Category: Slovakia

Dentons has advised the sole owner of I.D.C. Holding Pavol Jakubec on the sale of the company to Valeo Foods. A&O Shearman advised Valeo Foods.

The transaction remains contingent on regulatory approval.

Ireland-based Valeo Foods is a portfolio company of the American private equity house Bain Capital. 

According to Dentons, I.D.C. Holding is a manufacturer of sweets in Slovakia with an annual turnover of almost EUR 200 million. “The portfolio includes traditional and iconic brands such as Horalky, Mila, Lina, Kavenky, Goralki, Moments, Verbena, and many others. The group employs more than 1,150 people across three production sites located in Slovakia and three subsidiaries in Czech, Hungary, and Poland.”

The Dentons team included Partner Juraj Gyarfas and Senior Associates Drahomir Siroky and Tomas Pavelka.

The A&O Shearman team included Partners Martin Magal and Marta Sendrowicz, Counsel Tomas Bury, Senior Associates Michaela Nemethova, Petra Dzubakova, Ivana Halamova Dobiskova, and Aleksander Braksator, and Associate Marek Bojkovsky.

Wolf Theiss has advised on the reorganization of Oerlikon’s nitriding business in Slovakia via a spin-off of the business into a standalone legal and operational entity.

Oerlikon is a supplier operating in the engineering and machine and equipment construction sectors for numerous polymers.

The Wolf Theiss team included Partner Bruno Stefanik and Senior Associate Vladimir Simkovic.

Wolf Theiss did not respond to our inquiry on the matter.

With a new Minister of Social Affairs aiming to tighten controls on self-employment practices, businesses and legal professionals are left grappling with unclear guidelines and significant risks, according to Fairsquare Partner Erik Schwarcz.

“The hot topic right now in Slovakia is employment law, specifically the boundaries between self-employment and traditional employment,” Schwarcz begins. “Our new Minister of Social Affairs is pushing an agenda focused on stricter checks and controls to ensure that self-employment is used appropriately, meaning that people classified as self-employed are genuine entrepreneurs and not in roles that should be covered by employment contracts. We receive numerous inquiries every week because the line between what constitutes self-employment and employment is quite thin, and there are no clear guidelines from the government,” he explains.

Focusing on the issue’s particular significance at this moment, Schwarcz explains that “the consequences of breaching the law in this area are enormous. From the government’s perspective, what might seem like legitimate self-employment could actually be a hidden employment relationship. This not only has implications for the employer but also for the self-employed individuals who might later claim the benefits they would have received as regular employees, such as health insurance, paid leave, and job security.” According to Schwarcz, the problem is widespread, especially in sectors like automotive manufacturing, where it’s common to see workers registered as self-employed.

Continuing, Schwarcz says that this renewed focus on employment classifications started “with our new Ministry of Social Affairs, which early this year declared this as a key issue they would target. However, the government has yet to provide any clear guidelines on how they plan to address it.” Schwarcz reports that many companies, including some of Slovakia’s largest, are now worried because there’s still a lot of uncertainty about how these regulations will be enforced. “We expect the government to begin inspections in the coming months, particularly in large companies, but so far, no raids have been confirmed. There is also the risk of backlash, especially against Slovakia’s national champions in the automotive sector.” 

Schwarcz believes that, in order to address this issue effectively, “the government needs to establish clear guidelines – essentially, a checklist that outlines the criteria distinguishing employment from self-employment. It’s challenging for individuals and companies to assess these conditions themselves without proper guidance. Having transparent rules would help reduce the risks for businesses and ensure that individuals are correctly classified.”

Additionally, Schwarcz reports that, recently, “there have been substantial changes to the criminal code, particularly regarding the statute of limitations for certain criminal acts. It’s a politically sensitive topic; some see it as a necessary modernization, while others argue it was designed to influence ongoing investigations.” According to him, even the Constitutional Court has been involved in these discussions. “Additionally, there have been minor adjustments in public procurement laws and some shifts in the energy sector to promote green energy, and ongoing discussion about new construction law,” Schwarcz reports.

Former CMS Associate Martin Balaz has joined Fairsquare in Bratislava as Partner.

Balaz specializes in corporate, M&A, and energy law. Before joining Fairsquare he spent seven years with CMS. Earlier, he spent almost four years with BNT, between 2013 and 2017, and, earlier still, he spent over a year with Eversheds Sutherland legacy firm Dvorak, Hager & Partners, between 2012 and 2013.

“We are really pleased that our highly professional team has been complemented by Martin Balaz, who gained his extensive experience in leading international law firms,” added Founding Partner Erik Schwarcz. “Martin joins Fairsquare as a Partner and we believe that his experience and dedication will be an asset to us and will take the firm one step further.”

Eversheds Sutherland has elevated Annamaria Tothova, Jana Sapakova, and Petra Hager to Equity Partners of its Bratislava office.

Tothova specializes in environmental law, waste management, construction law, real estate law, and energy law and has been with the firm since 2006. She began her career with Haslinger / Nagele where she spent three years between 2003 and 2006.

Sapakova is an expert on employment law, personal data protection, and ESG. She joined the firm in 2008.

Hager, who has been with the firm since 2016, specializes in corporate and M&A, commercial contracts, as well as commercial litigation. Earlier, she spent two years with the Ministry of Economy of the Slovak Republic as a Senior Lawyer as well as four years with Roedl & Partner as an Attorney, between 2010 and 2014.

“We are very pleased to have embraced the corporate changes, which represent another significant step in strengthening our company,” commented Managing Partner Bernhard Hager. “Jana, Petra, and Annamaria are an integral part of our team and their promotion is a recognition of their work, expertise, and professional approach to clients. We are proud of their achievements and look forward to working with them in the future.”

Schoenherr has advised OMV Slovakia on the acquisition of a network of 27 filling stations from the Benzinol Group.

Headquartered in Bratislava, OMV Slovakia has the second-largest chain of filling stations in the Slovak Republic. According to Schoenherr, “the inclusion of Benzinol’s sites will further strengthen the company’s position as the number two on the market.”

The Schoenherr team included Partner Michal Lucivjansky, Franz Urlesberger, and Sona Hekelova, Counsel Peter Devinsky, Attorneys at Law Jan Farbiak and Tomas Silhanek, and Associate Marek Fuchs.

Schoenherr could not provide additional information on the matter.

This article follows up on the article in the previous issue titled “Transformative Legal Changes: Slovakia’s New Transformations Landscape” where colleagues outlined the permissible changes in legal form in the Slovak Republic.

The Transformations Act also brings benefits for startup companies; the possibility to change the legal form of the company from a limited liability company to a simplified joint-stock company is a new element introduced by the legislation. A limited liability company is the cheapest and fastest form of business for starting companies and many companies choose this route at the time of foundation. However, doing business in the form of a limited liability company may not be attractive from a VC investor’s perspective. This change in legal form precisely creates space for founders to make their companies more appealing to investors in the market

The change of legal form is preceded by:

1. Project
2. Report of the statutory body
3. Opinion of the Supervisory Board
4. Expert opinion
5. Decision

PROJECT

The statutory body prepares a project proposal for change of legal form (the “project”), which mainly includes:

1. Identification of the company before the change of legal form,
2. Legal form and business name of the company after the change of legal form,
3. Shares of shareholders, the contributions of shareholders to the company after the change of legal form (if the legal form is changed to a joint-stock company or a simplified joint stock company, also the form, type, nominal value, and number of shares of shareholders after the change of legal form),
4. Determination of persons who will be members of the statutory body (not required if the board of directors elects the supervisory board according to the articles),
5. Determination of persons who will be members of the supervisory board if it is established after the change of legal form.

The annex to the project forms a draft of the memorandum of association or, in the case of a joint-stock company/simplified joint stock company, a draft of the articles.

REPORT OF THE STATUTORY BODY

A report of the statutory body is necessary if a company changes its legal form to a simplified joint-stock company, a joint-stock company, or a limited liability company.

In the report, the statutory body will explain and justify the change of legal form from a legal and economic point of view.

The report must be provided to the shareholders for inspection.

OPINION OF THE SUPERVISORY BOARD

If the company has a supervisory board, it will review the intended transformation of the company, the project, and the report of the statutory body. After reviewing, the supervisory board will prepare an opinion to be submitted to the general meeting.

An opinion of the supervisory board may be waived if all shareholders of each of the participating companies agree to it.

DECISION OF THE GENERAL MEETING

Approval of the project requires the consent of a two-thirds majority of all shareholders’ votes if the memorandum of association does not establish stricter criteria. In the case of companies not obligatorily creating share capital, the approval of the project requires the consent of all shareholders.

EXPERT OPINION

An expert opinion is required if a company changes its legal form to a company or cooperative, the formation of which requires the contribution of shareholders to the company. The opinion demonstrates that the value of the company’s equity, as of the date of processing the decision to approve the project, corresponds to the amount of contributions of shareholders to the company or cooperative after the change of legal form.

SHAREHOLDER PROTECTION

In the project proposal for changing the legal form, it may be agreed that some shareholders will cease to be shareholders in the company on the effective date of the change of legal form, and the company will pay them a settlement share. The validity of such an agreement requires the consent of the affected shareholders.

CREDITOR PROTECTION

If a limited liability company, joint-stock company, or simplified joint-stock company changes its legal form and if afterwards, the company does not create registered capital or creates lower registered capital than before the change of legal form, the statutory body of the company is obliged to notify the change of legal form within 30 days from the effective date of the change of legal form to known creditors of the company who have incurred claims against the company before the date of publication of the announcement of the entry of the change of legal form.

The statutory body is obliged to publish the change of legal form in the Commercial Journal twice consecutively with an interval of at least 30 days, along with a call for creditors to report their claims against the company, which were not due to third parties on the effective date of the change of legal form.

EMPLOYEES

The employer will discuss organizational changes (including changes in legal form) with employee representatives in advance. The discussion should be conducted in a comprehensible manner and at an appropriate time, with appropriate content, to reach an agreement, unless a special regulation provides otherwise.

TRADE LICENSE

The company may continue to operate the business of the company before the change of legal form.

In the next article, we will provide you with information on the possibilities of a cross-border change of legal form.

By David Kozak, Associate, Majernik & Mihalikova, PONTES

Polacek & Partners has promoted former Senior Associate Simon Hudak to Partner.

According to Polacek & Partners, Hudak “specializes in real estate and construction, dispute resolution, environmental law, and waste.”

Hudak has been with the firm since 2015 when he joined as a Junior Associate. He was promoted to Senior Associate in 2016. Earlier, he spent three years as a Paralegal with Skubla & Partners.

“Simon has come a long way with us and from the very beginning he has been involved in our biggest cases,” commented Managing Partner Pavol Polacek. “He is a great lawyer, with a strong character who has earned a high level of trust from colleagues and clients. He is well-organized, understands people, and strives to push himself and others forward. I am sincerely glad that Simon will be involved in the management of the firm and that clients will continue to receive his quality service.”

“I greatly appreciate the trust shown to me,” said Hudak. “I am humbled to accept this promotion and recognition and I look forward to the challenges it will bring. A big thank you also goes to my family, especially my wife, who has stood firmly by my side on this journey.”

The Slovak government proposes a bill introducing indirect tax on sweetened non-alcoholic beverages with added sugar or sweeteners. Due to the voting majority in the National Council, it may be expected that the bill will be passed and will become effective from 1 January 2025.

This newly introduced tax will impact import and sales of sweetened non-alcoholic beverages in Slovakia, including sirups and other substances requiring preparation and mixing with water, ice or carbon dioxide before consumption.

TAX ON SWEETENED NON-ALCOHOLIC BEVERAGES DETAILS

Subject to tax on sweetened non-alcoholic beverages shall be the first delivery (transfer of ownership) of sweetened non-alcoholic beverage commenced either by the producer or a supplier in Slovakia. The supplier may opt to pay the tax at time of the acquisition (import) of sweetened non-alcoholic beverage from abroad. As sweetened non-alcoholic beverage subject to tax shall be regarded:

• packaged non-alcoholic beverage (Common Nomenclature codes: 2009 , 2202 10 00, 2202 91 00 or 2202 99 19) for direct consumption that contains added sugar or sweetener;
• packaged concentrated substance (any form of substance, not just liquids), that contains added sugar or sweetener, which requires preparation before consumption as sweetened non-alcoholic beverage by adding water, ice or carbon dioxide;
• packaged sweetened non-alcoholic beverage with high content of caffeine.

Exemptions from tax applicable to some non-alcoholic beverages, such as infant formula, medicinal use and dietary supplements shall apply.

The tax shall depend on the type of sweetened non-alcoholic beverage and form of substance and packaging. The tax shall start with EUR0,15 per Liter and may be as high as EUR4,30 per kilogram.

TAX ADMINISTRATION

The administration of this tax requires registration with the Slovak tax authorities. The tax returns shall be filed monthly, within 25 days following the end of the respective calendar month.

By Michaela Stessl, Partner, and Radislav Bibel, Senior Tax Lawyer, DLA Piper

We bring you a brief overview of important legislative news from the Slovak Republic that should not escape your attention.

Draft amendment on EIA from the workshop of the Ministry of the Environment of the Slovak Republic

In February 2024, the Ministry of the Environment submitted a proposal to amend Act No. 24/2006, on Environmental Impact Assessment. Even though the declared aim of the legislative regulation was to harmonise the law with the EU legal framework and to make the procedure more efficient, more than 700 comments pointing to the shortcomings of the legal regulation were raised within the comment procedure. One controversial point, for example, is the effort to significantly limit the rights of the affected public in investigative proceedings. The fate of the proposed legislation is thus unclear.

Extended authorised period for providing energy subsidies for businesses

Slovakia has extended the period for providing energy subsidies for businesses and continues to disburse them according to the same rules as before. The authorised period has been extended until June 2024, and it is currently possible to apply for the payment of energy subsidies individually for the months of January 2023 to January 2024.

Higher court and administrative fees from 1 April 2024

The basic fee rate for filing a lawsuit (the subject of the proceedings can be valued in money) remains 6%, while the minimum and maximum fees (min. EUR 25 max. EUR 25,000, in business matters max. EUR 50,000) will change. Court fees for other court proceedings and administrative fees are increased, while for electronic filing the rate will be reduced by 50%, but at most by EUR 50.

Decision of the Supreme Court of the Slovak Republic

A guarantee is created by a unilateral written declaration of the guarantor, but it cannot be imposed on the creditor, and therefore it cannot be denied the opportunity to reject it.

Changes in levies from 1 January 2024

Contributions to voluntary old-age pension savings in the form of the second pillar are reduced from 5.5% to 4%. At the same time, the health insurance rates for employers are increasing from 10% to 11% and for self-employed persons from 14% to 15%.

Employer’s obligation to pay for prescription glasses if employees need them to perform their work

Employers are obliged to provide glasses to employees who use a computer as a significant part of their work, if so determined by an ophthalmologist. The employer can provide prescription glasses directly or reimburse the costs incurred. If the employer reimburses the costs, it is advisable to regulate the method of request and the amount in an internal regulation.

Slovak government expands the possibilities of granting national visas

As of 6 March 2024, the Government of the Slovak Republic has expanded the range of foreign nationals to whom it is interested in granting a national visa in selected industrial jobs to citizens of India, and in the field of transport to citizens of the Philippines, India, Indonesia and Nepal. The Slovak government has increased the total number of national visas granted in the interest of the Slovak Republic in industry from 2,000 to 10,000, for bus drivers from 200 to 2,000 and for heavy truck drivers from 2,000 to 5,000.

By Jana Sapakova and Petra Markova, Counsels, Simona Makuchova, Senior Associate, and Jan Scerba, Marek Prityi, Martina Oveckova, and Martina Tymkova, Associates, Eversheds Sutherland