CEE Legal Matters

Category: North Macedonia

  • New Changes in Macedonia’s Law on Construction Land to Ease the Sale of Land

    The Government of the Republic of Macedonia, in its program for the period 2014-2018, incorporated a project that shall enable electronic concluding of real estate purchase agreements.

    For the purposes of implementation of the project, an appropriate legal amendment has to be introduced within the Law on Construction Land, which will regulate the procedure for electronic sale of construction land owned by the Republic of Macedonia, as well as the manner of concluding the real estate purchase agreements. Therefore, an amendment of the provisions of the Law on Construction Land is inevitable. 

    The new Law on Construction Land is based the principles of guaranteeing the right to property and its legal protection, creating rights and obligations that serve the good of the individual and the community, distinguishing the rights over construction land from the rights on the object, establishing profitable relationships in the field of construction land, transparency in process of sale of construction land owned by the Republic of Macedonia and efficiency in process of the sale of construction land.

    The Law on Construction Land regulates the rights and obligations regarding the construction land, arrangement of the construction land, conditions and manner of disposal of construction land, as well as other issues of urban land. The essential novelty of this law is the way of the procedure.

    The Law on Construction Land predicts a new procedure, essentially a new way of conducting the proceedings concerning the Law regarding the alienation, long and short-term lease of land, the establishment of the easement and permanent use. The new procedure imply that the submission of the request until the registration of land title deed to the new owner will be conducted electronically without any physical contact between the applicant and the officer conducting the procedure.

    This means that the applicant via computer will electronically submit the request to the relevant municipality or the ministry, depending on who manages the construction site.

    Electronic Agreement will be submitted to the State Attorney’s Office, which shall give its opinion. If positive, solemnization by a notary shall be conducted.

    Furthermore, the clerk who is responsible to work the subject shall electronically require from the person that initiated the procedure to pay the compensation for selling or leasing the construction land owned by the Republic of Macedonia. After payment of the fee, the applicant will electronically attach the payment receipt and will electronically submit the agreement to the State Attorney’s for issuing of an opinion. If there is a positive opinion, the documentation is electronically submitted to the competent notary to perform solemnization and also electronically submitted to the relevant municipality for payment of the tax. The calculation of the tax is electronically submitted to the applicant in order for the fee to be paid. After the payment of the tax, the notary confirms the solemnization and electronically submits the Agreement to the Cadaster Agency for registering the change in public records for registration of rights to real estate.

    The above changes are implementing fast and efficient administrative procedure, which will be a gain for all subjects.  

    By Dragan Dameski, Partner, and Martin Boskoski, Senior Associate, Debarliev, Dameski & Kelesoska Attorneys at Law and member of TLA.

  • Amendments in Macedonia’s Notary Public Regulations to Bring Procedural Efficiency

    It is expected that the new Law on Notary Public will overcome the weaknesses identified in the existing Law and will also lead to higher efficiency in the notary public operation.

    The amendments of the Law require presence of attorneys at law at the moment of drafting of the notarial deeds and the drafting of the private deeds prior to the confirmation by the notary. The presence of the attorneys at law depends on the value of the taken action, the preparion of proposals for issuing decision for notary payment order, regular legal remedies by the attorneys at law, as well as the presence of lawyers in the process of discussion of legacy before a notary. 

    The novelty that comes with the law determines a mandatory presence of lawyers in drafting the notarial documents and drafting of private documents. According to the amendments, the documents must be proofed from attorneys with legal stamp and signature which will then be confirmed by a notary, where participation of lawyers depend on the value of the official action to be taken, preparing proposals issuing certificates for notary payment order as the regular legal remedies by the lawyers as well as the presence of lawyers in the process of discussion of legacy before a notary. The mentioned is an introduced in order to increase legal certainty for the parties in front of the notary.

    In addition, the competence of the notaries in the procedure of adoption of decision allowing enforcement based on an authentic document (notary payment order) will be regulated as well as significant innovation giving the notaries a possibility to draw up and issue electronic notary document and electronically archived notary documents. 

    The amendment of the majority of the existing legal provisions will be reflected in the procedures upon proposals for adoption of decisions for allowance of enforcement based on an authentic deed (notary payment order). Moreover, it will introduce significant opportunity for the notary public to draft and issue electronic notary public deeds and electronically archived notary documents. The amendments also state that the private document has to be composed of a lawyer and contain legal stamp and signature in case, of legal work worth over 10,000 euros in denars according to the average rate of the National Bank of Macedonia, unless one of the parties is the Republic of Macedonia. Also, it is determined that the proposal for issuing a decision on notarial payment order by the creditor bank, savings bank, financial company, a provider of financial leasing or insurance company does not have to be composed of a lawyer and contain legal stamp and signature, if the value the claim in a credible document under  10,000 Eur.

    The new legal provisions also stipulated that the proposal for issuing a decision on notarial payment order by the creditor bank, savings bank, financial company, a provider of financial leasing or insurance company does not have to be composed of a lawyer and contain legal stamp and signature, if the value of the claim in a credible document is under 10,000 Eur.

    The draft law on notary aims for a new legal solution for providing faster access to justice and increase the level of legal security in legal transactions. The new version of the Law will overcome the weaknesses identified in the existing law. The content and the structure of the law shall be reorganized by specifying the legal provisions, and by changing the great part of the existing legal provisions. 

    By Dragan Dameski, Partner, and Martin Boskoski, Senior Associate, Debarliev, Dameski & Kelesoska Attorneys at Law and member of TLA.

  • The New General Administrative Procedure Law in Macedonia

    The system of administrative procedures in the Republic of Macedonia has been modernized by the incorporation of a completely new legal framework – the new Law on General Administrative Procedure.

    The Law entered into force on July 27 2015, with an effect from July 27 2016. The law in general represents a logical continuation of the founding principles that were a basis for the previous Law, but at the same time it introduces progressive administrative tools such as IT communication, access to a single point of contact, administrative agreement and an effective system of administrative remedies. It is expected that the new Law will contribute towards improvement of the transparency of administrative procedures, incensement of the citizens’ trust in public administration, as well as encouragement of the practice-oriented administrative services and professional public administration as an essential requirement for economic development.

    The previous law recognizes only the administrative act or unilateral and very formalized administrative decision, as only legal form of administrative action. However, the transparent cooperation between public authorities and citizens requires new additional means of administrative actions to enable administrative service that is citizen-oriented. Accordingly, the new law will provide a degree of flexibility in terms of administrative actions including the legal instrument of the administrative contract.

    Unlike the current law, the new General Administrative Procedure Law shall apply also when an administrative body performs its tasks of administrative law through other unilateral administrative actions that are not included in the concept of an administrative act, but are related to the citizen’s rights, their duties and legal interests, such as the delivery of information, warnings, notices, publication of expert opinions, or citizens’ complaints. The new law will also provide legal protection for the delivery of public services that hamper the rights of citizens or their legal interest. 

    The unnecessary formalism of the administrative procedures complicates the legal protection of individuals and the economic activities. Accordingly, the new law should provide efficient, simpler and faster administrative procedures. In this way, the administrative costs of the state budged and the business sector shall be reduced. Effective and efficient processes of adopting administrative acts are expected to encourage investment and contribute to the economic development of Macedonia.

    The law should establish the legal conditions for development and application of information communication between public administrations and citizens (“e-administration”). E-administration should include e-assistance (eg. Dissemination of information to the general public, activities, public relations, etc.) and e-administration, which is a very important form of communication between the governing body and the participant in the administrative procedure. The e-administration should be seen as a further opportunity in the public administration. The law should ensure that the technical possibility of easy communication would not be to the detriment of those citizens who do not have Internet access or who are not familiar with information technology.

    The regulations fare essential for fast and efficient administrative procedure in accordance with the new law. The fast and simple communication is now a higher priority than the extremely formal procedure. The formal submission should be an exception. 

    By Dragan Dameski, Partner, and Martin Boskoski, Senior Associate, Debarliev, Dameski & Kelesoska Attorneys at Law and member of TLA.

  • Macedonia Employs II

    The government project for decrease of the unemployment, which finished at April 2016, is now going to be repeated for a second time under the same name, “Macedonia Employs II”.

    The project is going to involve a direct assistance from the government for the business sector that needs new employees but lacks the resourses to fund it. The business that are going to sign up for this project can hire unemployed individuals for which the entity shall not be obligated to pay the benefits for that employee. The only obligation for the employer is not to reduce the number of the employee for a certain period of time after the using of the benefits of this project. 

    The project “Macedonia Employs” was initiated in order to reduce unemployment by creating new jobs with coverage of different categories of unemployed persons difficult to enter the labor market. The package of measures, which provides incentives for companies exemption from payment of contributions for compulsory social insurance for all new staff within the project, contributed 10140 companies employ 19,000 people in just one year. 

    The new package, “Macedonia Employs II”, is expected 20,000 new jobs in lower costs for employers and thus solving the existential question of thousands of people who wait for their first employment. The package includes five categories of unemployed individuals:

    First group: unemployed individuals under 35 years of age, who has not been employed previously or who had previously been employed but have been unemployed for at least three months prior to the application. Companies will be exempt from payment of contributions for compulsory social insurance and personal income tax, for a period for 3 years from the date of employment, where the employer is obliged to detain the person for 1 year after expiry of the period, which is exempt from paying contributions and personal income tax.

    A second group of unemployed individuals aged 35 to 50 years, who at the last 15 years were more than 5 years employed and at least three months prior to recruitment had not been under employment. The employer that hire a person from this group will be exempted from payment of contributions for compulsory social-life insurance for a period of 5 years from the date of employment in which he is obliged to detain the person for 1 year after the period in which is exempt from payment of contributions compulsory social insurance.

    A third group of unemployed individuals aged over 50 years and at least three months prior to recruitment had based employment. The employer that will hire a person from this group will be exempted from payment of contributions for compulsory social insurance for a period of 60 months from the date of employment. The employer has no obligation to keep the employee for additional months of work after the usage of the measure.

    Fourth group refers to the oldest unemployed individuals that are over 58 years and are unemployed for the last two years. An employer that will hire an individual of this group will be released from payment of contributions for compulsory social insurance until meeting the conditions for retirement pension.

    Fifth group of unemployed persons who are parents of three or more children and at least three months prior to recruitment had not been employment; single parents and members of single parent families where at least three months prior to recruitment had not been employment; recipients of social assistance; children without parental care; victims of domestic violence; disabled person with a diagnosed disability according to the Law for employment of disabled persons and persons with reduced work capacity determined or professional inability to work for 50% according to the regulations of the Pension and Disability Insurance; professional soldiers whose employment was terminated under the Law on Service in the Army of the Republic and parents of children with disabilities that are unemployed for at least three months prior to employment. Exemption from payment of contributions for compulsory social insurance and personal income tax applies for a period of 5 years from the date of the employment.

    By Dragan Dameski, Partner, and Martin Boskoski, Senior Associate Debarliev, Dameski & Kelesoska Attorneys at Law a member of TLA.

  • The Buzz from Macedonia: Interview with Valentin Pepeljugoski

    The Buzz from Macedonia: Interview with Valentin Pepeljugoski

    “Let’s start with the bad,” said Valentin Pepeljugoski, the Managing Partner of the Pepeljugoski Law Firm in Macedonia, who reported that the strike of Skopje court administration employees that began at the end of May and still continues, is “not good for bar members.”

    The strike, which started when administration employees were not included in the recent 35% salary increase received by judges, public prosecutors, and officials in the public prosecutor’s offices, is, according to Pepeljugoski, “really bad for the rule of law, for clients, etc.”  He concedes, however, that the salaries of court administration “are really very low” — he called them “beneath human dignity” — and he emphasized that, “if you ask me I fully approve of the administration.” Matters considered “urgent” which can’t easily be postponed — including requests for injunctions, bankruptcies, and IP matters — are being heard, but the solo practitioners and smaller law offices that focus their practices heavily on litigation are being really hurt by the delay in most matters. Business law firms like his, Pepeljugoski says, are better able to weather the storm.

    Otherwise business in Macedonia is as good as it can be in the circumstances, Pepeljugoski says, “although the political situation is not so good.” He refers especially to the energy sector as strong, as the country’s Competition Authority has begun a process of reviewing agreements in the sector very carefully, providing substantial work for lawyers. The Macedonian energy market is not a “free market,” according to Pepeljugoski, with only state-owned enterprises able to purchase energy from suppliers, who are often badly-positioned to sue because of badly-drafted agreements. He also notes that the banking sector is strong.

    Interestingly, he refers to an ongoing fight for market share among two trash collecting companies, which spills over regularly into the courts.

    Turning to the legal market in Macedonia, Pepeljugoski points out that there are no “big international firms” in the market, as “our law does not allow foreign lawyers to set up classical law firms here as founders,” though he notes that several regional law  firms specialized in the former Yugoslavia have “consultant” offices in Skopje. The market is fairly stable, and a few local firms have sprung up recently, started by 2-3 young lawyers, but in his opinion the traditional firms still dominate the market.

    Finally, Pepeljugoski noted, a new Civil Code is in the works and expected to be enacted sometime next year. “For me it is not necessary,” he sighed, “because we already have the the law.” He said the decision to create a new Civil Code in the country is following “a trend in CEE,” and said, “for me, it’s not a positive one.” He sighed. “It creates problems when you’re always amending, always revising.”

  • Macedonia: Considerations for Investors

    Macedonia: Considerations for Investors

    For a country struggling through the transition following its separation from the former Yugoslavia, in the past decade Macedonia has made significant progress and has invested both time and resources into promoting itself as a foreign investment haven.  

    It is incentives such as those offered to companies investing in the free economic zones that have brought some serious foreign investors into Macedonia and that are helping change the country’s business climate. Those incentives include a 10-year profit tax holiday and a 5-year 50% reduction of the personal income tax so that the effective rate of personal income tax amounts to 5%. Investors are also exempt from payment of value added tax and customs duties on goods, raw materials, equipment, and machines. 

    Despite these incentives, one problem that many foreign investors struggle with is the significant bureaucracy that still exists in many spheres. Fortunately, as part of the process of reaching out to investors, Macedonia is shortening some administrative procedures.

    One such shortened procedure is that for setting up a company. In theory, now, in Macedonia a company can be set up within 4 hours. In practice, however, it usually takes between 1-3 business days. Either way, what neither the theory nor the practice reveal is that before even beginning the process of establishing a company an investor first needs to understand the business setting of the country – and be advised on possible alternatives to an original plan. In other words, what might seem like a good idea in the United States may be more easily achieved in a different manner in Macedonia, and instead of setting up a joint stock company, for instance, an investor may be well-advised in Macedonia to establish a limited liability company. In another example, while in some ventures a branch office may be a viable option, in others, licensing and other reasons may require that the investor set up a separate legal entity which will be present on the Macedonian market. Ultimately, therefore, a good legal advisor is very important in grasping the consequences of what establishing a certain type of company would be for the investor. 

    Also, with regard to regulated activities requiring licenses (for example the energy, insurance, and banking sectors), the standard period of 1-3 business days for setting up a company does not apply, and it may take significantly more time. Thus, in such circumstances as well, it is important to have a legal advisor who will understand the dynamics of the investor and get a good grasp of what the investor requires, and who will be able to manage the entire process of setting up the company in a timely and efficient manner. 

    Another issue which investors need to take into consideration is the frequent change of legislation in Macedonia. While it is often done with the goal of harmonizing Macedonian legislation with EU legislation, even seasoned lawyers find it challenging to keep up with all the amendments to essential legal acts. Laws regulating issues which are of essential importance to citizens should be subject to debate by experts, people should be given time to understand the effect of those changes on their lives, and investors should be given the time to alter their plans and forecasts to the proposed changes. None of the these things have been happening in the past decade, however, as the country rushes to change quickly what normally takes much more time to distillate. And those frequent changes have been known to cost investors a lot.

    One manner to cope with those frequent changes and at times to even use them to one’s benefit is to know and follow EU legislation. As the country is striving become part of the EU, most important changes are towards the principles of EU directives, and a good lawyer working in the present set of circumstances in Macedonia will know why certain laws are being amended and the direction investors can expect the laws to evolve in. The one to profit from this reasoning will always be the client.      

    By Dragan Dameski, Partner, and Elena Miceva Stojchevska, Attorney at law, Debarliev, Dameski & Kelesoska Attorneys at Law a member of TLA.

    This Article was originally published in Issue 4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Hogan Lovells Pro Bono Team Wins US Asylum for Macedonian Woman

    Hogan Lovells has announced that a team of its lawyers, working pro bono, recently won asylum for a lesbian Macedonian woman who claimed she would be persecuted if forced to return to her native country.

    The asylum petitioner was able to demonstrate that, while living in Macedonia, individuals who learned of her sexual orientation had threatened her life. She fled to the United States as a result and petitioned for asylum. 

    Her petition was granted by the Arlington Asylum Office on February 18, 2014. The successful asylum applicant stated that, “Macedonia is not a safe place for LGBT people and the government of Macedonia is not doing anything to protect us from discrimination and violence.”

    Chava Brandriss, an Associate in Hogan Lovells’ Washington, D.C. office, and Immigration Equality, a national organization that advances the immigration rights of LGBT individuals, referred the woman to Hogan Lovells. Both Brandriss and Immigration Equality provided assistance in the case. The team leading the successful representation included Hogan Lovells’ New York Partner Scott Friedman, Washington, D.C. Associates Robert Baldwin and Katelyn Ruiz, and New York Associates Erin Meyer and Samuel Zimmerman.