Category: Serbia

The Government of the Republic of Serbia enacted the Decree on Establishing the Investment Program “Recovery and Development” (the “Program”) to establish a new credit line for the allocation of favourable credit funds to entities for the implementation of new investments, which will accelerate the recovery and growth of economic activity in the Republic of Serbia in difficult economic conditions caused by the SARS-CoV-2 virus.

Funds for the implementation of the Program are provided from:

1. the credit line of the European Investment Bank (the “EIB”) of EUR 90,000,000.00 under the financial agreement on faster recovery of small and medium-sized enterprises (SMEs) and mid-caps from COVID-19 signed between the EIB and the Republic of Serbia (the „Financial Agreement“), and
2. the Development Fund of the Republic of Serbia (the “Fund”) of RSD 100,000,000.00 (approx. EUR 850,000).

The request may be submitted until the funds from the Program are spent but no later than 30 June 2022.

Who qualifies?

Each applicant must meet the following conditions:

1. to have less than 250 employees (full-time), or to be a legal entity with a medium market capitalization (“MidCap”), defined as companies with a minimum of 250 employees and less than 3,000 employees (full-time),
2. privately or cooperatively owned and registered with the Business Registers Agency and other relevant registers,
3. perform and have registered as a predominant activity one of the activities from the list of activities provided in the Program. 

How can the funds be used?

Legal entities are entitled to apply for the funds under the Program for the following purposes:

• purchase, construction, extension, reconstruction, adaptation, rehabilitation, investment maintenance of space for performing business activities, or storage space and accommodation facilities in tourism, except for the purchase of land;
• purchase of new or used (up to six years old) equipment for performing business activities, including tools and delivery vehicles as well as other means of transport, except for light commercial vehicles, category N1;
• purchase of computer equipment;
• intangible assets (software procurement).

Assets acquired through investment must be new, except when the assets are acquired by micro, small and medium-sized legal entities.

Loan Conditions

The funds may be granted under the following conditions:

1. the maximum loan amount is RSD 290,000,000.00 (approx. EUR 2.465.000) whereas the minimum amount is RSD 1,000,000.00 (approx. EUR 8,500), whereas the amount of the approved loan may not exceed 75% of the eligible costs from the estimated value of the investment;
2. duration of the repayment period may be:

• 12 years including a grace period of up to 2 years and the interest rate of 1.5% per annum for all collateral with the application of the currency clause, or
• 6 years including a grace period of up to 1 year and the interest rate of 0.9% per annum for all collateral with the application of the currency clause.
• intercalary interest is calculated and paid monthly during the grace period.

Security instruments include:

1. guarantee or endorsed bills of exchange of a commercial bank; and or
2. first-class mortgage on real estate (the amount of the approved loan will depend on the market value and the type of the mortgaged real estate), and or
3. pledges on existing production equipment and other movable property (for loans with 6 years repayment period).

Additionally, applicants must provide a solo promissory note, as well as establish a pledge/mortgage over the subject of the investment.

Supervision and control of the intended use of funds are performed by the Fund, and users are obliged to enable the Fund with control and insight into the documentation necessary for supervision.

In order to allocate the funds reasonably, the Funds requires applicants to submit a statement whether and in what amount they have already received state aid / de minimis aid or are they in the process of obtaining it for the same eligible costs.

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 Andja Nikolic, Senior Associate, Samardzic, Oreski & Grbovic

NKO has advised CTP on its acquisition of land in Kac, the suburb of Novi Sad, intended for industrial development. 

According to NKO, “the land covers an area of almost 12.5 hectares and was acquired from 16 different individuals. NKO has advised CTP on the whole acquisition process … and assisted with signing and closing the deal.”

Last year, NKO advised CTP on two previous land acquisitions in Novi Sad, one in July (as reported by CEE Legal Matters on July 7, 2021), and one in December (as reported by CEE Legal Matters on December 20, 2021).

The NKO team was led by Senior Associate Luka Aleksic.

On 25 June 2022, the long-awaited Rulebook on Keeping Records and Reporting on Gender Equality Implementation entered into force, and it was published in the Official Gazette of RS no. 67/2022 (“the Rulebook”). The respective piece of regulation prescribes the template on which employers, public authorities and gender equality bodies record data categorised by gender, as well as the content and manner of submitting reports on implementation of gender equality within the stated entities, as well as political parties and syndicates.

The basis for the Rulebook adoption

The Rulebook was adopted as a by-law to the Law on Gender Equality (Official Gazette of RS no. 52/2021) (“the Law“), which entered into force on 1 June 2021 (whereas certain provisions will start to apply from 1 January 2024) and which prescribes general and specific measures for implementation and promotion of gender equality.

Among other, the Law thus stipulates that employers, public authorities and gender equality bodies shall be obliged, for the purpose of monitoring and implementing gender equality and reporting thereon, to record the prescribed data categorised by gender, and to prepare annual reports on implementation of gender equality with the prescribed content.

Recording data on implementation of gender equality

In accordance with the above, the Rulebook prescribes that employers (and public authorities) which employ or engage 50 or more persons (including gender equality bodies, according to the Law) shall be obliged to record data on implementation of gender equality, which information need to be presented and categorised collectively, by gender and age.

Such records of data shall be kept electronically and in writing, on templates prescribed by the Rulebook. The electronic data and written records are identical and presented in numerical form or in percentages, and they may not contain personal data. The records are kept in Serbian language and in Cyrillic script, whereas it may also be in Latin under the law regulating official use of language and script.

Form (no. 1) for recording the respective data is printed along with the Rulebook and represents its integral part.

Reporting on gender equality implementation

Under the Rulebook, employers, public authorities and gender equality bodies shall also be obliged to prepare and submit annual reports on implementation of gender equality (while political parties and syndicate organizations shall prepare periodic reports and submit them to the competent ministry under the Law).

Annual reports of employers (and public authorities) shall contain:

• general data on reporting entity (name, seat, telephone number, e-mail, website, company number, tax identification number);
• assessment of situation with regards to gender equality implementation;
• reasons for non-achievement of the prescribed equal presence of men and women (if such presence has not been achieved); and
• report on implementation of risk management plan (when the reporting entity is legally obliged to adopt such plan under the Law).

The stated report is made in form (no. 3) that is also printed with the Rulebook and represents an integral part thereof.

Alike the records on gender equality implementation, this report is also prepared in Serbian language and Cyrillic script, while it may be written in Latin according to the law on official use of language and script. It is delivered to the relevant ministry in electronic form or in writing, no later than 15 January of the current year for the preceding year.

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, PR Legal

Harrisons, working with Norgren Legal, has advised Claret Capital Partners on its EUR 12.25 million investment in Devtech. MBM Commercial reportedly advised Devtech.

According to Harrisons, “Devtech will use the funding to accelerate the company’s growth in key markets worldwide and expand its end-to-end digital innovation capabilities for Fortune 1000 companies.”

Invest Europe company Claret Capital Partners is a London-based growth fund. Devtech is a global digital innovation services company.

“Claret Capital Partners is one of the most respected financial firms in Europe and the company’s track record in helping fuel the growth and success of industry leaders is unmatched,” Devtech CEO Milovan Milic commented. “The funding is another indicator that our business strategy and holistic digital innovation approach is resonating among our global customers. As digital transformation accelerates, executives are under growing pressure to drive greater agility and growth. We will continue augmenting our core end-to-end capabilities to help our clients innovate, transform, and disrupt.”

“Claret is delighted to support Milovan and the whole Devtech team with the continued expansion of its digital innovation capabilities across key markets,” Claret Capital Partners Partner Antony Baker added. “Highly valued by its clients worldwide, we believe Devtech’s expert services are uniquely positioned to take advantage of growing market demand and further M&A opportunities. We look forward to our continued partnership with Devtech.”

The Harrisons team was led by Consultant Ines Matijevic-Papulin.

NSTLAW has advised both Lotika Mokra Gora and TMB Diamond Vocar Pancevo on their partnership for the production of organic food and beverages.

Lotika is a hospitality and tourism company in Serbia owned by movie director Emir Kusturica.

TMB Diamond Vocar, an agricultural production company, is a sister company of organic fertilizer and plant protection company TMB Diamond Pancevo.

NSTLAW’s team included Partner Nenad Stankovic, Senior Associate Andjelka Radovanovic, and Legal Trainee Teodora Markovic.

The Law on Public-Private Partnership and Concessions of the Republic of Serbia (Law) defines public-private partnership as a dynamic and developmental process of financing infrastructure projects, which represents a form of cooperation between government bodies and the private sector, intending to modernize the infrastructure and improve the provision of public services.

The key elements of the public-private partnership concept are an allocation of responsibilities, risk-sharing, and a long-term, stable, and sustainable partnership between public and private partners, who find their basis in the mutual and complementary benefits. Risk-sharing allows each of the partners to take the risk that they can manage most adequately, thus achieving greater efficiency in these projects. The concept of public-private partnership frees the public partner from a good part of the costs that they would otherwise have to bear and reduces the problem of fiscal pressure.

Another clear advantage of a public-private partnership is the fact that the public sector typically lacks the appropriate level of expertise, knowledge, and know-how to tackle and implement complex infrastructure projects itself, so involving a private partner is usually a more practical solution that allows the utilization of the managerial, technical, financial, and innovative capabilities of the private partner.

The growing need to build new public infrastructure, invest in projects of general interest, and provide services of public interest in Serbia has required the creation of a legal and institutional framework for attracting private investment. The Law was adopted in 2011, by which a concept of public-private partnership was introduced into the legal system of Serbia.

Aware that investments in infrastructure can impact the economic growth and living standards of the population, the Government of Serbia has focused its strategic choices in the past years on infrastructure projects. As a developing country with limited resources, Serbia is inclined to use public-private partnerships as a more innovative form of providing public services and a suitable mechanism for ensuring sound and quicker delivery of infrastructure projects.

The existing legal framework enables various types of cooperation between the public and private sectors. According to the Law, a public-private partnership may be contractual or institutional, which may or may not include elements of concession.

A public contract that solely regulates all the rights and obligations of the parties is the legal base for the contractual public-private partnership establishment. On the other hand, an institutional public-private partnership is based on the relationship between the public and private partners being the shareholders of a legal entity, which leads the public-private partnership’s project.

The Law includes concessions, which represent a contractual or institutional public-private partnership with elements of concession, governing the commercial use of a natural resource or assets in general use owned by the public partner. Through a public agreement, the public partner assigns to the private partner the right to use the subject of the concession for an agreed period. For the utilization of the subject of the concession, the private partner shall pay a concession fee.

Practice shows that the challenging phase of a public-private partnership project in Serbia is its implementation and contract management, which presupposes that both public and private partners have dedicated teams that will cover all aspects of the delivery of the PPP project, i.e., operational, technical, legal, and financial aspects. Progress should be made in this regard and the public sector’s capacity in this respect overall should be strengthened.

Although popular in many European countries, the concept of public-private partnership had relatively little application in Serbia until amendments were adopted in 2016. According to the European Investment Bank, in 2016, Serbia implemented only one project worth more than EUR 10 million based on public-private partnerships. However, its practical implementation has mostly been seen in the past several years, in relation to which it is noted that the Public-Private Partnership Commission has approved 217 public-private partnerships to date.

Despite the COVID-19 pandemic, the dynamic growth of public-private partnership projects is evident in 2020 and 2021, which has been confirmed by several major ongoing infrastructure projects at a national and local level. In addition, several large-scale projects currently in the preparation phase seem to be a constructive step forward toward the full exploitation of the public-private market potential.

Overall, it appears that the rules now in place for the successful realization of public-private partnership projects are adequate, but their potential has not yet been fully used.

By Igor Zivkovski, Partner, Zivkovic Samardzic

This Article was originally published in Issue 9.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Zivkovic Samardzic has advised OTA Sync on its latest investment round with the TS Ventures Fund, the DSI Business Angel Group, and Startup Wise Guys.

OTA Sync is a Belgrade-based startup developing cloud software for hotels and private accommodation.

According to Zivkovic Samardzic, “the OTA Sync team plans to invest in growth in regional markets, through education and promotion of sustainable and modern technologies, to position itself as the most modern and complete solution for hotel and apartment management. In the coming period, the plan is to launch a support program for all hotels that are eco-certified or turn to sustainable energy sources.”

Earlier this year, Zivkovic Samardzic advised on the Serbian Bookers – OTA Sync Partnership (as reported by CEE Legal Matters on January 5, 2022).

The Zivkovic Samardzic team was led by Partner Igor Zivkovski.

On 21 March 2022, new rules for personal data transfers to countries outside the United Kingdom (“UK”) came into force. Transfer of the respective data according to the previous rules will be possible until 21 September 2022, while starting from 22 September 2022 only new rules will apply to all new transfers. In addition, any contract on transfer of personal data concluded pursuant to the previous rules will be valid until 20 March 2024, while as of 21 March 2024 the parties thereto shall be liable to conclude a new contract, according to the new rules.

Reasons for adoption of the new rules

According to the regulations of the UK on personal data protection, the subjects to whom these regulations apply are obliged to implement appropriate safeguards when transferring personal data outside the country (unless the jurisdiction to which the data is transferred is assessed by the UK as providing an appropriate level of protection to such data, i.e., as existing in the UK).

Following the Brexit, UK and EU concluded the Withdrawal Agreement on 1 February 2020, which stipulates that during the transition period (until 31 December 2020) the UK shall continue to apply the General Data Protection Regulation of the European Union (“GDPR”), therefore the personal data transfers shall be performed in the same way as with respect to the member states of the European Union.

Transfer rules

After the expiration of the aforementioned transition period, new rules for the personal data transfers outside the UK were adopted, and they are included in Data Protection Act and General Data Protection Regulation of the respective country.

The subject rules allow such transfers on the basis of a concluded International Data Transfer Agreement or by using the International Data Transfer Addendum to standard contractual clauses established by the European Commission for international data transfers.

The first of the abovesaid options can be used when a specific transfer falls under the UK regulations and involves the conclusion of a separate contract in addition to the “main” contract, while the second one is intended for situations where the transfer is regulated by the GDPR as well, given that the subject regulation stipulates the obligation of both the transferor and the recipient of personal data to apply the new standard contractual clauses.

Regime of personal data transfer from Serbia to the UK

On the other hand, Brexit has not brought any changes in the regime of data transfer from Serbia to the UK, as the subject country is considered a country with an adequate level of protection, since it is a signatory to the Convention 108 (on the protection of persons with respect to the automatic processing personal data), as well as that it is stated in the Decision of the Government of Serbia on the List of states, parts of their territories or one or more sectors of certain activities in those states and international organizations where it is considered that an appropriate level of personal data protection is provided.

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 Ivana Ruzicic, Partner, and Lara Maksimovic, Senior Associate, PR Legal

The digital sector remains the fastest-growing part of Serbia’s economy, with big movements in battery, components, and electric vehicle production as well as technology and media, according to Gecic Law Founding Partner Bogdan Gecic.

“The energy crisis accelerated the diversification of energy sources, in parallel with the Green agenda, which is similar to the EU Green Deal but applies to Western Balkan countries,” Gecic begins. “The Serbian government just announced a EUR 35 billion national investment plan for renewables. We see increased interest in hydro, wind, and solar energy.”

There is also a big shift of focus in the region toward the electric vehicle supply chain, Gecic adds. “As a significant source of lithium, Serbia aims to develop battery, components, and electric vehicle production. An agreement worth EUR 200 million was signed between the Stellantis Group and the Government of Serbia to produce electric vehicles in the Fiat plant in Kragujevac. Other large projects in the production of lithium-based batteries have been announced,” he says.

“Another major topic is the Open Balkan initiative, which aims to create a single market for Albania, North Macedonia, and Serbia until they join the EU,” Gecic points out. “A number of framework agreements are already in place, allowing for the free movement of goods, capital, and labor. This may benefit everyone, as nowadays we have labor shortages, even when it comes to ‘blue-collar’ work.” Gecic says that, because of it, “many clients struggle to find software developers, engineers, etc., and the Open Balkan project will likely lead to better access and circulation of the labor force.”

According to Gecic, the technology and media sectors have seen big movements as well. “Over-the-top media services are extremely popular in the region, with all major telecom players being involved. This is related to a big diaspora from the region living abroad, who are now keen on streaming domestic content,” he notes. “We call it a ‘renaissance’ of domestic content production, and this is also helping develop other industries. We expect that this will keep booming for at least the next five years,” Gecic says.  

In addition, Gecic reports that Serbia has more than tripled its digital sector exports in the past five years. “This is the fastest-growing side of the economy by far, while the only thing slowing it down is the lack of developers,” he says. “On a weekly basis, we have companies looking for opportunities to open up some form of operations, to further expand in the region.”

Finally, Gecic notes “the EU’s Carbon Border Adjustment Mechanism should become a reality soon, however, none of the Western Balkan countries have adopted any measures to address the challenges. The CBAM will initially target cement, steel, petroleum, aluminum, electricity, etc., but will have a spillover effect on the costs of any finished goods that use these in their production processes.” Gecic says that, to address it, multi-layered work is required from many companies and governments.

The Walt Disney Company and Disney DTC EM Limited have appointed Petrikic & Partneri in cooperation with CMS Reich-Rohrwig Hainz as their Serbian Data Protection Representative.

According to the firm, “pursuant to Article 44 of the Serbian Law on Personal Data Protection, data controllers that do not have a registered seat in Serbia are required to appoint a representative in Serbia to act as a point of contact for the data protection authority and for data subjects.”

“Since the Disney+ streaming service has recently been launched in Serbia, Disney+ customers in Serbia may reach out to Petrikic & Partners for any questions or complaints in relation to the processing of their personal data by the above Walt Disney companies,” the firm announced.