CEE Legal Matters

Category: Serbia

  • Project ePaper – A Call for Business Entities to Participate

    The Government of the Republic of Serbia launched Project ePaper in 2016 with the aim of simplification of administrative procedures and modernizing public administration (“Project”). The Project aims to reduce the administrative expenses by 15-20% – from 3.46% to 3.0 % of GDP by 2021.

    In July 2019 the Government of the Republic of Serbia adopted the Programme for the Simplification of Administrative Procedures and Regulations ‘e-Paper’ for the Period 2019-2021 (“Programme”) together with the Action Plan for the implementation of the Programme (“Action Plan”).

    The measures envisioned by the Programme for achieving the above-mentioned general goal are inter alia:

    • Establishing a Single Public Register of Administrative Procedures by the end of 2020;
    • Simplifying and eliminating unnecessary procedures, optimizing the 500 most frequent and most expensive procedures, and digitalizing the 100 most frequently used procedures by the end of 2020;
    • Digitalizing 2,500 administrative procedures by 2021

    Recently the Public Policy Secretariat (“Secretariat”) as the coordinator of the Project has announced on its website the amendments to the Action Plan in accordance with the “second package” of the Recommendations for the Optimization of Administrative Procedures (“Recommendations”) and invited all interested parties to send their comments, proposals, and suggestions.

    The Draft Act on the Single Public Register

    The first Draft Act on the Single Public Register (“Act”) was published on the website of the Secretariat.

    The public register should be a one-stop-shop where citizens and economic operators will be able to obtain all necessary information and documentation relevant for a specific administrative procedure.

    The Act regulates the establishment and maintenance, content, manner of use, as well as other issues of importance for the functioning of the register of administrative procedures. The Act will also establish principles for regulating administrative procedures, as well as the authority to adopt methodological rules governing these procedures.

    The Act should be adopted and enter into force by the end of 2020 and will constitute the legal basis for the establishment of the Register.

    Questionnaire on Administration Simplification

    The Questionnaire on 2500 administrative procedures has been made publicly available on the portal http://www.epapir.rsjp.gov.rs/start.

    Every interested party can fill in the questionnaires and submit a) opinions on each administrative procedure before public authorities (for example Tax Authority, National Bank of Serbia etc) b) explanations on difficulties encountered within the administrative procedure and c) proposal which administrative procedures should be abolished or simplified.

    In its announcement, the Secretariat invited all interested partiesto actively participate in the survey. The input provided directly by entrepreneurs, experts, companies and various organizations should help implementation of the Project and systematic examination of 2500 administrative procedures.

    This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

    By Radovan Grbovic, Partner, and Vanja Vujnovic, Senior Associate, Samardzic, Oreski & Grbovic

  • Milos Gledovic Promoted to Partner at Samardzic Oreski Grbovic

    Milos Gledovic Promoted to Partner at Samardzic Oreski Grbovic

    Milos Gledovic has been promoted to Partner at Samardzic Oreski Grbovic.

    Gledovic has over ten years of professional experience, serving international and local clients in areas of real estate, banking & finance, corporate, and M&A. According to SOG, “he provides tailor-made advice to real estate developers, retailers, banks, and industry professionals on a variety of real-estate-related matters, including project development, sales, and acquisitions, property joint ventures, construction contracts, as well as real estate strategies and complex transaction structures.”

    “This has been a logical choice for us,” comments SOG Founding Partner Milan Samardzic. “Milos has proven to be an invaluable asset to our legal practice, and his promotion to partnership is our way to show the appreciation for his commitment to delivering excellent service to clients and his collaborative approach to colleagues in our firm.”

    Gledovic has an LL.B. from the University of Belgrade. Prior to joining SOG he spent almost four and a half years with CMS, over two and a half years in-house with Delhaize Serbia, and almost two and a half years with Zavisin Semiz & Partneri.

  • Karanovic & Partners Advises Backer on Acquisition of Stake in Elektrotermija

    Karanovic & Partners Advises Backer on Acquisition of Stake in Elektrotermija

    Karanovic & Partners has advised Sweden’s Backer AB on the acquisition of shares in Serbia’s Elektrotermija d.o.o.

    Backer AB is a member of the NIBE Group, which develops and manufactures intelligent, energy-efficient indoor comfort solutions. Elektrotermija, which was founded in 1983, produces different kinds of electric heaters and devices.

    Karanovic & Partners‘ team included Partner Ivan Nonkovic and Associate Igor Radovanovic.

    Karanovic & Partners did not reply to our inquiry on the matter.

  • The Buzz in Serbia: Interview with Dragoljub Cibulic of BDK Advokati

    The Buzz in Serbia: Interview with Dragoljub Cibulic of BDK Advokati

    “The main thing, politically, is the upcoming Parliamentary elections set for this April,“ says Dragoljub Cibulic, Partner at BDK Advokati in Belgrade. “We’re entering a period of increased political instability, especially given the announced boycott of the elections by the major opposition block. The boycott is rooted in the imbalance on the Serbian political scene, which is heavily dominated by the ruling party. Opposition parties are cut-off from the mainstream media, the ruling party wields tremendous financial power from close ties with the privileged local business caste, and state institutions crucial for a functioning democracy have been hijacked and submitted to the interests of the ruling party.“

    This fallout from the situation is likely to come down the road, Cibulic thinks. “Short-term, the boycott is not likely to have a serious effect, but in the long run it carries a lot of weight because it signals that the opposition will no longer take part in a game which is, pretty much, rigged.”

    Speaking about recent legislation, Cibulic reports that a new law regarding infrastructural projects of significant strategic importance has already been passed this year. “The idea behind it is the need for more efficient realization of important strategic infrastructural projects. The new law has its good sides — but is not free of downsides. On the plus side, expropriation and construction-permitting processes are simplified. But on the minus side, the public procurement rules for the development of infrastructural projects have been heavily modified, with a possibility of their full exclusion if the Government opts to develop the project under a still hazy strategic partnership model.“

    Otherwise, he says, potentially important legislation is “on hold, pending the end of the elections. The first thing the Government is likely to focus on is public sector reform, which is sorely needed.“

    Finally, Cibulic reports that the biggest growth drivers of Serbia’s economy are likely to be infrastructural projects and FDI, as well as the “recent increase of pensions and wages in the public sector.“ He states that the winter and the end of the construction season have not slowed down projects in Serbia, and that the sector is booming.

  • Data Protection Act Principles for Business Managers

    The rising importance of data protection practice inevitably affects even those who intentionally want to ignore it. There is already an infinite quantity of material about the new data protection regime. The practice is getting richer every day, which makes the interpretation of the existing legislation even more complex. As in other areas of law, there are no shortcuts. It is not possible to read from one specific source and to immediately get to the point of at least general understanding.

    Still, there is a smart approach for non-experts which can help a lot in the preliminary estimation of compliance with the Serbian Data Protection Act (“SDPA”).

    As in the General Data Protection Regulation (widely known as GDPR), principles envisaged by the SDPA are straightforward. These principles are at the heart of the SDPA. They set the spirit of the data protection regime in Serbia.

    If your company’s data protection practice follows the logic of the six principles, it means that you may be on the right track.

    On the contrary, if your company is not compliant with these principles, it means that you certainly need to work on your data protection practice.

    Six SDPA key principles are:

    1. Lawfulness, fairness, and transparency;
    2. Purpose limitation;
    3. Data minimization;
    4. Accuracy;
    5. Storage limitation;
    6. Integrity and confidentiality.

    The business manager faced with a question about whether their company data protection practice is doing a good job, may firstly to go through the six key questions based on the above-mentioned principles.

    So, personal data should be:

    • processed in a lawful, fair and transparent manner;
    • collected with the lawful purpose and processed in line with that purpose;
    • limited to what is necessary and with respect to the purpose;
    • accurate and kept up to date;
    • kept for no longer than is necessary for the respective purpose;
    • processed in a manner that ensures the security and integrity of the data.

    Principles are not to be used as a quick test. Yet, knowing principles help non-lawyers to understand the logic behind the Serbian data protection regime.

    This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

    By Milos Velimirovic, Partner, and Katarina Zivkovic, Senior Associate, Samardzic, Oreski & Grbovic

  • New Regulation for Derivatives Transactions with Sovereign Counterparty in Serbia

    New Regulation for Derivatives Transactions with Sovereign Counterparty in Serbia

    According to the Public Debt Act (Zakon o javnom dugu) of the Republic of Serbia, the Minister of Finance manages the country’s public debt by (i) entering into transactions that would reduce or eliminate currency risk, interest rate risk and other risks, (ii) deciding on the sale and purchase of foreign currencies, and (iii) managing cash balances on the Republic of Serbia’s treasury accounts. The aim of public debt management is to provide the means for regular servicing of budgetary needs at the most favourable conditions and cost of financing, with an acceptable level of risk.

    The Public Debt Act entrusts the Government of the Republic of Serbia to regulate the conditions for the performance of financial transactions by the country for public debt management purposes. The Government did this on 26 December 2019 by adopting the Regulation on the Performance of Financial Derivatives Transactions for the Purpose of Managing the Republic of Serbia’s Public Debt (Uredba o obavljanju poslova sa finansijskim derivatima u cilju upravljanja javnim dugom Republike Srbije) (“Derivatives Regulation“).

    The Derivatives Regulation entered into force on 4 January 2020 and has the following key features:

    Scope

    The Derivatives Regulation lays down the general conditions for the performance of financial derivatives transactions by the Republic of Serbia as a sovereign counterparty. Such derivatives transactions may solely be entered into for the purpose of hedging against risks affecting the amount and structure of public debt and costs of financing of public debt liabilities.

    The Derivatives Regulation defines hedging (zaštita od finansijskog rizika (hedžing)) as a combination of derivatives transactions seeking to manage, reduce or eliminate risk (exchange rate risk, currency volatility risk and other types of risk) relating to the debt instruments issued by the Republic of Serbia.

    Within the meaning of this Derivatives Regulation, the following are regarded as financial derivatives: interest rate swaps, cross currency swaps, basis swaps, FX swaps, options, futures and forwards.

    Eligible counterparties

    The Derivatives Regulation envisions these counterparties: (i) the Ministry of Finance on behalf and for the account of the Republic of Serbia; and (ii) a counterparty.

    The Minister of Finance is authorised to negotiate and enter into ISDA Master / CSA agreements on behalf of the Government and for the account of the Republic of Serbia. The Minister of Finance or a designated Ministry of Finance employee authorised by the Minister may enter into derivatives transactions on behalf and for the account of the Republic of Serbia.

    To be eligible to enter into derivatives transactions with the Republic of Serbia, a counterparty must fulfil the following conditions:

    • it must be a financial institution licensed to enter into banking transactions, supervised by the regulatory body in its country of origin;
    • it must enter into an ISDA Master Agreement; and
    • it must have a credit rating which is not below BBB-/Baa3 and must originate from a country having a long-term credit rating not below BBB-/Baa3 according to well-known rating agencies.

    The credit rating is further regulated as follows:

    If a counterparty (of the Republic of Serbia) obtained a different credit rating from different rating agencies, the Ministry of Finance shall take into account that counterparty’s second-highest credit rating.

    If a counterparty is a subsidiary, a guarantee shall be required from the parent company, and the credit rating applied shall be that of the parent company, unless otherwise specified in the agreement. The minimum credit rating for the parent company must be BBB-/Baa3.

    If a counterparty’s credit rating should fall below the minimum threshold, entry into a transaction with that counterparty will only be permitted for the Republic of Serbia where it is necessary to reduce the risk arising out of the transactions already entered into with that counterparty, subject to approval by the Minister of Finance or a designated Ministry of Finance employee authorised by the Minister for that purpose.

    If a counterparty’s credit rating should fall below the minimum threshold, the existing derivatives transactions may be held to maturity on account of the costs of termination of all transactions with such counterparty, subject to prior approval by the Minister of Finance or a designated Ministry of Finance employee authorised by the Minister for that purpose.

    Transactions

    The Public Debt Administration (Uprava za javni dug), which is established as a sub-organisational unit of the Ministry of Finance to support the administrative activities of public debt management, is authored to define the Republic of Serbia’s requirements for the implementation of derivatives transactions and to implement the derivatives transactions.

    The Public Debt Administration shall collect bids for entry into transactions from at least three potential counterparties and shall confirm which parties are eligible. The Minister of Finance will enter into the derivatives transaction with the counterparty having bid the most favourable price defined in the request for quotation. If several interested parties provide the same quotation, the bid accepted shall be the one provided by the party with the highest credit rating. If several interested parties with equal credit rating provide the same quotation, the Minister of Finance may enter into a transaction with an interested party taking into account the quality, overall bid and cooperation with that interested party. The Minister of Finance may enter into the transaction with several counterparties at the same price.

    The transaction may be entered into via a Bloomberg terminal or by email, or in another manner agreed in the ISDA Master Agreement.

    Collateral

    Derivatives transactions may be entered into with or without collateral. Where a CSA has not been signed and the transactions have been performed without collateral, restrictions for the credit limit per transaction and per party shall be set for the counterparty to limit the maximum risk exposure.

    Financial collateral will be provided and the right to satisfy claims from the collateral (including credit claims) will be exercised according to the provisions of the Financial Collateral Act (Zakon o finansijskom obezbeđenju), unless otherwise agreed in the ISDA Master Agreement and the CSA.

    By Petar Kojdic, Partner, Schoenherr

  • Milica Radeka Vojvodic Promoted to Partner at ODI Law in Serbia

    Milica Radeka Vojvodic Promoted to Partner at ODI Law in Serbia

    Milica Radeka Vojvodic has been promoted to Partner at ODI Law in Serbia.

    Radeka Vojvodic joined ODI Law in 2016 after spending seven years with the Samuilovic-Radeka Law Office, then three years as Assistant Registrar at the Serbian Business Registers Agency then eight years in-house as Legal Adviser at the Stara Planina resort. She graduated from the University of Belgrade.

    In a statement released by ODI Law, the firm declared: “This promotion speaks much in favor of ODI’s commitment to excellence and it also marks ODI as a firm which values hard work, knowledge, expertise, and a true commitment of its employees. It is with great honor that we present to the public, our new Partner Milica Radeka Vojvodic.”

  • BDK Advokati, Dentons, and Andric Law Advise on GetSwift Acquisition of Majority Stake in Logo

    BDK Advokati, Dentons, and Andric Law Advise on GetSwift Acquisition of Majority Stake in Logo

    BDK Advokati has advised the shareholders of Serbian IT company Logo doo on the sale of a 60% stake to GetSwift. Dentons and Andric Law advised GetSwift on the deal.

    According to BDK Advokati, “some of Logo’s specialties are network and communication systems, including their own production of the optical cables, data centers, telecommunications infrastructure, InfoSec, and infrastructure safety systems, as well as building automation systems.” Also, according to the firm, GetSwift is “a delivery management automation company from New York that is listed on the Australian Securities Exchange.”

    BDK Advokati’s team included Senior Partner Vladimir Dasic and Associates Jelena Zelenbaba and Sanja Dedovic.

    Dentons’ team included Budapest-based Partner Rob Irving, Washington D.C.-based Partner Chris Fetzer, and Associates Kamran Pirani, Frantisek Ordody, and Gabor Velkey.

    The Andric Law team was led by Partner Luka Andric.

  • Dragan Karanovic Takes Over as Managing Partner at Karanovic & Partners

    Dragan Karanovic Takes Over as Managing Partner at Karanovic & Partners

    Dragan Karanovic has been made the new Managing Partner of Karanovic & Partners, taking over from Rastko Petakovic, who served as Managing Partner for the past three years.

    Karanovic will be assisted by Senior Partner Darko Jovanovic.

    According to Karanovic & Partners, “Dragan has 25 years of experience and is ranked as one of Serbia’s leading corporate lawyers. He has garnered some of the most prestigious accolades from the most relevant legal directories and has been recognized as a market leader for his role in advising multinational clients, financial institutions and governments on mergers and acquisitions, privatization, and energy and infrastructure transactions. Apart from being involved in some of the largest deals in the SEE, his vision and leadership placed the company at the very top of the SEE legal industry.”

    Petakovic will continue as a partner handling competition and corporate law matters, as well as assisting on the business development and digital transformation of the firm. According to Karanovic & Partners, during his tenure as Managing Partner, he “brought along a new wave of energy and innovative ideas to contribute to the firm’s position in the market.”

    “Rastko left a lasting legacy during his tenure,” said Dragan Karanovic. “His devotion and commitment were remarkable and he has been a true role model to our younger associates. I am looking forward to continuing our joint vision, which is solidifying our position in the market and creating new exciting opportunities.”

  • The Newly Adopted Law on Employment Agencies – Equal Rights for Employees but Unequal Rights for Employers

    After a long wait and numerous criticisms from the private sector and NGOs, Serbia has adopted the Law on Agency Employment (the “LAE”) which starts to apply from 1 March 2020. The purpose of the law is to provide equal treatment for employees leased by agencies to employers.

    Whether this goal is achieved remains to be seen, although the general reaction does not seem to be entirely favorable.

    Background for adopting the LAE

    Up until now the practice staff leasing was entirely unregulated, but implicitly allowed by governmental authorities and courts. This gray zone status of leased employees led to lowering of employment terms for leased employees compared to “regular” employees that were engaged directly by the employer for whom they work.

    In reality, leased employees had very few legal protection mechanisms that regular employees enjoyed and there were not regulatory requirements for agencies that leased employees.

    The standards introduced by LAE

    The LAE aimed to rectify these shortcomings of an unregulated market that emerged in the legal vacuum regarding staff leasing by obliging employers to provide equal terms of employment to leased employees in comparison to comparative employees working with the employer and by providing a legal framework for staff leasing agencies.

    The key rights acknowledged and guaranteed to leased employees include equal pay and other types of remuneration, health and safety conditions and annual vacation days as those provided to regular employees with an employer.

    A threshold is set for the number of leased employees that can be engaged by an employer that runs at no more than 10% of the number of total employees.

    Although the LAE does raise the bar of employee rights in some key aspects in a broader sense, some of the key rights are still missing.

    New solutions or new problems?

    It could be argued that an entirely new set of problems and ambiguities were created by the enactment of the LAE.

    One of the most glaring objections to the LAE can be found in what seems to be a limitation of relief that can be sought before courts by a leased employee. By a strict reading of the letter of LAE, leased employees can claim up to 18 monthly salaries in case of unlawful termination of their employment.

    Coupled with the fact that labor disputes before Serbian courts can last up to 6 years, the limitation of recourse of leased employees can lead to a gross inequality between regular and leased employees, and create an entirely new disbalance between the two.

    Another highly questionable rule of the LAE labeled “presumption of leasing” by which employees that provide services for an employer or sit in the premises of another entity other than their employer, are presumed to be leased employees.

    Finally, even employers using leased employees are potentially exposed to risks if they are not careful in their business dealings with staff leasing agencies.

    For example, the LAE introduces a joint and severable liability of user employers for salaries and other remuneration of leased employees. This can lead to financial exposure of employers in the event that, for example the agency goes bankrupt or refuses to pay the salaries for leased employees.

    Bearing in mind that the law starts to apply from March 2020 a thorough revision of the terms of agreements with staff leasing agencies is recommended for all companies, in order to off-set some of the inherent imbalances and unclarities of the newly fashioned LAE.

    This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

    By Milan Samardzic, Partner, and Boris Radojcic, Senior Associate, Samardzic, Oreski & Grbovic