Category: Serbia

BDK Advokati has advised Enlight Renewable Energy and Enlight K-2 Wind on the development and financing of the 94.4-megawatt Pupin wind farm slated for construction in Kovacica, Serbia. Harrisons and, reportedly, White & Case advised lenders Erste Bank AG, Erste Bank Novi Sad, and the EBRD on their EUR 91.4 million financing.

According to BDK Advokati, “the Pupin Wind Farm emerged as one of the successful bidders in last year’s market premium auction and is the first one to secure project financing. Situated adjacent to the operational 104.5-megawatt Kovacica Wind Farm, also developed by Enlight Renewable Energy, these projects will collectively position Enlight Renewable Energy as one of the largest independent power producers in the Republic of Serbia.”

According to Harrisons, “Pupin will be the second windfarm in Kovacica financed by the same lenders and owned by Enlight. It will have 16 wind turbines [and] also be the first EBRD project under the contract for difference (CfD) scheme. [This] will contribute to climate change mitigation and the Serbian energy green transition by increasing the share of renewable energy generation in the country and adding new wind generation capacity to the national energy system. In addition, the project will also strengthen the private sector presence in the renewable energy sector in Serbia.

The BDK team included Senior Partners Dragoljub Cibulic and Dragoljub Sretenovic, Partner Milan Dakic, Senior Associate Djordje Zejak, and Associate Ana Jovanovic.

The Harrisons team included Consultant Ines Matijevic-Papulin and Associates Mina Zeljkovic and Aleksandar Jovicevic.

On July 4, 2023, CEE Legal Matters reported that Kinstellar and SOG were teaming up in Serbia through a strategic partnership. Recently appointed Kinstellar Belgrade Managing Partner – and co-head of the firm-wide Financial Institutions sector – Milos Velimirovic shares an insider’s perspective on the move.

CEELM: First off, congratulations on the move! Can you give our readers a bit of background on SOG?

Velimirovic: Thank you! I’d be happy to: the firm was founded between 2010 and 2011 by Milan Samardzic, who was the Founding Partner and previously part of DLA Piper Vienna. He was joined a year later by two other Partners and, together, they commenced operations in Belgrade under the name SOG, an acronym derived from the initials of their names. From its inception until July 1, 2023, the firm experienced significant growth, highlighted by several large transactions along with numerous small and medium-sized ones. SOG is a full-service law firm covering all sectors and service lines, growing its team from around 25 people last year to more than 45 now. We were a mid-sized law firm by Serbian standards before the merger and ranked among the top 10 in the country in terms of revenue and team size. Now our position has improved, and we are among the top 3 firms. Our goal was to elevate our status from second tier to first tier across all service lines.

CEELM: And how did this Kinstellar/SOG merger come about?

Velimirovic: While the Serbian market is currently vibrant with discussions and actions regarding potential mergers – particularly among mid-sized firms – this merger was a first of its kind, to my knowledge. Prior to engaging with Kinstellar, we had been approached by several entities interested in growth in the Serbian market through acquisition or merger. Kinstellar presented a compelling strategy along with their local team and references, proposing we join them to become part of their broader organization. The consolidation trend is global, and in the CEE region, law firms can generally be divided into two categories: established firms with long-standing referral networks outside their local area and younger, growth-oriented firms with burgeoning connections. We were identified as part of the latter, appealing for Kinstellar on account of our entrepreneurial spirit and approach.

CEELM: Why did joining Kinstellar make sense for your team?

Velimirovic: The business rationale was clear for us; we aimed to augment the portion of our business sourced from abroad. Prior to the merger, international work constituted around 15% of our revenue. This figure has since increased substantially. Even though 85% of our portfolio pre-merger comprised international companies, the majority was local work. The synergy with Kinstellar also extended to our shared values and work culture, albeit with Kinstellar adopting a slightly less aggressive approach than ours in pursuing clients and projects. Nevertheless, our methods and philosophies were highly compatible.

CEELM: You had been approached before. What made this proposition more attractive than the others?

Velimirovic: Beyond financial considerations, cultural alignment is paramount. While many potential mergers seem viable on paper, they must also be practical and resonate on a deeper level. Kinstellar’s approach and vision aligned with ours, making this partnership the right choice.

CEELM: What was your selling point – what drew Kinstellar towards the SOG team and operation?

Velimirovic: Kinstellar was attracted to our local expertise and entrepreneurial flair. They sought to expand in Serbia, aiming to become a leading firm capable of handling significant transactions and work, both in terms of size and quality. This merger was envisioned to increase market share, enhance client service capabilities within Serbia, and improve our ability to service inbound clients and manage work sent to other regions.

CEELM: Which stage of the integration process are you currently on?

Velimirovic: The formal and technical merger occurred on July 1, 2023, with the integration process spanning approximately six months until the end of that year. While we have addressed most of the major integration points, some aspects of our business operations still require fine-tuning.

CEELM: What synergies did you find? And what required ironing out?

Velimirovic: The merger has yielded numerous synergies, notably in specialization across sectors and service lines, consolidating firm-wide knowledge with SOG’s local insights. Additionally, SOG’s experience in the Western Balkans has been a significant asset, enabling the creation of a hub to cover the region from our Serbian and Croatian offices. The primary challenge was integrating two previously independent teams into a cohesive unit.

CEELM: What were your team’s clients’ reactions, and to what extent did they remain on board?

Velimirovic: The response has been overwhelmingly positive. We emphasized the benefits of the merger, reassuring clients of the continuity of service with the added advantages of broader knowledge and reach. All our existing clients stayed with us, and we attracted new ones post-merger, bolstered by our enhanced connections and capabilities.

CEELM: And how did your client portfolio evolve after the move?

Velimirovic: Post-merger, our focus has increasingly shifted towards international work without neglecting local engagements. We’ve seen a rise in inbound work and cross-border transactions, reinforcing our transactional focus while maintaining a vibrant dispute resolution and arbitration practice.

Our objective is to maintain and expand our local client base while also growing our international portfolio. This dual focus allows us to pursue growth opportunities both locally and internationally, catering to a diverse range of client needs.

CEELM: Finally, please share with our readers a bit on what we can expect from the Kinstellar Belgrade team in the future.

Velimirovic: Looking ahead, we are committed to achieving first-tier status in Serbia, a goal supported by our quality of work and the recognition of legal directories. The SOG-Kinstellar collaboration will tackle larger transactions and more significant dispute resolution and arbitration cases. Internally, we are transitioning from service lines to sector-focused services, aiming to align more closely with our clients’ business perspectives: they are used to speaking about their businesses and care less for the separation between different legal lines of work. So we’ll focus more on seeing things from their perspective. That’s important, especially for business leaders.

The Parliament of Montenegro has adopted again the Law on Amendments to the Companies Act with 43 votes in favor, at the extraordinary session of the Parliament held on January 19, 2024, and the Amendments entered into force on January 23, 2024.

The initial Proposal of the Law on Amendments to the Companies Act was submitted by six members of Parliament on December 13, 2023. The Amendments proposed a change of Articles 135 and 136 of the Companies Act. These articles pertain to convening shareholder meetings, with the proposed amendments stipulating a deadline of 21 days for holding the general meeting from the date of its convocation, in which case the deadline for sending notice of the meeting would also be 21 days. Committee on Economy, Finance, and Budget of the Parliament of Montenegro made Amendments to this proposal, aiming at “more appropriately locating the proposed solutions within the law itself.” After the Government of Montenegro provided its opinion on December 29, 2023, stating that the Proposal of Law on Amendments to the Companies Act should be accepted, it was adopted at the session held on the same day.

The adopted legislative solution removes Article 151, paragraph 6 of the Companies Act, and introduces new Articles 151a and 330b. Article 151a stipulates that the Board of Shareholders or the Supervisory Board is obliged to convene an extraordinary general meeting of shareholders upon the proposal of 95% of voting shareholders, that the extraordinary general meeting shall be convened within eight days from the receipt of the request for convening the meeting, and that the meeting shall be held within 21 days from the date of the decision to convene the meeting. Furthermore, it is prescribed that shareholders who have submitted a request for convening the general meeting have the right to convene the meeting themselves at the expense of the company if the board of directors or the supervisory board fails to convene the meeting within 8 days of receiving that request. This meeting shall be held within 15 days of the date when the shareholders make the decision to convene. Additionally, the adopted legislation provides the manner and timing of the announcement of the convening of the general meeting, as well as an exception that an extraordinary general meeting of shareholders may be convened without adhering to the specified deadlines, provided that all voting shareholders or their proxies agree to it. The rationale of the Proposal is directed towards aligning the operational dynamics of companies with those of the market itself through the proposed amendments. The aim is to enable timely information of shareholders about significant issues and decisions by convening extraordinary general meetings of shareholders more swiftly, thereby improving business operations through more efficient management, adapting to changes, reducing bureaucracy, and enhancing transparency.

The adopted Amendments also include the addition of Article 330b, which stipulates that “procedures for convening and holding a general meeting of shareholders that commenced before the entry into force of this law shall be concluded pursuant to this law unless the deadlines for holding the meeting are shorter than those specified in Article 151a of this law.” The retroactive application of regulations is highly contentious, as highlighted by the President of Montenegro in a letter dated January 3, 2024, wherein the Proposal of the Law on Amendments to the Companies Act was reoccurred to Parliament for reconsideration. It has been pointed out that the prescription of retroactive application of the amended provisions of the Companies Act is against Article 147, paragraph 1 of the Constitution of Montenegro, which states that legal provisions may only exceptionally have retroactive effect under the condition that the public interest is established in the legislative process. The existence of public interest has not been established considering that the rationale of the Proposal lacks reasoning in that regard, nor did the Parliament specifically address it, although Article 145, paragraph 2 of the Rules of Procedure of the Parliament of Montenegro stipulates that the Parliament shall specifically address whether there is a public interest for the retroactive effect of the law. Neither has the determination of the public interest for retroactive application of the Amendments been the subject of the discussion during the session of the Parliament of Montenegro held on January 19, 2024, as the President of the Parliament stated that public interest would not be specifically discussed.

On that occasion, only the Proposal was put to a vote and adopted. Pursuant to Article 94, paragraph 2 of the Constitution of Montenegro, the President of Montenegro was obliged to promulgate the Amendments of the Companies Act, which he did. The enactment of the Companies Act Amendments has sparked fierce debates among both experts and the wider public. Some political parties believe that it is an ad hoc solution motivated by personnel changes in Elektroprivreda Crne Gore AD Nikšić and they announce the submission of an initiative for the assessment of constitutionality. In our opinion, there is no dispute that prescribing a deadline for convening and holding a shareholders’ meeting and informing them of the meeting contributes to quicker response to the accelerated business dynamics and timely action and that this legislative solution is not contrary to Directive 2007/36/EC. However, this legislative solution, which was adopted in an exceptionally short time and in the described manner, especially its retroactive application without the previous establishment of public interest for it, indeed raises several uncertainties, both of a formal-legal nature concerning the constitutionality of this law, and regarding the motives for amending the Companies Act.

By Marija Zivkovic, Partner, and Mina Coguric, Associate, JPM & Partners

The luxury design company Hermès is facing allegations of engaging in unlawful practices by “tying” the purchase of its popular Birkin bags to the purchase of other luxury clothing and accessory items, as claimed in a class-action lawsuit filed in the US. According to the lawsuit, two California shoppers stated that they were compelled to buy additional Hermès products from various categories such as apparel, scarves, and homeware before being allowed to purchase Birkin handbags from the Paris-based brand.

Hermès is renowned for its famous Birkin and Kelly handbags (collectively referred to as “Birkin handbags”), which are exclusive Hermès designs. Birkin handbags cannot be purchased through the Hermès website; instead, consumers can only buy them by physically visiting a Hermès retail store. However, unlike most consumer products, consumers cannot simply walk into a Hermès retail store, select the Birkin handbag they desire, and make a purchase. Birkin handbags are almost never publicly displayed for sale at Hermès retail stores. In fact, only consumers deemed worthy of purchasing a Birkin handbag will be shown one in a private room.

Hermès Sales Associates are responsible for selecting consumers qualified to purchase Birkin handbags. These sales associates are directed by Hermès to offer Birkin handbags only to consumers who have established a sufficient “purchase history” with Hermès’ ancillary products. Only after a consumer has a sufficient purchase history will they be given the opportunity to purchase a Birkin. Hermès has designed the compensation structure of sales associates to ensure they adhere to the policy of only selling Birkin handbags to consumers with a sufficient purchase history of ancillary products.

The plaintiffs allege that consumers are coerced into purchasing ancillary products from Hermès because they want to buy Birkin Handbags, which represents the anti-competitive conduct of tying. Specifically, the lawsuit alleges that Hermès has enough economic power in the tying market, the Birkin Handbag, to affect competition in the tied market, ancillary products. Furthermore, the main argument of the plaintiffs is that the tying product, the Birkin Handbags, is separate and distinct from the tied products, the ancillary products required to be purchased by consumers because consumers such as plaintiffs have alternative options for the ancillary products and would prefer to choose among them independently of their decision to purchase Birkin handbags.

Another argument cited in the lawsuit is the company’s commission structure for sales associates, which allegedly incentivizes promoting the categories of ancillary products over Birkin handbags. Over the years, feedback from Hermès customers indicates that the company’s sales associates have adopted a more stringent approach, reserving Birkin handbags exclusively for clients who make significant purchases across various other categories.From the perspective of intellectual property legislation in South-Eastern Europe, trademark holders possess the exclusive right to utilize a specific mark in commerce. While ‘monopoly’ may be an unpopular term, trademark rights are exactly that – a monopoly. They essentially grant trademark holders considerable leeway to exploit this exclusivity. Hermès has invested significantly in its reputation as a luxury brand and the aura surrounding it. Now, through trademark rights, it induces consumers into a shopping spiral. This seems legitimate, as these products are not essential consumer goods, and fashionistas have the option to choose other brands.

It remains to be seen how the US court will decide on the matter. Should the plaintiffs’ arguments prevail, Hermès may be compelled to amend its practices.

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

By Bojana Miljanovic Hussey, Partner, Nikola Kliska, Senior Associate, and Sanja Dedovic, Associate, Karanovic & Partners

Kruna Savovic – until recently the Head of the Media and IP Litigation team and a Partner at Zivkovic Samardzic – left the firm in March 2024.

According to Zivkovic Samardzic, Savovic “will focus on establishing a practice of her own” but will continue to cooperate with her old team on select cases. She had joined the ZS team back in 2008 as a Trainee and became an Attorney at Law in 2011. She was promoted to Senior Associate in 2016 and then to Partner in 2019 and has led the firm’s Media and IP Litigation team for the past five years.

Zivkovic Samardzic Partner Slobodan Kremenjak, alongside Natasa Saric and Ana Stanisic and with the support of Senior Partner Nebojsa Samardzic, will lead the Media and IP Litigation team.

“Kruna Savovic and Zivkovic Samardzic are tightly bound by 16 years of friendship, trust, and successful collaboration,” Managing Partner Branislav Zivkovic commented. “We are grateful for her valuable contribution to the firm’s success and growth during that period and are truly happy that we will continue to cooperate with her on several assignments in the future.”

“After our sweet sixteen, it’s time for a new song,” Savovic added. “Thank you, my dear friends and colleagues. We were a fine-tuned band, with a lot of amazing gigs!”

Moravcevic Vojnovic and partners in cooperation with Schoenherr has advised Fifth Quarter Ventures on its recent investment in Cosmic.

Fifth Quarter Ventures is an early-stage venture capital fund investing in start-ups that address pressing global challenges.

Cosmic develops self-powered, carbon-neutral homes, emphasizing cost-effectiveness, health, and efficiency in their construction.

“The investment will enable Cosmic to launch eco-friendly prefabricated homes, enhance its team, and increase production for the housing sector’s urgent need for sustainable and affordable living solutions,” Schoenherr announced.

The Schoenherr team was led by Partner Igor Zivkovski.

Former Gecic Law Partner and Head of Dispute Resolution Jovana Velickovic has launched her own law firm in Belgrade – Velickovic Law – specializing in dispute resolution, labor, and corporate law.

Before launching Velickovic Law, Velickovic spent over a year with Gecic Law and, earlier, two years as a sole practitioner. Before that, she spent almost five years with Karanovic & Partners as an Attorney at Law. Earlier still, she spent three and a half years with JPM Jankovic Popovic Mitic, between 2012 and 2016.

“I am very grateful for the collaborations that have shaped my career so far and wish to thank my colleagues and clients for their support during the transition to this exciting new chapter of my career,” Velickovic commented.

Gecic Law has advised JFE Shoji on a EUR 50 million greenfield investment in Serbia through the acquisition of a 10-hectare land plot in the Indjija industrial zone.

The new production plant is poised to produce rotors and electric motors for the global automotive brands.  According to the law firm, “this venture aligns JFE Shoji Serbia with other prominent Japanese investors in the country. These include, above all, Toyo Tires and Nidec, who have already enhanced the nation’s industrial landscape.”

“The investor will construct a cutting-edge production plant in this location, that will serve as headquarters for JFE Shoji’s European operations. The investment will significantly contribute to Serbia’s economy and expand JFE Shoji’s footprint in Europe. The new factory in Indjija will create more than 100 jobs in its first phase, reflecting JFE Shoji’s commitment to the local economy,” Gecic Law reported.

Part of JFE Holdings, the JFE Shoji Corporation was born in 2004 through the merger between the Kawasho Corporation and NKK Trading, to handle the steel and steel peripheral business as the core trading house of the JFE Group. Kawasho Foods, Kawasho Semiconductor, and Kawasho Real Estate were established through a company split-up, becoming operating subsidiaries of JFE Shoji Holdings.

The Gecic Law team included Senior Associate Milos Petakovic.

Gecic Law was unable to provide further information on the matter.

The Single Open Balkans Labor Market, comprised of Serbia, Albania, and North Macedonia, has commenced on Friday, March 1. This means that all citizens of the mentioned countries will be able to obtain employment in any of the countries within this initiative through the simplest procedure possible.

Citizens of Serbia, Albania, and North Macedonia who wish to work in any of the member states of the Open Balkans or have already found an employer need to obtain an ID number by registering electronically in a few simple steps.

• This entails completing a form on the platform (eGovernment) and attaching a valid biometric document. Based on the provided data, the competent authorities in the country of residence generate a unique Open Balkans Identification Number, through the eGovernment platform. Subsequently, the interested individual can access the eGovernment portal of the destination country and submit a request for free access to the labour market. The destination country then makes the final decision after verification.
• Upon receiving approval, the interested individual can be employed under the same conditions as a local citizen of the country for up to two years.

Electronic services for registering workers on this market will become available to citizens during the next week, and the eGovernment portals of the three countries will be interconnected.

Continuing with the theme of digitalization of foreigner’s procedures and laws, we would like to stress out the following innovations regarding the new portal “Welcome to Serbia”.

NEW LAWS REGARDING FOREIGNERS – APPLICATION IN PRACTISE 

As widely recognized, effective February 1 of the present year, the new legislation comprising the Law on Foreigners and the Law on Employment of Foreigners has been fully enacted. Consequently, the eagerly anticipated portal “Welcome to Serbia” has commenced its operational activities.

Having in mind that the process of submitting requests for various permits and visa types has become compulsory in electronic format on the aforementioned portal, the initial encounters with the portal’s functionality as the exclusive channel for request submissions are outlined as follows.

1. Portal is overbooked during the day

Considering the number of requests for permits and visas, submission is restricted during the day. As the government improves the portal and the request number decreases, submissions should start working normally. As of right now the portal most commonly is working in the latter hours of the day.

2. Account creation can be with problems

After a foreigner or an employer finished the registration of account, a message appears stating that “to complete the registration you need to confirm your email address within 24 hours by clicking the confirm button in the email. After confirming your email address, you will receive another email as confirmation that your account is active, latest within 48 hours”, but in some cases the confirmation email does not appear in the stated hours, in which case you should try making more accounts until its fully registered.

3. Certain options mandatory for submission are not fully operational

For example, when applying for unified permit, it is mandatory to “chose” from the falling – down menu in which position the foreigner will work in RS. But when inspecting the list, it is not uncommon that you cannot find your work position. In this situation the Office for IT and e-Government suggest that a foreigner should mark the most similar work position offered in the list.

As the time progresses, we are positive all of the simple problems and bugs will be fully operational. We hope that this text can help you with improving your experience with future submissions.

By Nenad Cvjeticanin, Partner, Cvjeticanin & Partners

Gecic Law has advised the European Bank for Reconstruction and Development and Enterprise Expansion Fund II on their investment in Vega IT.

According to Gecic Law, the EBRD and ENEF II have committed to a “senior secured loan to support the expansion efforts of Vega IT, a premier Serbian software development company.” The firm reports the loan will enable Vega IT to expand on new markets, open new business development offices, and hire additional sales talents.