduced to enhance cybersecurity across the EU, aiming to protect critical infrastructure and essential services such as energy, transportation, and healthcare. NIS2 sets a high bar for all EU Member States, requiring them to improve their cybersecurity resilience, implement strong risk management practices, and report incidents within strict timelines. Yet, despite these clear guidelines, Bulgaria, like many other EU countries, has been slow to adopt the necessary changes and was unable to meet the deadline for transposing NIS2 (i.e., the 17th of October this year). The delay has left Bulgaria facing several legal and operational challenges, compounded by the absence of a functioning Parliament.

    While many EU countries are struggling with the complexities of implementing NIS2, Bulgaria’s situation is particularly dire because of its current political vacuum. The country has been without a stable government for months, leaving it unable to pass new laws, including the transposition of NIS2. Without a Parliament to debate and approve the necessary legislative changes, Bulgaria finds itself unable to comply with EU requirements for cybersecurity, although the draft law is already presented to the public.

    The lack of a clear national cybersecurity framework due to the delay in adopting NIS2 has created uncertainty for businesses and government agencies in Bulgaria. Sectors like energy, transport, and finance, which are directly impacted by NIS2, have found themselves in a legal gray area. In the absence of the required national laws, these sectors are unsure of what specific obligations they must meet. Furthermore, Bulgaria’s lack of legal clarity could lead to inconsistencies in how different companies interpret the need to comply with NIS2, further complicating the overall cybersecurity landscape.

    The delay also places Bulgaria in violation of EU law. NIS2 is legally binding for all Member States, and failure to comply with it has already led to open criminal proceedings against Bulgaria and 22 other EU countries for failing to implement European cybersecurity rules fully. The lack of progress has sparked concerns about the country’s commitment to EU-wide cybersecurity efforts. Non-compliance with such a key legislative text not only risks legal action but also damages Bulgaria’s reputation within the EU and could, in turn, discourage foreign investment and collaboration, especially in industries like technology, where cybersecurity is a top priority.

    Bulgaria’s political crisis exacerbates the situation. While this is a unique challenge for Bulgaria, it is not entirely uncommon across the EU. Many Member States have faced delays in meeting the NIS2 deadline, fighting with bureaucracy, political inertia, or simply lacking the necessary expertise in cybersecurity to implement the new requirements. But Bulgaria’s political deadlock presents a more immediate and severe challenge.

    The situation also highlights a wider challenge within the EU: while cybersecurity is becoming an ever more critical priority, the complexity of implementing NIS2 has left many Member States grappling to stay on track. The wide-ranging requirements—covering everything from risk management to incident reporting—demand significant changes in national laws and regulatory practices.

    Looking ahead, Bulgaria must prioritize resolving its political crisis and forming a stable government to move forward with NIS2 transposition. Once a government is in place, swift action will be needed to draft and pass the necessary laws, establish a national cybersecurity strategy, and ensure that critical sectors are fully compliant with NIS2. While the delay is unfortunate, it also presents an opportunity for Bulgaria to reassess its cybersecurity infrastructure and ensure that it is better prepared to address future challenges.

    On a side note, despite the delays, there is a silver lining for Bulgaria’s cybersecurity future. The draft law for transposing NIS2 is already on the table and, in an ambitious twist, it actually proposes some stricter requirements than NIS2 itself. This demonstrates Bulgaria’s commitment to not just meeting the EU’s expectations but exceeding them in the effort to strengthen its cybersecurity framework. We don’t know, of course, whether this will not be seen as yet another over-regulation for the business. Looks like there are many unknowns on the threshold of 2025, and like every year we can only wish everyone involved “Keep calm and tighten your seatbelts!”.

    By Irena Georgieva, Managing Partner, PPG Lawyers

  • Major Accident Prevention is a Topic of Concern, Right?

    The Czech Republic is struggling to implement the European SEVESO Directive into its legislation. Preventing the consequences of accidents in potentially hazardous companies, such as chemical plants, is thus in a state of emergency. After previous half-hearted solutions, however, the amendment that is being prepared by the Ministry of the Environment offers new hope.

    A few definitions upfront. Prevention refers to a set of measures designed to prevent the occurrence of an undesirable phenomenon and reduce the likelihood of occurrence. An accident is an extraordinary, usually man-made, incident that results in fatal or bodily injury and damage to property and the environment. Implementation of EU law is the process of transposing EU legislation into the national legislation of EU Member States. A problem in the implementation of EU law is a situation where a particular European legal regulation is implemented “imperfectly” or even not at all.

    EU Legislation vs. Czech Legislation I.

    In the field of major accident prevention, Directive 2012/18/EU on the control of major accident hazards exists at the EU level. In simple terms, the purpose of the Directive is to establish a comprehensive system of preventative measures for the development and, in particular, the operation of potentially hazardous facilities, such as chemical plants. These measures limit the impact of potential accidents on human life and health and on the environment. The Directive is called the SEVESO Directive, after the notorious accident at an herbicide and pesticide factory in the Italian town of Seveso.

    In the Czech legal system, this issue is currently regulated by Act No. 224/2015 Coll., the Major Accident Prevention Act. The Act is not very well known among the general public, and if it is, it is mainly with regard to the so-called emergency planning zones that are established under the Act in the vicinity of the largest companies where hazardous chemicals or mixtures are handled. For the sake of simplicity, let us call these facilities, which the Czech law refers to as “objkekty” (facilities), SEVESOs. The Major Accident Prevention Act is the implementing act that transposes the SEVESO Directive into Czech law.

    Both the SEVESO Directive and the Major Accident Prevention Act regulate the obligations of SEVESO operators very strictly. In addition, Article 13 of the SEVESO Directive sets forth that to duly implement the Directive’s objectives it is important to cover the development and operation of various construction projects which are not carried out by SEVESO operators and which are not related to the operation of SEVESOs, but are located (for various strategic or economic reasons) in the vicinity of SEVESOs. These projects can fundamentally change the situation in the area, whether it concerns the number of people present, the logistical situation of the area, and other relationships that logically translate into the scope and complexity of dealing with the issue of major accident prevention.

    If you ask where and how this important part of the SEVESO Directive has been incorporated into the Major Accident Prevention Act, the answer is simple – nowhere and in no way for some time. The Major Accident Prevention Act did indeed address how to locate new facilities and how to maintain mutual distances between facilities and residential areas; however, the regulation of the placement of “non-facilities” in the vicinity of SEVESOs was somehow left out of the legislative solution.

    In practice, it was common for the construction of a logistics centre or a kindergarten to be planned in the immediate vicinity of a SEVESO (for example, within sight of ammonia tanks), even though it was obvious that the location was more than inappropriate (to put it bluntly) from the point of view of safety. Moreover, the Czech authorities repeated with Austro-Hungarian pedantry that they had no competence to deal with such situations and that it was therefore up to the SEVESO operators to adapt their emergency and safety plans to the new situation themselves and at their own expense. Construction plans for “non-facilities” in the area of the emergency zones were thus often permitted without giving the SEVESO operators concerned, who were usually not even parties to the proceedings question, the opportunity to influence their development in any relevant way.

    EU Legislation vs. Czech Legislation II.

    The unfortunate situation described above was the reason why the Major Accident Prevention Act was amended simultaneously with the adoption of the new Construction Act, which, as of 1 July 2024 (and as of 1 January 2024 in the case of so-called reserved buildings) provides for the following:

    The regional authority shall issue a binding opinion which will serve as a basis for issuing decisions in project permit proceedings and in building demolition proceedings under the Construction Act, if the implementation of a new development project that is situated within the reach of the emergency events specified in the relevant risk assessment of a major accident of a building classified in Group A or Group B may cause or increase the risk of a major accident or worsen the consequences thereof and it is not a simple construction under the Construction Act; in its binding opinion, the regional authority shall lay down the conditions for the location and execution of the new construction project, as well as for putting it into trial operation or use in the event that trial operation is not carried out.

    Theoretically, the amendment to the Major Accident Prevention Act provided the regional authorities with the missing power to assess (from the point of view of serious accidents prevention) construction projects that were located in the vicinity of SEVESOs; however, the wording opened up a number of interpretative ambiguities. For example, it was not entirely clear how to interpret the phrase “the reach of emergency events” and whether it was synonymous with the phrase “the reach of the selected limit values of the effects of the identified major accident scenarios” contained in implementing Decree No. 227/2015 Coll. It was not even clear how the reach of emergency events/the reach of limits chosen should be determined in real life.

    Methodological Guideline of the Ministry of the Environment vs. Another Amendment?

    Even before the amendment to the Major Accident Prevention Act came into force, the Ministry of the Environment began to prepare a methodological guideline that would solve the interpretation problems and set out recommendations that the regional authorities could follow.

    The concept was based on the premise that the developers of projects located in the vicinity of SEVESOs should enter into negotiations with the operators of the affected SEVESOs when preparing their projects and that they should have change analyses (risk assessments) prepared together, which would show whether and how the safety situation will change with the development of the new project in the vicinity. The existence of a subsequent agreement between the operator of the affected SEVESO and the new developer on how to address the new project’s impact on the prevention of major accidents in the area should then be one of the determining factors for obtaining a consent opinion from the competent regional authority, which would form one of the necessary bases for obtaining the permit for the project.

    Although a draft of the methodological guideline was completed, in the end it was not issued, as it turned out that the implementation of the SEVESO Directive was weak in a number of other points that could not be solved through the methodological guideline. Currently, the Ministry of the Environment is preparing an amending legal text that should resolve these shortcomings.

    There is a good chance that the new legislation will address all the topics that have long been discussed among SEVESO operators and the professional public in this area. These include not only the clarification of the powers of the regional authorities in issuing the binding opinions in question, but also the enshrinement of the statutory participation of SEVESOs in the construction proceedings relating to projects located in the vicinity of SEVESOs and the reflection of the existence of emergency planning zones in the relevant zoning-planning documentation.

    We can only hope that the new legislation will be prepared and adopted as quickly as possible, ideally during this parliamentary term, as the current situation, where the permitting of development projects in the vicinity of SEVESOs is not duly assessed from the point of view of major accident prevention, can be described – without any exaggeration – as an emergency.

    By Tomas Sequens, Partner, Kocian Solc Balastik

  • A Challenging Year in Hungary: A Buzz Interview with Csaba Polgar of Pontes Budapest

    Hungary’s economy and legal market have faced a tough year, shaped by political tensions, economic challenges, and global uncertainty, according to Pontes Budapest Partner Csaba Polgar, and from delayed investments to unpredictable regulations, the market has been navigating a challenging and uncertain landscape.

    The market in Hungary “is undoubtedly experiencing a general slowdown, driven by a range of economic and political factors,” Polgar notes. “This turbulence is felt across industries, with Hungary’s macroeconomic situation reflecting these challenges. While Hungary has technically avoided a recession, the economy appears to be stumbling.” Key factors according to him, “include delays in the release of EU funds due to political issues and geopolitical tensions, such as the war in Ukraine and uncertainty surrounding the US elections. Many projects are currently on hold, awaiting clarity on these developments.”

    Polgar adds that Hungary’s unique position in Europe adds another layer of complexity. “Hungary is the only EU country that has openly supported Trump, placing significant hope on the US elections as a potential turning point for FDI and broader economic prospects. The upcoming state budget submission is tied closely to this expectation, with many believing next year could bring a better economic outlook. However, whether these hopes are well-placed remains to be seen.”

    As a result, Polgar says that for the legal market, the year has been challenging. “Law firms that do not traditionally engage in public sector work are experiencing less activity. Large firms with state-linked clients or a focus on M&A transactions saw better activity in the first half of the year, but this has since been dampened by state budget cuts,” he says, adding that “as a result, many firms are focusing on maintaining their know-how and client relationships, waiting for better times.”

    Specific sectors are facing additional hurdles, according to Polgar. “Hungary’s FDI screening mechanism, introduced in 2022 during the pandemic, continues to create significant uncertainty for foreign investors,” he points out. “This unpredictability is particularly evident in sectors like renewables, where state pre-emption rights and lengthy approval processes discourage investment. Combined with high financing costs and challenging market conditions, only highly profitable projects are moving forward.”

    Additionally, “private equity and venture capital activity have also seen certain declines in Hungary and across Europe, with 2024 figures lagging behind previous years,” Polgar notes. “A significant improvement is needed to restore pre-crisis levels of activity.”

    One potentially positive development, according to Polgar, is “Hungary’s new proposed scheme for outbound investments, focusing on regional projects, particularly in the Balkans. Historically, Hungary has been a recipient of investments from CEE countries like the Czech Republic and Poland. This new government initiative, which involves capital injections and subsidized loans, aims to encourage Hungarian companies to expand abroad. However, only a small number of firms are currently capable of taking advantage of this program, and it remains to be seen whether it will deliver tangible results or merely reflect wishful thinking.”

    Lastly, “the unpredictable nature of Hungary’s legislative process and broader rule-of-law concerns continue to weigh heavily on investor confidence,” Polgar points out. “The political risks associated with these issues add to the uncertainty, further complicating an already challenging environment.”

  • CMS Advises on Formation of Wattwise FlexCo

    CMS has advised Florian Prasky on co-founding with Katharina Porenta Wattwise FlexCo.

    According to CMS, Wattwise FlexCo will offer a broad range of services related to decentralized energy supply. The company’s focus includes planning, implementation, and operation of energy communities and communal generation systems.

    The CMS team included Partner Georg Gutfleisch and Associates Alexandros Hantasch and Rebecca Herlitz.

  • Gladei & Partners Advises Trans-Oil Group on USD 500 Million Eurobond Refinancing

    Gladei & Partners has advised the Trans-Oil Group on refinancing its USD 500 million, senior secured Eurobond due 2026.

    The Trans-Oil Group is an integrated agribusiness operator in the Black Sea region. According to Gladei & Partners, the group has issued a new USD 550 million Eurobond, maturing in 2029, as part of its strategy to optimize the capital structure and extend the debt maturity profile.

    “This deal reflects Trans-Oil’s strategic foresight in optimizing its capital structure and strengthening its financial position. We were happy to invest our dedication and expertise in navigating this complex transaction to ensure a seamless process and a successful outcome that supports Trans-Oil’s long-term growth and market leadership,” commented Gladei & Partners Partner Iulian Pasatii.

    The Gladei & Partners team was led by Pasatii and included Managing Partner Roger Gladei and Junior Associates Tatiana Mocanu and Nicoleta Petco.

    Gladei & Partners could not provide additional information on the matter.

    Editor’s Note: After this article was published, Sayenko Kharenko announced that it advised the joint bookrunners, Citigroup, ING, Oppenheimer, Raiffeisen Bank International, and Unicredit. The firm’s team included Partner Igor Lozenko, Senior Associate Oles Trachuk, Associate Vladyslava Mitsai, and Paralegals Mykola Suprunovych, Polina Savinska, and Danylo Dashko.

    Additionally, Baker McKenzie announced that it advised the Trans-Oil Group of Companies. The firm’s team included Kyiv-based Partner Serhiy Chorny as well as further team members in London and Zurich.

  • Clifford Chance and Spasov & Bratanov Advise Lenders on PLN 300 Million Financing for Benefit Systems

    Clifford Chance and Spasov & Bratanov have advised a consortium of lenders including Santander Bank Polska and the EBRD on a PLN 300 million financing granted by Santander Bank Polska to Benefit Systems. Norton Rose Fulbright reportedly advised Benefit Systems.

    Benefit Systems provides comprehensive well-being solutions, notably through its MultiSport program.

    The Clifford Chance team included Warsaw-based Partner Andrzej Stosio, Senior Associate Wojciech Wator, and Associate Oskar Ratajczak as well as Czech Republic-based Partner Milos Felgr and Senior Associate Theresa Rehorova.

    The Spasov & Bratanov team included Partner Vassil Hadjov and Senior Associate Petar Dyankov.

    Editor’s Note: After this article was published, Norton Rose Fulbright confirmed its involvement to CEE Legal Matters. The firm’s team included Partner Grzegorz Dyczkowski and Counsel Marta Kawecka.

    Additionally, Kinstellar informed CEE Legal Matters that it had advised Benefit Systems alongside Norton Rose. The Kinstellar team included Counsel Svilen Issaev and Senior Associate Denitsa Kuzeva.

  • Walless Advises Baltic Horizon Fund on Leasing Agreement with International School of Riga

    Walless has advised Baltic Horizon Fund on an office lease agreement with the International School of Riga. Sorainen reportedly advised International School of Riga.

    Baltic Horizon Fund is a listed real estate fund.

    According to Walless, the agreement will enable ISR to create a modern, expanded campus in the S27 building located in the Skanste district. The 3,680-square-meter space will serve the school’s growing secondary school community.

    The Walless team included Latvia-based Managing Partner Kristine Gaigule Saveja, Partners Evaldas Klimas and Indre Jonaityte-Grice, Senior Associate Laura Tumina, and Junior Associate Emils Klavs Liepins.

  • Dentons Advises GTC on Real Estate Portfolio Acquisition from Peach Property Group

    Dentons has advised Globe Trade Centre on the acquisition of a real estate portfolio from the real estate investor Peach Property Group. GTC acquired the portfolio in a consortium along with Luxembourg Finance House. Greenberg Traurig’s Germany office reportedly advised Peach Property Group.

    Founded in 1994 and headquartered in Warsaw, GTC Group is a real estate investor and developer focusing on Poland, Hungary, and the capital cities of Central, Eastern, and Southern Europe.

    According to Dentons, “the portfolio focuses on three cities in Germany: Kaiserslautern, Helmstedt and Heidenheim. In total, it comprises around 5,200 residential units, 47 commercial units, 71 other units, and 2,108 parking spaces, with a total rental area of 324,167 square meters.”

    In 2021, Dentons advised on Globe Trade Centre’s bonds issuance (as reported by CEE Legal Matters on July 2, 2021).

    The Dentons team included Budapest-based Partners Istvan Reczicza, Gergely Stanka, and Judit Kovari and Senior Associate Rita Varnagy as well as further lawyers in Berlin, Frankfurt, and Luxembourg.

    Editor’s Note: After this article was published, Rymarz Zdort Maruta announced that it advised GTC as well, particularly on the company’s issue of series A participation notes in bearer form, with a total nominal value of approximately EUR 41.8 million, as well as the Polish aspects of financing the transaction. The firm’s team included Partner Jakub Zagrajek and Associate Patrycja Gliwka.