Category: North Macedonia

In the realm of legal matters in the Republic of North Macedonia, the concept of “bankruptcy for individuals” that exists in Western countries is completely unknown. Here, a person burdened with debt could find themselves perpetually trapped, facing an ever-growing debt that seems impossible to escape.

However, a ray of hope has emerged with recent amendments to several legal provisions, adopted on 20.07.2023. These changes not only shorten certain limitations in favor of the debtor but also introduce a groundbreaking provision that can pave the way to debt relief.

Under the new amendments, the statute of limitations on a court decision or settlement ends when a request for enforcement is submitted to a competent executor. Once the enforcement procedure begins, there’s a ten-year window to address the debt. This is a significant development as such a statute of limitations did not exist before, and now, it offers a chance for individuals to break free from their debts after a specific period.

Furthermore, the changes made to the Law on Obligation Relations bring more good news. In cases where inflation remains below 50% annually, the interest on a debt cannot exceed the principal amount. This measure is designed to curb excessive interest rates and ensure that debts are more manageable for borrowers.

In conjunction with the amendments to the Law on Financial Companies, the government is sending a clear message: the burden of high consumer loans must be regulated and controlled. To achieve this, the law now limits the total costs that can arise from consumer credit agreements. Financial companies are prohibited from including fees that are not factored into the annual rate of total costs. This measure ensures that fees don’t exceed 60% of the approved loan amount, offering relief to borrowers who were once at the mercy of exploitative financial practices.

These progressive changes demonstrate the government’s commitment to protecting citizens from over-indebtedness and promoting financial stability. By organizing and stabilizing citizens’ liquidity, we can expect a positive ripple effect throughout the economy, including a potential reduction in the gray economy.

The new legal landscape brings a glimmer of hope for individuals facing crushing debt, and it’s a step towards creating a fairer and more transparent financial system for everyone in the country.

By Martin Boskoski, Founding Partner, Lalicic & Boskoski Law Office

The Public Enterprise for State Roads of North Macedonia (“PESR”) published an invitation for prequalification (“Invitation for Prequalification”) for works for the construction of a 10.5 km long sub–section of the TEN-T Route 6 Motorway (“Project”).

The Project is the second phase of the TEN-T route from the Kosovo – North Macedonia border to Skopje. Construction on the first phase is already underway. The awarded contract will be subject to the procurement policies and rules of the European Bank for Reconstruction and Development (“EBRD”).

The procurement documents are available free of charge through the EBRD Client E-Procurement Portal (“ECEPP”), at the following link: https://ecepp.ebrd.com/respond/52H2FXY2G6.

The procurement documents include information on the detailed technical and financial requirements, information on lots, expected outcome, eligibility and qualification requirements, contract start date, planned contract duration, and other relevant information.

The Project is financed by the EBRD, which has provided a loan to the PESR at the value of EUR 167.6 million.

Interested companies can apply until 21 August 2023.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku, Partner, and Ana Kashirskaa, Senior Associate, Karanovic & Partners

ODI Law has advised the owner of Macedonian supermarket chain Kit-Go on its sale to Kosovo-based company Viva Fresh. The Zeqiri Law Office reportedly advised Viva Fresh.

According to ODI Law, “the Kit-Go supermarket chain is a well-established and reputable retail brand in North Macedonia. With a history spanning over a decade, Kit-Go has become synonymous with quality, convenience, and a wide range of products. The chain has successfully positioned itself as a leading player in the Macedonian retail market, catering to the diverse needs of its customers. Kit-Go supermarkets are strategically located in prime areas throughout the country, ensuring accessibility and convenience for shoppers.”

Viva Fresh describes itself as “the largest retail network in the country, with over 110 stores in 32 cities of Kosovo, with over 5,000 employees, and the largest logistics center in the region (with over 42,000 square meters).”

The ODI Law team was led by Partners Gjorgi Georgievski and Ana Stojanovska.

The Lalicic & Boskoski Law Office has advised Mr. Bricolage on relocating its business premises in Skopje across the street from its former location through a lease agreement with landlord Tinex.

Financial details were not disclosed

According to the firm, the long-term lease agreement, centered around the relocation of the Mr. Bricolage store “just across the street from its previous establishment,” also involved “addressing zoning regulations, permits, and potential disputes that may arise during the transition.”

Mr. Bricolage is a French retail chain offering home improvement and do-it-yourself goods. The company has around 400 stores across France and 70 stores abroad.

Tinex, the owner of the real estate, is a chain of supermarkets in the Republic of North Macedonia. It was founded in the 1990s, with its first store opening in Skopje.

The Lalicic & Boskoski team was led by Partner Martin Boskoski.

ODI Law has advised Makedonski Telekom Skopje on insourcing 150 employees from the Macedonian subsidiary of Ericsson. Karanovic & Partners advised Ericsson.

Makedonski Telekom is a telecommunications company in North Macedonia that provides a range of mobile, fixed-line, internet, and digital services to residential and business customers.

Ericsson is a Swedish multinational networking and telecommunications company headquartered in Stockholm.

According to ODI Law, “the strategic decision to insource the employees from Ericsson reflects the company’s commitment to strengthening its workforce and enhancing operational capabilities. By bringing these skilled professionals in-house, Makedonski Telekom Skopje aims to optimize its services, drive innovation, and deliver an exceptional customer experience.”

Back in 2022, ODI Law had also advised Makedonski Telekom on its collective bargaining negotiations with trade unions (as reported by CEE Legal Matters on August 25, 2022).

The ODI Law team included Partner Gjorgji Georgievski.

The Karanovic & Partners team included Partner Veton Qoku and Attorneys at Law Martina Andjelkovic Apostolska and Ana Kashirska.

The Public Enterprise for Railway Infrastructure Railways of the Republic of North Macedonia – Skopje has published a contract notice for project implementation support and safeguard services for the construction of a new railway section from Kriva Palanka to the border with the Republic of Bulgaria (“Project”). The 24 km section is the last part – the third phase of the railway Corridor VIII to the Republic of Bulgaria.

The 60–month contract worth EUR 3,750,000 will be awarded to a suitably qualified and capable firm or joint venture/consortium worldwide that will provide implementation support, safeguard support and monitoring services for the Project.

To be eligible to participate, candidates must meet certain criteria, including holding a trade license in their country of establishment, having employed a minimum of 20 employees for the last three years (or at least ten in the case of a joint venture/consortium), and possessing a valid ISO certificate or its equivalent.

Candidates must also have an annual turnover of at least EUR 1,500,000 for the last five financial years, a positive net worth in each year and a liquidity ratio of more than one in each year.

Furthermore, candidates must have completed at least two service contracts in the relevant field in the past seven years, with a minimum value of EUR 3,200,000 each and a minimum participation of 50% in those contracts. At least one of these contracts must have been completed in a country of the Western Balkans 6, Turkey, Slovenia, Croatia, Bulgaria, Greece, or Romania.

The deadline for submitting applications is 26 June 2023.

By Veton Qoku, Partner, and Ana Kashirskaa, Senior Associate, Karanovic & Partners

The recent dismissal of Vesna Dameva from her position as President of the Judicial Council of North Macedonia was both surprising and concerning – and could spell disaster for the country’s judicial system – according to Law Firm Joanidis Partner Aleksandar Joanidis.

“There is no bigger topic in Macedonia right now,” Joanidis begins. “The dismissal was illegal, in my opinion, as there is no legal ground to terminate the President of the Judicial Council, outside of their mandate naturally expiring,” he points out.

Joanidis explains that Dameva “was dismissed with a majority vote of the Judicial Council, which had no precedent, and no basis in law – it has never happened before since the council’s establishment – but the development itself is now a precedent.” He says he’s both disappointed and worried: “This is the body that oversees the nomination of judges and stands as the guarantor of the legality of courts functioning in general. Which is why it’s such a problem when the council does not obey the laws that should apply to it. There’s an erosion of the belief that the judges it appoints and the courts it oversees will themselves obey the law.”

To make matters worse, Joanidis highlights that “a significant number of judges have retired of late. We have courts with no appointed judges and no new appointments coming. Or worse, there are doubts on the legality of those judges’ appointments.” As he sees it, “the courts are not functioning according to the law. So, we are being left to our devices. Which is a very dangerous situation that’s quite toxic in practice. We’re still hoping that the debacle in the judicial system will be addressed, but no news so far.”

This is why Joanidis finds the Judicial Council’s decision to go out on a limb so odd. “It has created such an inconvenient situation, casting a shadow on court practice in general,” he says. “We became lawyers – and we advise clients – with the understanding that our advice should incorporate the evolution of court practice. It’s not just a dry recitation of legal texts. And it should not have to come with a ‘This was the practice thus far, but since yesterday that’s all out the window’ disclaimer.”

In practice, this unprecedented situation means uncertainty for clients and a shift in the role of lawyers. “We’re trying to help clients avoid the courts,” Joanidis says. “We’re advising them to get everything they can get done through a Notary Public, a Judicial Officer, or executive clauses in contract writing – to be able to bypass the whole court situation and minimize disputes. We’re creatively trying to protect the rights of our clients as well as their enforcement later.”

The final nail in the coffin, Joanidis points out, is the judges’ and the authorities’ silence on the matter. “So far, no statement has been issued by Parliament (which appoints people to the Judicial Council). The worst of it is that the judges themselves, and the courts, are being quiet. There were no opinions expressed on this unprecedented development. Once you’re disappointed by the courts,” Joanidis concludes, “your belief in the whole system fades. We’re in court every day – we expect justice to be served there – if the legality principle is being ignored, all expectations fly out the window.”

North Macedonia introduces a new minimum wage and price-freezing measures, as the country continues to grapple with workforce shortages, including in the legal profession, according to Bachovski Sinkoli Attorneys Managing Partner Robert Bachovski Sinkoli.

“Recently, there has been a change in the minimum wage, effective from April 1, with the new minimum wage set at EUR 330,” Bachovski Sinkoli says, noting that the minimum wage varies depending on industries. “The government has also announced a review of the minimum wage in six months, to ensure it is adequate to cover the cost of living.”

“On the other hand, price caps have been introduced on essential items such as food and energy,” he adds. “For example, there have been fixed prices on bread: however, this has led to protests from bread producers who claim they will not make any profits under this pricing scheme.” According to Bachovski Sinkoli, as a result, there have been instances where bread was not available in shops for a few days. “Similar price caps have also been observed in the energy sector, leading to concerns about the availability of heating,” he continues. “These price-freezing measures have caused disruptions in the market and have been met with mixed reactions from various stakeholders.”

Another interesting topic in North Macedonia, according to Bachovski Sinkoli, is the shortage of professionals in the legal system, including lawyers, judges, and notaries. “To illustrate, in the Basic Court of Prilep there are only three judges currently working, whereas official reports indicate that there should be at least 15 judges. This shortage of judges has resulted in delays in court procedures, particularly in civil, criminal, and commercial cases.” When it comes to hiring lawyers, Bachovski Sinkoli points to “the perception that younger generations are more inclined to pursue careers in fields such as engineering, where they may find better opportunities outside the country. This trend may further impact the availability and quality of legal professionals, exacerbating the existing challenges in the legal system.” 

According to Bachovski Sinkoli, the entire country is facing challenges related to workforce shortages. “To address the issue of workforce deficit, North Macedonia, along with Serbia and other countries in the Balkan region, initiated a new joint plan two months ago to attract investments under the Open Balkan scheme,” he notes. “This could potentially result in the removal of tax between the countries to promote open movement in the Balkans. Working together could be one way to overcome our deficits.”

In February, the Parliament of the Republic of North Macedonia ratified the Agreement on the Conditions for Free Access to the Labor Market in the Western Balkans and the Agreement on the Interconnection of Schemes for Electronic Identification of the citizens of the Western Balkans as part of the Open Balkans initiative.

Both agreements were signed in Tirana on December 21, 2021, by the President of the Republic of Serbia, Aleksandar Vučić, the Prime Minister of the Republic of North Macedonia, Zoran Zaev, and the Prime Minister of the Republic of Albania, Edi Rama.

The Agreement on the Conditions for Free Access to the Labor Market in the Western Balkans provides citizens of the three member states of the initiative with identical conditions to each member state’s local population when accessing the labor market. The Agreement on the Interconnection of Schemes for Electronic Identification of Western Balkans citizens enables the member states to obtain an identification number for access to electronic services. With the identification number, citizens gain unrestricted access to the labor market in other member states.

The benefits are reflected in that citizens of the signatory countries will not have to obtain work permits to work in one of the three countries, as well as simplified administrative procedures and the elimination of administrative costs. The Open Balkans ID number also eliminates the need for obtaining residency permits.

As these agreements are implemented in the member states of the Open Balkans, we will see first-hand the benefits and challenges that these member states’ administrative and other bodies may face. Until then, we invite you to revisit our Hitchhiker’s guide of the Open Balkans initiative from August 18, 2022 and follow us to find out what practical consequences the signed agreements will have on the Open Balkans member states.

By Vuk Lekovic, Senior Assiociate Gecic Law

In today’s world, businesses realize the importance of incorporating Environmental, Social, and Governance (ESG) factors into their operations for long-term sustainability. This is important not only for running the business but also for investors who consider these factors in their investment decisions. Stock exchanges play a key role in promoting sustainability for both corporations and investors.

ESG practices are still in the early stages of development in Macedonia, the Macedonian government has taken steps to promote sustainability and encourage responsible business practices in the country. In 2020, the government adopted the National Strategy for Sustainable Development, which aims to promote social, economic, and environmental sustainability in the country.

The strategy includes targets for reducing greenhouse gas emissions, increasing the share of renewable energy in the energy mix, and improving energy efficiency. It also includes targets for improving social equity, reducing poverty, and promoting education and health. The government has also launched several initiatives to promote sustainable practices in the private sector.

For example, in 2019, the Ministry of Economy launched the Green Finance Initiative, which aims to promote green financing and investments in the country. The initiative includes training and capacity-building for financial institutions on how to evaluate and finance sustainable projects. The government has also launched a program to provide financial incentives for companies that invest in energy efficiency and renewable energy projects.

In November 2021, the Macedonian Stock Exchange adopted the Corporate Governance Code. The Corporate Governance Code incorporates ESG aspects to promote transparency. It requires publicly traded companies to report on environmental and social issues in their annual reports, including gender representation in the supervisory and management board, communication with stakeholders, and environmental and social policies. Companies must also disclose all significant information related to their financial condition, operations, ownership structure, and corporate governance in a timely and accurate manner. These companies should also establish internal policies and procedures that promote responsible behavior towards the environment, society, and all stakeholders and build a business model that takes into account the impact of their activities on the environment and broader social community. These policies should be publicly available on the company’s website, along with other relevant information provided with the Code. The company’s Board is responsible for ensuring the timely and accurate publication of all information through the electronic information system for listed companies on the Macedonian Stock Exchange (SEI-NET) in accordance with the law or the Listing Rules.

This information must include details on shareholder rights, the internal acts that determine the responsibilities of the supervisory and management board, the Board Profile of the Supervisory Board, the ethical Code of the company, and environmental policies and issues of social interest, in line with the ESG factors.

To ensure that they are transparent and compliant with legal requirements, companies have various options for reporting their ESG information. These reporting options include integrating ESG disclosures within the company’s annual report, adopting a separate sustainability report that includes all relevant sustainability information, or using integrated reporting to combine financial and sustainability reporting in a single document that demonstrates how the company’s strategy and value creation model are linked to its ESG performance. When disclosing ESG information, companies can also utilize internationally accepted reporting standards and frameworks. In North Macedonia, the most commonly used reporting standards and frameworks are the GRI Standards developed by the Global Reporting Initiative (GRI), the IIRC Framework developed by the International Integrated Reporting Council (IIRC), and the SASB Standards developed by the Sustainability Accounting Standards Board (SASB). These frameworks provide a structured and systematic approach to ESG reporting, ensuring that companies report their ESG information in a standardized and comparable manner.

The inclusion of ESG factors in the Corporate Governance Code highlights the importance of responsible corporate governance practices and promotes transparency and accountability among publicly traded companies in Macedonia. However, it is worth noting that not all companies operating in North Macedonia have fully integrated ESG considerations into their corporate culture.

While some companies have embraced sustainability and social responsibility as core values, others have been slower to adapt to these trends. As such, the degree to which ESG factors are integrated into the corporate culture of Macedonian companies can vary widely. Overall, there is growing awareness of the importance of ESG factors in the business community in North Macedonia, and this is reflected in the country’s regulatory framework. However, more work may be needed to fully integrate ESG considerations into the corporate culture of all companies operating in the country.

By Gjorgji Georgievski, Partner and Ema Tasevska, Associate, ODI Law