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Let us briefly inform you of the latest amendment to Act No. 513/1991 Coll., the Commercial Code, as amended (hereinafter referred to as the “Commercial Code”) adopted by the Slovak Parliament on 12 November 2015 and with a planned date of effectiveness on 1 January 2017, that aims to create a new type of capital company, the so-called Simple Joint Stock Company, in order to support start-up companies.

The new legislation further aims to simplify the entry and exit of potential investors into and out of the company. Like other EU countries, Slovakia is also committed to support the growth of the digital industry and create synergies between start-up founders and potential investors as a key part of the long-term economic plan to support business and create new job opportunities. Therefore, the Slovak legislator has introduced a new type of company specifically designed to address the most important issues that start-up companies are facing in the early stages of development. Similar legislative measures have already been taken by several EU countries such as Italy or Germany, where new types of companies can be founded with a minimum registered capital of EUR 1. 

The new law introduces the legal institute of the Simple Joint Stock Company with:

• less stricter incorporation and winding up rules;
• a relatively low registered capital, and
• exit possibilities well recognized under common law, such as the drag along, tag along and shootout rights.

What follows is a brief overview of the main features of a Simple Joint Stock Company (“SJSC”) also known as a “j.s.a.” (jednoduchá spolocnost’ na akcie). 

MIXED NATURE OF THE SJSC

The SJSC is going to be a mixed type of company which will incorporate the features of a limited liability company, however with a substantially lower threshold for registered capital in the amount of at least EUR 1 and a simplified structure of the company, as well as features of a joint stock company, i.e. the participation in the registered capital will be reflected by the number of shares with a certain nominal value and the aggregate of all the nominal values of issued shares will equal the registered capital of the SJSC. The SJSC will be liable for breach of its obligations with all its assets however shareholders of the company will not be liable for the obligations of the company. 

INCORPORATION AND WINDING UP OF SJSC

The SJSC may be founded by one or more natural or legal persons. The articles of association/foundation deed (which include the bylaws) shall be executed in the form of a notarial deed. The specific nature of the SJSC is also reflected in the fact that it may also be wound up due to the reasons stated in the articles of association/the foundation deed or bylaws and not only due to statutory reasons. 

DRAG-ALONG, TAG-ALONG AND SHOOTOUT RIGHTS

As part of inclusion of the SJSC into the Commercial Code, three contractual rights of the shareholders are stipulated in order to improve the flexibility of the SJSC. These rights were more typical for shareholders’ agreements governed by English or US law and are now introduced to Slovak law as well. The relevant rights shall be included in the shareholders’ agreement as the so-called “other arrangements” and are as follows: 

• Tag-along right

Tag-along is a contractual agreement between the shareholders that allows the entitled shareholder to sell his/her/its shares to a third party together with the shares of the obliged shareholder and this right directly corresponds to the obligation of the obliged shareholder to ensure that the shares of the entitled shareholder are sold under the same conditions, price and terms. This would typically apply in the cases where the entitled shareholder wants to “exit” the company as it no longer wishes to either conduct business without the obliged shareholder or with the new shareholder, i.e. transferee. 

• Drag-along

Drag-along is a very similar instrument. It is a contractual agreement between the shareholders that allows the entitled shareholder to demand the obliged shareholder to sell his/her/its shares to a third party together with the entitled shareholder’s shares and under the same conditions, price and terms that apply to the entitled shareholder. 

• Shootout

Shootout is a contractual agreement between the shareholders that allows the entitled shareholder to set a price for one share of the SJSC and subsequently demand the obliged shareholder that this obliged shareholder sells his/her/its shares to the entitled shareholder for the set price. The entitled shareholder is designated by the time of delivery of the offer with the set price to another, i.e. obliged shareholder. If the obliged shareholder does not accept the entitled shareholder’s offer in a manner and period determined in the shareholders’ agreement, it is obliged to acquire the entitled shareholder’s shares under the same conditions. 

SJSC CORPORATE BODIES AND SHARES SPECIFICATIONS

The corporate bodies of the SJSC comprise the general meeting, the board of directors and the supervisory board with the same functions as in a common joint stock company. However, the shares of the SJSC may only be issued in the form of registered book-entry securities. The SJSC may issue common shares and shares with individual rights. Shares with individual rights can set the extent of the share on profit (dividend), the amount of votes for the shareholder and the extent of the right to receive information about the company. The SJSC will also be able to issue shares with no voting rights to the extent of their nominal value reaching 90% of registered capital of the company. 

Furthermore, the SJSC will also be able to issue non-transferable shares. The holder of such shares will be able, providing he/she/it has paid the issue price of the shares, to demand the company to buy the non-transferable shares back, after four years following their purchase (the bylaws of the company may stipulate otherwise). This allows for a smooth exit for investors who do not wish to make long term investments into the company. 

CONCLUSION

The introduction of the SJSC as a new type of capital company to the Slovak legal system is a consequence of the European-wide trend of countries and their legal systems to have more start-up-friendly environments. It means new opportunities for start-up companies as well as natural persons who are interested in investing in companies with high innovation and growth potential. Among the main advantages are the flexibility of entering into and exiting from the SJSC, its relatively low registered capital, the option of issuing shares with individual rights, transparency through a publicly accessible list of shareholders maintained by the Central Securities Depositary of the Slovak Republic and the mixed nature of the SJSC combining the popular features of a limited liability company and a joint stock company. It remains to be seen whether start-up companies will make use of the advantages that the SJSC offers as a new type of company as of 1 January 2017.

By Michaela Stessl, Country Managing Partner, and Jan Farbiak, Associate, DLA Piper

Kochanski Zieba & Partners has successfully defended a writer for Newsweek Poland against charges that he had defamed Browary Regionale Jakubiak, a brewery near Krakow in Poland, in an article published in the magazine on September 29, 2014, and on the newsweek.pl. portal.

According to KZP, on February 10, 2016, the District Court for Warsaw – Mokotow acquitted the journalist of all charges against him, finding that the information contained in the disputed article was accurate, and the publication was created to protect an important public interest. The judgment is not final.

The journalist was represented by Kochanski Zieba & Partners Partner Konrad Orlik and Lawyer Agnieszka Chajewska.

Dimitrov, Petrov & Co. (DPCo.) has become the legal counsel of the Bulgarian National Bank (BNB).

According to a statement released by the firm, “the BNB is one of the oldest national institutions established right after the restoration of the Bulgarian state on January 25, 1879. The BNB plays a key role in the Bulgarian economy and takes care of maintaining the stability of the Bulgarian currency, and of strengthening and development of the banking and credit system in the country.” 

DPCo. announced that “the BNB will rely on Dimitrov, Petrov & Co.’s interdisciplinary expertise to deal with complex legal matters that the bank faces.”  

The DPCo. team advising the BNB consists of Hristo Nihrizov, the Head of the firm’s Banking & Finance Practice Group, Senior Associate Donka Stoyanova, and Associate Kristina Dimitrova, supported by Nikola Stoychev.

Poland’s Drzewiecki Tomaszek (DT) has advised Bank BGZ BNP Paribas Capital Development on its investment with the IPF Group and its founder and majority shareholder Mariusz Dolata, providing funding for further dynamic development of the Group.

According to DT, the IPF Group has been operating since 2008 and is a certified recruitment and temporary employment agency, with net income exceeding PLN 60 million. The IPF Group is engaged in the coordination and employment of specialist staff for customers in Poland, France, and Germany.

The DT team was led by Partner Rafal Roszkowski.

Austria’s Binder Groesswang and Hungary’s Lakatos, Koves and Partners have advised the Al Habtoor Group on its acquisition of the Hotel Imperial, a historic hotel on Vienna’s Ringstrasse, from the Starwood Group. Freshfields advised the Starwood Group on the deal. The signing took place on January 27, 2016, and the deal closed on February 15, 2016.

The Hotel Imperial Vienna was built as a private residence for the Prince of Wuerttemberg and transformed into a hotel for the 1873 World’s Fair. Guests since that time have, according to Binder Groesswang, included “emperors, kings, statesmen, composers, writers, and famous actors.” 

The Al Habtoor Group, based in Dubai, is active in the fields of construction, hotel, automotive, real estate, education, and publishing.

The “core team” at Binder Groesswang consisted of Partners Michael Kutschera and Markus Uitz, and Associate Philipp Kapl. The transaction involved also involved Partner Christian Wimpissinger, Horst Lukanec, Lawyer Michael Pinggera, and Associates Sabine Apfl, Hanna Oberbichler, and Regina Kroell, as well as Michael Ebner, Mona Holzgruber, Oliver Loksa, and Quido Gero.

The Lakatos, Koves & Partners team consisted of Partner Attila Ungar and Counsel Ivan Solyom. 

The Freshfields team consisted of Partner Thomas Zottl and Principal Associate Sandra Gutmann.

Image Source: assets.imperialvienna.com

Tark Grunte Sutkiene has successfully represented the Latvian Public Utilities Commission (PUC) in a case before the Administrative Regional Court initiated by AS Latvijas Gaze regarding regulations on the use of the natural gas transmission system and the natural gas underground storage facility in Incukalns. TGS reports that the Administrative Regional Court found for its client and terminated the proceedings.

The court’s decision means that the regulations issued by the PUC are valid and enforceable and Latvijas Gaze is required to ensure free third party access to the gas infrastructure, including transportation of natural gas from alternative sources outside Latvia.

On September 10, 2015, the PUC approved the regulations on the use of Latvijas Gaze’s natural gas transmission system, as well as the regulations on the use of Latvijas Gaze’s natural gas underground storage facility in Incukalns. The PUC’s obligation to approve the regulations derives from Article 15(7) of Latvia’s Energy Law, and Latvijas Gaze’s obligation to ensure third party access to gas infrastructure is set forth in Article 42.1 of the Energy Law, and is implemented on the basis of the European Union legal framework prescribing opening of the gas market. Latvijas Gaze argued that the PUC exceeded its competence by adopting the regulations, which — it claimed — therefore illegally provided third party access to its infrastructure, thus infringing on its exclusive rights to trade in natural gas guaranteed by the privatization agreements.

On November 17, 2015, the court of first instance granted an injunction in the case; however, following the appeal by the PUC the Supreme Court overruled this decision and denied Latvijas Gaze’s request for injunction. The Supreme Court has also upheld the PUC’s argument that the regulations on the use of gas infrastructure are normative acts rather than administrative acts, and thus  may be reviewed only by the Constitutional Court.

The Public Utilities Commission was advised and represented in court proceedings by Tark Grunte Sutkiene Partner Linda Strause and Associate Mara Stabulniece.

Sorainen’s Latvia office, working pro bono, has assisted 28 members of the Latvian start-up community establish the Latvian Start-up Association. The founding members include Uldis Leiterts, co-founder of Infogr.am and Fragmentic, the Airdog drone manufacturer, TechHub Riga (Latvia’s oldest and biggest co-working space), Latvia’s recent successful science exit Naco Technologies, and many other start-ups, organizations, and individuals.

In a statement released by Sorainen, Jekaterina Zaiceva, the chair of the Latvian Start-up Association board, declares that the ambition of the association is to help Latvia grow into “a hub of the north-eastern European startup movement.” 

Sorainen Latvia advised the founders on choosing the optimal organizational structure for the association and helped with registration formalities. Partner Eva Berlaus and Legal Assistant Toms Vilnis advised the founding members of the association. 

Zamfirescu Racoti & Partners has assisted Romanian aluminum producer Alro SA in securing two separate loans. The first one was extended by the Black Sea Trade and Development Bank (BSTDB) and valued at USD 60 million. Skadden Arps Slate Meagher & Flom advised on English law matters and Dentons advised the BSTDB. The second loan, which amounted to USD 137 million was from a syndicate of banks and was aimed primarily at refinancing a credit from the EBRD. Clifford Chance advised the consortium and RTPR Allen & Overy advised the EBRD.

The first agreement was announced on February 9, 2016 with the goal of the facility being to allow Alro to proceed with its investment program for 2016, which is focused on increasing the efficiency of its operations, reducing energy dependency, and improving overall competiveness. Ihsan Ugur Delikanli, BSTDB President explained: “Our financing will help Alro to grow its value-added production capacity while increasing energy efficiency and sustaining environmental compliance. I believe that this facility would also help Alro to position itself as a leading supplier to high-tech industries, including aero-space. Furthermore, it will contribute to the company’s expansion and will help create more jobs in Romania.”

Marian Nastase, President of the Board of Alro, added: “The loan we secured from the Black Sea Trade and Development Bank will support our program to continue the investments in modern technology, increasing the production capacities and the quality of the products, while reducing specific consumptions.”

According to an Alro press release, the company guarantees the loan with one or more immovable assets, movable mortgages, mortgages on the rights, and receivables from insurance policies covering the Company’s assets and concluded in relation with the goods that are object of the guarantees created, as well as mortgage on all the shares of Alum, owned by Alro and all the shares of Conef SA, owned by Alro. The loan has a maturity of seven years, with semi-annual instalments starting month 24 following the first utilization. Under the terms of the agreement, Alro will continue to conduct its business with due diligence, maintain accounting and cost control, pay all taxes in due time ,and implement an agreed Environmental and Social Action Plan.

The second loan, announced on February 12, 2016, was provided by a syndicate of banks led by Raiffeisen Bank International and Raiffeisen Bank Romania, acting as co-ordinator and Mandated Lead Arranger, and including Unicredit Bank, OTP Bank, Eximbank, Garanti Bank, Intesa Bank, and Transilvania Bank. The loan’s main purpose is the refinancing of the USD 120 million revolving facility concluded with the European Bank for Reconstruction and Development in 2010. 

The ZRP team advising Alro on both loans was coordinated by Partner Ioana Racoti and Managing Associate Elena Iacob, and included Senior Associates Iuliana Negoita and Larisa Popoviciu and Associate Andra Turtoi.

Skadden Partner Mark Darley and Associate Corrine Noel advised on English law matters related to the BSTDB loan.

Dentons Bucharest-based Partner Perry Zizzi advised BSTDB, along with attorneys from Dentons in Russia “involved due to the existing relationship with BSTDB.” Specifically, Moscow-based Partner Tim Stubbs also advised on the deal.

The RTPR Allen & Overy team advising the EBRD in relation to the second loan consisted of Partner Victor Padurari, Senior Associate Poliana Naum, and Junior Associate Alexandru Coras.

Clifford Chance confirmed it advised the banks but declined to provide further details. 

Lawyers from the International Legal Center EUCON defended the interests of JSC Ukrrichflot shipping company before the Supreme Administrative Court of Ukraine.

The claim on the cancellation of tax notice-decisions levied by the State Tax Inspectorate of Kyiv was filed by Ukrrichflot. The subject of these decisions was CPT and VAT liabilities in the total amount of UAH 2.5 million. The court rejected the findings of the Tax Inspectorate concerning Ukrrichflot’s alleged violation of the norms and methods specified in Article 39 of the Tax Code of Ukraine regarding unlawful pricing of business operations of the company. EUCON Attorney Volodymyr Bevza defended the interests of Ukrrichflot in court, and he was led by EUCON Managing Partner Yaroslav Romanchuk.

This article is powered by our friends at ujbl.info. You can find the original full article here.

 

White & Case has announced that former CEO of TV Nova Jan Andrusko has joined the firm as a new International Partner in Prague.

According to White & Case, “the hire of Jan Andrusko supports the firm’s strategic focus on further growth in M&A.” Andrusko specializes on mergers and acquisitions, general corporate matters, media law, dispute resolution, and international arbitration, with a particular focus on technology, media & telecoms, and infrastructure & energy. In addition to being active in private practice, Andrusko was Chief Executive Officer of Nova Group and Executive of CET 21 spol. s r.o. (TV Nova) from 2011 to 2013. He joins White & Case from the Czech law firm Kotrlik Bourgeault Andrusko, which he co-founded and where he served as Managing Partner. He obtained a Master of Law degree in 1999 from the Charles University Faculty of Law.

“Jan is a very experienced lawyer and highly respected figure in the Czech business community, whose career we have been monitoring for more than fifteen years,” said Partner Jan Matejcek, EMEA Regional Section Head, M&A/Corporate. “Our CEE corporate practice focuses on private equity, infrastructure, energy and the sector of technology, media and telecoms, and Jan’s expertise in all these areas is unique.”

“The arrival of Jan Andrusko will reinforce our leading position in M&A, while providing the partner team with unique expertise in the area of telecoms, media and technology,” said David Plch, Managing Partner of the Prague office. “It is namely these strategic areas that we expect to be highly active, with Jan to be CEE Regional Section Head of this practice.”

“From the long-term perspective, I consider White & Case to be the strongest global player in the area of legal services, not only in the Czech Republic, but also across the entire CEE region,” said Andrusko. “On this very strong and broad platform, I will have the opportunity to join the top regional and global team of partners and lawyers, and at this highest level of quality, to put to good use not only my years of experience in the provision of legal services, but also my practical experience and strategic knowledge from mergers and acquisitions, with a focus on media, telecoms and new technologies.”