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  • Labour Law of the Federation of Bosnia and Herzegovina Repealed

    Labour Law of the Federation of Bosnia and Herzegovina Repealed

    The Labour Law which entered into force on 20 August 2015 has been repealed and as of 16 March 2016 will no longer have any legal effect.

    On 17 February 2016, the Constitutional Court of the Federation of Bosnia and Herzegovina (FBiH) issued a judgment (Judgment) stating that the Labour Law of FBiH (Labour Law) was adopted in a procedure contrary to the Rules on Procedures of the House of People of the Parliament.

    The Judgment was published on 16 March 2016 in the Official Gazette of FBiH and as of this date the Labour Law no longer has any legal effect.

    In issuing the Judgment, the Constitutional Court of FBiH did not assess the merits of the Labour Law, but only the procedure under which it was enacted.

    The Labour Law has now been returned to the House of People of the Parliament of FBiH as a draft proposal.

    The relevant authorities have not yet issued any statement as to which law will be applicable until a new labour law is adopted. However, in practice it seems relevant that the previous labour law published in the Official Gazette no. 43/99, 32/00 and 29/03 shall apply.

    By Adnan Sarajlic, Associate, Wolf Theiss

  • Czech Republic: Crowdfunding – Introduction to Regulatory Framework

    Czech Republic: Crowdfunding – Introduction to Regulatory Framework

    Crowdfunding has become an increasingly popular method of financing in recent years. While this method of raising funds from the wider public creates a lot of new investment opportunities, there are also risks associated with it. EU financial market regulators are responding to the growth of crowdfunding and related risks in order to protect investors.

    Crowdfunding: definition & models

    The term crowdfunding first appeared in the 1990s to describe an internet platform designed to collect funds to finance various artistic or social projects. Nowadays, there are thousands of crowdfunding platforms all around the world. The most successful platforms include GoFundMe, Kickstarter, Indiegogo, RocketHub and FundRazr.

    Basically, crowdfunding is a form of funding a project or venture by raising monetary contributions (usually small amounts) from a large number of people (investors), typically via the internet. Crowdfunding usually involves three participants: (i) the operators of the crowdfunding platform, who set the conditions for the functioning of the platform, and determine the requirements for accepting a project; (ii) investors, who provide their resources to finance individual projects offered through the platform; and (iii) applicants, who request funds needed to implement their projects.

    The types of financed projects can vary: development of new technologies, works of art and cultural events, but also private real estate purchases or loans to buy a car or other consumer goods.

    The traditional crowdfunding model is donation-based crowdfunding, which is used to raise funds, mostly for charitable or other public purposes. The legal relationship under which the investor provides resources to the applicant is usually based on a donation contract, and therefore investors do not expect an immediate economic consideration or service from the applicant.

    Today, however, the most popular crowdfunding model is reward-based crowdfunding, which is a model based on economic compensation. This compensation may be either material or financial. Reward-based crowdfunding with material consideration is often used to fund arts projects (films or music albums, books or theatre performances) to support certain communities or organisations, but also to finance various technical and technological innovations. The legal relationship between the investor and applicant usually has the nature of a donation agreement, purchase agreement or agreement on the provision of services, and often it is a combination of these.

    On the other hand, there are different models of reward-based crowdfunding with financial consideration. One of these is debt/lending based crowdfunding, where each investor decides how much to lend the respective applicant or specific project (peer-to-peer lending, “P2P”), and possibly lending companies to other companies (business-to-business lending, “B2B”). The legal relationship between the contributor and the applicant is usually regulated by credit agreements or loan agreements.

    The last crowdfunding model with financial consideration – equity based crowdfunding – is a platform mediating investment interests in business corporations or to a particular asset when the contributor becomes the owner of that asset, or of an interest in a company. This model is most commonly used by start-up companies and entrepreneurs in the IT sector.

    Regulation of crowdfunding in the Czech Republic

    Czech law does not explicitly regulate crowdfunding, but it does lay down certain rules and limitations for the collection of funds from the public and their use, rules on consumer protection and the prevention of money laundering.

    In addition to the general rules establishing consumer protection conditions, including the negotiation of contracts through the internet, regulated by the Civil Code and the Consumer Protection Act, the following Czech laws may be applicable: (i) the Act on Banks, which prohibits the acceptance of deposits from the public without a banking licence; (ii) the Act on Payment Systems, determining rules for the provision of payment services, including transfers of funds; (iii) the Act on Capital Markets, regulating the mediation of investments in shares and bonds and public offerings; (iv) the Act on Public Collections, regulating the collection of voluntary cash contributions from contributors for a predetermined public benefit; and hypothetically also (v) the Lottery Act, where winning or losing is decided by chance.

    Whereas those rules are fragmented into many Acts, and it is not always clear which set of rules will apply to each platform, there are many platforms that work outside the statutory regime. Therefore, it would be desirable to adopt a comprehensive regulation laying down rules that are in accordance with the individual sector regulation.

    The Czech Ministry of Finance is currently preparing a new Act on Consumer Credits, which will tighten the conditions for the provision and procurement of credits to consumers, probably also including some form of regulation of dedicated crowdfunding platforms for the funding of consumer loans.

    Moreover, the EU has long been considering the establishment of harmonised crowdfunding legislation. The European Banking Authority (“EBA“) as well as the European Securities and Markets Authority (“ESMA“) proposed a series of measures to reduce risks connected with crowdfunding, including the possibility of introducing specific registration and regulation of operators of crowdfunding platforms.

    It is expected that future EU legislation, which should be presented by the European Commission later this year, will resemble the system in the UK, where crowdfunding platforms need to be licensed by the British Financial Conduct Authority.

    Czech law does not explicitly regulate crowdfunding, but it does lay down certain rules and limitations for the collection of funds from the public and their use, rules on consumer protection, and the prevention of money laundering.

    By Rudolf Bicek, Associate, Schoenherr

  • Paksoy Advises Georg Fischer Ltd on Acquisition of Remaining Stake in GF Hakan

    Paksoy Advises Georg Fischer Ltd on Acquisition of Remaining Stake in GF Hakan

    Paksoy has advised Georg Fischer Ltd (“GF”) on its acquisition of sole control over Georg Fischer Hakan Plastik Boru ve Profil San. Tic. A.S. (“GF Hakan”) via the purchase of shares left outstanding in its earlier acquisition of a majority stake in 2013.

    As in that 2013 transaction, the Paksoy team was led by Partner Elvan Aziz, supported by Senior Associate Nihan Bacanak. Paksoy’s antitrust team, led by Partner Togan Turan, working together with Counsel Derya Genc, represented GF in the merger clearance filing regarding this most recent transaction.

    When contacted by CEE Legal Matters, Paksoy announced that for “client confidentiality reasons” it was unable to disclose what percentage of ownership changed hands in either the 2013 or 2016 transactions, what the acquisition price was, who the sellers were, or which law firm advised them.

  • CMS and DGKV Advise on Renesola Sale of Bulgarian PV Portfolio to Solar World Aquiris

    CMS and DGKV Advise on Renesola Sale of Bulgarian PV Portfolio to Solar World Aquiris

    The Sofia office of CMS has assisted ReneSola, a leading international manufacturer and supplier of green energy products listed on the New York Stock Exchange, with the successful sale of its operational portfolio of 9.7 MWp photovoltaic power plants in Bulgaria to Solar World Aquiris S.A.R.L. Djingov, Gouginski, Kyutchukov & Velichkov advised Solar World Aquiris S.A.R.L. — a subsidiary of the Luxemburg-based investment fund Solar World Invest Fund SIF — on the deal.

    According to CMS, the firm has acted for ReneSola in Bulgaria since 2012, “and the sale was only possible following the recent success of CMS’ Disputes Resolution team in a multi-million complicated dispute with ReneSola’s Italian EPC contractor Sedna, which started in 2013, which prevented the plans for an earlier exist.”

    The CMS team was led by Partner Kostadin Sirleshtov, CMS’s CEE Energy, Projects and Construction Practice Leader, and included Associates Borislava Pokrass, Raya Maneva, and Dimitar Dimitrov. CMS’s Sofia Disputes Resolution team was also involved, led by Practice head Assen Georgiev.

    The DGKV team consisted of Partner Omourtag Petkov, Senior Associate Anton Krustev, and Associates Nikola Minchev, Aleksandar Dorich, Ivan Punev, Lora Aleksandrova, and Alexander Spatov. 

  • Lawmore, SSW, and Lukasz Stanek Advise on iTaxi Investment

    Lawmore, SSW, and Lukasz Stanek Advise on iTaxi Investment

    Lawmore has represented Stefan Bator, the founder of iTaxi, in iTaxi’s acquisition of PLN 8 million in investment from Experior Venture Fund and existing investors, including Dirlango and Lech Kaniuk. The Experior Venture Fund was represented by the L.E. Lukasz Stanek Law Office, and Dirlango and Lech Kaniuk were represented by SSW Spaczynski Szczepaniak i Wspolnicy.

    According to Lawmore, iTaxi is a platform for ordering taxis that operates in over 100 cities in Poland, and claims over 10 thousand drivers. The newly-acquired capital will be spent on development, and funds will be used to expand the sales department of the company, to recruit more drivers, and for marketing purposes. 

    Capital One Advisers was the investment advisor for iTaxi and its shareholders.

    The Lawmore team was led by Partner Michal Kulka.

    The SSW team was led by Partner Pawel Chyb, supported by Associate Katarzyna Solarz.

    The L.E. Lukasz Stanek Law Office team was led by Founding Partner Lukasz Stanek, working with Advocate Igor Bendza. 

    Image Source: itaxi.pl

  • RTPR Allen & Overy Obtains Reduced Competition Council Fine on Aegon

    RTPR Allen & Overy Obtains Reduced Competition Council Fine on Aegon

    RTPR Allen & Overy has successfully persuaded the Romanian Competition Council to reduce the fine it imposed on Aegon Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. (Aegon) by over 80%.

    The Competition Council had imposed its penalty on AEGON and other companies managing mandatory private pension funds (Pillar II) for an alleged allocation of customers.

    The RTPR Allen & Overy team consisted of Of Counsel Lucian Mihai, Senior Associates Roxana Ionescu and Adriana Dobre, and Associate Andrei Mihul.

    “This has been a case in which we firmly believed from the very beginning, and we managed indeed to convince the Bucharest Court of Appeal in the first instance to annul in full the fine imposed on Aegon,” declared Ionescu, who coordinates the office’s competition law department. “Unfortunately following the ruling rendered by the Court of Justice of the European Union on a preliminary question referred to by the High Court of Cassation and Justice in another case file having as object the annulment request against the same decision lodged by another sanctioned company, the High Court of Cassation and Justice had to consider the existence of an infringement of the competition law and sent the case file for retrial to the Bucharest Court of Appeal in order to rule on the lawfulness of the fine calculation. Although we believe that the correct solution would have been the annulment of the decision of the Competition Council (as we provided enough arguments and evidence to demonstrate Aegon did not infringe the law), the reduction of the fine by over 80% represents a genuine success, given the CJEU’s ruling.” 

  • Jus Aureum Wins Significant Tax Case in Russian Supreme Court

    Jus Aureum Wins Significant Tax Case in Russian Supreme Court

    Jus Aureum has announced that the Supreme Court of the Russian Federation has ruled in favor of firm client Novaya Tabachnaya Kompaniya LLC in a dispute regarding whether interest paid on controlled debt is convertible into dividends where a Russian company is the lender.

    Jus Aureum released an extensive statement describing the matter: “The legal battle marked the first time the nation’s supreme judicial authority invoked the rules laid down in Article 269 of the Tax Code following a memorable case involving the Severny Kuzbass coal-mining company and capped by Resolution No. 8654/11 of the Presidium of the Supreme Arbitrazh Court, dated November 15, 2011, which had served as the touchstone for the accumulation of adverse court practice in disputes over the so-called thin capitalization.

    The rules limit the subtraction of interest accruals during the assessment of profit tax on loans drawn by Russian taxpayers from their foreign shareholders or from their Russian affiliates and define the obligation of Russian borrowers to withhold profit tax during the disbursement of such interest as dividends.

    The vast majority of arbitrazh courts so far have sided with tax authorities, ruling that the application of Article 269.4 of the Tax Code (which equates interest to dividends) should not be excluded even where the interest is paid to a Russian lender affiliated with the borrower’s foreign shareholder.

    Now, however, the Russian Supreme Court concluded … that as interest is paid to a Russian recipient, the Russian borrower should not be expected to pay dividends as a tax agent (Article 269.4). The interest in such cases is not to be treated as dividends.

    The resulting resolution is likely to prompt courts to take a less formal approach to intra-group funding for Russian companies by emphasizing the fiscal nature of the thin capitalization rules and the inadmissibility of their broad interpretation.”

    According to Jus Aureum, the “ground-breaking hearing in the case” occurred on March 16, 2016, under the Chairmanship of Justice T.V. Zavyalova of the Supreme Court’s panel for economic disputes, and involved other Justices, including M.V. Pronina as the rapporteur and N.V. Pavlova.

    The Jus Aureum team representing Novaya Tabachnaya Kompaniya LLC in court consisted of Senior Associate Nikita Shcherbakov and Attorney Alexandra Ambrasovskaya, both working under the direction of Partner Tatiana Vladimirova.

  • SSW Advises Famur on Bond Issue

    SSW Advises Famur on Bond Issue

    SSW Spaczynski, Szczepaniak and Partners has advised Famur SA, a manufacturer of machinery and systems used in underground mining and quarrying, on a March 18, 2016 bond issue on the Catalyst bond market of the Warsaw Stock Exchange. Haitong Bank, S.A. Spolka Akcyjna Oddzial w Polsce (Polish branch) organized the issuance.

    According to SSW, “Famur launched a bond issuance programme at PLN 500 million. There was private offering directed to no more than 149 entities. SSW’s experts drafted the legal part of an informational memorandum prepared for Famur which involved conducting extensive due diligence of various legal aspects. Moreover, SSW’s advice included providing comprehensive support during the process of issuing bonds. In particular, it consisted of preparing the relevant documentation, especially concerning securities.”

    The SSW team was coordinated by Partner Szymon Okon. 

  • RTPR Allen & Overy Advises Regina Maria on Lease for New Hospital in Cluj-Napoca

    RTPR Allen & Overy Advises Regina Maria on Lease for New Hospital in Cluj-Napoca

    RTPR Allen & Overy has advised the Regina Maria healthcare network on the lease of an approximately 7000 square meter space for a new private hospital to be built in Cluj-Napoca, in Romania. PeliFilip advised Horia Ciorcila, the developer on the deal.

    According to RTPR Allen & Overy, negotiations began in autumn 2015, and the deal was successfully completed by executing a “built-to-suit” lease agreement in February 2016. 

    RTPR has been working with Regina Maria for some time, including advising it on the lease of space in the Charles de Gaulle Plaza office building in Bucharest last year (as reported by CEE Legal Matters on March 19, 2015), and advising Advent International Corporation on the sale of its majority stake in Regina Maria to Mid Europa Partners last year (as reported by CEE Legal Matters on August 5, 2015 and covered more extensively in the Inside Out feature of the December 2015 issue of the CEE Legal Matters magazine).

    “We are honoured to have once again advised Regina Maria on the lease of the hospital that will be built in Cluj-Napoca,” said RTPR Allen & Overy Senior Associate Adrian Cazan, who led the firm’s team on the deal. “The project represents a genuine partnership between Regina Maria healthcare network and the developer who will work together in the following months for the development and operation of the new private hospital in the Regina Maria network.”

    “We are extremely happy we had the opportunity to be part of this complex project together with Regina Maria,” said Associate Alexandra Ivancia, who worked with Cazan on the deal. “The building where the new private hospital will operate will be developed and operated according to the highest quality standards as we already got used to by Regina Maria healthcare network over the past years. We are sure that the new private hospital will be a landmark of excellence in the healthcare sector in Cluj-Napoca and beyond.”

    PeliFilip did not reply to our inquiry regarding its work on the matter.

  • Chajec, Don-Siemion & Zyto Advises on Centrum Mobilnych Technologii Mobiltek Sale of Group Companies

    Chajec, Don-Siemion & Zyto Advises on Centrum Mobilnych Technologii Mobiltek Sale of Group Companies

    Chajec, Don-Siemion & Zyto (CDZ) has advised the shareholders of the Warsaw-based Centrum Mobilnych Technologii Mobiltek S.A. (CMTM) on the sale of 100% of its shares and 100% of its shares in other group companies shares, including Eurokoncept Sp. z o.o. and Dotpay S.A. (whose sole shareholder is CMTM), to MCI Private Ventures Closed Investment Fund. SKS Soltysinski Kawecki & Szlezak advised MCI on the deal, which closed on March 10, 2016, following clearance from the Polish Antimonopoly Office.

    The CMTM Group is active in the market of SMS premium and direct carrier billing services, IT solutions for mobile banking, and online payments and platforms, as well as mobile payment and other online services. 

    As part of the transaction, CDZ represented the shareholders in negotiations with MCI and was responsible for the drafting of the transaction documents, including a shareholders’ agreement on exit from the group of companies and a share sale agreement. The CDZ team was headed by Partner Szymon Skiendzielewski, supported by Advocate Malgorzata Sas.

    SKS Soltysinski Kawecki & Szlezak did not reply to our inquiries on the matter.