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CHSH Cerha Hempel Spiegelfeld Hlawati has advised red-stars.com data AG (“red-stars”) in connection with the acquisition of 33% of the share capital and voting rights in Machine & Voice Communication GmbH (MAVOCO) — which was advised by Bichler & Zrzavy. The transaction closed in May 2015.

MAVOCO’s subsidiary Freeeway GmbH (Freeeway) is a virtual network operator providing M2M connectivity services based on a portfolio of international wholesale agreements with network operators.  Freeeway provides a range of products for transport companies and truck drivers and allows roaming-free telecommunications and telematics in more than 40 European countries. According to a CHSH statement, by using Freeeway, “transport companies can make a saving of up to 60% on their communication costs.”

Together with its new partner red-stars, MAVOCO hopes to achieve a subscriber base of at least one million operational SIM cards within five years.

Red-stars was advised by CHSH Partner Albert Birkner and Associate Nadine Leitner. 

Cobalt and Linklaters have advised Rakuten — Japan’s version of Amazon.com — on its acquisition of Fits.me, a startup founded in Estonia (now headquartered in London).

Fits.me develops “virtual fitting rooms” — two-way technology that lets online buyers who can’t physically try something on better visualise how those items might fit them (and lets retailers collect more information about the preferences and interests of visitors to their sites). The price of the acquisition was not disclosed.

“Fits.me represents both the fun and functionality of shopping online and is a natural complement to our growing portfolio of e-commerce and marketing services,” said Rakuten’s CEO and founder Hiroshi Mikitani in a statement. “Not only does the virtual fitting room provide customers with a more realistic shopping experience, it also empowers merchants with the valuable data they need to continually improve their service.

The 5-person Estonian Cobalt team was led by Partners Marina Tolmatshova and Pirkko-Liis Harkmaal. Linklaters acted as lead counsel, with London-based Partner David Holdsworth leading the team, which included managing Associate Lorna Tennent and Associate Kimberly Low.

On July 3, 2015, Union Asset Management Holding AG (Union Investment) acquired 100% of shares in Volksbank Invest Kapitalanlagegesellschaft m.b.H (VB Invest) as well as 94.5% of shares in Immo Kapitalanlage AG (Immo KAG).

CMS advised Union Investment throughout the entire bidding and due diligence process and handled all regulatory issues with the Austrian Financial Market Authority (FMA), while Schoenherr advised VB Invest and Immo KAG. Closing is expected in the third quarter of 2015 (subject to approval by the FMA). The purchase price was not disclosed.

The acquisition of VB Invest and Immo KAG was preceded by a tender process, from which Union Investment emerged as the successful bidder. Before their takeover, VB Invest and Immo KAG managed assets worth EUR 5.4 billion (as of June 30, 2015). VB Invest currently offers 42 securities funds, and Immo KAG offers an open-ended real estate fund. The two companies employ 45 staff members in total.

“We are very happy that we could successfully support our client in the expansion to Austria by offering cross-border advice on a variety of topics,” says CMS Partner Johannes Trenkwalder, who led the firm’s team advising Union Investment throughout the entire bidding and due diligence process and handling the case at the FMA. 

The CMS team was made up by the following experts: In Vienna, Partners Johannes Trenkwalder, Alexander Rakosi, Attorneys Lisa Oberlechner, Oliver Werner, Dieter Zandler, Martin Trapichler, Helmut Bruckner, Marie-Stephanie Schweizer, and Jens Winter, and Associates Caroline Schmidt, Eva-Maria Vogerl, and Martin Schweinberger. In Hamburg, Partners Sebastian Orthmann, Daniel Voigt, Tillman Kempf, Jesko Nobiling, and Associates Simonetta Hahn, Eva Heidemann, Stefanie Nagel, and Sebastian Huck.

Schoenherr’s core team advising on the sales to Union Investment consisted of Partner Ursula Rath and Attorney Stefan Paulmayer, supported by Partner Hanno Wollmann and Stefan Kuhteubl and Associate Susanne Olt.

Sayenko Kharenko has announced that Serhiy Verlanov has joined the firm to lead its Tax Practice.

Verlanov, who joins as a Partner, has over 14 years of experience in taxation and tax litigation. According to a statement released by Sayenko Kharenko, he “advises local and international companies on the most sophisticated taxation matters relating to cross-border transaction structuring as well as representation of clients in tax litigations at all levels of the judiciary.”

Before joining Sayenko Kharenko, Verlanov worked for over six years at the Ukrainian office of PWC.

In 2003 Verlanov obtained his Master of Laws degree from the Ivan Franko University in Lviv, and in 2007 he received a Ph.D. in the Theory of Law from the same school.

“Sayenko Kharenko’s Tax Practice is well established on the market,” said Michael Kharenko. “We have good reasons to believe that Serhiy’s tax expertise combined with the advantages and capacities of a large full service law firm, such as top legal talent, well-balanced clientele, and strong marketing support will deliver a great synergy.”

In its ruling dated June 16, 2015, in Case No. A07-7616/2014 (the “Supreme Court Ruling”) the Judicial Chamber of the Supreme Court of the Russian Federation on Economic Disputes set forth its position on one of the most problematic issues arising in the course of the implementation of construction projects, namely: the question of whether a construction permit can be obtained after construction has already commenced.

Below we briefly review the key provisions of the Supreme Court Ruling and related issues.

Conditions of Issuance of Construction Permit

According to the facts of the case, a company involved in the construction of a residential building applied to the competent authority for a construction permit. However, the authority rejected the application because the company had already begun construction of the residential building without a permit. The company challenged the rejection of its application in court. The courts of first instance and appeal instance dismissed the company’s lawsuit, while the cassation court vacated these court decisions, finding that the rejection by the competent authority of the application for the issuance of a construction permit was unlawful. The case was considered by the Judicial Chamber of the Supreme Court of the Russian Federation on Economic Disputes, which vacated the ruling of the court of cassation, and the Supreme Court thereby deemed lawful the rejection of an application for the issuance of a construction permit after construction had already commenced.

Until this case was heard by the Judicial Chamber of the Supreme Court of the Russian Federation on Economic Disputes, there was extensive court practice on the question of whether it was possible to obtain a construction permit after construction had already begun. The courts indicated that a construction permit should be obtained prior to actual commencement of construction and, in the opinion of the courts, the moment when the application for a construction permit was received by the competent authority — before or after completion of construction — had no legal relevance.

The principal conclusions of the courts in favor of the argument that a construction permit must be obtained prior to commencement of work at the site consist of the following:

• Pursuant to Art. 51.1 of the Town Planning Code of the Russian Federation a construction permit is a document entitling the developer to carry out construction or renovation of capital construction facilities;
• It follows from this rule that a developer may commence construction of a facility only after a construction permit is obtained, and all actions required by the law have been performed and documents prepared for the purposes of obtaining a permit and undertaking the construction have been issued;
• An application for a construction permit filed with the competent authority after construction has begun constitutes an attempt to circumvent the requirements of town planning legislation and, thus, legitimizes unauthorized construction using administrative means (Art. 10.1 of the Town Planning Code);
• If a developer has all of the documents required to obtain a construction permit, submission of such documents to the competent authority is not sufficient to obtain a construction permit. The developer must submit these documents prior to the commencement of construction of the facility.

Risk of Building Being Deemed Unauthorized Construction

Applicable civil law contains an exhaustive list of grounds whereby a completed real estate property may be deemed unauthorized construction, and the absence of a construction permit in respect of the completed facility is one such ground.

If there is no construction permit for a facility (including where the rejection of an application for a permit was challenged in court and the court found that such rejection was lawful), the completed facility may be deemed an unauthorized construction. As a general rule, real estate found to be unauthorized construction must be demolished, unless ownership title to the unauthorized construction is established by a court (Art. 222 of the Russian Civil Code).

A review of court practice shows that ownership title to an unauthorized construction (where the property was constructed without obtaining the necessary permits) may be established if the following criteria have been met:

• The applicant applied to the competent authorities for issuance of a construction permit in a timely manner and included all of the documents envisaged by the law;
• There is evidence that it was not possible to obtain a construction permit prior to commencement of construction (e.g., evidence of unlawful rejection of an application for issuance of a construction permit by the competent authorities).

Therefore, in order to avoid potential disputes and the risk of completed property construction being deemed unauthorized construction in the absence of the necessary permits and approvals, we recommend that construction permits be obtained prior to the commencement of any construction work, and that all enquiries and submissions to the competent authority regarding the issuance of a construction permit prior to commencement of construction work at the property be documented.

Amendments have recently been made to Art. 222 of the Civil Code in respect of regulation of the unauthorized construction regime. These amendments will be covered in more detail in our next client update.

By Alyona N. Kucher, Partner, Roman L. Sadovsky, Associte, Vadim G. Kolomnikov, Associate, Debevoise & Plimpton

The Schnitzer law firm has advised Montenegro on its accession to the World Trade Organisation’s Government Procurement Agreement (the GPA), completed within the framework of a project financed by the European Bank for Reconstruction and Development.

Schnitzer reports that “only three sovereign states have managed to successfully conclude the very complex GPA negotiations since 2001,” and that “no country has ever completed the complex accession process faster than Montenegro.”

Schnitzer also states that, “globally speaking, the WTO government procurement agreement is the most important international treaty on liberalising national procurement markets. Membership of the GPA gives Montenegro and the other GPA members market access to public contracts worth about USD 1.7 trillion per year. Besides promoting international competition for public procurement, the GPA aims above all at increased transparency and responsible management of tax money (good governance). The current GPA parties – alongside Montenegro from now on – include the EU (with all 28 member states), Israel, Japan, Canada, Korea, Lichtenstein, Singapore, Switzerland and the USA.”

Montenegro becomes the first country to accede to the revised GPA that came into force in 2014. 

“We are proud of having been able to give Montenegro and the EBRD legal and strategic advice during the entire accession process including the complex negotiations in Geneva,” said Johannes Schnitzer, Managing Director of the firm. “Above all, we are happy that Montenegro’s accession is already seen as an example for other countries which strive towards GPA membership in the near future.”

Motieka & Audzevicius has advised the management and a group of investors (including leading laser manufacturers Sviesos Konversija, Eksma, and several unnamed financial investors), on the buy-out of shares of UAB Brolis Semiconductors, a company developing advanced diode laser and sensor technologies, from Litcapital I.

According to a Motieka & Audzevicius statement, “the investment will support further growth of Brolis Semiconductors and help to expand its laboratory, a project that is partially co-financed by EU grant.” The firm also reported that “Lithuania’s laser technology producers, especially companies participating in this investment collaboration, are considered world-wide leaders of the laser technology market. With great support from the state and the President of the Republic of Lithuania herself, such investments are expected to trigger more significant recognition of Lithuanian laser technology producers and their products, in such way strengthening the leadership in this market and further development.”

The buy-out included the acquisition of securities in Brolis semiconductors from initial investor Litcapital I, a growth capital fund established in cooperation with European Investment Fund under the JEREMIE initiative, which will remain a shareholder in Brolis. 

Motieka & Audzevicius advised on the overall structure of the buy-out and participated in all stages of the process. 

Paksoy has advised Turkish optical product distributor Merve Optik on its acquisition by the French eye-glass giant Essilor Optica International Holding. Herguner Bilgen Ozeke advised Essilor Optica on the deal. The acquisition was completed on July 1, 2015, and filed with the Competition Board on July 15.

Merve Optik owns a portfolio of proprietary sunglass frame brands with strong brand recognition in Turkey, including Osse, Mustang, and Hawk. 

Paksoy Partner Elvan Aziz led the firm’s team advising Merve Optik on negotiation of the share purchase agreement and shareholders agreement, obtaining merger clearance, and completion of the share transfer. Azis was assisted by Senior Associate Serdar Ildirar and Counsel Derya Genc.

The Herguner team advising Essilor Optica was led by Partner Kayra Ucer, supported by Associate Ismet Bozoglu. Competition issues are being handled by the firm’s Competition expert, Suleyman Cengiz.  

CMS, Russia has announced the appointment of Partner Dominique Tissot as Head of the Tax Practice and the promotion of Artem Rodin to Partner in the office’s infrastructure and public private partnership group.

Tissot joined CMS as Tax Partner in 2008, and he advises international and Russian companies on various aspects of cross-border investment deals, structuring of major infrastructure and M&A projects, creation of efficient holding structures, and compliance with the transfer pricing rules. In addition, Tissot specializes in advising clients on legal aspects of energy savings, energy efficiency, and renewables projects. He is a member of the Administrative Council of the Franco-Russian Chamber of Commerce and Industry (CCI France Russie) and a foreign trade advisor of France. 

Jean-Francois Marquaire, the Managing Partner at CMS, Russia, said of the appointment that:“Over the many years Dominique has been making a strong contribution to our tax practice helping us develop and maintain our leading positions in this competitive marketplace. I am sure that his experience and leadership skills will open new opportunities for the business.” 

Rodin has over 10 years of experience advising clients from both public and private sectors on legal aspects of major infrastructure and PPP projects in public utilities (water, wastewater, waste management), energy (including renewables), transport (roads, railroads, airports) and healthcare industries. His experience also includes representing clients in complex litigation and arbitration proceedings. He  is an advocate with a Chamber of Advocates of  Moscow, has PhD in law, and is an author of publications on legal aspects of PPP projects in Russia and abroad. Artem is an active member of the Health, Safety, Security and Environment Committee of the The Association of European Businesses. 

”Artem joined CMS as counsel a year ago, and already enjoyed recognition from the clients and colleagues for his expertise and ability to offer best solutions for clients even in a very complex situations,” said Leonid Zubarev, Senior Partner at CMS, Russia. “We are convinced that his broad experience, high qualification and energy will be of benefit to our infrastructure and PPP practice and to our clients.”     

The Cobalt law firm has advised Cgates on its acquisition of Lithuania’s Kava telecom operator for an undisclosed fee. The purchase will be financed through debt and awaits the approval of the relevant authorities in Lithuania.

Kava is a growing telecommunications company with around 20,000 subscribers. It has one of Lithuania’s most modern fibre networks, and covers more than 100,000 households in the cities of Vilnius, Klaipeda, Siauliai, and Panevezys. 

Cgates is a wholly owned subsidiary of the Estonian cable operator Starman, of which East Capital Explorer owns 63%. Cgates is Lithuania’s second largest cable TV and broadband internet provider with a network covering 300,000 households in 12 cities. Its revenues in 2014 were EUR 15.8 million.

The Cobalt team was led by Managing Associates Juozas Rimas, the Head of the Mergers and Acquisitions Practice group, assisted by Associate Audrius Slazinskas.