Category: Serbia

According to the definition contained in the Law on Misdemeanors (Official Gazette of RS no. 65/2013, 13/2016, 98/2016 – decision of CC, 91/2019, 91/2019 – other law and 112/2022 – decision of CC) (“the Law“), misdemeanor is an unlawful act established as misdemeanor by law or other regulation of a competent authority and which is subject to misdemeanor sanctions.

In accordance with the above and according to its nature, misdemeanor is unlawful action which, considering its gravity, i.e., consequences, does not represent criminal act (or economic offence). Under the Law, misdemeanors may be prescribed by law or regulation and/or decision of the assembly of autonomous province, municipal assembly and city assembly (including assembly of the city of Belgrade).

According to the Report on Work of the Misdemeanor Appellate Court for 2021  (the last published annual report at the time of drafting this article), the annual inflow of cases to this highest-instance misdemeanor court that decides on appeals against decisions of misdemeanor courts is around 30 thousand. Out of that number, misdemeanors in the field of finance and customs make for 8.03%, misdemeanors in the field of economy 6.46%, misdemeanors in the field of labor, employment relations and protection at work make for only 1.78%, while largest number of cases are in the field of transport safety – 57.31%. Similar trends can be observed in the report for 2020, while reports for 2019 and 2017 indicate somewhat higher percentage (except for transport safety).

The above therefore shows a decreasing tendency for the number of cases in the economy-relevant fields, which naturally brings about the question as to the reasons that brought to that. Among other, whether the prescribed misdemeanor sanctions contributed to that and to what extent, or the awareness of economic entities about them?

Since, as it was already noted, misdemeanors represent offences, misdemeanor sanctions resemble penal sanctions, wherefore the Law stipulates that the following may be pronounced or imposed for misdemeanors:

• penalties;
• penalty points;
• reprimand;
• protective measures;
• educative measures.

As regards penalties, misdemeanor may be subject to imprisonment, fine and community service.

Fines

In relation to fines, the Law recognizes several modes of pronouncing. Namely,

• by law or regulation, misdemeanor fine may be imposed:
• within appropriate range (namely from RSD 5,000 to 150,000 for a natural person or responsible person, from RSD 50,000 to 2,000,000 for a legal entity, and from RSD 10,000 to 500,000 for entrepreneurs);
• in fixed amount (so-called mandate penalty, for a natural person and responsible person from RSD 1,000 to 50,000, for entrepreneur from RSD 5,000 to 150,000, and for legal entity from RSD 10,000 to 300,000); while
• by decisions of assembly of autonomous province, municipal assembly, city assembly or assembly of the city of Belgrade, fines can only be imposed in fixed amount, from minimum to one half of the highest amount under the Law.

Exceptionally, for misdemeanors in the field of public revenues, public information, customs, foreign trade and foreign exchange operations, environment, trade in goods and services and trade in securities, the law may prescribe fines that correspond to the amount of damages or unrealized obligation, value of goods or other object that is subject of misdemeanor (but not exceeding the twenty-times the amount of such values, and not exceeding five-times the amount of maximum fines that may be pronounced under the Law).

Previously noted mandate fines (prescribed in fixed amount) shall be pronounced by supervising authorities instead of misdemeanor courts, while the latter nevertheless have the competence to pronounce the fines prescribed in a relevant range, given that it is necessary to measure the fine, i.e., determine its amount within the prescribed range on basis of presented evidence and assessing all circumstances of the case.

Examples

The Law on Protection of Personal Data contains penalty provisions under which fines in a prescribed range (from RSD 50,000 to 2,000,000) will be imposed on controller and/or processor with legal person capacity in case it commits a misdemeanor prescribed by Article 95, para. 1 of this law (e.g., processing of personal data contrary to the principles of processing from Article 5, para. 1 of the law), as well as provisions under which fines in fixed amount (RSD 100,000) will be imposed on controller and/or processor with legal person capacity in case it commits a misdemeanor prescribed by Article 95, para. 2 of the law (e.g., it fails to inform the recipient about special terms for personal data processing prescribed by law and its obligation to meet such terms).

On the other hand, the Customs Law stipulates that fine from one to five times the value of goods subject to misdemeanor will be imposed on a legal entity, entrepreneur or natural person, and fine of RSD 20,000 to 150,000 on a responsible person in a legal entity, if some of misdemeanors from Article 265, para. 1 of this law are committed (e.g., failure to properly report the goods imported to or exported from the customs territory of the Republic of Serbia).

Similarly, the Law on Tax Procedure and Tax Administration stipulates that taxpayer – legal entity or entrepreneur failing to submit tax application, calculate and pay taxes, shall be fined for misdemeanor with 30% to 100% of owed tax amount established during tax control, and no less than RSD 500,000 for legal entity and RSD 100,000 for entrepreneur.

In relation thereto, as we have already mentioned in one of our previous texts (available here), the recently adopted Strategy for Personal Data Protection for the period 2023 – 2030 announced stricter penal policy for infringement of obligations in the field of personal data protection, and underlined that that the model used by the Commission for the Protection of Competition should be applied for this purpose and that fine should be pronounced in the amount depending on the company income.

Namely, for the sake of comparison, the possibility prescribed by GDPR for infringement of obligations in the field of personal data protection is fine up to EUR 10,000,000 or 2% of the total annual turnover of the company in the world for the previous financial year (whichever amount is higher), and up to EUR 20,000,000 or 4% of the total annual turnover of the company in the world for the previous financial year (whichever amount is higher) – therefore, in the amounts exceeding by far the ones prescribed by the Law on Personal Data Protection.

Finally, it was noted in practice that the acting courts usually, and particularly in case of first misdemeanor, do not pronounce maximum fines. However, it can also be noted that penal policy tends to be stricter recently, however it remains to be seen whether the announced fines are enough to achieve the effect of general prevention, i.e., committing so-called dissuasive influence on potential perpetrators of misdemeanor as offence.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Lara Maksimovic, Senior Associate, and Andrea Arsic, Associate, PR Legal

A golden parachute is a compensation agreement guaranteeing significant financial benefits to a top executive who loses their job, namely chief executive officers and other high-ranking employees who depart because of a merger or acquisition. They are often applied through clauses in employee contracts, specific contracts, or acts of incorporation.

The primary purpose of Golden Parachutes is to protect top executives in case of a takeover and change of control (i.e. M&A) from job loss and financial hardship, by providing them with means included in the „exit packages” that they have a legal right to receive, giving them a means to „survive“ the unintended leave of position.

Golden Parachutes can also be used as a defence mechanism in case of a hostile takeover, as they are used to disincentivise acquiring companies through the expensive packages that would need to be paid out in order to complete the takeover. They are best used alongside other defence mechanisms such as a sale of the company’s „crown jewels“ and „The white knight technique“.

A hostile takeover is when an „acquiring company“ takes over a „target company“ against the wishes of the target company’s management. This occurrence is ever so present in today’s corporate world and has resulted in the creation of „Golden Parachutes“ in its many forms.

Comparative practice pertaining to this legal institute has given us insight on the many Golden Parachutes being „triggered“, particularly in the USA where it is most lucrative, reaching numbers as high as hundreds of millions of dollars, to CEO-s of companies such as Pfizer, Gillette, General Motors. This however does not mean its presence cannot be felt on European grounds, as it is very much flourishing. This information, however, is not considered public in Serbia and is rarely available to find.

Golden Parachute  name meaning:

• „Golden“- indicates the lucrative benefits its holder receives, ranging from lump sum cash payouts to stock options in the new company, and many more!
• „Parachute“- indicates its purpose of „softening the landing of the exiting top executive“, being pushed out of the target company by the acquiring company.

For a Golden Parachute to „activate“ two certain requirements need to be met, regardless of the comparative practice of the given legal institute :

1. Change of control in the company, that occurs as a result of a Merger or an Acquisition; and
2. The termination, whether willful or not, of the employee agreement.

LEGAL BASIS

For a Golden Parachute to be valid, it needs to be based on either, a contractual agreement between the company and the potential holder of the parachute or more seldom is guaranteed in the Incorporation Act.

The Agreement can be in the form of an employee contract or a separate contract which stipulates specifically the terms of this clause. If a Golden Parachute has its legal basis in a contract, it provides the company power to suit the clause to its needs much more freely.

The incorporation act, has the benefit of the company being able to generalize the use of the clause, however, the drawback is it is not being specialized to the management at hand, which could lead to, if triggered, payments of such amounts which are not „tailored“ to the quality of work that the holder presented during their tenure.

Specifics, regarding the implementation of the clause in the aforementioned ways, can be found in the Corporate Governance Code (Official Gazette no. br. 99/2012) under the ninth principle.

COMPENSATION

The type of compensation the holder can receive are the following:

• Severance payments: in the form of cash, stock options, special bonuses
• Paid insurance: Dental and health
• Executive pension benefits
• Other perks

The type and amount of compensation a person receives is determined by several factors:

• The position of the holder in the company
• The amount of other Golden Parachute holders
• Yearly salary as well as duration of tenure in said position.

ADVANTAGES AND DISADVANTAGES

The advantages of Golden Parachutes almost unilaterally target its recipients, granting them financial stability during difficult times, often at the detriment of the company’s shareholders. For the targeted company, it is useful for deterring Hostile Takeovers.

Their existence allows experts in certain areas to accept positions at the company due to the benefits they possess.

The more relevant topic, and the point of discussion of many in the legal environment, are the disadvantages of Golden Parachutes, specifically how easy it is to falsely „trigger“ the mechanism by purposely incentivizing market „opponents“ to complete a hostile takeover.

The reasoning for implementing Golden Parachutes, as part of an executives contract or incorporation act, is vast, it includes:

• Receiving a payout that amounts to a sum larger than the sum that the exiting top executive would have received as part of their regular salary.
• In case of a possible firing, due to not fulfilling certain requirements, the top executives protect themselves by „triggering“ the Golden Parachute and essentially reaching the same result in terms of unemployment, however, the payout they receive is many times larger than what they would’ve received had there not been a hostile takeover.

TYPES OF PARACHUTES

Different modifications of Golden Parachutes exist, all of them following the same naming principle as the Golden Parachute. They differ in the amount that is paid out and/or the position of the recipient inside the company:

• Silver Parachute- the sum received is smaller than the one in Golden Parachutes.
• Tin Parachute- Provides a smaller sum to a wider number of persons inside the company, where compensation is directly affected by the duration of the tenure of said persons.

CONCLUSION 

The idea of Golden Parachutes is great, however, due to it being more flexible in its regulation, many flaws of this concept become apparent. Freedom, in the way it is applied, has caused company executives to lose sight of the purpose of this legal institute.

For Golden Parachutes to be viable, there needs to be a balance between the needs of the existing upper management at hand, for which this legal institute was created, and also the shareholders whose financial interests may be at risk. The dampening of said effects can be achieved through stricter regulation, namely provisions that nullify extremely lucrative Golden Parachutes by limiting the amount of the payout received, thus disincentivizing top executives from „pushing“ towards a merger that is neither needed nor „healthy“ for the company’s future.

By Zivko Simijonovic, Senior Associate and Milic Perkovic, Associate, JPM & Partners

5G is the fifth-generation mobile network, which promises to lead to a revolution, particularly in transportation.  This article focuses on connected and automated mobility (CAM), an offspring of 5G.  CAM lets vehicles communicate with each other and with the surrounding infrastructure.  Such communication can, in fact, enhance road safety, ease traffic jams, and cut CO2 emissions.  With this in mind, countries worldwide are diligently working on developing 5G cross-border corridors.

5G cross-border corridors are networks that connect transportation routes.  These routes, whether along roads, railways, or waterways, maintain 5G connectivity across international borders.  This connectivity is vital for CAM’s full-scale use, potentially transforming transportation in Europe and beyond.

The European Union Embraces 5G Cross-Border Corridors

The European Commission recognizes the significance of 5G cross-border corridors in Europe’s digital strategies.  They’ve endorsed and funded their development.  The EU’s primary initiative is the 5G Infrastructure Public Private Partnership (5G PPP).  This partnership with the European ICT industry aims to speed up 5G technology development and deployment.  Notably, the 5G PPP funds projects like 5G-CARMEN, 5GCROCO, and 5GMED, testing 5G CAM technology on cross-border portions of highways, rail, waterways, and airline corridors.

Creating uniform rules and standards for 5G cross-border corridors is a priority for 5G PPP.  Such standards would ensure consistent 5G CAM cross-border corridor deployment throughout the EU.  In addition, the EU funds research programs, including 5G AUTOPILOT.  This initiative integrates the Internet of Things (IoT) with vehicles, enabling complete automation.  The IoT eco-system involves vehicles,  infrastructure, and surroundings focusing on the safety in automated driving.  The European Commission’s real-world scenario testing plans presently span pilot sites in Finland, France, the Netherlands, and Italy. The results obtained from these tests would subsequently allow for multi-criteria evaluations.  They also collaborate internationally to set standards for 5G cross-border corridors.

Serbia’s Regional Leap into 5G CAM Cross-Border Corridors

Serbia is actively pursuing the development of 5G cross-border corridors.  In 2018, Serbia, Bulgaria, and Greece signed a letter of intent to create an experimental corridor from Belgrade through Sofia to Thessaloniki.  Serbia also partners with Romania and Bulgaria on a corridor along the Danube River, underscoring regional 5G network collaboration.

Benefits of 5G CAM

5G cross-border corridors offer numerous advantages:

• Enhanced road safety: 5G-enabled CAM provides real-time data, reducing collisions.
• Efficient traffic flow: 5G CAM coordinates vehicles, preventing traffic snarls.
• Reduced CO2 emissions: Less braking and acceleration from 5G CAM lowers emissions.
• New business avenues: Companies can exploit markets opened by 5G cross-border corridors.

Conclusion

In conclusion, 5G technologies and cross-border corridors could redefine transportation as we know it.  They consequently facilitate continuous CAM connectivity across borders.  Indeed, the EU and Serbia view them as pivotal to promoting mobility facilitated through high-speed, low-latency connectivity required for CAM to operate securely and efficiently.

By Nemanja Sladakovic, Senior Associate, and Zarko Popovic, Associate, Gecic Law

Starting from 1 January 2024, the Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (hereinafter: Directive) will start to apply.

The principle that has led the EU to render this Directive is to reinforce the fight against aggressive tax planning within the internal market and to establish an efficient and coherent framework for the global minimum level of taxation at the Union level.

The Directive applies to entities located in the Union that are members of MNE groups or large-scale domestic groups that meet the annual threshold of at least EUR 750 000 000 of consolidated revenue. MNE (multinational enterprise) group is any group that includes at least one entity or permanent establishment that is not located in the jurisdiction of the ultimate parent entity (hereinafter: MNE). It is intended that this Directive puts an end to the tax practices of MNEs that allow them to shift profits to jurisdictions where they are subject to no or very low taxation by establishing a global minimum level of taxation.

The agreed minimum tax rate of 15% for corporate income tax represents fair tax competition amongst jurisdictions, according to the Directive. Any jurisdiction with an effective tax rate of below 15% is considered a low-taxed jurisdiction. The Directive introduces two rules which are called the Income Inclusion Rule (IIR) and the Undertaxed Profit Rule (UTPR). Under this set of rules, the parent entity of an MNE located in a member state should be obliged to apply the IIR to its share of top-up tax relating to any entity of the group that is low-taxed, whether that entity is located within or outside the Union. The UTPR should act as a backstop to the IIR through a reallocation of any residual amount of top-up tax in cases where the entire amount of top-up tax relating to low-taxed entities could not be collected by parent entities through the application of IIR. The effective tax rate of an MNE group in each jurisdiction where it carries out activities or of a large-scale domestic group should be compared to the agreed minimum tax rate of 15% in order to determine whether the MNE group or large-scale domestic group should be liable to pay a top-up tax and consequently should apply the IIR or the UTPR.

From a local perspective, the corporate income tax rate in the Republic of Serbia is 15%. However, the Serbian law has a tax incentive of a 10-year tax holiday for investments into fixed assets of a Serbian entity exceeding 1 billion RSD, provided that the Serbian entity employs for an indefinite period of time at least 100 new employees. In Montenegro, the corporate income tax rates are: 1) up to EUR 100,000 of taxable profit – 9%; 2) from EUR 100,000.01 to EUR 1,500,000.00 of taxable profit: EUR 9,000.00 + 12% on the amount over EUR 100,000.01; 3) over 1,500,000.01 euros of taxable profit: 177,000.00 euros + 15% on the amount over 1,500,000.01 euros.

It should be taken into account that the Directive is not applied directly to the local entities in Serbia and Montenegro. However, an ultimate parent entity of an MNE group, a tax resident of the EU, to which a local entity belongs has the primary obligation under the Directive to apply the IIR to its allocable share of top-up tax relating to all low-taxed constituent entities of an MNE group. This means that after the local entity uses tax incentive/tax rates from the previous Paragraph, its parent entity (MNE group) might have an obligation to pay top-up tax calculated in line with the Directive. Consequently, the MNE group as a whole could lose the tax benefit of conducting business in the region.

The impact of the Directive on the Serbian and Montenegrin market is subject to discussion. In regards to the standards imposed by the EU in the Directive, both Serbian and Montenegrin jurisdictions might be considered as low-taxed jurisdictions. Also, the Directive urges countries worldwide to implement measures similar to IIR. On the other hand, the Directive only concerns MNEs exceeding certain consolidated revenue thresholds and would not impact smaller entities, as well as local entities conducting business on the territory of Serbia and Montenegro. However, it is important to note that implementing measures like cancelling policies such as the 10-year tax holiday would affect the conducting of business of worldwide non-EU companies that have subsidiaries in the region if the country of the parent company does not apply a minimal tax rate policy as well as local domestic companies.

The question remains whether the countries will continue to apply their tax policies enforced up till the date of issuing this article or will they take a step further in harmonizing with the EU legislation and consider new ideas for differently structured incentives for attracting new investments. In any case, the process of harmonizing with the EU legislation will require the implementation of these measures. However, this all shall largely depend on the pursuance of Serbia and Montenegro to stay on the bumpy road to the Union.

By Nikola Djordjevic, Partner, and Stasa Kneselac, Associate, JPM

The new Decree on Conditions for the Delivery and Supply of Electrical Energy in Serbia enters into force today, 13 October 2023. Long-awaited regulation sends the signal that the connection procedure for new projects that has been basically on hold for more than two and a half years will be deblocked soon.

The new rules will apply to all requests for preparation of the connection study filed after April 2021.

As expected, the new decree introduces a stricter regime with tighter deadlines and higher costs for the connection of the power plants to the transmission and distribution system:

Minimum cost for preparation of grid connection study to the transmission system is EUR 50,000

This amount applies to power plants not exceeding a capacity of 50MW and is increased by EUR 400 for each MW above 50 MW to 100 MW, EUR 300 for each MW above 100 MW to 250 MW, and EUR 200 for each MW above 250 MW.

First grid connection studies are expected in the period of 20 December 2023 – 20 April 2024

The first interval for preparation of the grid connection studies is from 20 December 2023 to 20 April 2024, for the request submitted until 1 December 2023. However, it is still expected that the TSO will first adopt new rules for the connection to the grid and that the Energy Agency will confirm the development plan (with adequacy analysis) prepared and adopted by the TSO.

Performance bank guarantee must be delivered for the connection to the transmission system

If the applicants accept the connection solution in the connection study, they will need to deliver a bank guarantee in the amount of EUR 25,000 per MW of the approved capacity. The bank guarantee serves as security that the project will be developed, constructed and put into operation within the prescribed deadlines.

If the holder of the connection study withdraws from the development of the power plant within six months from the conclusion of the connection agreement, the TSO can collect 5% from the bank guarantee. After that. , the TSO can collect between 10% and the full amount of the bank guarantee depending on the stage of the development/construction.

Release of the bank guarantee in case of failure to progress with the project due to circumstances outside the investor’s control is not envisaged, although there is indication that in some of these cases, certain deadlines could be extended (hopefully, this should be explicitly provided and elaborated in the connection agreement).

The obligation to deliver the bank guarantee does not apply to state projects.

Connection approval can be extended only once for two years

The validity of the connection approval under the new regime is limited to three years for the connection to the transmission system and two years for the connection to the distribution system. It can be extended only once, while under the previous regime did not have limitations regarding the number of extensions.

Fulfilment of the conditions regarding the provision of the ancillary services

Together with the request for the conclusion of the connection study agreement applicant will have to provide proof of fulfilment of conditions for exemption from the measure on the delay of connection to the transmission or distribution system if applicable. In the case of battery storage, this will mean that the applicant will have to either include battery storage in the request for preparation of the connection study for the power plant or submit a request for a separate connection study for the battery storage if the battery storage will have a separate delivery point from the power plant.

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

By Milos Vuckovic, Senior Partner, Petar Mitrovic, Partner, and Nemanja Providzalo, Senior Associate, Karanovic & Partners

With yet another election cycle impacting legislative activity in Serbia, few – but noteworthy – updates warrant attention, according to PR Legal Managing Partner Ivana Ruzicic. Notably, land conversion fees have been eliminated, potentially unlocking vast construction opportunities, while the excise tax framework is being modernized, with a centralized electronic system set to streamline processes.

“Serbia has experienced a period of political turbulence in the past few years, marked by frequent elections – and a new cycle is slotted to culminate very soon, most likely in December,” Ruzicic begins. “This has significantly impacted legislative activities, creating a pause in the passing of new laws and reforms, as political parties shift their focus to campaigning and forming governments.”

Still, there have been interesting legislative updates and Ruzicic continues by highlighting land conversion regulation updates, as one. “The elimination of conversion fees for land ownership is a noteworthy development. Before this change, the process of converting land usage rights to ownership came with substantial fees, discouraging businesses and individuals from participating. This reform opens up opportunities for investors and landowners alike, making approximately 15 million square meters available for construction,” she explains. 

“This is expected to boost investments in Serbia and stimulate economic growth,” she goes on to say. However, the new law, which was passed at the beginning of August, still has its full impact to be seen, Ruzicic stresses. “It is anticipated that the law will attract new investors, stimulate construction projects, and promote economic development in the country. The Ministry of Construction is eagerly monitoring its progress to assess its effectiveness,” she says.

Moreover, Ruzicic adds that there have been important changes made to excise tax laws. “The changes in the excise taxes regulatory framework aim to modernize the system through the implementation of a centralized electronic information and communication system,” Ruzicic says. These changes will be introduced gradually, with full implementation expected by 2025. “The new system will simplify submissions and information exchange related to excise warehouses, stamps, and license renewals. Additionally, a new type of control excise stamp with a QR code will be introduced in 2025 to improve tracking and compliance, particularly for cigarette and heated tobacco products,” she explains.

Ruzicic also reports there are more legislative updates in the pipeline and highlights the purported changes to the tobacco regulation framework. “These changes, which will likely not come to pass until the election cycle ends in late December and a government is formed, will address tobacco-related products that haven’t been regulated before.” Furthermore, amendments related to the labeling of tobacco products will also take effect in the near future.

Finally, Ruzicic says that the media laws will likely be on the docket to get updated as well. “These laws are quite important; we expect to see some changes after the elections are over, especially in terms of media registrations, but it remains to be seen whether the government will adopt the remarks of professional associations pertaining to a definition of journalists, and state aid – which is a very sensitive topic in Serbia in its own right.”

The adoption of the Law on the Use of Renewable Energy Sources in 2021 created a very favorable environment for investments in green energy. Recognizing the opportunities and incentives, investors in a short period of time submitted a large number of requests to Elektromreža Srbije as a transmission system operator (“TSO“) for the connection of future power plants using renewable energy sources. More precisely, requests for the connection of 22,000 MW have been submitted so far, while the total capacity of the power plants connected to the system is about 8,500 MW.

Having in mind that on the one hand the new 5,800 MW can be connected to the energy system without jeopardizing the security and stability of the system, while on the other hand, there is great interest in investing in this sector, the Government of the Republic of Serbia adopted at the session held on 28 September 2023 new Regulation on the conditions of delivery and supply of electricity („Official gazette of the RS“ no. 84/23) (“Regulation“), which prescribes the procedure for connection to the system in more detail, and certain novelties were introduced as follows.

Connection to the transmission system

As before, the connection procedure is initiated by the request for connection. However, the Regulation now prescribes the preparation of a connection study as a mandatory element. Even before, the connection study was a mandatory element prescribed in the TSO network code and connection procedure. With the adoption of the Regulation, this step gained more importance.

Namely, a person interested in connection to the transmission system first submits to the TSO a request for the execution of the agreement on the preparation of a connection study. This request is submitted no later than the 1st of the month preceding the first month of the interval in which the connection study will be prepared. The Regulation defines that TSO prepares the connection study in two intervals – from 01 March to 30 June and from 01 September to 31 December, which means that requests for the execution of the agreement must be submitted by 01 February, i.e., by 01 August. However, the Regulation stipulates that the initial interval for preparing the connection study begins on 20 December 2023 and that the first requests for the execution of the agreement can be submitted no later than 01 December 2023.

Along with the request for the execution of the agreement, it is necessary to submit proof of the deposit of funds for the costs of preparing the connection study. For the connection of the consumer facility, storage or facility for the production of electrical energy with a power of up to 50 MW, an amount of EUR 50,000 must be deposited. If the electricity producer wants to connect a production facility with a higher power, then the deposited funds are increased for the following facilities:

• over 50 MW and up to 100 MW, EUR 400 per MW is deposited;
• over 100 MW and up to 250 MW, EUR 300 per MW is deposited; and
• over 250 MW, 200 EUR per MW is deposited.

TSO prepares the connection study only after the execution of the agreement, and in the above time intervals. The connection study consists of two parts: the system part and the technical conditions for connection.

Upon receipt of the connection study, the applicant has a deadline of 60 days to submit to the TSO a bank guarantee, guaranteeing that it will:

• execute the connection agreement within 60 days from the delivery of the bank guarantee to TSO;
• obtain approval for connection within 3 years from the date of execution of the connection agreement;
• build the facility within the validity period of the connection approval;
• extend the bank guarantee in a timely manner, if applicable.

A bank guarantee must be provided in the amount of EUR 25,000 per requested MW.

If it is necessary to build the missing infrastructure for the connection, it is possible to execute the agreement on the construction of the missing infrastructure at the same time as the connection agreement with the TSO, and the investor may build the necessary infrastructure at his own expense and on behalf of the TSO.

After taking the above steps and obtaining a construction (and energy) permit, a request for connection to the transmission system is submitted.

Connection to the distribution system

The Regulation envisages the obligation to prepare a connection study for storage and facility for the production of electric energy, which means that end consumers are exempt from this obligation.

The connection study is prepared after the agreement on the preparation of the connection study has been executed. The applicant for the execution of the agreement is obliged to provide the distribution system operator (“DSO”) with proof of the deposit of funds for the costs of the study in the amount determined by the DSO, which for electricity producer facilities cannot be greater than:

• EUR 2,000 for objects whose required power is greater than 10.8 kW and less than or equal to 160 kW;
• EUR 3,000 for facilities whose required power is greater than 160 kW and less than 1 MW;
• EUR 5,000 for facilities whose required

power is equal to or greater than 1 MW.

The connection study ceases to be valid if the applicant does not receive connection approval within 2 years from the preparation of the study or in case of the expiration of the construction permit based on which he received connection approval.

By Marko Mrdja, Senior Associate, JPM Jankovic Popovic Mitic

BDK Advokati has advised Waberer’s International on its acquisition of a 55% stake in the MD International distribution company in Serbia, with an option for the remaining 45%. JPM & Partners advised MDI shareholder Dragoslav Micic. Marjanovic Law reportedly advised the other sellers.

Financial details were not disclosed. The transaction is expected to close by year’s end.

According to BDK Advokati, Waberer’s is the largest road transport company in Hungary and one of the largest road freight transport companies in Europe, operating a fleet of 3,500 trucks. It has a presence in Belgium, Germany, France, Italy, the Netherlands, Poland, and the UK.

MDI is a Serbian distribution industry player responsible for brands such as Henkel, Vileda, Wilkinson Sword, and Pionir.

The BDK Advokati team included Senior Partner Vladimir Dasic and Junior Associate Milan Popovic.

The JPM & Partners team included Partner Aleksandar Hadzic.

Radovanovic Stojanovic & Partners has advised the shareholders of Belgrade-based pharmacy chain Emily Pharm on the sale of all their shares to the Dr. Max Group.

The Dr. Max Group is a Prague-headquartered pharmacy chain operating in Central and Eastern Europe, with approximately 2,300 pharmacies in the Czech Republic, Serbia, Slovakia, Poland, Romania, and Italy.

The Radovanovic Stojanovic & Partners team was led by Partner Sasa Stojanovic and included Attorneys at Law Luka Radojevic and Djordje Vicic.

The firm did not respond to our inquiry on the matter.

Editor’s Note: After this article was published, NKO Partners informed CEE Legal Matters that it had advised the Dr. Max Group on the deal. The firm’s team included Partners Djordje Nikolic and Branko Jankovic and Associate Goran Mihajlovic.

BDK Advokati has advised the Amiga DOO shareholders on the full sale of the company to Beam Global. MMD Advokati advised Beam Global.

According to BDK, Amiga is a regional leader in the production of poles for mobile networks, street lighting, and innovative solar poles.

Nasdaq-listed Beam Global is a clean technology company providing sustainable products and technologies for EV charging, energy storage, and energy security.

According to MMD Advokati, the deal’s significance goes beyond the Serbian market: “the transaction is certainly a milestone deal, as it relates to the emerging market of EV and chargers, and the synergy between the local target and [the buyer] in the close future should lead to the sale and implementation of their new solutions all over Europe.”

The BDK team was led by Senior Partner Vladimir Dasic and included Partner Dragoljub Sretenovic and Senior Associate Marija Gligorevic.

The MMD Advokati team included Partners Rastko Malisic and Miodrag Klancnik and Attorney at Law Cedomir Jelesijevic.