Category: Croatia

  • Savoric & Partners Advises Feelsgood on Vidi-To Investment

    Savoric & Partners has advised Croatian private equity fund Feelsgood on its EUR 600,000 investment in Zagreb-based educational technology company Vidi-To.

    “The investment in Vidi-To and their Vidi X educational computers is particularly special because it has the potential to make a significant impact on education,” Savoric & Partners announced. “With more than 24,000 students already having access to these specialized computers, the investment will help expand the reach of this technology to even more schools and students.”

    Editor’s Note: After this article was published, Savoric & Partners announced that its team was led by Partner Mia Lazic and Senior Associate Dominik Zugaj.

    Miskovic & Miskovic subsequently confirmed it had advised Vidi-To and its majority owner, founder, and CEO Tomislav Kotnik. The firm’s team included Partners Pavo Miskovic and Iva Miskovic.

  • Croatia Introduces Significant Changes in its Employment Legislation

    As of 1 January 2023, Croatian employers should start with the implementation of new employment rules not only in employment agreements and internal documents but also in practice. After years of discussion between all involved parties, the amendments to the Labour Act were passed mid-December 2022 and entered into force on 1 January 2023 (apart from certain provisions which will enter into force on 1 January 2024).

    Additionally, the newly introduced Act on Elimination of Unregistered Work sets out rules aimed at combating non-payment of salaries, salary add-ons and contributions as well as hidden/unregistered employment, which entered into force on 1 January 2023 as well.

    The main provisions are summarised below, with the aim to assist companies to streamline and plan the implementation process and adapt existing practices.

    1. Amendments to the Labour Act

    Summary – practical next steps
    Existing rules and procedures should be carefully examined and updated. We suggest to:

    • Take a close look at existing employment practices and documents, particularly employment agreements. All employment agreements entered into after 1 January 2023 should comply with the new statutory rules. It should be assessed on a case by case basis whether an existing employment agreement should be amended as well, in order to make use of certain new statutory possibilities.
    • Comply with statutory requirements (especially in relation to new statutory requirements for the appointment of dignity officers) and update internal bylaws at the latest by 1 July 2023.

    New rules to start employment

    Mandatory contents of employment agreements: The list of mandatory provisions of the employment agreement has been expanded, which means that going forward employment agreement templates should be amended.

    Fixed-term employment: One of the most significant changes relates to the duration and justification of entry into the fixed-term contract (FTC):

    • Entry into the FTC should be an exception (and permanent contracts a rule); therefore, not more than three consecutive FTCs with a maximum total duration of three years, including the first agreement may be entered into (certain exceptions apply).
    • FTCs may be entered into only if one of the following objective reasons exists: (i) replacement of a temporarily absent worker, and/or (ii) the need for performance of work that is limited by a deadline or an event.
    • Same rules apply for conclusion of FTCs with affiliated companies (intra-group).

    Probationary work: A new set of rules regarding probationary work has been introduced:

    • New provisions on probationary periods now (finally) resolve the situation that often occurs in practice – i.e. when the employee is absent from work during the probationary period due to objective reasons such as sick leave, use of maternity and parental rights or garden leave; from now, it will be possible to extend the duration of the probationary period in such case for the maximum period of absence (but not longer than actual six months spent at work).
    • If fixed term employment is concluded, the probationary period must be proportional to the duration of the FTC.

    The employee may request conclusion of an indefinite term employment agreement, if (i) they have worked with the employer for at least six months and (ii) the probation period has passed. The employer should consider the employee’s request and, if denied, provide a substantiated written response within 30 days (or 60 days if the employer employs less than 20 employees). The employee may repeat their request after six months.

    Additional work: New regulation of additional work has been implemented:

    • An employee who works (i) full-time for one employer or (ii) part-time for several employers, with a total of 40 working hours per week, may now additionally work eight hours per week for another employer (or 16 hours if the working hours are unevenly distributed); certain exceptions apply.
    • No consent of the main employer(s) is required, only a prior notification.
    • The main employer may request the termination of additional work for another employer only if there are objective reasons for such request, e.g. if such work represents a violation of the employee’s non-compete obligation or if additional work is performed within the employee’s working hours for the main employer.
    • The additional employer should enable the employee to use the proportional part of the vacation at the same time when vacation is used with the main employer.

    Furthermore, new rules on employment of seasonal workers have been introduced as well.

    Completely new legal framework relating to work-life balance is now in force

    Remote work: Previous regulation of remote work was scarce and did not keep pace with the existing fast-changing trends in the labour market. More flexibility should be offered under the newly introduced extensive remote work regulations. In summary:

    • In addition to work performed outside the employer’s premises, where the exact place of work is agreed between the parties (e.g. work from the employee’s home), the possibility of remote work has also been introduced, under which the employees can freely determine their place of work.
    • Employees working outside the employer’s premises are entitled to reimbursement of working costs if such work exceeds seven working days per calendar month.
    • The employer is entitled to enter the employee’s home or other premises for the purpose of maintenance of equipment and supervision of the employee’s working conditions, provided that this has been contractually agreed.

    The employee may request to temporarily work outside the employer’s premises in statutorily pre-defined cases (e.g. pregnancy, personal care of a family member, etc.) and the employer needs to consider such request and provide the employee with a substantiated response within 15 days.

    Right to disconnect: For the first time, a very “soft” version of the right to disconnect has been implemented into Croatian legislation. Namely, the employer should not contact the employee outside working hours, unless (i) there is an urgent matter, (ii) this is required due to the nature of the work, or (iii) if such possibility has been envisaged under the collective agreement or individual employment agreement. However, there is no monetary fine for non-compliance with such obligation.

    Request to work part-time: The employee who has worked with the same employer for at least six months may request to work part-time or that the employer adjusts the working time schedule, if they (i) have a child of up to eight years of age or (ii) provide personal care to a close family member (as defined by law). The employer should consider the employee’s request and, if denied, provide the employee with a substantiated written response within 15 days. However, there is no monetary fine for non-compliance with such obligation.

    Leave for personal reasons: The employee is entitled to paid leave due to an important and urgent family matter, for one working day per year. The employee is entitled to use unpaid leave to provide personal care to a close family member, for five working days per year.

    Salary add-ons: Employees working on Sundays are entitled to a salary increase of 50% for the work performed on such days.

    Work through digital working platforms: Provisions on work through digital working platforms will enter into force on 1 January 2024. Work performed through digital working platforms will be extensively regulated, including, inter alia: (i) mandatory content of the employment agreement, (ii) use of automated management systems, (iii) processing of employees’ personal data, and (iv) protection of independent contractors performing work. Digital working platforms and aggregators will need to register with the relevant register maintained by the competent ministry.

    Digital working platforms will be liable as joint and several debtors for the payment of salaries to the employees of the aggregators working through the digital working platform, but can be released from such liability if they undertake certain statutorily defined actions (e.g. request monthly delivery of pay slips, confirmation on no outstanding tax debts, etc.).

    Certain ESG-relevant novelties

    Some of the new provisions of the Labour Act are relevant in the wider ESG (or more precisely “S”) context.

    Dignity protection: The procedure of appointment of the officer for protection of the employee’s dignity has been amended, to the effect that now employers with more than 75 employees have to appoint at least two dignity protection officers of different sex, who will receive and investigate dignity protection claims. Dignity protection officers do not have to be employed with the employer.

    Equal pay: In order to exercise the right to equal pay for female and male employees, the employer should provide the employee with information on the criteria for the calculation of the salary of the employee who performs the same or similar work tasks, if such an employee exists. However, there is no monetary fine for non-compliance with such obligation.

    New rules to end employment

    Notice period: The notice period does not run if the employee is on sick leave. However, if the termination notice was handed over to the employee before the commencement of sick leave and the employee was placed on garden leave, the notice period will run during the sick leave period.

    Delivery: Employer’s decisions (other than the termination notice) may be delivered to employees electronically, provided that the employer retains proof of delivery and such documents are (i) available to employees, (ii) printable, and (iii) storable.

    2. Introduction of the Act on Elimination of Unregistered Work

    Focus on elimination of unregistered work: The following main regulations have been introduced:

    • Unregistered work generally comprises the following situations: (i) non-registration of the employee with mandatory social insurances, (ii) performance of work without a written employment agreement, (iii) hidden employment relationship, (iv) non-compliance with regulations on the employment of foreigners, (v) non-payment of salary add-ons and (vi) non-payment of public contributions.
    • The competent ministry will maintain publicly-available registers of compliant and non-compliant employers.
      Companies active in certain sectors will have to register working hours of their employees through an electronic work record system which will be maintained by the competent ministry – implementation details are still pending.
    • If a company engages a subcontractor for performance of certain services, then the company will be jointly and severally liable for the payment of salaries to the subcontractors’ employees. The company may be released from such liability if it undertakes certain statutorily defined actions (e.g. requesting monthly delivery of pay slips, employee data, etc.).
    • In summary – the new statutory provisions mean that companies should (i) immediately closely examine their existing practices and contractual relationships with their subcontractors and (ii) monitor the implementation of bylaws regarding the work record system to ensure compliance.

    By Dora Gazi Kovacevic, Partner, Wolf Theiss 

  • BDV Advises South Central Ventures on Investment in Recommend

    Batarelo Dvojkovic Vuchetich has advised South Central Ventures on leading the seed investment round in digital marketing platform Recommend.

    South Central Ventures is a venture capital investor operating in Ljubljana, Zagreb, Belgrade, and Skopje.

    Recommend provides digitalized word-of-mouth marketing services through its digital platform.

    The BDV team was led by Attorney-at-Law Antonia Curkovic.

    Editor’s Note: After this article was published, Metelko Knezevic and Partners announced it had advised Recommend. The firm’s team was led by Partner Ivan Dilber and included Managing Partners Damir Metelko and Kruno Knezevic.

  • Lovric Novokmet & Partners Advises on Sale of Koncar-Elektricni Uredaji to Koncar-Aparati i Postrojenja

    Lovric Novokmet & Partners has advised the Koncar Group on the sale of Koncar-Elektricni Uredaji to Koncar-Aparati i Postrojenja.

    The Koncar Group is a Croatian electrical, transport, and energy company based in Zagreb. Listed on the Zagreb Stock Exchange, the company consists of 16 subsidiary companies, employing a staff of 3,600.

    LNP’s team included Partner Mate Lovric, Senior Associates Manuel Kralj and Katarina Simac, and Associate Marijan Zivkovic.

    LNP could not provide additional information on the deal.

  • Lovric Novokmet & Partners Advises Koncar Digital on Acquisition of Kodeks Sistemske Integracije and Exa Globe

    Lovric Novokmet & Partners has advised the Koncar Group on Koncar Digital’s acquisition of Kodeks Sistemske Integracije and Exa Globe.

    The Koncar Group is a Croatian electrical, transport, and energy company based in Zagreb. Listed on the Zagreb Stock Exchange, the company consists of 16 subsidiary companies, employing a staff of 3,600.

    Kodeks Sistemske Integracije and Exa Globe are Croatian ICT companies.

    LNP’s team included Partner Mate Lovric, Senior Associates Manuel Kralj and Katarina Simac, and Associate Marijan Zivkovic.

    LNP could not provide additional information on the deal.

  • Vukmir & Associates Advises on Zagrebacka Banka Bond Issuance

    Vukmir & Associates has advised Zagrebacka Banka on the issuance of internal MREL notes to its majority shareholder UniCredit.

    UniCredit member Zagrebacka Banka is a bank in Croatia. UniCredit is a European commercial bank with a range of services in Italy, Germany, and Central and Eastern Europe.

    The Vukmir & Associates team was led by Partner Ivan Cuk and included Partner Tomislav Pedisic and Attorney-at-Law Tea Cerinski.

  • Ilej & Partners and Dominkovic & Osrecak Advise on MYTY Group Acquisition of 404 Group

    Ilej & Partners, in cooperation with Karanovic & Partners, has advised the MYTY Group on its acquisition of the 404 Group. Dominkovic & Osrecak advised the seller.

    According to Ilej & Partners, the acquired portfolio consists of four targets in Croatia, including 404, Shape 404, SevenofNine, and Rijetka Biljka.

    The MYTY Group is a Zurich-headquartered advertising agency. The 404 Group is a Croatian marketing and communication agency.

    The Ilej & Partners team was led by Senior Partner Goran Ilej, Senior Associate Nika Jurkovic, and Associate Antun Skansi.

    The Dominkovic & Osrecak team included Attorneys-at-Law Matija Osrecak and Lana Matas Curic.

  • New Year, New Clubs, and New Assets To Trade for Croatia: A Buzz Interview with Miroslav Plascar of Zuric i Partneri

    Aside from Croatia entering the Euro and Schengen zones, there have been numerous other legislative updates of note – primarily in the spheres of labor and land rights – according to Miroslav Plascar, Co-Managing Partner of Zuric i Partneri in cooperation with Kinstellar.

    “First of all, with the euro being introduced as the official currency, the entire market started feeling immediate changes,” Plascar begins. “Most of these changes are most acutely reflected by Companies Act amendments – expectedly, all legal entities must now amend their articles of association and all bylaws so as to denominate share capital and the like in euros instead of kuna.” As he explains, a time frame of a couple of years was introduced within which these changes were manded to be made, “but these term limits are likely to be annulled seeing as how big of a change it will be for companies – they could incur significant costs.”

    Moreover, the Croatian labor legal framework was amended to more accurately reflect the “post-COVID-19 state of affairs. Primarily, changes were introduced to regulate remote work and home office but also fixed term agreements, salaries, probation work, and others,” Plascar explains. In addition, he reports there has been a change to the rules regulating attorney compensation. “The base price of one point, which is used to determine the prices of an attorney’s work, has jumped from HRK 10 to HRK 15 – after 18 years. With this being the first change since 2004, it has been a long time coming,” he says, adding that it is “sure to impact the work of every lawyer in the country, especially when it comes to official billable actions.”

    Additionally, Plascar highlights an important and major update to the agricultural legal framework. “A significant change has been introduced to remove the existing moratorium on agricultural land acquisition by non-Croatian citizens and entities. The ban will be lifted on June 30, 2023, thus ending the moratorium which has so far prevented the selling of state and privately-owned land to foreign citizens,” he reports. This amendment is, according to him, “crucial because there are strong indications of existing investor interest among EU citizens and entities for acquiring land in Croatia as a strategic asset.” Also, he stresses another change which the amendments introduced, that of “the Croatian state having the right of first refusal for any and all agricultural land transactions.”

    Finally, Plascar comments on another essential change for Croatia – its entry into the Schengen zone. “Starting from the beginning of 2023, all Croatian citizens can now freely travel within the Schengen zone. This opening up, coupled with the eurozone entry, is sure to increase the levels of cooperation with other EU member states, for example, in terms of criminal law cooperation,” he says. “Moreover, this will lead to an uptick in legal work, following the inevitable increase of EU-related cooperation bandwidth,” Plascar concludes.

  • Kinstellar Advises Angelina Yachtcharter on Acquisition of Jadranka Yachting

    Kinstellar’s Croatian affiliate Zuric i Partneri has advised Angelina Yachtcharter Holding on its acquisition of 85% of the shares of Jadranka Yachting from Jadranka d.d. and Arman Percinlic.

    Founded in 1995, Angelina Yachtcharter is a nautical charter management company in Croatia, currently operating a fleet of more than 280 vessels berthed at ten marinas along the Adriatic coast.

    Jadranka Yachting is a charter company located in Mali Losinj, Croatia.

    Kinstellar’s team included Managing Associate Andrijana Kastelan and Associates Tena Pajalic, Matea Sekur, Hrvoje Klisanic, Zrinka Ivankovic, and Kristina Marinov.

  • Kinstellar, BDV, and Kramaric & Partners Advise on Adria Dental Group Financing and Acquisition of Fiziodent Polyclinic

    Kinstellar Croatian affiliate Zuric i Partneri has advised OTP Banka on the financing for Adria Dental Group’s acquisition of the Fiziodent Polyclinic. Batarelo Dvojkovic Vuchetich advised the Adria Dental Group on the acquisition and financing. Kramaric & Partners advised Karlo Sudarevic on the sale.

    Founded in 2003, Fiziodent operates two polyclinics in Zagreb and employs a total of 40 people. The clinic specializes in the field of transparent and mobile braces.

    The Adria Dental Group is a Croatian company that has seven clinics and five laboratories in Zagreb, Solin, Rijeka, and Porec.

    The Kinstellar team included Partner Mihovil Granic and Associate Tena Pajalic.

    The BDV team included Partners Ivan Dvojkovic and Marko Bohacek.

    The Kramaric & Partners team was led by Partner Damir Kramaric and Attorney-at-Law Ivan Sostaric.