Category: Issue 11.7

The topic of genetically modified organisms (GMOs) has lately become an actual and increasingly important aspect in Moldovan law. Until recently scarcely regulated, the activity involving GMOs was subject to significant legal loopholes. This led to the inherent risk pertaining to GMOs being difficult to control, especially with agriculture playing an important role in the national economy.

To address such risks, the need for improved legislation on biological safety became stringent. This was also necessary in the context of the population’s reluctance toward GMOs

Thus, the Moldovan legal framework has been significantly updated through an approximation of the European Union’s acquis. As of summer 2024, two important pieces of legislation entered into force, namely Law No. 152 dated June 9, 2022, on the regulation and control of genetically modified organisms (Law on GMOs) and Law No. 394 dated December 15, 2023, on genetically modified food products and fodder.

What Is a GMO?

Under the national legislation, a GMO is any organism, other than human, whose genetic material has been altered using modern laboratory techniques other than through mating or natural recombination.

As disclosed by the national authorities, all of the following GMO plant crops are currently present on the Moldovan market: (i) GMOs resistant to insect attacks, (ii) GMOs resistant to viral infections, and (iii) GMOs with increased tolerance to herbicides.

How Is Genetic Modification Controlled in Moldova?

Moldova’s stance toward genetic modification is that biotechnological cultures are essential for the economy. Nonetheless, due to the potential adverse impact on the environment and the population’s health, it is essential to set a rigorous regulatory framework to minimize and manage the risks entailed by GMOs.

The recently approved legislation has addressed these issues, striking a balance between protecting the environment and benefiting from the advantages offered by GMOs. A strict 20-year ban on commercial cultivation of genetically modified plants has been put in place, while cultivation of superior plants for research purposes is allowed. The current national laws tackle the importation and use of GMOs and set explicit rules for food containing GMOs to be placed on the market.

Public input is also a core part of GMOs’ management. Thus, all applications to authorize a GMO release into the environment are subject to a public notification and consultation process.

How Are GMOs Placed on the Moldovan Market?

To release a GMO into the environment, authorization shall be obtained from the Moldovan Environment Agency.

This applies to the importation, distribution, trade, and development of GMOs or tests performed with GMOs. Each application for authorization is examined upon assessing the biological safety, socioeconomic considerations, and the outcome of the public consultations pertaining to the GMO. Once authorized, the GMO is registered in the National Registry of GMOs and is subject to constant monitoring by national authorities.

What Is Labelled?

Mandatory labeling standards are applicable to genetically modified products placed on the market. Products such as food, fodder, ingredients, food additives, or any other items containing GMOs must be duly labeled. These rules are to help consumers decide whether or not to purchase a certain product.

Products containing GMOs shall bear the “genetically modified” reference on the label. If GMOs’ traces in a product are adventitious and are below 0.9% (for most products) or 0.1% (for seeds), no such labeling rules are applicable. If so, the “No GMOs” note may be applied on the product’s label.

What about Legal Liability?

Authorization holders face legal liabilities for placing on the market, importing, exporting, storing, and handling GMOs in any other way. To protect themselves from legal actions and to mitigate the associated risks, the authorized entities shall take necessary precautionary measures.

Where legal requirements for GMOs are breached and risks to human life and health, the economy, the environment, livestock, or animal health occur, the Environment Agency will implement emergency measures. These may lead to GMOs being suspended or terminated.

To alleviate the consequences of breaching GMOs-related legislation, the Environmental Agency may order the decontamination of affected areas, the elimination of the GMOs altogether, the isolation of the affected regions, and other appropriate actions. The public shall always be made aware of any such undertaken measures.

By Doina Doga, Head of Practice, and Domnica Bejan, Junior Associate, ACI Partners

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On May 28, 2024, the Turkish Medicines and Medical Devices Agency (Agency) took a significant step in regulating the healthcare industry by unveiling the draft Regulation on Promotional Activities of Medicinal Products for Human Use and Foods for Special Medical Purposes (Draft). This comprehensive Draft aims to address various aspects of promotional activities, ensuring that they are conducted in a manner that upholds scientific integrity and prioritizes patient safety.

The Draft seeks to create a more transparent and fair healthcare environment. Moreover, it introduces specific restrictions to be applied to individuals and clarifications to streamline promotional practices and maintain accountability among the industry stakeholders. This regulatory effort reflects the Agency’s commitment to enhancing the standards of promotional activities within the healthcare sector and indicates the ministry’s intention to implement a more robust promotional and engagement framework.

While the Draft broadens definitions and expands the scope of implementation in certain areas, it is evident that the underlying aim is to regulate more effectively the activities of companies that sell non-pharmaceutical products, even those not yet available in the Turkish market. Also, even though the Draft claimed to be published to provide clearer guidance, it seems to be introducing new ambiguities and interpretation challenges for the industry. Below are some highlights:

Expanded Profession Scope for Scientific Service Departments: The Draft broadens the range of professionals eligible for scientific services to include biologists, biomedical engineers, and chemists. This addresses a significant industry issue by incorporating a wider array of qualified experts, enhancing the quality and diversity of scientific discourse.

Inclusive Scientific Meetings: The definition of scientific meetings now encompasses national and international associations involving newly included professions, i.e., psychologists. This expansion facilitates booth participation and satellite symposiums at such meetings, increasing opportunities for valuable interactions and collaborations with professionals other than physicians, pharmacists, and dentists.

New Restrictions for Promotional Documents: The definition of promotional materials has been added in the Draft. Thus, a clear distinction is made between promotional equipment and promotional materials. The Draft prohibits product promotion and distribution of promotional materials at meetings held outside healthcare institutions, including electronic scientific meetings. This approach underscores the Agency’s commitment to fostering a professional and ethical environment in the promotion of medicinal products and food for special medical purposes. 

Further Transparency in Promotional Materials: License or permit holders must record promotional materials in the Agency’s electronic database before distribution. This measure, while increasing transparency, may slow down promotional activities due to the additional administrative step required.

Change to the Transfer of Value Notification Threshold: The Agency has reduced for the limit of value transfer to healthcare professionals, healthcare institutions/organizations, and non-governmental organizations established for the protection and promotion of health from 10% of the gross monthly minimum wage to 5% the limit, further increasing the Agency’s control over promotional activities.

Patient Support Programs Regulation: The nature of patient support programs is not related to promotion of the products; rather, patient support programs aim to ensure patients have access to the products they need. Yet, patient support programs are regulated under the Draft. The prevailing opinion is that the regulation pertaining to patient support programs should not be included in the Draft but should have a separate regulation.

Scientific Meetings Registration: The organization that conducts the scientific meeting must register in compliance with the Draft and relevant guidelines. However, details on the registration process and evaluation remain unclear and need further elaboration.

Prohibition of Influencers: The Draft prohibits the use of well-known influencers for promotion, a positive step toward maintaining scientific integrity.

Fee-Based Application Clarification: With the introduction of fees for applications for promotional activities, the question arose as to whether the date of application should be considered as the date the fee is paid or the date the application is made. This distinction is crucial for timely application processing.

Revised Administrative Sanctions: Administrative sanctions now encompass warnings and prohibitions on promotional activities that can last from one month up to one year. This offers a clearer and more structured approach to compliance enforcement. On the other hand, while the Draft permits the Agency to apply sanctions to individual healthcare professionals and healthcare organizations along with the marketing authorization/permission holders, the implementation methods remain unclear.

While it is uncertain how many of these regulations in the Draft will be included in the final version, all these draft amendment provisions indicate the ministry’s intention to exercise stricter oversight over promotional activities.

By Elvan Sevi Bozoglu, Partner & Head of Life Sciences, Balcioglu Selcuk Ardiyok Keki Attorney Partnership

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

CMS Hungary Partner Katalin Horvath and CMS Austria Partner Stefan Paulmayer discuss the implications of central bank digital currencies (CBDCs) and the evolving landscape of digital payments in Europe.

CEELM: To start, what is a central bank digital currency and how does it differ from other virtual currencies?

Paulmayer: The general idea is that the countries’ central banks – or the ECB in the eurozone – are contemplating the introduction of a substitute for cash – in the EU the Digital Euro – allowing the transfer of funds from a bank account to a CBDC wallet or account through, e.g., an app. Such digital cash can be used to make payments for things like coffee, sales of goods, and other expenses.

CEELM: How close are we to making this a reality?

Paulmayer: In the EU, the project has been in the preparatory phase since November 2023. This stage involves evaluating the technical implementation and regulatory aspects. Ultimately, Member States will need to decide to implement the Digital Euro. If everything proceeds smoothly, the earliest we can expect it is around 2028.

Horvath: Some countries outside the EU are already using CBDCs. The first – the Sand Dollar – was launched in the Bahamas in 2019. Several countries are in the testing phase, such as the US, Canada, and Switzerland. In fact, 11 countries have already implemented them. Many others are in the research or testing phase, including nations in the Asia-Pacific region like Japan, Malaysia, and Australia, each at varying stages of development. In the EU, based on the draft regulation on the establishment of the Digital Euro, the Digital Euro will be a retail, indirect, account-based CBDC with the status of legal tender.

CEELM: Considering the case studies, why is this topic important, and what would be its selling point?

Horvath: It depends on whether it’s a retail or wholesale CBDC. Retail CBDCs are designed for the public and are used for daily transactions, such as C2C, B2B, B2C, or C2B payments. Wholesale CBDCs, on the other hand, are used for interbank transactions or securities transactions, similar to the existing processes banks have been using for years. In both cases, I believe it can enhance financial inclusion, improve the safety of cross-border payments, and ensure financial stability. This is particularly beneficial for countries where online payment methods are not widely used or where the population has limited access to such methods.

Paulmayer: In the Euro area, there was growing concern about digital currencies, their deregulation, and the volatility of cryptocurrencies like Bitcoin, which are seen more as investment instruments than actual currencies or currency substitutes. The EU also aims to become more independent from the financial markets of other countries. For instance, if the US government sanctions a country, it can suddenly become impossible for other parts of the world to process payments with that country because payment institutions are influenced by the US government.

Additionally, there is an issue of fees. In the case of bankcard payments, for customers, there doesn’t appear to be any cost involved, but for merchants, there is always a fee to pay to the international card schemes, especially for cross-border transactions, which can become expensive. Using a CBDC wallet for transactions could reduce or eliminate these fees, making it cheaper. However, it is still unclear if merchants would effectively pass on these savings to the consumers.

Horvath: I think there will be a cost associated with storing CBDC, such as digital euros, it won’t be free. Consumers will need to have an account with a payment service provider to use digital euros, and merchants will also need to open such accounts. Both consumers and merchants will incur fees, not for transactions, but for maintaining these accounts. While the Digital Euro draft regulation includes provisions on fees, they cannot be higher than those for existing bank accounts.

CEELM: What do you believe public opinion will be regarding the adoption of the Digital Euro?

Horvath: I see the retail Digital Euro as just another electronic payment method. There are several types of electronic payments, such as online bankcard payments, POS, softPOS, and the euro instant payment method. For example, in Hungary, the majority of the public is not very well-educated about digital payments, and trust in digital wallets and digital payments is limited. Additionally, paying with cash has historically been associated with anonymity, and creating a CBDC even if it is account-based or token-based, indirect or direct, can’t guarantee the same level of anonymity

Paulmayer: I agree that public acceptance will be a major challenge. We already have digital wallet solutions and other smartphone payment options, and I wouldn’t want to go through the hassle of opening a CBDC/Digital Euro wallet or account, manually transferring funds, and then making payments. I also think there will be resistance. This concern is often based on misconceptions about data protection, but there’s still significant opposition among the general public, which is likely to be just one of many hurdles.

CEELM: Looking ahead, what do you expect to be the main hurdles in terms of adopting CBDCs?

Paulmayer: There are numerous technical challenges to address, including who will operate the wallets, how they will be structured, and how we will integrate them with smartphones. These are significant tasks for the central banks to resolve. Following that, if a roadmap is established, eurozone governments will need to decide whether to adopt the Digital Euro, which may pose an even bigger hurdle than the technical issues. It’s also essential to gain government support, especially given the potential for substantial public backlash.

Horvath: There are also cybersecurity concerns, as we can’t rule out potential attacks on the entire CBDC system. Additionally, there may be challenges related to AML in the context of the Digital Euro and CBDCs. I’m curious to see how they will address these issues in practice, especially together with the European digital identity wallet eIDAS 2.0 regulation which must be able to store the Digital Euro. Another issue is that a few member states are developing their own digital identity wallets, like in Hungary. This could lead to multiple wallets operating in parallel and competing for storage of CBDC. If an EU member state wants to develop its own wallet, it must align with the technical solutions of the Digital Euro.

CEELM: Speaking of identity wallets, are those closer to being implemented?

Horvath: The development of the Hungarian digital identity wallet has already been finished. The Hungarian government opted not to engage with the broader European digital identity wallet concept when creating its own wallet solution. While we are not part of the eurozone, I can envision a scenario where the government decides to join the eurozone while maintaining its own independent wallet. It will be interesting to see what happens when a non-eurozone country seeks to join.

Paulmayer: In Austria, we already have a digital app provided by the Austrian government that includes a digital ID and driver’s license. I believe this is preparatory work for the broader implementation of the EU ID wallet project. While it currently functions on a national level in Austria and isn’t yet recognized by foreign authorities, the long-term goal is to achieve synchronization and recognition across the EU.

Similar to that, I believe, CBDCs are going to be adopted, it’s just a matter of when, as this will influence adoption rates. If we implement it effectively and conveniently, it might stand a chance of being embraced by consumers.

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In recent months, Slovenia’s real estate market has experienced significant shifts driven by economic, technological, and regulatory factors, with more changes expected.

Despite a recent halt and a slight decrease in inflation and interest rates, property prices have continued to rise, leading to a notable decline in real estate transactions. While the number of purchase transactions for residential real estate declined by 25-30% in 2023 compared to the year before, and the number of purchase transactions for commercial real estate in the same period declined by 20-25%, this trend is also continuing in 2024. The latest information on prices shows that residential real estate prices increased by 6.3%, and commercial real estate prices increased by 16.2% annually.

Online marketplaces for short-term housing leases, such as Airbnb and Booking.com, have increased investor interest in purchasing real estate for short-term rentals. This trend has contributed to rising housing prices, particularly in tourist areas. The increased demand for accommodation by tourists is expected to continue driving this trend. The latter also significantly impacts Slovenia’s underdeveloped rental market. An increasing number of tenants compete for a limited supply of rental housing, often due to higher financing costs and lower creditworthiness. In addition to short-term housing leases, housing shortage in most areas of Slovenia is pushing up rental prices. The government is attempting to address housing issues by building new rental properties rather than incentivizing the use of empty homes.

A significant trend in all real estate market segments is the growing emphasis on environmental, social, and governance (ESG) considerations. Investors and developers are increasingly prioritizing (or at least promoting it as such) sustainable and ethical practices, reflecting global trends toward greener and more socially responsible development. This shift is not just a response to regulatory pressures but also a reflection of a broader societal demand for sustainability in business practices. There are many opportunities for progress in this area, particularly in many older office buildings and premises, which are often energy inefficient, higher emitting, poorly designed for modern business and working environments, and ultimately associated with higher operating and maintenance costs.

As the real estate market evolves, it’s crucial for the industry to adapt to changing conditions. Financing for real estate projects remains predominantly reliant on bank loans, though innovative financing methods, such as real estate bonds, have seen limited success. For instance, one of the major real estate developers attempted to issue a five-year bond but faced low demand. Nevertheless, such financial instruments can offer excellent opportunities for the future when the market accepts them.

A significant challenge facing the Slovenian real estate market is the difficulties and delays in obtaining building permits, particularly affecting companies constructing prefabricated houses. These delays have been exacerbated due to a long-term strike among administrative unit employees, protesting low wages and high workloads. The impact has been severe, with companies experiencing significant drops in the number of building permits issued, leading to delays in project executions and potential financial losses. Although the strike recently ended, the accumulated delays in obtaining building permits will continue.

On the legislative front, the Slovenian government is considering substantial tax reforms, including the long-anticipated introduction of a wealth tax that would encompass real estate. This proposed reform aims to curb speculative investments and encourage using vacant properties. It has been suggested that primary residences will not be taxed, but additional properties owned by individuals might be subject to a tax rate ranging from 0.1% to 1% of the property value per year. The proposed reforms are intended to be implemented by 2025, though similar attempts in the past faced significant political hurdles and failed.

Additionally, the government announced the allocation of up to EUR 100 million annually to finance rental apartment construction to address the shortage of affordable rental housing and support urban development. However, legislation has yet to be drafted and clarify a series of unknowns.

Overall, Slovenia’s real estate market is navigating a complex landscape shaped by economic pressures, technological advancements, and evolving regulatory frameworks. The emphasis on ESG considerations, the impact of proptech, and major development projects continue to drive the market forward. However, challenges such as delays in obtaining building permits and the uncertain implementation of proposed tax reforms and housing legislation continue to pose significant hurdles. As the market evolves, stakeholders must adapt to these changes and navigate the regulatory environment to capitalize on opportunities within Slovenia’s real estate sector.

By Polona Bozicko, Partner, Zagorc & Partners

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On June 15, 2024, the long-awaited Act on the Judicial Protection Procedure for Former Holders of Qualified Liabilities of Banks (ZPSVIKOB 1) entered into force in the Republic of Slovenia.

Its purpose is to eliminate the unconstitutional position of former holders of qualified liabilities of banks. The act tries to achieve this by introducing a number of provisions aimed at balancing the position of the former holders with the position of the inherently stronger Bank of Slovenia. Under the new act, former holders affected by the haircuts in six Slovenian banks back in 2013 will finally have the possibility to claim compensation.

Due to the economic crisis spreading through the banking sector, in 2013, the European Commission and the European Central Bank requested Slovenia to conduct a financial stability assessment of its banks. The results revealed a significant capital shortfall in several banks, based on which the Bank of Slovenia took several measures to rehabilitate the banking system.

In December 2013, the Bank of Slovenia issued decisions on extraordinary measures to five Slovenian banks, based on which all qualified liabilities of these banks (shares and subordinated financial instruments) ceased to exist. The sixth bank was imposed with a similar decision a year later, in December 2014. These measures impacted more than 100,000 holders of subordinated bonds or shares, who, literally overnight, lost their assets amounting to EUR 960 million in total.

In 2016, the Slovenian Constitutional Court found that the Banking Act, valid at the time, did not provide effective judicial protection to former holders and, therefore, ordered the legislator to adopt an appropriate legal framework.

For this purpose, in 2019, the Act on the Judicial and Out-of-Court Protection Procedure for Former Holders of Qualified Liabilities of Banks (ZPSVIKOB) was adopted. However, the legislator’s first attempt to regulate the position of former holders was not successful. Namely, the Bank of Slovenia successfully challenged the ZPSVIKOB before the Slovenian Constitutional Court, as, among other things, it did not agree to be the payer of any compensation. In 2023, the Constitutional Court found that the central provision of the ZPSVIKOB, which stipulated that compensations would be paid from the Bank of Slovenia’s reserves, was incompatible with the Slovenian Constitution, and consequently annulled the contested ZPSVIKOB in its entirety.

In May 2024, the new ZPSVIKOB 1 was adopted. It provides that former holders may only claim compensation for the effects of measures adopted by the Bank of Slovenia under the (rather unique) procedure outlined in ZPSVIKOB 1. The former holders may bring lawsuits against the Bank of Slovenia, with the Republic of Slovenia assuming liability for damages. The new ZPSVIKOB 1 recognizes the former owners’ right of access to all documentation related to decisions on extraordinary measures. This documentation will be available in virtual data rooms to which former holders and their qualified proxies will have access. The new law also foresees the possibility of establishing a settlement scheme through which former holders could be reimbursed 60% of their losses. The scheme would be established by a government decree if a preliminary opinion of a court appointed group of independent experts showed that former holders suffered greater damage as a result of the extraordinary measures than they would have suffered if there had been no extraordinary measures. The deadline for filing claims is nine months from the publication of the notice on establishing the virtual data room or six months in case of a class action. To facilitate the position of former holders, the burden of proof in court proceedings will lie with the Bank of Slovenia. This means that it will be on the Bank of Slovenia to demonstrate the grounds for the extraordinary measures and that the former holders did not suffer greater losses than they would have suffered without them.

Most of the former holders will most likely assert their rights under the new act, and as a result, we can expect a variety of events in the competent court in the coming months.

By Helena Butolen and Alen Savic, Partners, Selih & Partnerji

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Slovenia’s economy has demonstrated resilience and adaptability, with a projected GDP growth rate of 2.3% in 2024, up from 1.6% the previous year. Inflation has stabilized at around 2.8%, and unemployment is at a historically low rate of 3.7%.

These indicators reflect a robust and investment-friendly economic environment, supported by the country’s strategic location, skilled workforce, and well-developed infrastructure. However, despite these positive economic indicators, Slovenia has long lagged behind the European average in terms of venture capital (VC) and private equity (PE) investment. Recognizing this gap, the Slovenian government has embarked on a mission to increase equity financing through strategic initiatives. A key player in this effort has been the Slovenian Export and Development Bank (SID Bank) in cooperation with the European Investment Fund (EIF).

In 2017, SID Bank and the EIF launched the Slovenian Equity Growth Investment Programme (SEGIP), with each partner investing EUR 50 million. This initiative aimed to provide equity and quasi-equity financing to growth-stage Slovenian SMEs and mid-caps, addressing a critical market gap in equity financing. Initially, two local alternative investment fund managers (AIFMs) were selected to manage the funds, one of which acquired the other at the end of last year. The objectives of the SEGIP were not only to fill the equity financing gap but also to develop the overall equity financing environment and attract private investors to Slovenian scale-ups. The success of the SEGIP is reflected in its ability to raise further funds. The AIFMs have secured an additional EUR 85 million from private investors. Building on this success, SID Bank and the EIF extended the program by a further EUR 120 million through the SEGIP Top-Up Programme. This extension enabled the creation of four new funds, including a technology transfer VC fund, a VC fund for start-ups, and a PE fund focused on family business succession. To support these new funds, the SEGIP partners raised a further EUR 220 million, with each partner contributing half. The final size of these funds will depend on the ability of the AIFMs to attract private investors.

The SEGIP and its Top-Up Programme represent a significant step forward in strengthening the Slovenian VC and PE sector. These efforts will not only support SMEs and mid-caps in their growth phase but will also help to attract private investors and thus stimulate further economic development. With Limited Partnership Agreements in the final stages, new investments will start soon, signaling a promising future for equity financing in Slovenia.

Slovenia’s growing attractiveness has been recognized not only by SID Bank and the EIF but also by foreign PE investors. This is evidenced by notable transactions in the last couple of years.

The relationship between Slovenia’s economic status and PE investment is symbiotic. Economic stability and growth prospects have attracted increased inbound investment, with foreign PE firms eyeing Slovenian assets due to the country’s strategic location and competitive advantages. At the same time, Slovenian PE firms are becoming more active in outbound investments, seeking opportunities in neighboring countries and beyond, driven by a desire to diversify portfolios and tap larger markets.

Current trends in the Slovenian PE market are influenced by economic factors and investor sentiment, with a notable shift toward the technology, renewable energy, and healthcare sectors. This focus on sustainable investment is in line with global environmental, social, and governance (ESG) criteria. However, challenges such as the relatively small size of the market and occasional delays in regulatory implementation pose potential hurdles.

Slovenia is at a critical juncture in its economic development, with significant potential for PE investment. The stable economic environment, favorable regulatory environment, and strategic location make Slovenia an attractive destination for investors. However, addressing the challenges of a small market and ensuring effective implementation of reforms will be crucial to sustaining growth. As Slovenia continues to integrate into the wider European and global economy, the interplay between economic conditions and PE investment will evolve, presenting both opportunities and challenges. For legal professionals and investors, keeping on top of these developments is essential if they are to realize the full potential of this dynamic market.

By Sasa Sodja, Partner, and Gasper Hajdu, Attorney at Law, CMS Slovenia

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Following a prolonged financial crisis, Greece’s economic recovery has significantly progressed in recent years, leading to a resurgence in the real estate market. This revival is not just a mere uptick but a significant surge, evident in rising property prices, increased transaction volumes, and growing interest from foreign investors. Prominent areas such as Athens and Thessaloniki and popular islands like Crete, Mykonos, and Santorini have experienced a substantial increase in real estate activity.

With its unique blend of sun, sea, and mountains, Greece’s natural allure continues to be a significant catalyst for real estate market growth. Athens, in particular, is a perennially popular city-break destination, boasting a wealth of historical heritage, a vibrant culture, and the picturesque Athenian Riviera. The country’s thriving tourism industry has been a key driver of real estate demand, especially in sought-after locations. The enduring popularity of Greece as a tourist hotspot ensures a steady demand for both residential and commercial properties, making it an attractive investment opportunity.

This upward trend in the real estate market is fueled by various factors, including, among others, recent economic growth rates, increased construction investments, and foreign direct investments (FDI) in real estate. According to a National Bank of Greece (NBG) report, FDI in residential real estate totaled EUR 3.5 billion from 2018 to 2022, accounting for roughly 25% of all residential real estate transactions during this period. Despite the global uncertainties of 2024, including conflicts in the Middle East and Europe and the upcoming challenging elections in the United States, Greece remains a stable and attractive investment destination. The Greek real estate market’s resilience is evidently contributing to its growth potential.

Transformative Development and Government Reforms Propel Greek Property Growth

Extensive real estate development and infrastructure projects currently under construction or planned for the next few years also boost the market. For example, the Hellinikon Metropolitan Park project is one of Europe’s most ambitious and transformative urban regeneration initiatives. Located in the southern suburbs of Athens, this EUR 8 billion real estate project aims to revitalize the former Athens International Airport site, covering an extensive area of approximately 6.2 million square meters. The Hellinikon project is designed to create a new urban hub that combines residential, commercial, and recreational spaces and is expected to impact the local and national economy profoundly.

Additionally, the Greek government’s proactive measures to streamline bureaucratic processes have significantly improved the efficiency of property transactions. The ongoing digitalization of public services, including the land registry and notarial services, has led to reduced delays and increased transparency. Moreover, the government has introduced a range of attractive tax incentives to entice foreign investment. These include a flat tax rate and exemptions on income derived from foreign sources, making Greece an even more appealing investment destination for non-Greek residents. 

Golden Visa Program Fuels Real Estate Revival

Last but not least, the highly successful Golden Visa program has thus far significantly contributed to these investments. The Greece Golden Visa program initially required a minimum investment of EUR 250,000 in real estate. In 2023, this threshold was increased to EUR 500,000 in various municipalities of Greece, including Athens, Thessaloniki, Mykonos, and Santorini. Recently, the government announced further increases in the minimum property investment threshold, effective August 31, 2024. The minimum property investment thresholds will rise again to EUR 400,000 for areas currently requiring EUR 250,000, and EUR 800,000 for areas currently requiring EUR 500,000. Greek residency through this program grants access to the European Union and Schengen area member countries. This makes it especially attractive to third-country nationals seeking global mobility. The program continues to draw significant interest from investors.

Conclusion

Overall, one can say that the Greek real estate market is experiencing a remarkable resurgence, bouncing back from the shadows of past economic downturns. The future of real estate law practice in Greece looks more promising than ever, offering numerous opportunities for growth and specialization.

By Elmina Chadio, Partner, and Panayiotis Papageorgiou, Counsel, Papapolitis & Papapolitis

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The energy market in Greece is undergoing dynamic changes and challenges. The country is trying to adapt to the requirements of the energy transition by focusing on the development of renewable energy sources (RES) and enhancing its energy independence. At the same time, legislative developments and initiatives aim to address existing challenges and promote sustainable solutions.

Limited Capacity of the Electricity Transmission System

The Greek energy market faces significant problems due to the limited capacity of the electricity transmission system, which leads to record levels of energy curtailments and delays in granting connection terms. This situation creates substantial obstacles for new investments in RES projects, negatively impacting their viability.

To address these challenges, several initiatives have been developed, such as promoting energy storage. Standalone batteries, RES projects with storage units, and behind-the-meter storage units in existing projects are prioritized to stabilize the grid and reduce curtailments. Ministerial Decision 55948/1087/19.05.2023 provided for three successive competitive processes for a total capacity of 1,000 megawatts. These projects must commence operations by December 2025 and be connected to the high-voltage grid.

Two competitive processes have already taken place, awarding operating aid of an average price of EUR 48 per megawatt-hour to projects with a total capacity of approximately 700 megawatts. The upcoming third process will focus on four-hour duration batteries with a total capacity of 300 megawatts.

The government is expected to legislate within the next two months to expedite the licensing of these projects, giving priority to granting connection terms for storage projects.

Bilateral Power Purchase Agreements

Bilateral Power Purchase Agreements (PPAs) have emerged as a significant mechanism in the Greek energy market, promoting the green transition and offering flexible and transparent solutions for energy producers and buyers. These long-term contracts between RES producers and large consumers or electricity suppliers allow producers to secure predictable cash flows and buyers to hedge against market price fluctuations. In practice, companies often choose virtual PPAs. Physical PPAs are also used but to a lesser extent.

The Greek government has enacted measures to encourage corporate PPAs, such as grid connection priority and the option for RES producers to suspend feed-in premium PPAs or terminate feed-in tariff agreements to enter into corporate PPAs.

The corporate PPAs market in Greece is maturing, with an expected increase in agreements as government measures and banking willingness to finance RES projects continues. Future measures, such as state guarantees covering price risk and a special platform for corporate PPAs in the Hellenic Energy Exchange, are under discussion to further encourage these agreements. With an estimated 30,000-40,000 corporate entities eligible to enter into corporate PPAs, these complex agreements must address diverse stakeholder interests and allocate inherent risks effectively.

Offshore Wind Farms

The development of offshore wind farms is a significant step toward achieving national goals for reducing greenhouse gas emissions and increasing energy independence through RES. The first legislative regulation for offshore wind farms was enacted with Law 4964/2022, and recently, Law 5106/2024 was published, setting targets for installing offshore wind farms with a total capacity of at least 2 gigawatts by 2030.

The new law simplifies the licensing process, reducing the time to less than two years and facilitating the rapid implementation of projects. The state determines the development areas based on environmental, social, and economic criteria, while the allocation of areas is carried out through competitive procedures.

Despite positive intentions, challenges remain concerning the implementation schedule and the development of necessary infrastructure, such as interconnections and energy storage. Successful development of offshore wind farms requires continuous monitoring and adaptation of legislative and regulatory frameworks.

The appetite for investments in the Greek energy market is evident, both from domestic and international investors. However, to proceed with these investments and effectively address the problem of curtailments, it is essential to ensure grid capacity in the system. Only then will the seamless financing of these investments and the sustainable development of the market be secured.

By Prokopis Linardos, Partner, Your Legal Partners

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Despite a slowdown experienced in the Greek M&A sector in 2023, primarily attributed to factors such as inflation, increased interest rates, pervasive geopolitical instabilities, and diverging valuation perspectives between sellers and buyers, the ongoing year of 2024 has seen a notable upsurge in transaction activity. This upward trend underscores the robustness and resilience of the market, which is not only recovering but is also attracting heightened attention from international investors.

The current M&A landscape in Greece is strongly favored by a multitude of factors, including the country’s improving economic stability and promising growth prospects, the ongoing regulatory reforms designed to streamline procedures and enhance transparency, such as the new Law 5069/2023 on the operation of data centers and the ongoing tax incentives related to cross-border transformations, as well as a number of privatization and digital transformation initiatives in the energy, tourism, and infrastructure sectors and, last but not least, a growing emphasis on Environmental, Social, and Governance (ESG) considerations in business practices.

In the M&A arena, Greek companies are progressively directing their efforts toward elevating their corporate governance protocols in order to comply with global benchmarks, ethical business standards, and legal requirements. In this context, ESG considerations are assuming an increasingly significant role in corporate strategic planning within the Greek business landscape. Businesses are taking proactive measures to integrate ESG criteria into their investment strategies, deal negotiations, operational frameworks, and post-merger integration plans to address environmental challenges, fulfill social obligations, and maintain robust governance structures. This paradigm shift is driven by a growing recognition of the impact of ESG risks on financial performance, corporate reputation, and stakeholder engagement. 

It is more than evident that institutional investors, private equity firms, and other financial institutions are placing a greater emphasis on ESG factors when assessing investment opportunities in the context of M&A transactions, as they seek to evaluate not only financial metrics but also the non-financial aspects that could impact the long-term sustainability of a target company. On their end, companies seeking investment or partnerships with said investors may need to demonstrate their commitment to ESG principles and clarify how they address ESG risks and opportunities.

ESG due diligence is, therefore, quickly becoming a standard and essential tool in corporate and M&A transactions, helping to identify potential risks and liabilities associated with a target company’s environmental, social, and governance practices, as well as opportunities to create value through improved sustainability practices, enhanced stakeholder relationships, and operational efficiencies. In addition, conducting ESG due diligence helps ensure that the transaction aligns with responsible business practices and avoids reputational damage, legal challenges, or financial penalties that could arise from environmental or social controversies or non-compliance with existing and upcoming regulatory requirements. Finally, understanding the target company’s ESG performance during the due diligence process enables investors to develop integration plans that address any ESG-related challenges and capitalize on opportunities for improvement, thereby contributing to the overall success of the post-merger integration process.

It is true that the national regulatory framework on ESG reporting is on the more stringent side, enabling regulators, investors, and other stakeholders to scrutinize M&A transactions in order to effectively monitor compliance with industry standards and promote transparency on aspects such as carbon emissions, inclusivity, and board composition. Through innovation, sustainability, and responsible governance, Greek companies are in a strong position to capitalize on emerging opportunities and overcome potential challenges.

As Greece progresses toward financial stability and growth, embracing ESG principles, promoting digital transformation, and nurturing strategic partnerships will be critical to unlocking the full potential of the Greek corporate and M&A market in 2024 and beyond. Backed by the Greek government’s commitment to cultivating a business-friendly ecosystem and the increasing awareness of ESG principles among industry players, Greece is set to attract further investment, stimulate innovation, and foster sustainable growth in the corporate/M&A sector.

By Mika Lalaouni, Partner, Drakopoulos

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In The Debrief, our Practice Leaders across CEE share updates on recent and upcoming legislation, consider the impact of recent court decisions, showcase landmark projects, and keep our readers apprised of the latest developments impacting their respective practice areas.

This House – Implemented Legislation

“As of July 1, 2024, Czech employers will be subject to a number of changes to employment regulations,” Peterka & Partners Partner Adela Krbcova notes. Some of these changes, according to her, introduce “new administrative obligation for employers who have not given up employing staff on flexible contracts, while other changes are aimed at simplifying procedures and giving a slight boost to the labor market still suffering from a shortage of labor in various sectors.”

Krbcova says that “the Czech Social Security Administration launched a new register of all employees employed under agreements on work performance. Employers are obliged to notify, electronically, of their employees working under such agreements, including their remuneration, by the 20th of the following calendar month and using a prescribed form.” This applies “to all employees with concluded agreements, regardless of whether they actually receive any remuneration or not.” She highlights that employers will have to submit notifications for the first time no later than August 20, 2024.

Krbcova adds that the regulations for the posting of workers from another EU member state to the Czech Republic for the purpose of providing services have been simplified and conditions for notification of job vacancies changed. Additionally, she says, “citizens of the following countries will no longer need to obtain a work permit to work in the Czech Republic: Australia, Canada, Israel, Japan, New Zealand, Singapore, South Korea, Taiwan, the United Kingdom of Great Britain and Northern Ireland, and the United States of America. However, such persons still need to have a valid residency permit, unless they also have free entry into the territory of the Czech Republic.”

This House – Reached an Accord

Hristov & Partners Partner Dragomir Stefanov reports that the introduction of the Variable Capital Company (VCC) was postponed to 2025 in Bulgaria. “Initially expected to be available in the second half of 2024, it will not be possible until March 31, 2025, according to an amendment to the Ordinance No. 1 of 2007 on the maintenance, storage, and access to the Commercial Register and the Register of Non-Profit Legal Entities, adopted on July 5, 2024.”

“A public tender for the development of the register’s electronic capabilities was announced earlier this year, but a contractor was selected only on July 8. The tender documentation suggests that the selected bidder will have up to 12 months to complete the work, meaning that an additional postponement beyond March 31, 2025 is possible,” Stefanov continues.

“The VCC is an entirely new type of legal entity introduced in 2023,” Stefanov explains. “It is designed to give more flexibility to start-ups by both combining elements from traditional corporate forms (limited liability company and joint-stock company) and introducing novelties, including no minimum capital and capital registration requirements and share transfer rules allowing for, among others, easier setup of equity incentive plans for key personnel.”

This House – The Latest Draft

Wolf Theiss Poland Associate Sonia Kurpiel draws attention to the recent draft amendment to the Polish Labor Code. “The Ministry of Family, Labor, and Social Policy has published a draft amendment to the Labor Code, which introduces changes to the method of calculating the length of service. The new regulations aim to level the playing field for accessing certain employee benefits,” she says. “The planned changes are set to come into force on January 1, 2026.”

The amendment, according to Kurpiel, “includes the following periods in the length of service: conducting non-agricultural business activities and collaborating with a person conducting such activities, provided that social insurance contributions such as a pension, disability, or accident insurance were paid for these periods; performing contracts of mandate, service contracts, agency agreements, and membership in agricultural production cooperatives and agricultural circle cooperatives, provided that pension and disability insurance were applicable; professional activities that constitute a basis for social insurance, even if the person was not subject to pension and disability insurance due to exemptions or reliefs, such as those resulting from the COVID-19 pandemic, start-up reliefs, or exceeding the annual contribution assessment base; and documented gainful activities abroad.”

In the Works

The oil & gas sector in Bulgaria saw some significant developments, according to CMS Sofia Managing Partner Kostadin Sirleshtov, “with the successful 2-year extension of the exploration agreement awarded to OMV Petrom for the Han Asparuh block offshore Bulgaria and with the new tender for the adjacent Han Tervel block.” Sirleshtov further reports that “the Bulgarian Black Sea oil & gas blocks are becoming of major interest to international investors following the start of production from the neighboring Sakariya block in Turkey and the final investment decision made by OMV Petrom for the Neptun Deep block in Romania.”

“Bulgaria also initiated the RESTORE project, which aims to provide funding for the construction and putting into operation of at least 3000 megawatt-hour battery storage capacity,” he continues. “The total amount of EU grant that can be provided under the whole project is BGN 1.1 billion. Each undertaking can bid for up to BGN 148 million of grant support. The maximum grant intensity is 50% of the allowed costs but not more than BGN 371,000 per 1 megawatt-hour. The deadline for the grid connection of these batteries should not be later than March 31, 2026. The RESTORE project is very needed by the Bulgarian electricity sector, which saw a major disturbance in May 2024 with the balancing costs sky-rocketing to unprecedented levels.”

Finally, Sirleshtov says, “Hyundai, the Korean company that the Bulgarian Parliament selected to construct Units 7 and 8 of the Kozloduy Nuclear Power Plant, presented its management and credentials to the Bulgarian authorities and promised delivery of the first unit by 2032.”

As for Serbia, JPM & Partners Senior Partner Jelena Gazivoda says that in May 2024, the Krivaca wind farm commenced production, “marking a milestone as one of the largest wind farms in the Republic of Serbia and the first in its eastern region, spanning the municipalities of Golubac, Kucevo, and Veliko Gradiste. Featuring 22 turbines with a total capacity of 105.6 megawatts, the farm generates 310 gigawatt-hours annually, powering approximately 75,000 households.” Gazivoda highlights that the project was “constructed over two years at a cost of EUR 155 million,” and “received backing from banking groups including Erste, Raiffeisen, NLB, and OeEB. Notably, it represents Serbia’s inaugural renewable energy project with a commercial power purchase agreement signed with Swiss firm Axpo.”

Additionally, Gazivoda says, “in June 2024, the EPS transformation plan was adopted, introducing organizational changes aimed at enhancing operational, managerial, and financial processes. These measures focus significantly on digitalization to bolster system security and overall management efficiency.” She adds that “concurrently, Serbia initiated a feasibility study to explore the potential introduction of nuclear energy into its energy mix. Since 1989, Serbia has maintained a moratorium on nuclear energy, prohibiting plant construction and fuel production. The Ministry of Mining and Energy has launched a public procurement process for a preliminary technical study to assess the viability of nuclear energy within the country.”

Regulators Weigh In

Debarliev Dameski & Kelesoska Partner Jasmina Ilieva Jovanovik draws attention to a recent case by North Macedonia’s competition commission, stating that “this in fact is a unique case, the first of its kind handled so far by the commission in its overall practice.”

According to Ilieva Jovanovik, “in its recent web publications, following an in-depth analysis of the effect of the merger on the competition in the relevant market (Phase II investigation), the Commission for Protection of the Competition of Republic of North Macedonia has published its decision by which it approved the concentration between Kappa Star Recycling d.o.o. Umka (Serbia) and Nutrivet Doo Skopje (North Macedonia), resulting from their intention to merge their businesses of collection, transport, and storing of non-hazard waste in North Macedonia, subject to the fulfillment of certain structural remedies proposed by the parties, which the commission has accepted as sufficient to ultimately result with the proposed concentration being in the line with local competition law.”

“The commission has opened a Phase II investigation in only a few other merger cases, which were cleared subject to behavioral remedies undertaken by the parties, however, in the present case, the commission has for the first time accepted proposed structural remedies and obligations, resulting in the divestiture of business, as a condition for approval of the proposed concentration by the commission,” Jovanovik adds.

This article was originally published in Issue 11.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.