Category: Slovakia

On October 22, 2019, the Slovak parliament adopted Act No. 390/2019 Coll. (the “Amendment”), which significantly amends the Slovak Commercial Code as well as some other acts. Most of the Amendment’s provisions will come into effect on October 1, 2020.

The Amendment introduces, among other things, substantial changes in the liquidation procedure, restrictions on individuals against whom enforcement proceedings are conducted (such persons can’t found an LLC, transfer or acquire an ownership interest in an LLC, or become a managing director in an LLC), and changes in the functioning of the Commercial Register (such as digitalization and deregistration of inactive entities).

We would like to focus on certain aspects of the new liquidation regime. In light of the COVID-19 crisis, it is likely that more businesses will consider discontinuation of their operations in Slovakia than usual. In such cases, voluntary liquidation of a company is one of the possibilities to exit the Slovak market, alongside, for instance, the sale of the Slovak operation or bankruptcy (where the statutory conditions for bankruptcy are met).

In general, liquidation can be defined as an out-of-court settlement of property relations of a wound-up company that does not transfer equity to a legal successor and that shall cease to exist upon its deregistration from the Commercial Register without a legal successor. The purpose of the liquidation is to convert the property of a company into money and to satisfy creditors.

Based on the explanatory report, the purpose of the Amendment is to make the liquidation procedure more efficient.

The Amendment distinguishes the winding-up of a company and its entry into liquidation. A company is wound-up as of the day stipulated in the resolution of the shareholder(s), and it enters into liquidation upon the registration of the liquidator in the Commercial Register.

Under the current regime, a company enters into liquidation on the day of its winding-up, i.e., as of the day stipulated in the resolution of the shareholder(s). The liquidation of the company and nomination of the liquidator shall be incorporated into the Commercial Register, but this incorporation is only of a declaratory nature.

This newly-introduced distinction is important because during the time between the winding-up of a company and its entry into liquidation, any disposal of assets of a company with a value exceeding 10% of the registered capital amount is subject to an expert evaluation and the approval of the supreme body of the company (e.g., in case of LLCs this would be the general meeting or the sole shareholder). This “standstill” regime is designed to protect the interests of a company’s creditors.

Further, during the time between the winding-up and its entry into liquidation a company will be considered to be in crisis with all related consequences arising from the relevant provisions of the Commercial Code. Again, this mechanism is designed to protect creditors.

Prior to the registration of the liquidator in the Commercial Register, a liquidated company will also be obliged to deposit an advance payment for the liquidation into a notarial escrow which can be used solely for the payment of the remuneration and the expenses of the liquidator.

Another important change introduced by the Amendment is that by entering into liquidation, any unilateral legal acts of the liquidated company – authorizations, powers of attorney, and procurations with the exception of powers of attorney granted for the representation in court proceedings – cease to exist.

The process of the registration of creditors’ claims will also be regulated in more detail. The liquidator shall, among other things, prepare a list of registered claims and deposit it with the Collection of Deeds. The liquidator shall also prepare and deposit a list of assets of the liquidated company with the Collection of Deeds.

The Amendment also regulates in detail the satisfaction of claims by the liquidator. One of the new rules stipulates that claims of affiliated persons shall be satisfied only after the satisfaction of other claims.

According to the Amendment’s transitional provisions, any liquidations where the liquidator was registered before October 1, 2020 shall be generally finalized according to the previous legal regime.

Overall, in terms of liquidation, the Amendment is a step towards greater protection of creditors of liquidated companies.

By Michaela Stessl, Country Managing Partner, and Andrej Liska, Associate, DLA Piper Bratislava

This Article was originally published in Issue 7.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In March of 2019, relative unknown Zuzana Caputova won the Slovakian Presidential election, becoming the first woman and – at 45 – the youngest person ever to hold that office. With a background as an environmental lawyer and human rights activist, Caputova is largely viewed in Slovakia as a unifier, taking strong and reasonable approaches to even apparently intractable problems. Her success has inspired a degree of hope for the future from her former peers and colleagues in Slovakia’s legal community.

The Background

Caputova, who was born into a working-class family in Bratislava on June 21, 1973, grew up in the nearby town of Pezinok, where she still resides today. Caputova has described her childhood as taking place in an “open-minded house,” which influenced her later development and work as an environmental activist.

After graduating from the Comenius University Faculty of Law in Bratislava in 1996 (with a specialization in both national and international law), Caputova worked for a while in the local Pezinok government, eventually becoming Deputy Mayor. In 2001, she moved into the NGO sector and started working with the Open Society Foundation on public administration and child protection issues. From 2001 to 2017 she worked with Via Iuris – a civic organization promoting the rule of law and supporting civil rights and society, representing individuals in environmental and human rights cases.

“She used to be a very strong and a very dedicated environmental lawyer,” says Radovan Pala, Partner and Co-Head of Taylor Wessing’s office in Bratislava, who serves as an official advisor to President Caputova. “The legal community knew of Zuzana for a long time, in the NGO world.”

It was at Via Iuris that Caputova first came to prominence, gaining particular recognition for her fight against the construction of a waste dump and an incinerator in close proximity to Pezinok. “She became recognizable person when she took on that fight in city of Pezinok,” recalls Katarina Mihalikova, Partner at Bratislava’s Majernik & Mihalikova law firm, who reports that “Caputova and her colleagues at Via Iuris managed to prove that the proposed project would be very damaging to the environment and the city, as well as to the quality of life of Pezinok’s inhabitants.”

Caputova wanted more influence than her position in the NGO sector provided her, Pala says, adding that, “I think that, as elections drew close, she decided that the time had come to move up.” She joined the Progressive Slovakia party in 2018 and began her campaign for president in 2019. Pala was there from the beginning, in fact, and he recalls with pride being “part of the three-member petition committee that helped her gather the necessary fifteen thousand signatures so that she could run in the first place.”

An important event in the run-up to that election was the February 2018 assassinations of investigative journalist Jan Kuciak and his fiancé, Martina Kusnirova. The murders generated a huge outcry in Slovakia, with enormous rallies organized in a demand to see the killers (and those who hired them, as it was widely believed that the act had been committed under orders) brought to justice. Caputova engaged with the murder case and started galvanizing support. “She had much to say, and people listened,” Pala says. “People understood that the corruption and oligarchical structures do not stop at anything and that this was hurting their way of life as well. It attacked our values – the most basic ones.”

“The murder piqued a civic movement of unprecedented proportions,” Mihalikova agrees, recalling that “the last time people started to rally out of fear and feeling threatened like that was in 1989.”

Caputova, who was a frequent participant in protests against the government after the murders, cast her campaign as a struggle for core values, eventually choosing “Let’s face the evil together” as her campaign slogan. It worked, and she won the first round of voting on March 16, 2019, with 40.57% of the vote, and the second round, on March 30, 2019, with 58.41% of the vote. On June 15, 2019, she was sworn in as President.

We Won, We Won! … Now What?

Caputova’s win, as surprising as it was to many, came in an election which saw the lowest voter turnout in Slovakia’s history. This was not lost on the opposition. “With the low voter turnout, her political opponents tried to argue that her presidency was not legitimate – which was, quite frankly, ludicrous,” says Veronika Pazmanyova, Partner at Glatzova & Co. in Bratislava. “She enjoys the strong support of the people now, as she did after she won. She won the hearts of the citizens by standing behind her values, even if controversial.” Pazmanyova cites President Caputova’s pro-gay rights stance as an example of this political courage. “Slovakia is a deeply catholic country,” says Pazmanyova, “and being pro-LGBTQ is not a common sight when one looks at our politicians. Still, President Caputova is standing her ground and arguing equality and freedom for all in Slovakia from a human rights standpoint, and her message is getting across.”

“I voted for her in the Presidential elections,” says Hugh Owen, Director of Go2Law. “While it sounds naive, I voted for her because I was desperate to see someone in a significant position of power who was not part of the political establishment. I could see from her history of campaigning that she was prepared to fight for her beliefs and for justice and that she would have a fresh and invigorating approach to her office.”

“I think the main reason people respond so well to her, even when she’s not saying the most popular things, isn’t only due to her being an eloquent speaker,” Pala says, “but also because she does not dodge questions. She always gives her answers straight, in a direct way.” That doesn’t mean she’s not careful. Pala points to Caputova’s comment on the topic of same-sex marriage and same-sex adoption that “this is a more preferable option than staying in an orphanage with no parents,” as reflecting her ability to reframe issues effectively.

This balanced approach – strong views coupled with an honest way of communicating – is what, Pala says, underpins President Caputova’s reputation as a unifier. According to him, “she takes a lot of care not to be a partisan president and to be there for all Slovakians, not just her supporters.” Indeed, he suggests, President Caputova’s focus over the past year has been, ultimately, a continuation of what she has fought for all her life.

“The President focuses most on protecting the human rights of those most in need,” Pala explains. “By fighting for law and justice and against corruption, promoting the environment, and proposing a higher rate of care for the elderly and the retired people of Slovakia, she has come across as somebody everybody can trust.”

And trust is an important asset in Slovakian politics. Pala notes that the previous government was linked to “shady figures with questionable ties to criminal aspects.” As a result, he says, “for this very reason, President Caputova’s public empowerment of those prosecutors and judges willing to take up, argue, and try cases that deal with corruption and criminals is an excellent example of the good she can continue to do for Slovakia.”

Pala is convinced the effects will be significant, and he suggests that the very fabric of society is changing in a way that will lead to the exclusion, or at least suppression, of criminal factors. “The consequences of her struggle to send this message can be seen already,” he says. “The trial of those accused of the murder of Kuciak and Kusnirova is likely to end soon with a conviction, hopefully putting this terrible chapter to rest.”

Of course, Caputova is not a one-issue President. Aside from battling corruption, Pala says, she has made an effort to “strengthen the ties Slovakia has in the international arena,” and essentially restarted the work of the Constitutional Court, which had been inactive, with only four of its 13 seats filled. “President Caputova pushed for the election of new judges and, basically, convinced the Parliament to nominate a sufficient number of candidates to enable her to elect six judges to the bench to make the Court functional again,” Pala says.

Slovakia’s Parliament is expected to enact more legislative reform in the future as well, Pala reports, and he insists that President Caputova will “show a strong voice in these as well.”

“She cannot be involved on the executive level in reform in a hands-on way,” Mihalikova says, “but just by virtue of her talking about the issue and by the force of her authority, she can make waves.” Mihalikova notes that 11 judges were arrested for corruption in March, describing this as “a clear representation that the judicial system is craving reform,” and adding that “it’s good that President Caputova is tackling this. If the system is corrupt people can’t do anything, their very way of life is under attack.”

Finally, President Caputova, staying true to her roots, remains a strong voice for environmental issues. “She did quite a lot on raising awareness of the importance of protecting the environment,” Pala says. According to him, President Caputova has made an effort not only to honor the Paris Agreement but also to go “above and beyond,” noting that “based on her initiative, Slovakia has currently pledged to approach a carbon-free economy.”

The Canny Caputova

Caputova’s message has not always resonated with Slovakia’s conservative Parliament – but she has managed to engage productively anyway. “The previous Prime Minister, Peter Pellegrini, is part of the Political Party, SMER, which is tied to several corruption scandals President Caputova vocally opposed,” says Pazmanyova. “You’d expect some friction there, or animosity, to swim to the surface and hinder cooperation between her and the former Prime Minister – but in fact it was rather smooth.” Pazmanyova says that Caputova and Pellegrini had “a constructive communication, laced with respect despite the differences they clearly had.”

However, cordiality is not, alone, enough. “Before the parliamentary elections that took place on February 29, 2020, the then-ruling SMER practiced some underhanded tactics in order to try and stay in power,” Pazmanyova recalls, pointing to attempts to extend the period of time immediately before the elections during which no political advertisements or campaigning was allowed. “This period of time, the pre-election silence, is usually 14 days long, and SMER wanted to extend it to 50 days,” she recalls, insisting that SMER’s goal was to silence its opposition.

“SMER made the case that the media is not independent and that it should, therefore, be excluded from the equation,” Pazmanyova says, describing this as “flimsy at best,” but noting that the party’s proposal nonetheless made it through Parliament and reached the President’s desk.

This is where President Caputova showed a lot of prowess,” Pazmanyova smiles, explaining that Caputova first vetoed the law, but when Parliament voted on it again, overriding the veto, Caputova then signed the law as required – but immediately filed a request with the Constitutional Court to review its legality. The Constitutional Court then suspended the amendment pending a full review. “This allowed for the elections to go ahead as planned without the extended moratorium,” Pazmanyova says.

Additionally, Pazmanyova reports that “only four days before the elections, Parliament passed an act revising the pension scheme in order to get a 13th pension payment to all retired people in Slovakia.” Retirees make up a significant portion of the electorate in Slovakia, and Pazmanyova believes the move was made in an effort to buy votes. “Many saw this as political corruption,” she says, “so close to the election.” According to her, the normal legislative procedure was purposefully truncated to preclude parliamentary debate and exclude input from experts and other relevant stakeholders. Pazmanyova reports that Caputova postponed her decision to sign or veto the law until after the election – then, after signing the law, again turned to the Constitutional Court for help, asking it to ensure the shortened procedure in which the new act was passed was proper. Pazmanyova describes this as “a political master move on the President’s end: she did not deprive retired people of the payment, but has effectively nullified its impact on the elections.”

Coping with COVID-19

Slovakia, like other European countries, has been hit hard by the COVID-19 crisis. Still, the quick response of the government has helped keep the number of cases low; as of May 21, 2020, there had been 1502 confirmed cases, and only 28 deaths.

“The President reacted swiftly and showed how important it is to earn the public trust and lead from the front lines,” says Pala. “Besides sending out messages of support to all those battling the disease head-on, like doctors, nurses, and police offices, and to those most affected, like the elderly, she also contributed greatly to widespread adoption of personal protection.” Pala says that Caputova has worn a facemask from the very beginning of the crisis during her work and public appearances, which he credits with helping to raise awareness of the pandemic’s seriousness and provide guidance as to how Slovakians should behave. “Her role in the handling of the COVID-19 crisis is universally acclaimed,” Pala reports.

Mihalikova agrees, noting that “according to very recent polls, [the President] is the most trusted politician in the country.” She says that this fact shows that President Caputova has “upheld her role very well,” and has handled the crisis with “calming and embracing addresses” that “gave the people just what they needed.”

Looking Ahead

Following the recent parliamentary elections, President Caputova is “likely to have a much easier relationship with current lawmakers,” Mihalikova says, and she adds that “the President has met with all the parliamentary party leaders and it seems they have a good starting point, in terms of communication.” However, Mihalikova notes, with the elections taking place so close to the start of the COVID-19 crisis, “the government was assembled hastily, and they’ll face a lot of pressure in the near future.”

Still, her fellow lawyers, at least, seem to have shed their traditional skepticism, and they remain confident that Caputova can succeed in unifying the country behind her progressive agenda. “Even deeply conservative, religious people, those that would vote for somebody else – even they do not attack her directly,” Pala asserts. “She has universal appeal.”

Hugh Owen is hopeful as well. “It is a time where change is necessary. She has a very strong background as an environmental campaigner, and seems to pursue a liberal agenda, both of which in my view are very positive influences in a time where reactionary forces and populism are also strong, and where climate change is still waiting not-so-patiently in the background.”

“It’s an amazing feeling, to be proud of your politicians, especially your President,” Pazmanyova says with a smile. “When her name is mentioned by some of our international clients or colleagues, I genuinely beam,” she laughs. “President Caputova is an advocate for human rights, a true teacher of tolerance and openness – and she communicates this very well.”

“On election day, I was with some friends and colleagues and we all felt very strongly about her winning,” Pazmanyova concludes. “A woman, a lawyer – very, very empowering. It was like I won myself.”

This Article was originally published in Issue 7.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Bartosik Svaby has advised the Eterus Capital fund on its EUR 1.5 million acquisition of a 12.36% stake in Eyerim.

Eyerim is an online seller of designer sunglasses and prescription glasses. The company, which was founded in 2015, is based in Bratislava.

Eterus Capital is managed by Wood & Company. Since 2008 the fund has invested over EUR 40 million in Slovak innovations. 

According to Bartosik Svaby, an additional investment of EUR 200,000 was made in Eyerim by existing investor 3TSCapital Partners (which is mainly supported by the investment fund of Cisco), in return for a 1.65% stake.

Bartosik Svaby’s team included Partner Igor Svaby and Senior Associate Tomas Strapec.

Editor’s Note: The article has been updated to correct a factual error. 

 

Clifford Chance has advised Vseobecna Uverova Banka a.s., the Slovak subsidiary of Intesa Sanpaolo, on the update of its EUR 5 billion covered bond program and another syndicated EUR 500 million issuance via the Luxembourg Stock Exchange. Allen & Overy reportedly advised joint lead managers Banca IMI S.p.A., Commerzbank Aktiengesellschaft, Danske Bank A/S, Erste Group Bank AG, and Landesbank Baden-Wuerttemberg.

According to Clifford Chance, “the transaction followed the footsteps of the VUB’s 2019 issuances [initially reported by CEE Legal Matters on April 1, 2019], which represented a landmark for the covered bonds market in Slovakia.” 

Clifford Chance’s Prague-based team included Senior Associate Stanislav Holec and Junior Lawyer Andrej Havko, while its team in Milan included Partner Filippo Emanuele and Senior Associate Jonathan Astbury.

In response to the coronavirus crisis, which is seriously impacting the Slovak economy, the Government of Slovakia has proposed and the Parliament has passed a second amendment to the Slovak Labour Code within a short period of time. We provide information on this topic below. Should you wish to obtain more details please do not hesitate to contact us.

Amendment to the Slovak Labour Code

The Amendment, which is to come into effect in the coming days, modifies provisions stipulating fixed-term employment under Act No. 311/2001 Coll., Labour Code, as amended. Under the current regulation, a fixed-term employment relationship may be agreed for at most two years and may be extended or renewed at most twice within this two-year period (by renewing the fixed term of an employment relationship beginning less than six months after the end of the previous fixed-term employment relationship between the same parties). The Labour Code provides only limited options for extending the two-year term limit, e.g. when substituting an employee during parental leave, etc.

Nevertheless, the modification introduced by the Amendment is only applicable during an extraordinary situation, state of distress or state of emergency declared by the competent authorities (“Emergency Situation”) and for two months after its recall. The most recent Emergency Situation was recalled on 13 June 2020.

According to the Amendment, if a fixed-term employment is to end due to the expiry of its term during the Emergency Situation declared in connection with COVID-19 or within two months after its recall (and if the current regulation does not allow its extension), the fixed-term employment relationship may be extended once more for a maximum of one year. If the fixed-term employment relationship already ended, it can be renewed under similar conditions.

In companies where employee’s representatives operate, the extension or renewal must be consulted with them. Otherwise the extended or renewed employment relationship will be deemed to be concluded for an indefinite time by virtue of law.

By Peter Devinsky, Attorney at Law, Schoenherr

A well-known chain of pharmacies launched a pilot project to run medical vending machines in Slovakia last year. Although Slovakia has not had such machines in the past, they are not uncommon abroad.

According to the creators of the idea, the machines are designed to improve comfort in the area of patient care. The vending machines, which operate nonstop, offer typical over-the-counter products for digestive problems, colds, eye preparations, food and nutritional supplements, vitamins, certain medical devices and medical supplies for first aid, disinfection, condoms and products for women, and so on. They do not offer medicines.

Slovak Chamber of Pharmacists Skeptical

Some are praising the innovation due to 24/7 product availability. However, the Slovak Chamber of Pharmacists has taken a stand against medical vending machines, which it claims are hazardous for patients. The Chamber points out that even with food supplements there are contraindications and a risk of negative interactions with various medicines.

Pharmaceutical care is based on professional expertise and advice about the appropriate medical assortment for a particular patient. Some pharmacists therefore point to the lack of expert advice to accompany vending machines, which are unable to do patient identity checks and do not limit the sale of nutritional supplements. Pursuant to the Slovak Act on Medicines, a pharmacy shall ensure the dispensing of medicines and medical devices by professionally-qualified persons. Pharmacies therefore also serve as consulting centers for patients.

Some pharmacists also fear that the machines will lead to a gradual reduction in the regulation of over-the-counter medicines. According to the Slovak Chamber of Pharmacists, any procedures to move medicines towards retail sales are undesirable.

In response, the chain of pharmacies introducing the vending machines has explained that the machines offer products designed to solve the most common minor problems and complications which do not necessarily require consultation with pharmacists.

Vending Machines Will Not Replace Pharmacies (Yet)

Medicines are strictly regulated in Slovakia. Patients can obtain prescription medicines only from a brick-and-mortar pharmacy, although over-the-counter medicines and many kinds of medical devices can be offered online. A pharmacy e-shop can be provided exclusively by the holder of a license to provide pharmaceutical care in a public – pharmacy or in a medical device store (i.e. a physical pharmacy or a physical medical device store).

Therefore, patients will not find any medicines in medical vending machines – not even painkillers, fever medications, or regulated medical devices.

Those strict dispensing rules, however, do not apply to vitamins, dietetic foods, medical supplies, hygiene and cosmetic products, and so on. Although such products are offered in pharmacies, they can also be freely sold in ordinary shops, in principle, in any form. Dispensing them in vending machines is not specifically regulated and thus not prohibited.

Medical vending machines as such are not legally regulated either. Nevertheless, given the wording of the Act on Medicines and the regulation of medicines described above, it can be concluded that the sale of any medicines and regulated medical devices in such an automated manner is still excluded.

Despite the concerns of some pharmacists, medical vending machines are likely to become popular.

Recent legislative changes in the area of emergency pharmacy services in Slovakia have resulted in many pharmacies shortening their evening opening hours. Especially in smaller towns, emergency pharmacies were underused. In addition, health insurance companies and the government do not provide any financial contributions to emergency pharmaceutical services. The pharmacies were therefore unprofitable during late hours. Since the January 1, 2020 entry into force of an amendment to the Act on Medicines, it is up to the Slovak Chamber of Pharmacists, the self-governing territorial region, and pharmacies themselves, to determine at what time and at what location an emergency pharmacy will be open, and only if no agreement is reached will emergency pharmaceutical services be ordered by law.

Whether other pharmacy chains will be interested in operating medical vending machines in the future and whether legislative measures regulating medical vending machines will be adopted are not yet known. For the time being, however, it can be said that views both for and against medical vending machines are based on the idea of protecting health and helping patients. So, let’s let the future of the automated dispensing of medical products be a surprise.

By Natalia Tunegova, Leader of Pharma and Life Sciences, Peterka & Partners Slovakia

This Article was originally published in Issue 7.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The title of this editorial is a famous song by the Spencer Davis Group – though it makes me wonder if they were CEE in-house lawyers singing to their CEOs.

OK, I am biased when it comes to this issue. Although I am now a partner with Dentons, based in Bratislava, and have been with the firm since 2007, prior to that I was an in-house lawyer (Associate General Counsel at Teachers Insurance and Annuity Association of America, known by the acronym TIAA (although the investment arm of TIAA has now been rebranded to Nuveen)) in Charlotte, North Carolina, and New York.

In my professional experience, businesses that value their in-house legal teams, give them sufficient independence, and demand more from them, achieve superior results. Although there are always exceptions, well-run, top financial institutions in the United States have in-house legal teams that are respected, given significant responsibility, and paid accordingly. In-house lawyers usually have extensive experience as outside lawyers before moving in-house and are fully engaged in the business of their companies. This means that not only are they responsible for general legal tasks related to making sure their companies are in compliance with applicable law, but they are also – at the very least – relied upon to assess and manage legal risk. If they are able to do these tasks effectively and garner the trust of their business teams, they are also increasingly likely to be brought into key strategic decisions, so that they are not only helping to run the railroad, but also helping to decide where and what new tracks should be laid.

As an in-house lawyer, I was drawn into transactions and new business initiatives right from the start, and I accompanied those transactions and initiatives through their lifetimes. This meant working closely with the business teams in structuring deals, drafting term sheets, preparing for investment committee approval, and of course advising on legal aspects if requested to do so by the committee, before the commitments were signed with the counterparty or any outside documentation to implement the transaction or initiative had begun. It also meant that the decision to select outside counsel was made by (or on the recommendation of) the in-house legal team. We were expected to know those lawyers and firms best suited to make transactions or initiatives successful and to be able effectively to communicate the goals and the “company way” to those outside lawyers. In effect, we were responsible for all the legal aspects – but crucially, commensurate with that responsibility, we were also empowered by the business to be in a position to properly assess a given situation so that the company could make an optimum decision, and if it was necessary, to say “No” or “Not like that, but like this” to protect the company.

I have now had the opportunity to work as an outside lawyer in CEE for 13 years. When I first moved to the region, I was surprised that some businesses did not put their in-house lawyers in positions to succeed and appeared not to value their input. While I have seen significant improvement during this time and many institutions do a great job in utilizing their lawyers, there is still work to be done. In situations where the in-house lawyers were sidelined and an adequate corporate structure was not in place, I saw fully-executed term sheets where the business was not even legally permitted to carry out the transaction, and key points that were not properly thought through … or even recognized. In other instances, businesses brought their in-house lawyers into a transaction only at the end of the process, and because those lawyers had not been included in the deal formulation and negotiation, they were not in a position to understand it and could not speak meaningfully about the deal, let alone raise critical objections. Needless to say, such situations are sub-optimal and can be disastrous. Some of those businesses no longer exist.

The issue is not one-sided. As much as CEE businesses should empower their in-house legal teams to be effective, it is imperative that the in-house lawyers and their leaders earn the trust of the business teams by understanding their roles and by staying ahead of the game through close communication and anticipating legal and strategic needs.

In summary, CEE businesses would be well served to value their in-house lawyers more consistently and to give them a greater opportunity to succeed. Likewise, my in-house legal colleagues must energetically seek out ways to ensure that they can more effectively fulfill their roles.

By Marcell Clark, Partner, Dentons Bratislava

This Article was originally published in Issue 7.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

 

White & Case has advised lead managers Barclays Bank, Citigroup Global Markets Limited, Deutsche Bank AG, HSBC, and Intesa Sanpaolo Group member Vseobecna Uverova Banka on the Slovak Republic’s dual tranche issuance of EUR 2 billion 0.250% notes due 2025 and EUR 2 billion 1.000% notes due 2032.

The notes were offered via a Regulation S offering and are listed on the Bratislava Stock Exchange.

“With an overall value of EUR 4 billion, this is the largest ever sovereign bond issuance by a Central & Eastern European issuer,” said White & Case Partner Juraj Fuska. “It also generated the largest demand from the investor community – more than EUR 15 billion – in the history of Slovak sovereign bond issuance.”

White & Case’s team in Bratislava included Partner Juraj Fuska and Associate Radoslav Palka. The firm’s team also included London-based Partner Stuart Matty and Associate James Clarke.

Contribution for employers with shut-down businesses

From 6 April 2020 businesses that had to be mandatorily shut down under a measure issued by the Public Health Office (Úrad verejného zdravotníctva) can apply for a state contribution of 80 per cent of each employee’s paid wage compensation. The government has removed the restriction as to the maximum amount of such granted contribution of EUR 800,000 per employer. Therefore the contribution can now be granted even to employers who employ more than 200 persons. The maximum contribution per one employee of EUR 1,100 remains unchanged.

The financial contribution will be granted to employers provided they do not terminate employment with the concerned employees within two months following the month in which they apply for the contribution, nor conduct any other legal action which would lead to the termination of the employment by notice or agreement for reasons on part the employer (Section 63 (1) let. a) and b) of Labour Code). Applications for payment of the contributions can be submitted via www.pomahameludom.sk  hosted by the Ministry of Labour, Social Affairs and Family.

Contribution for self-employed with shut-down businesses or drop in revenues 

The respective contribution will target solely self-employed with no employees that had to shut down their businesses under a measure of the Public Health Office or that have recorded drop in revenues as compared to last year’s figures. The applications can be submitted starting 8 April 2020. 

Aid for employers affected by emergency situation

The conditions for the provision of the planned financial contribution for employers the businesses of which have not had to mandatorily shut down and that have recorded revenue shortfall as compared to last year have now been modified by the government. The amount of a fixed contribution per employee is visible from the table above under point 2. 
The government has also introduced a new option for obtaining a contribution. Employers who cannot assign any work to their employees on serious operational grounds as stipulated in a written agreement concluded with the employees’ representatives under Section 142 (4) of Labour Code can now apply for a contribution in an amount exceeding the fixed rate. For such cases, the contribution will be provided in the amount of employees’ wage compensation as agreed with the employees’ representatives (where by law the amount cannot be lower than 60 per cent of employee’s average earnings), but no more than 80 per cent of average earnings and, at the same time, in the maximum amount of EUR 880 per month. 
The financial contribution will be granted to employers provided they do not terminate employment with the concerned employees within two months following the month in which they apply for the contribution, nor conduct any other legal action which would lead to the termination of the employment by notice or agreement for reasons on part the employer. Detailed information on the provision of the contribution will be published by the Ministry of Labour, Social Affairs and Family along with the launch of application submission.   

Aid for natural persons with no income during the emergency period

Each natural person who has no income from business activities, non-business activities or employment since 13 March 2020 and who 

• is self-employed and has suspended or restricted performance or operation of its business activities,  
• is self-employed and has suspended its authorisation to conduct business activities,
• is employed under an agreement outside of employment which is valid during the emergency period,

will be entitled to a contribution. The fixed contribution for March 2020 amounts to EUR 105 and for April and May 2020 to EUR 210.  

By Pavol Rak, Partner, and Martin Tupek, Senior Associate, Noerr

White & Case has advised lead managers Ceskoslovenska Obchodna Banka, Slovenska Sporitel’na, and Tatra Banka on the Slovak Republic’s issuance of EUR 1.5 billion 1.000% notes due in 2030.

The notes were offered via a Regulation S offering and are listed on the Bratislava Stock Exchange.

Ceskoslovenska Obchodna Banka is a member of the KBC Group, Slovenska Sporitel’na is a member of the Erste Group, and Tatra Banka is a member of the Raiffeisen Group.

White & Case’s team in Bratislava was led by Partner Juraj Fuska and included Associates Radoslav Palka and Lukas Kralovic.