Category: Serbia

Kinstellar has advised Evelixon Trading Limited on its acquisition of the Grand Wind Park project company from Windvision Serbia Holding and the subsequent sale of a 50% stake in Grand Wind Park to MK Green Energy Limited. Karanovic & Partners advised Windvision. AP Legal advised MK Green Energy.

Windvision and MK Green Energy are energy companies.

According to Kinstellar, “the project, known as the WN NBT Wind 1 wind farm, is currently in the early stages of development. Located in the city of Pancevo, the farm is planned to have an installed power capacity of 120 megawatts.”

Additionally, Kinstellar reports that “the project company’s acquired subsidiary DVD Windpower is actively developing the wind farm Vetropark 1, in its’ early stages. This project, located in the City of Pancevo, has a planned installed power capacity of 150 megawatts and is adjacent to the 120-megawatt wind farm. The transaction structure envisages a merger of Grand Wind Park and DVD Windpower into one company that will eventually develop the wind farm with a planned installed capacity of 270 megawatts.”

The Kinstellar team included Partners Radovan Grbovic and Milan Samardzic, Senior Associate Aleksa Bosnjovic, and Associates Jelisaveta Folic and Vuk Vuckovic.

The Karanovic & Partners team included Partner Petar Mitrovic, Senior Associate Katarina Tomic, and Associate Jelena Petronijevic.

The AP Legal team included Partner Aleksandar Preradovic and Senior Associate Jovan Cirkovic.

NKO Partners has advised Achiona on its joint venture with Triglav to develop 20,000 square meters of office space in Belgrade.

Triglav is a Slovenian multinational insurance company headquartered in Ljubljana.

Achiona operates in the real estate industry in Serbia.

According to NKO Partners, “the joint venture agreement sets out the mechanics for the development of office space at a prime location in Belgrade, Serbia, which will cover around 20,000 square meters, and the division of the property.”

The NKO Partners team was led by Founding Partner Djordje Nikolic.

By its decision dated 29 December 2023, the Serbian Competition Commission determined that the companies KTG Solucije and Eco Sense from the town of Subotica (in Serbia) entered into a restrictive agreement by colluding in public procurement procedures (i.e., bid rigging).

The Commission opened this investigation in May 2023 based on a complaint and following the misdemeanour procedure initiated against the companies by the Office for Public Procurement for a breach of the Public Procurement Law. During the court hearing, it was alleged that one of the accused companies had been withdrawing from public procurement processes with the aim of inducing the purchaser in public procurement to enter into an agreement with the second-ranked bidder (the other accused party) but at higher prices.

During the Competition Commission’s investigation, the dawn raids were conducted at the companies’ premises which revealed the direct email communication between the companies regarding the withdrawal from public procurement processes. Simultaneously, the Commission analysed Internet Protocol addresses and determined that the parties used the same Internet Protocol address, at the same time, to access the Public Procurement Portal and submit bid documentation.

The Commission demonstrated leniency in its fining policy in this case, considering the very low annual turnovers of the parties (i.e., below EUR 1 million in 2022) and the fact that the parties cooperated with the Commission during the process. It is noteworthy that the party that admitted the infringement first and identified an additional bid rigging not covered by the initial Commission’s analysis received a fine of approximately 50% less than the other party.

This case highlights the Competition Commission’s readiness to cooperate with other state authorities and its eagerness to use all available technical tools to identify potential competition infringements. Additionally, it is important to note that the Commission has shown appreciation for the parties’ cooperation in the form of a much lower fine for the cooperating party.

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, Karanovic & Partners

The U.S. Securities and Exchange Commission (SEC), the agency responsible for regulating the securities markets and protecting investors in the U.S.A, granted approval to 11 spot Bitcoin exchange-traded funds (ETF), in its Approval Order on 10 January 2024.

By giving the green light to Bitcoin ETFs, the SEC has enabled investing on the stock market in Bitcoin without having to directly own or store the digital currency. 

BACKGROUND

Over the past several years, the SEC received numerous proposals to list bitcoin investment products on national exchanges, consistently denying proposals on the grounds that they were not “designed to prevent fraudulent and manipulative acts and practices”.

Notably, the listing of Grayscale Investments Grayscale Bitcoin Trust (BTC), spot Bitcoin ETF, faced denial due to the same concerns. The SEC found that it was not “designed to prevent fraudulent and manipulative acts and practices” and failed to satisfy the significant market test.

Responding to the denial, Greyscale filed a petition for review of the SEC’s final order disapproving listing and trading shares of Grayscale Bitcoin Trust, with the United States Court of Appeals for the District of Columbia Circuit.

Grayscale’s primary argument was that the SEC acted arbitrarily and capriciously by denying the listing of Grayscale’s proposed bitcoin ETP and approving the listing of materially similar bitcoin futures ETPs.

In 2023, the court granted Grayscale’s petition for review and vacated the SEC’s order.

In the most recent Approval Order, the SEC determined that, due to changed circumstances and the numerous submitted filings for approval for spot bitcoin ETFs, it was necessary to approve the listing and trading of the spot bitcoin ETFs.

CHAIRMAN GENSLER’S STANCE

In the Statement on the Approval of Spot Bitcoin Exchange-Traded Products from 10 January 2024, Chairman Gary Gensler stated “We are now faced with a new set of filings similar to those we have disapproved in the past. Circumstances, however, have changed. The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order). The court therefore vacated the Grayscale Order and remanded the matter to the Commission. Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares”.

WHAT IS BITCOIN SPOT ETF?

A Bitcoin Spot ETF is a type of exchange-traded fund directly tethered to the real-time value of the bitcoins it holds.

Investors purchasing shares of a spot ETF are not directly purchasing bitcoin itself, but they are buying shares in a fund that holds bitcoin as the underlying asset. They do not hold the cryptocurrency itself. This also represents the main downside of the bitcoin ETF, keeping in mind that investors do not directly own bitcoins, which means they cannot use it in trading, i.e., for buying products or services. 

On the other side, there are more advantages to bitcoin ETFs, such as simplified procedures for investing in bitcoin without the need to own a crypto wallet. Owning a brokerage account is the only necessary step for entering into the ETF crypto market. Furthermore, this removes the technical obstacles such as the need to manage a crypto wallet, making investing in bitcoins similar to trading traditional stocks or ETFs. 

LIST OF 11 SPOT BITCOIN ETFs 

• ARK 21Shares Bitcoin ETF (ARKB)
• Bitwise Bitcoin ETF (BITB)
• Fidelity Wise Origin Bitcoin Trust (FBTC)
• Franklin Bitcoin ETF (EZBC)
• Grayscale Bitcoin Trust (GBTC)
• Hashdex Bitcoin ETF (DEFI)
• Invesco Galaxy Bitcoin ETF (BTCO)
• iShares Bitcoin Trust (IBIT)
• Valkyrie Bitcoin Fund (BRRR)
• VanEck Bitcoin Trust (HODL)
• WisdomTree Bitcoin Fund (BTCW)

SEC’s POSITION ON THE MATTER

Despite approving the bitcoin ETFs, the SEC is still skeptical about cryptocurrencies and said that its decision did not mean it approves or endorses bitcoin.

“While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto” said chairman Gary Gensler.

Besides that, commissioner Caroline Crenshaw, in her Statement Dissenting from Approval of Proposed Rule Changes to List and Trade Spot Bitcoin Exchange-Traded Products, stated that “I fear that today we are setting ourselves up for tomorrow’s failure, and it will be the investors that we have a duty to protect who will ultimately pay the price”.

ENGAGING IN BITCOIN ETF INVESTMENTS FROM SERBIA

Given the current underdevelopment of the Serbian stock market, domestic investors are increasingly aiming for foreign stock exchanges. As before the SEC’s Approval Order, Serbian citizens can invest in ETFs listed on foreign stock exchanges through domestic brokers providing such services and foreign brokers providing their services to Serbian investors.

With bitcoin ETFs now being equal to traditional ETFs, investing in them from Serbia is already achievable.

The key lies in identifying foreign brokers who offer some or all of the approved spot Bitcoin ETFs on their platforms, and who at the same time offer the possibility of trading by Serbian citizens. 

Regardless, prudence is paramount, and as emphasized by Chairman Gensler, investors are advised to exercise caution due to the inherent risks associated with Bitcoin and related products.

By Katarina Savic and Zivko Simijonovic, Senior Associates, JPM & Partners

Serbia has been hard at work implementing extensive revisions to its immigration laws – merging the work and residency permits, for example – producing both timely results and temporary issues, according to DNVG Attorneys Partner Damjan Despotovic.

“Starting February 1, Serbia has implemented a completely revised procedure for granting residency and work permits,” Despotovic begins. “This marks a move towards liberalizing immigration, albeit not radically. The changes are partly technical but significant in facilitating the process,” he says.

One of the key novelties, Despotovic continues, is the “elimination of separate work permits. Instead, we now have a joint permit that allows foreigners to both reside and work in Serbia. This is a significant simplification, merging two processes into one,” he explains. “Additionally, this permit will now be issued electronically, which is a new approach for us.”

Considering such a new system, he reports there exists a “mix of curiosity and anxiety about it – we’re transitioning to a completely different way of working, and the authorities are currently in a bit of disarray adapting to these changes.” The electronic application system isn’t fully set up yet, but Despotovic does feel that it promises greater efficiency. “For example, the processing time is expected to shrink from two months to just 15 days,” he adds.

Additionally, Despotovic indicates that the permit’s longer validity – now valid for three years instead of one – is a “very beneficial change, especially for those planning longer stays in Serbia. It reduces the bureaucratic hassle of annual renewals, providing a more stable situation for immigrants.” Moreover, the “joint permit will now be a personalized ID with chips, enhancing security and functionality, and there is also a provision for temporary residency aimed at those who seek to stay in Serbia for reasons other than work, like family reunification, students, real estate investors, and those investing in or establishing innovative technology companies in Serbia,” he outlines.

However, all is not smooth sailing – when it comes to regulating digital nomads, the law is less clear cut. “The law hasn’t specifically addressed digital nomads – which is a growing segment in immigration inquiries. While they must apply for a joint permit as self-employed, the government now has the provision to create exceptional situations for foreigners to work on temporary residency, potentially accommodating digital nomads in the future,” Despotovic explains.

Finally, Despotovic also reports that it is expected that, starting on March 1, the “citizens of North Macedonia and Albania can work in Serbia without needing a joint permit. This is a result of multilateral treaties and signifies a major step in regional cooperation,” he says. Ultimately, this slew of employment legislation updates is a good thing, Despotovic says, especially given the recent turmoil in the IT sector. “There were numerous redundancies announced, particularly in the IT industry. This is a relevant issue for big companies and a frequent subject among lawyers and business professionals – it’s something we’re dealing with daily,” he notes in conclusion.

PwC Legal, working with Van Campen Liem, has advised Blue Sea Capital on co-investing to acquire the Telekom Srbija telecommunications tower portfolio alongside Actis and in co-operation with Andrej Jovanovic’s family office.

Telekom Srbija is a telecommunications operator in the CEE region, operating across Serbia, Bosnia & Herzegovina, and Montenegro.

According to Blue Sea Capital, “the carved-out portfolio is comprised of approximately 1800 macro towers and is well placed for further commercialization and expansion. The towers market in CEE and the Western Balkans region is forecast to expand significantly over the coming years, driven by the increasing consumer demand for mobile data, the rollout of new technologies such as 5G and 6G as well as changing mobile capacity and coverage requirements. Independent tower companies have a significant role to play in efficiently investing in, improving, and mutualizing passive infrastructure to support mobile growth and overall developments of local economies.”

The PwC Legal team included Slovakia-based Of Counsel Hugh Owen.

PwC Legal did not respond to our inquiry on the matter.

Editor’s Note: After this article was published, Deloitte Legal announced it had advised Telekom Srbija. The firm’s team included Local Legal Partner Stefan Antonic and Attorneys at Law Vojislav Janicijevic, Igor Dencic, and Srdjan Sijakinjic.

Subsequently, Kinstellar announced it had, working alongside Paul Hastings, advised Deutsche Bank, Alpha Bank, UniCredit, and UniCredit Bank Serbia on a EUR 205 million financing for Actis regarding the acquisition. The Kinstellar team included Partner Petar Kojdic and Managing Associate Mina Sreckovic.

Furthermore, CMS and White & Case announced that they advised Actis on the deal.

The CMS team included Serbia-based Partners Marija Tesic, Radivoje Petrikic, Ivan Gazdic, and Milica Popovic, Counsels Marija Marosan and Srdjan Jankovic, Senior Associates Sandra Miljanic, Ksenija Boreta, Jovana Bingulac, Ksenija Ivetic Marlovic, Tamara Zejak, and Tamara Samardzija, and Associates Mila Drljevic, Milica Tomic,  Jelena Djordjevic, Teodora Vujosevic, and Jovan Beciric as well as Bosnia and Herzegovina-based Partners Indir Osmic and Andrea Zubovic-Devedzic, Counsel Sanja Voloder, Senior Associates Ana Terzic and Zlatan Balta, and Associates Zlatko Masovic, Stefan Cosovic, and Zerina Spahic.

The White & Case team included Prague-based Partner Vit Stehlik, Local Partners Jan Stejskal and Karel Petrzela, and Counsel Pavel Cizek as well as further lawyers in London and Dubai.

NKO Partners has advised Emmezeta on the development of a distribution center in Novi Sad with Structura to perform the construction works.

Emmezeta is a home decor retailer in the SEE region.

According to NKO, the project “involved the execution of a joint venture arrangement between Emmezeta and Delhaize, a prominent player in the European retail industry from Belgium. The JV agreement detailed the reconstruction of the distribution center, which will be partially leased back to Delhaize.”

Back in 2023, NKO advised Emmezeta on the acquisition of the real estate plot used for this development from Delhaize (as reported by CEE Legal Matters on January 20, 2023).

The NKO team included Partner Djordje Nikolic and Senior Associate Luka Aleksic.

Insufficiently precise provisions of the law, unharmonized court practice, as well as the average duration of the employment disputes, were affected creating the “fear of litigation” amongst many employers. Due to the stated reasons, instead of unilateral employment termination, even in cases when there is firm evidence confirming its lawfulness and validity, the employers tend to execute the mutual agreement on employment termination, as well as to pay certain one-time compensation on the said basis.

The risk in case of losing employment dispute is definitely higher for the employer in case the employee established employment relation an indefinite period, due to which reason it is no surprise that it has become common practice to establish employment on a definite period due to “temporary increase of the scope of work” with new employees.

Having in mind that the maximal duration of the probation work is six months, the employers sometimes prolong the probation work of the employees through work on a definite period, before deciding to establish employment for an indefinite period with the employee in question.

If we exclude special cases when work on a definite period can be established for a period longer than 24 months (with and without interruptions), the Labour law stipulates that the employment relation on a definite period can be established due to “objective reasons that are justified by the deadline or by the execution of a certain job or the occurrence of a certain event, during the duration of those needs“.

The stated legal provision indicates that it refers to the employer’s temporary need to perform certain tasks or to engage additional executors for the existing tasks, which the employer is obliged to state in the employment agreement itself – one of the mandatory elements of the employment agreement is the basis for establishing the employment relation on definite period.

In the event that the conditions prescribed by the Labor law for establishing employment relation on a definite period are not met, employers are exposed to practically the same risk as in case of termination of employment relation established on an indefinite period.

Namely, the Labor law stipulates that “if employment agreement on definite period is executed contrary to the provisions of this law or if the employee remains working for the employer for at least five working days after the end of the period for which the agreement was executed, it is considered as if the employment relation was established on indefinite period“.

Therefore, if the employee could prove that there was no objective need for the work on a definite period, but that there was a constant need to perform specific tasks for the employer, i.e. a greater number of executors, the claim could refer not only to the annulment of the resolution on termination of the employment agreement, but also to determine the existence of the employment relation on indefinite period.

Due to the aforementioned reasons, employers should pay special attention to the fulfilment of not only the formal conditions for establishing an employment relation on a definite period, but also the existence of an actual need for temporary engagement of an individual.

By Jelena Nikolic, Partner, JPM & Partners, JPM & Partners

Former Zivkovic Samardzic Partner Ana Popovic has joined VMT Vujetic Trisic in Belgrade as a Partner.

Before joining VMT, Popovic spent over 11 years with Zivkovic Samardzic, joining in 2012, becoming a Partner in 2019, and leading the firm’s Employment practice for the past five years (as previously reported by CEE Legal Matters on January 8, 2024).

“Ana brings with her a wealth of experience and expertise, reinforcing our dedication to providing exceptional legal services. As a highly reputable lawyer, Ana will strengthen our Employment and Commercial law practice. Simultaneously, she will continue her contributions to the realms of Personal Data Protection and Intellectual Property,” VMT Vujetic Trisic announced.

Ana Popovic, the Head of Zivkovic Samardzic’s Employment practice and a Partner with the firm, has left the outfit on January 1, 2024.

Popovic had joined Zivkovic Samardzic back in 2012. She became a Senior Associate in 2017, a Partner in 2019, and has been at the helm of the Employment practice for the past five years.

According to the firm, its Employment practice will continue to operate as normal, with no disruption to client service.

“After 12 years at Zivkovic Samardzic, it is hard for me to leave this firm to which I owe my whole career and where I have made friends,” Popovic said. “I know that clients and colleagues are in the very best hands, with other partners and the rest of the fantastic team. With that knowledge, I can now look towards new challenges.”

“Ana Popovic and Zivkovic Samardzic are tightly bound by 12 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.”

“I want to thank Ana for her positivity and hard work,” Senior Partner Nebojsa Samardzic added. “She is the one making an impact in whatever she does and I am sure will continue to do it with her future endeavors.”