Category: Uncategorized

The Hong Kong and Moscow offices of Debevoise & Plimpton have advised the Russia China Investment Fund (RCIF) in its investment in TutorGroup.  

The investment was made as part of an approximately EUR 200 million Series C equity financing by TutorGroup, which also involved new investors GIC (Singapore’s sovereign fund), Goldman Sachs, and Silverlink Capital LP, as well as existing investor Temasek.  

TutorGroup, which was launched in 2004, is an online education platform with offices throughout Asia and a core R&D team based in Silicon Valley. Proceeds from the new investment round are to be used to accelerate TutorGroup’s international expansion and for the continued enhancement of the company’s platform.  

RCIF is a private equity fund which invests in projects that advance bilateral economic cooperation between Russia and China. It was established in June 2012 by two government-backed investment vehicles – the Russian Direct Investment Fund and the China Investment Corporation.  

The Debevoise team advising RCIF was led by Hong Kong-based Partner E. Drew Dutton and included Hong Kon-based Associate Parveet Singh Gandoak, Moscow-based Partner Alan Kartashkin, and Moscow-based Associate Maxim Kuleshov. 

When asked by CEE Legal Matters, Debevoise stated that it was unable to identify counsel for TutorGroup.

Amendments to labour regulations

Pursuant to recent labour regulation amendments, an employer could be released from the obligation to pay mandatory social contributions (“Contributions”) for the hired replacement of an employee on a maternity leave, if certain conditions are met.

The main intention of these amendments is to increase the protection of female employees and to decrease the risk of termination of an employee due to pregnancy. In order to rely on this exemption, the employer must:

• file a written request to the Employment Agency of the Republic of Macedonia (“Employment Agency”) for use of the benefit during the period of the maternity leave;
• provide the replacement employee with the same amount of salary as granted to the employee using the maternity leave; and
• not have any unpaid salaries, taxes or contributions for a period longer than two subsequent months.

Once this benefit is used, an employer cannot fire an employee on maternity leave. This prohibition lasts for the duration of the period when the employer relied on the social contributions exemption in hiring a replacement. As an example, if an employer was exempt from paying social Contributions for a replacement employee for 9 months, the employment of the employee cannot be terminated for the next 9 months upon her return from maternity leave. Employment can be terminated, however, if the employee provides a notarized statement that she no longer wishes to be employed in the respective company.

If the employer fails to meet its obligations related to this benefit, it shall be obliged to return the amount equivalent to the granted exemption from payment of Contributions. This measure will be implemented by the Employment Agency in cooperation with the Public Revenue Office (“PRO”). This means that the Employment Agency will provide the PRO with a list of employers using such benefit, and the PRO will determine whether these employers have any unpaid salaries, taxes or contributions for a period longer than two subsequent months. If the PRO finds an employer to be in arrears in making payments, the benefit will cease to be valid for the respective employer and a procedure of repayment of the funds reimbursed for Contributions will be initiated. This kind of check up by the PRO will be performed once a month.

New regulation on reporting of credit operations with non-residents

The National Bank of the Republic of Macedonia (“NBRM”) has adopted a new Decision on the Manner and Terms of Recording and Notification of Executed Credit Operations (“Decision”), which applies to credit operations of Macedonian residents with non-residents. This Decision was adopted at the beginning of October, and came into force on 1st November. Notification of credit operations with foreigners for statistical purposes must be conducted within 10 working days as of the conclusion of the agreement, or within 5 working days as of the change in the registered credit operation (such as granting or returning the loan). The amendments stated in the new Decision refer to the documents that need to be submitted for registration at the NBRM. As a novelty, resident companies reporting such credit operations are obliged to submit only the application form issued by the NBRM and the loan agreement containing all relevant information (e.g. loan amount; terms on granting, use and returning of the loan). No additional documentation is required at the moment of notification. However, if the NBRM finds that some information is missing, they still reserve the right to require additional information or documentation.

Even though this Decision does not implement important novelties, its enactment serves to harmonize several previous amendments of regulation on this matter and to remind the business community that the NBRM intends to actively control the reporting obligations of residents. Companies should be aware that compliance with this Decision is obligatory and the NBRM intends to enforce this requirement. If a deadline is missed or notification is not completed, a company may be subject to a fine in the range of EUR 2000 to EUR 4000.

‘Safe Harbour’ agreement ruled invalid by the European Court of Justice

On 6 October 2015, the European Court of Justice deemed the “Safe Harbour” agreement that allowed for the transfer of personal data from the EU to the US to be invalid. The “Safe Harbour” agreement was concluded in 2000 between the European Commission and the US government and essentially guarantees protection of personal data transferred by American companies from the EU to the US. In practice, it allowed companies (such as Facebook, Google, Apple etc.) to selfregulate the protection of EU citizens’ data in carrying out exports to US data centres. With the “Safe Harbour” agreement being declared invalid, these companies will now have to: (i) enter into model agreements with the entity exporting the data; and (ii) require the consent of national authorities in order to export personal data from EU member countries to the US. Although these agreements are usually standard, getting them approved before transferring data will be time-consuming, as well as a financial and administrative burden.

In Macedonia, the export of personal data to EU/EEA member countries could be carried out freely and does not require the consent of the Directorate for Personal Data Protection (“Directorate”). However, exports of personal data to the US have always been subject to prior confirmation that the country would provide adequate level of protection of the personal data. With the “Safe Harbour” agreement in place, the national authority could have confirmed the level of protection based on selfregulation of US companies. However, based on the ruling of the European Court of Justice, it is expected that transfers of personal data to the US will now be subject to thorough checks to ensure an adequate level of protection of the data upon export.

Changes in the Law on Waste Management

The most recent amendments of the Law on Waste Management introduce new rules with respect to the management with waste motor oils and misdemeanour proceedings for a failure to comply. The entities possessing waste oils are now obliged to keep records for:

• supplied and used amounts of waste motor oils;
• manner of waste motor oils management; as well as
• type and quantity of sold waste oils and manner of their transport.

Such entities are also obliged to submit six-month and annual reports to the Ministry of Environment and Physical Planning with respect to these records. The amendments also increase the authorizations of the State Environmental Inspectorate of Macedonia. According to the amendments, the State Environmental Inspectorate will now focus its attention on implementation of: (i) integral ecological licenses; and (ii) the elaboration studies prepared by companies with installations, allowing the State Environmental Inspectorate to more effectively implement the law.

The amendments further harmonize misdemeanor provisions of the Law on Waste Management with the new Law on Misdemeanors. It is important to note that as a result of this harmonization, there is a new method for calculating fines in the event that a company breaches its obligations under the Law on Waste Management. The new calculation method takes in consideration: (i) the revenue of a company; (ii) the number of employees; (iii) as well as the previous behavior of the company; and intends to provide a balanced level of fines for the entities in accordance with their performance. Large companies with many employees can therefore be subject to heft fines for a failure to comply with the above mentioned record-keeping obligations.

By Milos Vuckovic, Senior Partner, Leonid Ristev, Senior Associate, Karanovic & Nikolic.

The Vegas Lex firm has completed its work for the Delovaya Sreda project, which intends to build a comprehensive technological infrastructure for Russian small businesses.

Vegas Lex was selected in September 2014 by the Delovaya Sreda company — a subsidiary of Sberbank — to advise on the Delovaya Sreda web portal, which was designed —according to Vegas Lex — to “help those wishing to start a business find an effective and interesting way to grow by connecting them with legal, accounting, and other services; the project is designed for those who seek profit-making cooperation with trusted partners, who want to share experience with others and learn from them.”

According to Delovaya Sreda General Director Mikhail Fedorenko, the project provides an infrastructure for creating services, products and solutions for micro and small businesses; educates new business leaders about starting their business and developing it effectively; and helps new entrepreneurs at the start, from company registration to complex IT solutions.

Vegas Lex lawyers evaluated the legal risks and restrictions on Delovaya Sreda’s activities., drafted contractual documents covering the relationship between Delovaya Sreda and its partners across Russia, developed the procedure for selecting contractors, and provided assistance in selecting and formalizing relationships with them. Also, the working group for the project drew up a report on the Delovaya Sreda procurement procedure’s compliance with Russian laws and procurement regulations and a list of steps the procedure involves.

The firm’s working group was led by Managing Partner Alexander Sitnikov and Head of Technology and Investment group Alexandra Vasyukhovna.

Sorainen has advised Deeper Fishfinder, the first Lithuanian product to get to Apple stores, on a full range of matters, including start-up financing, ongoing international expansion, and other everyday legal matters.

The Deeper Fishfinder gadget — which was recently awarded the best Wireless Handset Accessory in the Consumer Electronics Show Best of Innovation Awards 2016 —  is a wireless fish finder specially designed for amateur and professional fishermen. According to Sorainen, “ smart castable sonar Deeper took part in the awards for the first time this year and prevailed over such brands as LG, SanDisk, and iWear to receive the award in the Wireless Handset Accessory category.”

Sorainen’s team was led by Partners Laimonas Skibarka and Renata Berzanskiene, Senior Associate Mantas Petkevicius, and Associate Laurynas Ramuckis, among others.

Kachkin & Partners has successfully represented the interests of the Cres Group — the owner of a class “A” refrigerated-warehouse facility in St. Petersburg spanning some 32,500 square meters — in a dispute with the SK management company, responsible for collecting and transferring “all of the lease payments from the warehouse tenants.”

The Kachkin & Partners team successfully persuaded the Court to award the Cres Group the “illegally-withheld amounts from the management company – as well as penalties for the delay in payment.” The court also dismissed the management company’s countersuit seeking damages for unilateral termination of the agency agreement (as the Cres Group had suspended all agency relations when SK refused to transfer the funds due to the Group for the use of its property). 

The firm also then successfully initiated a joint liability claim against the management company’s directors following the discovery in enforcement proceedings that the company had insufficient property “sufficient to even partially satisfy the claims of Cres Group.”

Finally, according to a K&P summary of the dispute, “as a result, in the course of its reconsideration of the dispute, the court of the first instance entered a decision ordering satisfaction of the joint liability claim in full. Once the court order has entered into legal force, collection proceedings will commence against the director to recover an amount in excess of RUB 12 mln, as a result of which the bankruptcy estate could be significantly augmented and our client’s demands – satisfied in full.”

The case remains subject to appeal.

Sayenko Kharenko has acted as a Ukrainian legal advisor to Commerzbank AG, the consent solicitation agent, in relation to solicitation of consent by PJSC Commercial Bank PrivatBank’s noteholders for the restructuring of the bank’s USD 200 million Eurobonds due in September 2015.

As a result of the restructuring, the interest rate on the notes was increased from 9.375% to 10.25% and the maturity was extended to 2016 with an additional automatic extension to 2018 upon a successful restructuring of the bank’s subordinated Eurobond issue.

According to Sayenko Kharenko, PrivatBank received a high level of investor support in the course of the voting: out of more than 85% of investors participating in the voting more than 95% voted in favor of the amended terms offered by PrivatBank. The firm describes this as “one of the highest results among similar exercises of Ukrainian issuers.”

PrivatBank is the largest Ukrainian bank and one of the leading banks in Central and Eastern Europe. The bank employs over 29 thousand people and serves more than 18 million individual and corporate customers.

Sayenko Kharenko’s team was led by Partner Nazar Chernyavsky, and included Counsel Anton Korobeynikov and Associates Marta Lozenko, Taras Shyb, and Dmytro Vasylyna.

Klavins Ellex has advised Primera Air Nordic SIA on an aircraft leasing transaction which resulted in a Boeing 737-700 aircraft being added to the Latvian operator’s fleet on October 26, 2015. Primera Air Nordic is part of the Denmark based Primera Travel Group, which operates charter flights for the Scandinavian market.

Primera Air Nordic was advised by Klavins Ellex Senior Associate Ivars Slokenbergs.

Klavins Ellex has advised Primera Air Nordic on four other leasing transactions for four Boeing 737-800 aircraft in the past year, and has also served as transaction counsel for the respective aircraft owner/lessor in registering the aircraft in Latvia.

Image Source: InsectWorld / Shutterstock.com

BSWW Legal & Tax has recently advised Fujitsu Technology Solutions with respect to negotiating and concluding a lease agreement with GTC UBP Sp. z o.o. concerning office space of approximately 6,000 square meters in the University Business Park in Lodz. Hogan Lovells advised GTC UBP on the deal.

“We are very satisfied with our cooperation with BSWW Legal & Tax who helped us to swiftly finalise a lease agreement with GTC on favourable conditions,” said Dave Deane, Managing Director of GDC Polska at Fujitsu Technology Solutions. “We plan to open an office in University Business Park in the first half of 2016. We are certain that this modern office building situated in the centre of Lodz will be a comfortable working place.” 

The BSWW team working on the transaction was led by Managing Partner Michal Wielhorski, who commented on the success of the deal: “For many years now we have been offering advice to major Polish and international clients in the field of negotiation and conclusion of Poland-specific commercial, office and storage lease agreements. We are pleased that we had the opportunity to work with Fujitsu, a leader in IT infrastructure and services, who made the decision to lease office space in the modern office complex of University Business Park.”

Wielhorski was supported by BSWW Partner Alicja Niska and Traineee Katarzyna Okonek.

When contacted by CEE Legal Matters, Hogan Lovells declined to comment.

On 30 October 2015 the European Commission published a new Guidance to assist contracting authorities across the EU member states to avoid the most common errors in planning and delivering purchases of public works, supplies or services funded by the European Structural and Investment Funds (‘Guidance’).

This Guidance is part of the Commission’s priority action plan to help Member States to strengthen their administrative capacity and improve the way the EU funds are invested and managed and to reduce the irregularities in public procurement contracts. The main aim of this Guidance is to give knowledge and exchange of good practices for better preparation of tenders and projects by the contracting authorities.

The Guidance covers EU funded contracts for the procurement of works, supplies and services as set out in Directive 2004/18/EC only. It is not related to procurement contracts funded by the Member States’ national budgets and to contracts awarded by entities operating in the water, energy, transport and postal services sectors. The document also does not consider the new procurement regulations set out in Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on the public procurement and repealing Directive 2004/18/EC, for those provisions are expected to be finally transposed into all Member States’ national law in April 2016. 

This Guidance contains a list of most common serious errors potentially leading to financial corrections and practical tips, alerts and interactive elements with links to the relevant legislative texts in order to avoid such mistakes. The Guidance is structured to cover all six stages of a public procurement process: (i) preparation and planning; (ii) publication; (iii) submission of tenders and selection of tenderers; (iv) evaluation of tenders; (v) awards and (vi) contract implementation. 

Some of the most common mistakes are highlighted and explained in detail in the document with a particular focus to those which lead to financial corrections at each of the stages (e.g. direct awarding of a contract with no adequate justification; artificial splitting of procurements; disproportionate and discriminatory selection criteria; short timelines for obtaining and submitting of tenders; unequal treatment of tenderers; lack of transparency during evaluation; undisclosed conflict of interest and others). 

EU funding plays vital role for the development of the Bulgarian economy – more than 7.5 billion euros from EU funds have been transferred to Bulgarian beneficiaries since 2007. At the same time, according to the Bulgarian Executive Agency ‘Audit of EU Funds’, irregularities were still detected in more than 5o% of the procedures (e.g. 57% for 2014). The main errors were related to preparation and planning and awarding public procurements stages. Setting up selection criteria that grant unfair advantage to some of the participants in the procedures or unjustifiably restrict their participation or applying short timelines for obtaining and submitting of tenders were considered as having the greatest financial implication over the beneficiaries. 

Because of the seriousness of the irregularities established in Bulgaria by the Audit of EU Funds Agency, many of them resulted in financial corrections. Due to such procurement irregularities in 2013 and 2014 two operational programs (“Environment” and “Regional Development”) were blocked by the European Commission where the financial corrections amounted to approximately 150 million euros. Some of those financial corrections ended up to 100% of the amount grant. 

Significant and continuous errors in public procurements may potentially cause severe problems for public budgets. To this extent, the Guidance is to be recognized and become integral part of the procurement procedures led by the Bulgarian contracting authorities for improving quality, efficiency in terms of value for money and effectiveness of public procurement. 

Although the Guidance does not provide a definitive legal interpretation of EU law, but is rather a technical tool for good practices, it could be also helpful for all economic operators in the private sector for better understanding of the process and predictability of the procurement outcomes of the EU funded public procurements in Bulgaria.

By Anna Rizova, Managing Partner and Katerina Novakova, Senior Associate, Wolf Theiss

Allen & Overy has advised PKO Bank Hipoteczny S.A. on the establishment of its covered bonds program, the first to meet the criteria of Poland’s amended Act on Covered Bonds and Mortgage Banks scheduled to come into force on January 1, 2016. This is the first Polish covered bonds program since 2010.

PKO Bank Hipoteczny is part of the PKO Bank Polski Group — the biggest banking group in Poland and one of the leading banking groups in Central and Eastern Europe.

Allen & Overy’s team was led by Partner Piotr Lesinski, supported by Senior Associate Lukasz Walczyna. In a statement released by the firm, Lesinski said: “We congratulate PKO Bank Hipoteczny S.A. on such an innovative project. I am proud that we could be a part of it.”