legal developments in transition countries legal developments in transition countries ... issued on...

Legal developments in transition

countries An update of commercial and financial laws

July – December 2014

Recent legal developments in transition countries

An update of commercial and financial law

July – December 2014

(Published February 2015)

Countries covered in this update:

1. Albania pages 2-4 12. Kyrgyz Republic

page 20

23. Tunisia page 34

2. Belarus pages 5-6 13. Lithuania

pages 21-22

24. Turkey pages 35-36

3. Bosnia pages 6-7 14. Moldova

pages 23-24

25. Turkmenistan

pages 36-37

4. Bulgaria pages 7- 8 15. Morocco page 24 26. Ukraine pages 37-38

5. Croatia pages 8-9 16. Poland pages 24-25 27. Uzbekistan page 39

6. Egypt pages 10-13 17. Romania

pages 25-27

7. Estonia pages 13-14 18. Russia pages 27-29

8. FYR Macedonia

pages 14-15

19. Serbia pages 29-31

9. Hungary page 16 20. Slovak Republic

page 31-32

10. Jordan pages 16-17 21. Slovenia page 32-33

11. Kazakhstan

pages 17-19

22. Tajikistan page 33

Note: This document has been prepared by lawyers of the Office of the General Counsel.

If you have any questions regarding this publication please send an email to the Office of

the General Counsel at the EBRD [email protected]. To read about the EBRD’s Legal

Transition Programme go to www.ebrd.com/law

mailto:[email protected]

mailto:[email protected]

http://www.ebrd.com/law

Albania

Amendments to the law on entrepreneurs and commercial companies

Law No.129/2014 dated 2 October 2014 “On some amendments on the law no.9901, dated

14.04.2008 “On Entrepreneurs and Commercial Companies”, as amended; published in the

Official Bulletin no.163, dated 23 October 2014.

The Law is partially aligned with directives 2009/109/EC and 2009/101/EC of the Council

and European Parliament.

The main novelties of the Law are as follows:

(i) The amount of the registered share capital and value of the paid-in capital must be stated in

all correspondence addressed from the company to third parties.

(ii) New rules governing the invalidity of the company and its corporate acts, as well as statutes

of limitation for such invalidity claims are introduced. Under the amendments, the

establishment of the company might be declared invalid by the court if:

the documents for the initial registration are not in written form;

the founding partners/shareholders of the company do not have the legal capacity to

act;

the scope of the company’s activity is contrary to the Albanian legislation;

the required information is not indicated in the Articles of Association (i.e. the name of

the company, the subscribed contribution by each founder, the total value of the

subscribed capital by the founder and the scope/purpose of the company;

the share capital of the company, subscribed by the founding partners/shareholders, is

lower than the minimum/legal share capital; and

the subscribed share capital of a joint stock company is not paid before registration

with the National Registration Centre.

The invalidity of the establishment of the company does not affect the rights of the third parties

acquired after the registration of the company with the National Registration Centre (“NRC”).

(iii) the law provision on ‘piercing the corporate veil’ is also amended, so that an individual

shareholder or a member of the management, or a representative of the shareholder (where

the shareholder is a legal entity), shall be held personally liable for the company's debts if they

willingly commit one of the actions set forth in article 16 of law 9901/2008, for an unfair

benefit to themselves or a third party. The personal liability is limited up to the value of the

unpaid obligations of the company.

(iv) the share capital of a limited liability company is divided into a number of shares equal to

the number of shareholders, and each shareholder owns a single share representing a part of

the capital in proportion with the value of that shareholder's contribution.

(v) resignation of administrators and members of the management body are now subject to

specific and detailed rules. According to the new provisions, the administrator or a member of

the Management Board or Supervisory Board may resign at any time upon the written

notification addressed to either the respective Board (for administrators) or the General

Assembly (for members of the Management Board). In case a new administrator, or member of

the Management Board/Supervisory Board, is not appointed by the competent

decision-making body of the company before the effective date of resignation, the resigned

administrator/member of the Board notifies the said resignation directly to the NRC. The latter

must undertake the registration of this fact accordingly.

(vi) new grounds for dissolving a limited liability and joint stock company and details on the

dissolution process are now introduced.

(vii) specific rules on mergers (such as agreements for, and report of, mergers, increases of

share capital, a right for shareholders to request documents related to the merger, etc.) are

amended.

(viii) a shorter term in the liquidation procedure is specified.

(ix) the share transfer contract governing the transfer of shares does not have to be a Notary

deed.

The Law abrogates certain transitory provisions, under which companies were dissolved due to

failure to fulfil the requirements set out by article 230 of Law 9901/2008 (i.e. adopt the

corporate documents in line with the provisions of the new company law within three years

from the entry into force of said law, such deadline expiring on 20.05.2011). However, an

additional period of 3 months from entry into force of the Law is granted to companies

registered before 20.05.2008 to:

(i) approve the required amendments to their Articles of Association harmonizing them

with Law 9901/2008, as amended; and

(ii) file either (a) the said amendments with the NRC or (b) a statement from the

representative of the company declaring that the company's Articles of Association

meet the requirements of Law 9901/2008.

Failure to perform the actions under (i) and (ii) above will result in a penalty of 30,000 ALL

(approx. EUR 215) and the NRC will not file any corporate act nor perform any other service for

a company which has not complied with the above.

Amendments to the law on the mineral sector

Law no.134/2014, “On some amendments and additions of the Law No.10 304, dated

15.07.2010, “On the Mineral sector in the Republic of Albania”, as amended; published in the

Official Bulletin no.165, dated 28 August 2014.

This law introduces various amendments concerning certain parts of the existing mining law as

well as new clauses. Among the new provisions on concession agreements, the Minister is

entitled to (i) negotiate the extension of the agreement and propose its approval; and (ii)

decide on the extension of the mining permit (insofar as such extension is permitted by

applicable legislation).

Within one year of this amendment, the holders of the mining permits who exploit through

underground galleries of other mining-permit holders, must enter into an agreement as

provided in Section 35 of the law, or open their own underground galleries.

The subcontracting clause, not previously encompassed by the law until this amendment,

allows mining-permit holders to subcontract their right to use the mining permit for prospection

– exploration, for exploitation or for prospection – exploration – exploitation. The

subcontractor, chosen by the mining-permit holder, must be specialized in the subcontracted

service and must obtain the Ministry’s approval regarding his conformity to the legal, technical

and financial requirements.

In a noteworthy change, the Minister has now established a Complaints Unit in respect of

administrative penalties, as opposed to addressing the Head of the responsible department

under the old legislation. The Complaints Unit examines the administrative complaint, reviews

the evidence and, within 30 calendar days from the filing of the complaint, renders a decision

upon the respective case.

Law no. 134/2014 allows the change of the coordinates in the mining permit only with regard

to special cases in respect of permits issued on the basis of Law no. 7796, dated 17.02.1994,

“The Albanian Mining Law”, as amended.

Amendments to the trading of gas, oil and their by-products

Law no. 71/2014 “On some amendments and additions of the Law No.8450, dated

24.2.1999, “On the processing, transporting and trade of oil, gas and their by-products”, as

amended; published in the Official Bulletin no.124, dated 8 August 2014.

This Law provides additions regarding oil refineries, which are obligated to apply the standards

and technical conditions to the projects. The Ministry in charge for hydrocarbons shall approve

the changes to the scheme and technological characteristics of the refineries’ function and the

license transfer. The processing plants are legal persons, and require a processing license, as

regulated by the Council of Ministers.

In respect of sanctions, in cases when it does not constitute a criminal offence, an

administrative fine may apply, ranging from a minimum of ALL 100,000 (approx. EUR 716) to

ALL 10,000,000 (approx. EUR 71,600), and the activity of the infringer may be suspended or

the licence temporarily or permanently revoked.

An appeal against the revocation of the concession, processing permit or other kinds of

permits can be filed within 30 days of the date when the decision was notified.

Belarus

Agreement on the Eurasian Economic Union (EEU) ratified

On 9 October 2014, the Republic of Belarus ratified the Agreement on the Eurasian Economic

Union (“EEU”) signed by the Republic of Belarus, the Russian Federation and the Republic of

Kazakhstan on 29 May 2014. The ratification of the EEU Agreement implies a deeper

integration among the member states if compared with the Customs Union. The EEU

Agreement provides for free movement of goods, services and economic resources among the

EEU member states. In the course of 2015, the EEU member states are expected to be

amending their national legislation to, inter alia, adopt the EEU Customs Code aimed at the

unification of the customs regulations throughout the union. International conventions

relating to the WTO (including agreements on simplification of trade procedures) will be taken

into account for the purposes of the unification of the EEU customs regulations and

harmonisation of the national legislation. The EEU Agreement comes into force in Belarus from

1 January 2015.

Changes concerning transactions with Government Securities.

Amendments were introduced to the legislation governing the principal conditions of issue,

circulation and redemption of government bonds denominated in a foreign currency, as well as

government issued securities denominated in Belarusian rubles. From 18 September 2014, in

addition to the possibility of arranging a direct sale of bonds by the Ministry of Finance, or a

transfer or sale of bonds to banks for their subsequent re-sale, bonds now may be offered for

direct sales at JSC “Belarusian Currency and Stock Exchange”. According to Clause 4 of the

Resolution of the Council of Ministers of the Republic of Belarus dated 13 February 2014 No.

173 (ed. 12.09.2014) “On approval of Principal Conditions for Issuance of Certain

Government Securities of the Republic of Belarus”, any legal or physical person, either a

resident or non-resident of the Republic of Belarus may purchase such bonds and become a

bondholder.

Online Registration of Business Entities Introduced.

Pursuant to the Resolution of the Ministry of Justice No 197 dated 19 September 2014,

starting from 30 November 2014, state registration of Belarusian business entities (wherever

located) can be carried out online on the website of the Uniform State Registry of the Legal

Entities and Individual Entrepreneurs (http://egr.gov.by). Online registration is available for

most legal entities and all individual entrepreneurs and can also be used for, among other

things, registering amendments to constituent documents, changes to certificates of state

registration, and submitting electronic documents for clearing the change of name of a legal

entity and notification of the change of business address. The online registration portal is

expected to significantly facilitate and expedite the relevant procedures.

http://egr.gov.by/

Powers of Court Enforcement Officers to be broadened.

Court enforcement officers in the Republic of Belarus will be given additional powers allowing

them to efficiently recover debts from debtors within enforcement proceedings. A draft law on

amendments to the Code of Economic and Civil Procedure was initiated with the aim of

improving economic judicial procedures. After the respective changes are approved and

entered into force, the powers of court enforcement officers will be broadened. In particular,

they will be entitled to include the debtors in the wanted list, to enter private premises and land

plots in the presence of witnesses and accompanied by the representatives of internal affairs

bodies without a debtor's consent if a debtor blocks access to private premises. In addition,

the procedure of recovery of money and other property of the debtor is to be clarified and the

list of safeguards to ensure compliance with the requirements of a court order is to be

broadened.

Bosnia and Herzegovina

Key legal issues for the leasing market in Bosnia and Herzegovina

In Bosnia and Herzegovina, leasing is regulated by two laws: “The Law on Leasing of the

Federation of Bosnia and Herzegovina' (FBiH), and “The Law on Leasing on the Republika

Srpska” (RS). Leasing companies are monitored and licensed by the banking agencies of the

FBiH and the RS. Leases can also be provided by banks.

It appears that there are currently two major legal constraints affecting the business of leasing

companies'. The first one is related to taxation. A lease is more expensive than a loan, because

of the application of VAT on interest and the costs of the transfer of ownership. The second

issue relates to the permitting regime for the transportation business. Under the current traffic

law, all licenses related to road traffic must be applied for by the vehicle owner, i.e. the leasing

companies and not the lessee, which results in complications for the financing of trucks and

vans.

Free Trade Zones

Free trade zones in Bosnia and Herzegovina are governed by the Law on Customs Policy

(Official Gazette of B&H No. 57/04, 51/06, 93/08, 54/10 and 76/11), the Law on Free Zones

of BiH (Official Gazette of B&H No. 99/09) and the Law on Free Zones of RS (Official Gazette of

RS No. 65/03) or the Law on Free Zones of FBiH (Official Gazette of FB&H No. 2/95, 37/04

and 43/04).

These can be created upon a demand from national or foreign legal or natural persons. The

Ministry of Foreign Trade and Economic Relations and the Council of Ministers of Bosnia and

Herzegovina are the relevant authorities involved on the creation and the management

process.

Its creation will be subject to the free zone being considered as economically viable, i.e. the

value of goods exported from the free zone will have to exceed at least 50% of the total value of

manufactured goods leaving the free zone in a period of 12 months. In addition, business in

the area of free zone shall be carried on under special conditions in accordance with the laws

mentioned above and with the prior approval of the customs authorities.

Benefits for the users of free zone include exemption from VAT, as well as from charges for any

investment in the free zone, transfer of profit and transfer of investment. Imports into the free

zone are also exonerated from customs and tariffs.

Bulgaria

VAT registration scheme enacted

It was decreed as of 1 October 2014 that suppliers can register to use a new “mini one stop

shop (MOSS)” electronic portal of the Bulgarian National Revenue Agency.

The MOSS regime will allow businesses to report and pay VAT for all digital services supplied in

Member States where the particular business has no place of establishment.

Through the introduction of the MOSS regime new VAT “place of supply” rules will be put in

place for the supply of digital services (such as broadcasting, telecommunications and

e-services) from businesses to consumers. Digital services will be taxed in the location of the

consumer, and therefore will attract the VAT rate of the consumer’s Member State.

Registrations under the Moss regime will be activated as of 1 January 2015.

Amendments to the Public Procurement Act

Amendments were made to the Public Procurement Act (effective October 2014) to enhance

the protection of bidders’ personal data in public procurement procedures. More specifically,

the revised law requires the contracting authorities to maintain a buyer’s profile, which should

be made publicly available through online media. Whilst the PPA explicitly defines the limit of

which information should be made publicly available, a recent decision of the Commission for

Personal Data Protection has confirmed that the written consent of the buyer is needed prior to

uploading information relating to a buyer’s profile. The contracting authorities should take

into consideration the requirement for the buyer to provide its written consent when launching

tenders.

Competition Protection Commission inquiry into the insurance sector

In October 2014 the Competition Protection Commission (CPC) initiated an inquiry into the

insurance sector. The inquiry will look at the traditional cooperation between insurers, with a

view to investigating possible anti-competitive behaviour. The inquiry will analyse the effective

application of Regulation 267/2010 of the European Commission, which relates to block

exemptions of certain agreements in the insurance sector.

The main aims of the inquiry are to provide a clear definition of what constitutes the relevant

market, the affected services in these markets and their price formation, and an analysis of

the changes in the supply and demand on amendments in the legal framework and the state

regulation, as well as changes in the general economic environment.

The CPC expects the inquiry to identify anti-competitive behaviour in the insurance sector and

the reasons for such behaviour. The findings of the CPC are expected to be published and to

then serve as a useful platform for public discussions on these findings. Should the CPC find

anti-competitive behaviour in certain insurance operators, it may then open antitrust

investigations.

Croatia

Amendments to the Enforcement Act

On 15 July 2014, the Croatian Parliament adopted the Act on Amendments of the Enforcement

Act.

Some of the most important amendments are as follows:

- introduction of the public electronic auction for sale of property and movables, which

will be implemented and maintained by the Financial Agency ( FINA);

- if the debtor lives on the property which is being enforced, the debtor is given the

option to propose a different asset which can be enforced. If the property where the

debtor lives is nevertheless sold in the enforcement proceedings, the debtor may

continue to live as a tenant on such property for one year following the day the decision

on hand-over of property is rendered;

- price limits for the sale of property in the enforcement proceedings have been

increased – on the first auction the property cannot be sold for less than 4/5 of the

appraised value and on the second auction it cannot be sold for less than 3/5 of the

appraised value;

- the legal institute where the debtor was invited by the court to give statement about

his assets has been abandoned; new grounds to postpone the enforcement

proceedings have been introduced;

- the deadlines for enforcement proceedings over the properties are now explicitly

stated -- if the enforcement request is founded, the court must issue its decision within

15 days period and further actions (appraisal and sale) have to be done in 30 days

period; and

- change of the enforcement creditors without the debtor’s consent in case the claim

has been transferred to a new creditor is now possible (until now, in such scenario, the

enforcement proceedings would have been cancelled and the new creditor had to start

over).

New Act on Factoring in force

The Factoring Act entered into force on 8 August 2014 regulating the factoring business for the

first time in Croatia. As a result of a request made by the Ministry of Finance in July 2012 the

EBRD provided technical assistance for the reform of the factoring sector, in particular for the

development of the law.

The subject of factoring are existing and/or future, undue, whole or partial monetary claims

arising from the supply of goods and/or services provided domestically or abroad. Claims

receivables arising from loans cannot be the object of factoring.

Factoring may be performed by: (i) factoring-company having a registered seat in Croatia,

established as a Limited Liability Company or a Joint Stock Company with minimum share

capital of million HRK, contributed entirely in cash, which obtained consent from the Croatian

Financial Services Supervisory Agency (HANFA), (ii) credit institutions and (iii) foreign

factoring-companies under certain conditions.

Companies currently performing factoring activities have to align their business activities with

the Act within 12 months following the date the Act has entered into force. If that that is not

done, they can be fined with the amounts form HRK 200,000.00 up to 500,000.00. HANFA

has to adopted and issue approximately 15 by-laws regulating many issues in more details

within 6 months following the date the Act has entered into force.

Amendments to the VAT Law

In November 2014, the Parliament adopted the amendments to the VAT Law with effect from 1

January 2015. The main amendments are summarized below.

Starting from 1 January 2015, real estate transfer tax will apply on:

the sale of buildings and the land on which the building stands and

the sale of buildings and the land on which the building stands

Furthermore, all documents (e.g., contracts) related to the acquisition of real estate must be

submitted to the tax authorities.

Such an obligation must be fulfilled, even if the acquisition is not subject to real estate transfer

tax for the reason of establishing a systematic control over taxation of real estate transactions.

Egypt

Renewable Energy Law (Law 203/2014):

In December 2014, Egypt enacted a new Renewable Energy Law (Law 203/2014) which is a

major step towards establishing a comprehensive legal framework for renewable energy

projects.

The law envisages the following project structures (Art. 2):

Projects which are tendered and operated by NREA. So far, the majority of renewable

energy projects are owned and operated by the state.

Projects which are tendered by the (state owned) Egyptian Electricity Transmission

Company (ETC) on a BOO (Build-Own-Operate) basis. The private investor builds, owns

and operates the project and enters into a long term Power Purchase Agreement

(“PPA”) with ETC. Since 2009, BOO models have been used as an alternative to state

owned projects.

The establishment of projects by private investors who sell the electricity generated by

those projects to ETC on basis of the feed-in tariff enacted by Decree 1947/2014.

This structure is new, and takes advantage of the feed-in tariff enacted in October

2014.

Private investors can enter into direct PPAs with (large) consumers and will be granted

access to the grid for that purpose. This structure is also new and addresses the

pressing needs of energy intensive industries in Egypt (in particular cement).

The new law provides considerable flexibility in implementing renewable energy projects. It

also permits a gradual move away from state (NREA) administered projects to privately

financed projects.

The feed-in tariff was enacted in October 2014 and provides for a sophisticated pricing system,

differentiating between solar and wind projects as well as project sizes. The feed-in tariffs will

be granted for 25 years for solar projects and 20 years for wind projects. The pricing system is

complex. Key indicators which are relevant to international investors are:

Solar:

500 KW up to 20 MW: 0.136 USD

20 MW up to 50 MW: 0.1434 USD.

Wind:

From 0.0957 USD to 0.1148 USD during the initial five years and then between 0.0460 USD to

0.1148 USD for the remaining 15 years of the project, depending on the hours of operation.

Although the prices are determined in USD, the feed-in remuneration will be paid in EGP.

According to the formula used, the investor will have to bear part of the foreign currency risk. In

addition, a foreign investor will have to manage an EGP revenue stream. This is clearly a

compromise.

The government shall provide private investors with project land on basis of a usufruct

(manfa’). A private investor establishing a project larger than 500 KW must establish an

Egyptian project company under the Investment Law (Art. 3 and Art. 4).

The operation of a renewable energy plant requires a license which is granted by the Electricity

Regulatory Authority (ERA).

ETC (or the distribution company), as the case may be, is under a legal obligation to connect a

renewable project to the grid (Art. 6 (1)). In addition, they are under an obligation to purchase

the electricity generated by qualifying projects and, if the take-off is not possible, the investor is

to be compensated (Art. 6 (2)).

The Implementing regulations have yet to be issued by the Council of Ministers.

Mineral Resources Law

A Presidential Decree was issued on 9 December 2014 promulgating the new Mineral

Resources Law No. 198/2014 (the “Law”). This Law replaces Law No. 86/1956 on Mines and

Quarries. The Law is dependent on a significant number of regulations to be issued in the near

future to provide details on how it will be administrated.

The Law applies on mines, quarries as well as salt beds. Ores recovered by mining include

metals, metallic ores and gemstones.

The Law does not apply on petroleum materials and natural gas which are still governed by

Law No. 66/1953 regulating Fuel Materials. Although the Law does not mention expressly that

it applies to coal, this could be inferred from the exclusion of coal from the ores subject to Law

No. 66/1953 on Fuel Materials.

Scope of Application

The Law shall apply to exploration and exploitation agreements which were previously

concluded by virtue of a law and still in force. However, in case of any conflict between the Law

and such agreements, the provisions of the agreement shall prevail.

Existing exploration and exploitation licenses granted before the effective date of this Law shall

remain in force. However, the new rent value, royalty rates and license fees stipulated in this

Law shall apply on such existing licenses at the time of their renewal. In the meantime, the

government has the right to invite the licensees to negotiate with them the application of the

new values on their existing licenses.

Competent Administrative Authority

The Egyptian Mineral Resources Authority (the “EMRA”) shall be the primary body responsible

for regulating and supervising exploration and exploitation of mines. EMRA shall entertain the

same responsibilities in coordination with the competent governorates in relation to quarries

and salt beds located in the relevant governorate jurisdiction.

Exploration and Production Licensing

The Law provides for two main categories of mining licenses, that is, for (i) exploration; and (ii)

production operations. An exploration license is granted for performing general survey,

exploration and feasibility studies within the licensed area. A production operation license is

granted for performing mining, construction, processing, and refining operations.

Licenses for mines shall be approved by EMRA and shall be issued by virtue of a decision from

the competent minister. Licenses for quarries and salt beds shall be issued by virtue of a

decision from the competent governorate. All licenses shall be subject to the technical

requirements set by EMRA in accordance to the terms and conditions provided for in the Law

and its executive regulations.

Terms and Extensions

The period of the exploration license for mines shall be 2 years and may be renewed once for

the same period. The maximum period for production licenses for mines and quarries is

decreased from 30 years (under the predecessor law) to 15 years.

Competitive Bid Process

The Law deviated from the previous approach in granting mineral licenses on a

first-come-first-serve basis to allow the grant of the exploitation licenses through a competitive

public bid. The rules and procedures of the bidding process shall be detailed in a special

regulation to be issued by the Prime Minister. The Law also provided that a special law shall be

needed for licenses in the following cases:

Licenses for an area exceeding 16km2.

Licenses for precious minerals and gemstones.

Renew of the production license after the expiry of the 15 years maximum term.

Licenses that are not restricted by the provisions of the Law.

Annual Rent and Royalty Fee

All licensees are required to pay annual rent as well as a production royalty to the competent

authority. The value of the annual rent shall be determined in the executive regulations of the

Law, and shall be paid in advance. The Law allows the competent authorities to reconsider and

suggest the amendment of the rent value each 4 years after taking the approval of the Prime

Minister.

The Law abandoned the fixed royalty scheme that was previously followed and replaced it with

a percentage royalty to be calculated on the basis of the annual production value. A minimum

royalty not less than 5% of the annual production proceeds shall be payable to EMRA. This is in

addition to 1% of the annual production value to be specified for the social development of the

governorate in which the exploitation area exists.

Governmental Supervisory Role

To guarantee the seriousness of the licensees in implementing the operations, the competent

authority may require it to submit a quarterly report about its employees, the extracted

materials and the amount transported, stored or sold thereof, as well as their average sale

price. This information shall be kept confidential and may not be disclosed unless in the

situations provided for in the law.

Transfer Restriction

The Law prohibits the transfer of the exploration and production license to a third party without

the prior approval of the competent authority. In this case the assignor shall pay double the

amount of the annual rent to the competent authority.

Revocation of the License

The competent minister may upon the approval of EMRA revoke the license in case of violating

the Law or the license. The license may also be cancelled, inter alia, in case the licensee did

not commence the operations for a period exceeding one month from receiving the land, or in

case of suspension of operations for more than three consecutive months, or lack of

seriousness for more than six months.

Penal Provisions

The Law also regulates consequences for violating the provisions of the law. A violation can be

punished by both administrative and criminal sanctions, including revocation of the license,

expropriation of the materials used in the as well as fines and imprisonment.

Estonia

E-residency

On 1 December 2014, the amendments to the Estonian Identity Documents Act entered into

force enabling all persons irrespective of their citizenship and actual place of residency to

apply for the Estonian e-residency and digital ID. Such digital ID confers some flexibility in the

everyday management of a company established in Estonia.

Investment Fraud: amendment to the Criminal Code

The furnishing of erroneous or false information as well as the omission to furnish information

to a “pre-determined group of individuals” (not defined) or the omission to present material

circumstances, have become a criminal offence. They constitute an investment fraud under

the new act entering into force in January 2015. The furnishing of erroneous or false

information or the abovementioned omission need to occur before any investment in

companies’ shares and bonds, shares of a syndicated loan or shares in an investment fund.

“Investment” is not precisely defined. It is expected that case law will refine the notion of

“investment”.

Insurance

A new Insurance Activities Act has been prepared in the scope of a pan-European reform of the

insurance regulation referred to as Solvency 2. The reform also contemplates some

amendments to the Law of Obligations Act. Amongst other amendments, it would become

illegal for a financial institution to require that the provision of a loan is subject to a related

insurance policy contracted with a specific insurance company or broker recommended by the

financial institution.

FYR Macedonia

Profit Tax Law

On 21 January 2014, the Macedonian Parliament adopted certain amendments to the Profit

Tax Law. The Law was published in the Official Gazette No. 13 on 23 January 2014 and

entered into force on 31 January 2014. According to the Law, dividends paid to resident

companies are subject to a final withholding tax of 10%. The Law levels the field for taxation of

all dividend distributions, regardless of the tax residency of the receiving entity or individual.

A further amendment to the Profit Tax Law was published in the Official Gazette No. 112 on 27

July 2014 and entered into force on 1 January 2015. This Law introduced significant changes

to the corporate tax regime. Key changes include:

Expansion of related party definition

Effective 1 January 2015, any foreign legal entity from a low-tax jurisdiction would

automatically be considered as a related party to a domestic taxpayer regardless of

whether there exists control, management or a capital ownership relationship between

the foreign and the domestic entity.

Taxation of realized profits

The annual corporate tax base has been modified and now comprises the profit the

taxpayer realizes in the year increased by the amount of the non-deductible expenses.

There is no change to the list of the non-deductible expenses. The law is effective as of

1 January 2015, and will apply to taxpayers’ annual corporate income tax obligations

for 2014.

Tax incentive for reinvested profit

Starting from 2015, a tax incentive will be available to taxpayers reinvesting the net

profits in business-related tangible or intangible assets. Under this measure, the

corporate tax base will be reduced by the amount of the previous year’s profit which is

reinvested. The incentive will be forfeited if the ownership of the asset acquired is not

kept for at least five years.

Loss carried forward

As of 1 January 2015, a tax loss would be eligible to be carried forward and offset

against a taxpayer’s profits for the subsequent three years. The carry forward of the

losses is allowed under the condition that the taxpayer utilizing the deferred tax asset

does not undertake corporate restructuring.

VAT Law

On 23 July 2014, the parliament amended the VAT Law to reduce the VAT level for a number of

products. The Law was published in the Official Gazette No. 112 on 25 July 2014 and entered

into force on 1 August 2014.

The reduced VAT rate of 5% now applies to the supply of:

Fodder, fodder additives and livestock

Baby products (e.g., baby beds, strollers, transporters, baby loungers and car seats)

School accessories (e.g., backpacks, notebooks, pens and pencils, and workbooks)

Excise Law - New rules for mineral oil retailers

On 12 November 2014, the parliament amended the Excise Law. The amended law was

published in Official Gazette No. 167 on 14 November 2014 and entered into force 8 days

later. The changes made were as follows:

Excise duty on petroleum coke is introduced in order to stimulate the use of less

polluting and more environmentally friendly fuels.

Importers of mineral oils must submit a certificate from a foreign tax or customs

authority, stating the content of imported mineral oil and the amount of each

component by volume.

Mineral oil retailers must keep records of the tax identification numbers of legal entities and

personal identification numbers of individuals in the case of purchases of more than 20 litres

of mineral oil.

Hungary

Public Procurement Law Changes.

Certain changes came into effect in public procurement law from 30 September 2014,

including:

Loan transactions entered into by contracting authorities

Public procurement obligations no longer apply to loan transactions by contracting authorities,

whether related to issuing, purchasing or transferring securities or other financial instruments.

This change incorporates EU public procurement directives (2014/24/EU and 2014/25/EU)

into Hungarian law, except that it does not extend the exemption from procurement obligations

to financial services relating to real estate acquisitions. Accordingly, a further amendment to

legislation will be required.

Qualifications of the Chairman of the Public Procurement Arbitration Board

Candidates for the position of chairman of the Public Procurement Arbitration Board need only

have at least 5 years of public procurement experience (rather than 10 years of experience, as

previously) or to have held a state office for 3 years.

Jordan

Income Tax Law No.34 of 2014

A new Income Tax Law was published in the official gazette on 31 December 2014; this

was enacted and came into force on 1 January 2015. There are several changes

introduced by the said law which include, inter alia, changes to the income tax rates

applicable to corporates and individuals. The new law also introduced an increase in the

withholding tax applicable to income payments to non-residents from 7% to 10%. Such

tax must be deducted and paid to the Income Tax Department by the party paying the

non-resident. Such withholding is considered as payment on account of actual income

tax payable by the non-resident, where the applicable income tax rate differs depending

on the activity performed. The Income Tax Department is authorized in the Income Tax

Law No. (34) of 2014 to issue instructions that would consider the withholding amounts

as final payment. It is our understanding that the Income Tax Department intends to

issue such instructions; however, no assurances can be given in this regard.

Investment Law No. 30 of 2014

The Investment Law No. (30) of 2014 (“Investment Law”) was recently enacted and came

into force on the date of its publication in the official gazette, which was 16 October

2014. Although the Investment Law repealed the Provisional Investment Promotion Law

No. (16) of 1995 and the Provisional Investment Law No. (68) of 2003, the provisions

relating to sectors, privileges, exemptions and procedures provided for in the aforesaid

legislations remain in force with respect to projects in the Kingdom including those

pertaining to the Incentives Committee until the Council of Ministers issues a new

regulation referred to in paragraph 4(b) of the Investment Law which relates to the

incentives and privileges granted under the Investment Law (other than incentives and

privileges applicable to registered entities in the development and free zones). With

respect to companies operating in the Development Zones, the Free Zones and the

Industrial Zone (other than Aqaba Special Economic Zone) certain incentives and tax

benefits are specified under the provisions of the Investment Law itself.

Public Private Partnerships Law No. 31 of 2014 (“PPP Law”)

Jordan did not have a single piece of legislation setting out the legal framework for

PPP(s). The PPP Law came into force on the date of its publication in the official gazette

on 2 November 2014. The law was enacted to allow for the contractual partnerships

between public and private sectors in all economic sectors other than certain sectors to

be excluded by the Council of Ministers. The law regulates and provides for the

requirements and limitations of forming such contractual partnerships (e.g. such PPP

arrangements should not be for more than 35 years). Certain regulations and

instructions should be issued to regulate the procedures and PPP project cycle.

Administrative Courts Law No. 27 of 2014

This law came into force on the date of its publication in the official gazette on 17 August

2014. The law has repealed the Higher Justice Courts Law No. 12 of 1992 which used to

allow for judicial review of administrative decisions before the Higher Court of Justice and

the decisions issued by the said court were considered final. The Administrative Courts

Law No. 27 of 2014 established the Administrative Court and the Higher Administrative

Court where judicial review of administrative decisions can now be conducted in two

stages and decisions issued by the Administrative Court can be appealed before the

Higher Administrative Court.

Kazakhstan

Eurasian Economic Union

The Treaty between Kazakhstan, Russia and Belarus on the Eurasian Economic Union ("EEU")

dated 29 May 2014 became effective on 1 January 2015. Armenia has signed the Accession

Agreement to the Treaty dated 10 October 2014 and became a member of the EEU on 2

January 2015. Kyrgyzstan and Tajikistan are also planning to join the EEU.

EEU is an international organisation for regional economic integration. EEU's aim is to provide

for the free movement of goods, services, capital and labour and conduct coordinated,

harmonised and unified policy in certain sectors of economy.

Amendments to the Subsoil Use Law

Law of the Republic of Kazakhstan "On Subsoil and Subsoil Use" dated 24 June 2010 was

amended on 29 December 2014. The amendments are aimed at simplifying and to liberalize

existing regulations.

Main amendments include:

The state's pre-emptive right to acquire alienated subsoil use rights as well as

associated objects (i.e. shares/participatory interests) will now apply only to strategic

deposits and subsoil blocks. However, alienation of subsoil use rights as well as

associated objects still remains subject to prior approval by the competent authority.

Breach of obligations under the project documents is no longer a ground for

termination of a subsoil use contract. However, the breach of financial obligations by

more than 70% for two consecutive years can now result in termination of a subsoil

use contract.

Simplified procedure of awarding the subsoil use right (via auction) is introduced.

The winner of the auction will be determined based on the highest signature bonus

bid.

New Law on Permits and Notifications

The Law of the Republic of Kazakhstan dated 16 May 2014 No. 202-V "On Permits and

Notifications" came into force on 21 November 2014. The new law replaced the Law "On

Licensing" dated 11 January 2007. The new law is aimed at unifying and simplifying existing

system of permits and reduce their number.

Below are the main changes introduced by the new law:

All permits and notifications are divided into three categories depending on the

performed activity's danger level: (i) licenses for high level of danger; (ii) permits for

medium level of danger and (iii) notifications for low level of danger.

The law provides for an exhaustive list of permits and notifications. It should be

noted, however, that this list does not cover permits and notifications in the areas of

technical regulation, legal entities registration, and currency control, registration of

security issuances, natural monopoly tariffs as well as state border and state

secrets.

Permits are now assumed to be grated in case the relevant authority has not

responded (granted or denied the permit) within a period stipulated by the law, save

for certain exceptions (e.g. permits related to nuclear energy objects and narcotic

drugs).

Legalisation of Property

The Law of the Republic of Kazakhstan dated 30 June 2014 No. 213-V "On Amnesty of

Kazakhstan Citizens, Repatriates (Oralmans) and Individuals Having Kazakhstan Permanent

Residence Permit in Connection with the Legalisation of Property" came into force on 1

September 2014. Legalisation will help to reduce the size of "shadow" economy and attract

additional funds into the budget.

Under the legalisation campaign the state will recognise the rights to property ejected from the

lawful economic turnover with the purpose of concealment of income and/or property where

the right to the property was not duly formalised/documented or property that was

formalised/documented to an inappropriate person. The property that is subject to legalisation

includes money, securities, participatory interests in legal entities and immovable property.

It should be noted that assets acquired as result of certain criminal offences (including against

person, family and minors, constitutional and other rights and freedoms, human security, basis

of constitutional system and state security, property, justice and punishment execution) as well

as ecological, transport, military and corruption offences cannot be legalised. Assets the rights

to which are being challenged in the court and monies received under loan agreements are

also excluded from legalisation campaign.

World Bank's Doing Business Rating

On 23 July 2014 the Prime Minister approved the plan for Kazakhstan to enter the top 30

countries of the World Bank's Doing Business rating by 2016.

The plan includes the following main steps:

Abolishing the requirement for notarial certification of the samples of a legal entity's

authorised persons' signatures and replacing it with bank's certification;

Shortening the terms for state registration of immovable objects;

Shortening the terms for import and export formalities; and

Making electronic submission available for a greater number of tax reports.

Concession Objects Having Special Significance

The Government's Decree No. 1060 "On Approval of the List of and Criteria for the Concession

Projects to be considered as Having Special Significance" was adopted on 7 October 2014 and

became effective on 24 October 2014.

Creditors of concession projects classified as having "special significance" would be able to

enter into direct agreement with the concession provider and the concession holder.

The list currently includes only one project – construction and operation of the Greater Almaty

Ring Road (BAKAD).

The criteria for concession projects to be considered as having "special significance" include:

Concession object's technical complexity;

Social importance;

Concession project is implemented with regard to state-owned objects and/or the

beneficiaries of such projects are two or more regions, cities of republican

importance, capitals; and

Construction (reconstruction) of the concession object will cost more than

4,000,000 monthly calculation indexes

Kyrgyz Republic

The Ministry of Economy proposes to provide the possibility for limited liability companies (LLC)

to create board of directors

On August 27, 2014 the Ministry of Economy submitted for public discussion the draft

Regulation “On the draft Law of the Kyrgyz Republic “On Amendments and Additions to Certain

Legislative Acts of the Kyrgyz Republic”.

Amendments and additions were proposed to the Civil Code of the KR and to the Law of the KR

No. 60 “On Business Partnerships and Companies” dated November 15, 1996. It was

proposed to establish the possibility to create board of directors in LLC. Therefore a business

entity of the mentioned type will have the right to create board of directors at its own option.

The draft law contains recommendations with regard to the powers of this body. Specific list of

powers of board can be determined by charter of company.

According to the explanatory note, the draft Law was aimed to introduce principles of

corporate management in LLC and development of business activity in the Kyrgyz Republic.

Mining

The Government of the Kyrgyz Republic has simplified a number of requirements to investors

in the mining industry

In order to improve the investment climate, the Government of the Kyrgyz Republic has

reduced the number of requirements for mining investors. The respective decree was signed

by the Prime Minister Djoomart Otorbaev.

It is planned to delineate authority to perform certain types of expertise to create a more

comfortable environment for the acquisition of licenses and the package of geological

information. In addition to attracting investment it is planned to simplify the procedures for

participation in tenders and auctions for foreign legal entities. A measure helping to avoid extra

costs in terms of the classifieds of tenders and auctions is taken. In addition, the rate for

distribution of total sum of the tender and auction is revised to increase up to 5% of the funds

transferred to the special account of the working body of the commission, and to reduce to 3%

- to the special account for the development of the mineral resource base of the Kyrgyz

Republic.

Lithuania

Joining the Euro zone

On 17 April 2014 the Lithuanian Parliament passed the Law on Euro Adoption in the Republic

of Lithuania No. XII-828 (the “Law on Euro Adoption”). On 23 July 2014 the Council of the

European Union gave its green light to adoption of the euro as of 1 January 2015. The

conversion rate has been set at 3.45280 Lithuanian litas to the euro.

Under the Law on Euro Adoption, until 30 June 2015 all traders must maintain dual pricing (in

euros and litas) throughout all stages of the purchase process. It is a mandatory requirement

for all types of goods or services offered as well as for all payment methods (online, e-money,

etc.). As of 1 January 2015 traders must not make payments to customers in litas and must

make refunds and returns in euros. All commercial contracts in litas remain valid for their

original term but values in litas will mean the value in euro converted in line with the above

fixed conversion rate.

In furtherance of the Law on Euro Adoption, on 14 October 2014 the Lithuanian Seimas

passed the Law on the Redenomination of the Nominal Value of Share Capital and Securities

of Private Limited Liability Companies and Public Limited Liability Companies and on the

Amendment of the Articles of Association of these Companies No. XII-1223 (the

“Redenomination Law”), which came into force on 1 January 2015. The Redenomination Law

provides that the litas-denominated nominal value of shares and bonds (including convertible

bonds) of companies established prior to 31 December 2014 shall be converted into euro in

line with the Law on Euro Adoption. A change in the value of share capital resulting from

conversion and rounding will not be treated as an increase or decrease in share capital but

must be accounted for as income if the change is negative or as an expense if the change is

positive.

The amendments related to the conversion of share capital into euro must be introduced in the

articles of association of the companies and registered with the Register of Legal Entities by 31

December 2016. The relevant changes should be also made in the lists of companies’

shareholders, in the security account entries of companies with uncertificated shares and in

the shareholders registers of companies with certificated shares. Based on the request of

shareholders, companies with certificated shares must replace the certificated shares with

new ones.

Amendments to the Civil Code

The Lithuanian Parliament has passed amendments to the Civil Code expanding the list of

transactions which must be certified by a notary public. As of 1 January 2015, agreements for

sale and purchase of shares in private limited liability companies must be certified by a notary

public if: (i) 25% or more of total shares in the company are being sold, or (ii) the shares are

sold at a price higher than EUR 14,500. However, even if these criteria are met, the notarial

certification is not required if shares are registered with the Lithuanian Central Securities

Depository and personal securities accounts of shareholders are kept by licensed account

managers (commercial banks or securities brokerage firms).

Amendments to the Law on Companies

On 5 June 2014 the Lithuanian Parliament passed amendments to the Law on Companies,

most of which came into force on 17 June 2014 with some still to become effective on 1 July

2015. The amendments can be summarised as follows:

(i) Corporate governance

All public limited companies will have to have at least one collegial body: a Management

Board or a Supervisory Council. In companies with no Supervisory Council, certain

supervisory functions (like supervision of managerial activities, proposals for the

company’s manager to cancel a decision that violates legislation or a decision of the

Management Board or shareholders, etc.) can be assigned to the Management Board.

More than half of members of the Supervisory Council (or of the Management Board if

certain supervisory functions were assigned to it) must be independent, i.e. such

members must not be in an employment relationship with the company. The

Management Board has been deprived of the right to decide on the company

restructuring in certain cases when such decision has to be adopted by the General

Meeting of Shareholders in its exclusive competence.

(ii) Audit of companies

For auditing their annual financial statements and performing other acts referred to in

the Law on Companies, companies can hire not only audit firms but also certified

auditors (natural persons holding the title of certified auditor issued in line with the

procedure prescribed by law).

(iii) Financial assistance for the acquisition of shares in a company

Companies have been allowed to financially assist their own employees and employees

of their parent or subsidiary companies (except for members of the management

bodies of those companies) in order to enable them to acquire shares in such

companies.

(iv) Acquisition of its own shares by a company

Before the amendments, the Law on Companies prohibited a subsidiary from

subscribing for and acquiring shares in the parent company, while the amended law

prohibits only subscribing for such shares. Shares acquired by a subsidiary in the parent

company are now considered to have been acquired by the company itself. In addition,

where shares in a company are acquired by someone acting in their own name but in

the interest of the company, the shares are considered to be acquired by the company

itself as well. Meanwhile, if someone acting in their own name but in the interest of the

company subscribes for those shares, the shares will be considered to have been

acquired by that person.

Moldova

Reform of security law over movable assets

Law on Pledge no.449-XV dated 30 July 2001 was amended by the Law on amendment of

certain acts, no. 173 dated 25 July 2014 (effective as of 8 November 2014) to reform the

Moldovan proprietary security law over movable assets. The reform did not however affect

mortgage over real estate.

One of the main objectives of the reform is to allow borrowers to borrow more against their

assets. To this effect:

a term in a pledge agreement stating that the pledgor cannot create a lower ranking

pledge in favour of another lender or that the pledgor cannot dispose of its pledged

movable asset is unenforceable. So no consent of the pledgee is required for these

transactions by the pledgor;

a pledge created to subsequent pledgee will be 2nd ranking, except where the law

recognizes to it super priority over the existing (1st ranking) pledgee. Super priority is

gained where a pledge is created in favour of a lender that finances the acquisition by the

pledgor of a new movable asset.

Another objective was to consolidate the various pledge registries (circa 5 at the time) into a

single Registry of Movable Proprietary Security largely based on the former Registry of Pledge

over Movable Assets held by the Ministry of Justice and operated by public notaries. For

example, after the reform, pledges over intellectual property or over shares will not be

recorded in the ownership registries of these assets, but in the single Registry of Movable

Proprietary Security.

Finally, the reform offers larger enforcement opportunities to a pledgee:

if the pledge agreement explicitly so provides (enforcement formula), the pledgee may bypass

the judicial enforcement process and enter into possession of the collateral by using the

services of a bailiff;

if the collateral consists of property rights, in addition the sale by way of assignment, the

pledgee may collect under the property right as if it were the original creditor;

if the collateral consists of funds on a bank account, a control agreement must be

entered into among the pledgee and the bank of the pledgor. Enforcement may occur

may simple collection from said account by pledgee.

Lowering of thresholds applicable for regulatory approval for acquisition of equity in Moldovan

banks

By virtue of the Law No. 180 dated 25 July 2014 and Law No. 187 dated 28 September 2014

(amending the Law on Financial Institutions No. 550 dated 21 July 1995) the threshold for an

acquirer of voting shares in a Moldovan bank to seek regulatory approval has been lowered

from 5% to 1%. Thus, any acquisition or increase of equity interest reaching the thresholds of

1%, 5%, 10%, 20, 33 and 50% or becoming a subsidiary will require the prior permission of the

National Bank of Moldova.

Also, a new ground for withdrawing a bank’s license by the National Bank of Moldova is

introduced, namely the reorganization and the disposal of share representing 25% or more of

the share capital of the relevant bank. One of the grounds for initiating the liquidation of a

bank by the National Bank of Moldova is precisely delimited to the circumstance when the

regulatory capital is less than 1/3 of the minimum amount set out by the regulation.

Moreover, the claims and the guarantees offered by the Ministry of Finance will enjoy priority

recovery after the claims of the National Bank of Moldova but before any other creditor of a

bank, as expressly stated by the law.

Morocco

In November 2014, Casablanca's international financial centre, Casablanca Finance City,

officially launched the Casablanca International Mediation & Arbitration Centre (CIMAC). The

creation of this new centre for mediation and arbitration dedicated to the resolution of

international commercial disputes aims to further position Casablanca Finance City as a

regional financial hub and reinforce Morocco’s role as a destination of choice for foreign

investment.

The Casablanca Finance City project was launched in 2010 and aims to attract companies

operating in financial and nonfinancial services at either a regional or an international level by

providing advantages such as tax incentives, streamlined visa and work permit application

processes, and free management of assets in foreign currencies from foreign sources.

Poland

Simplified accounting for micro-undertakings

The Accounting Law (Ustawa o rachunkowości) was amended in September 2014 in order to

ensure the compliance of the law with the provisions of EU Directive 2013/34/EU on the

annual financial statements, consolidated financial statements and related reports of certain

types of undertakings, with the main purpose to reduce the administrative burdens arising

from accounting requirements for micro-undertakings. The amendments allow certain entities

(including individual entrepreneurs, civil law, general and professional partnerships to qualify

as micro-undertakings and to benefit from simplified accounting under certain conditions.

Amendments to the law related to gas trading

In July 2014, the Polish President signed into law an amendment to the Polish Energy Law,

which will enable PGNiG, the Polish state-owned oil and gas company, to spin off its retail

business to form a new entity which will purchase gas from PGNiG. The spin-off will allow

PGNiG to comply with its legal obligations to trade a certain volume of high-methane gas on the

power exchange. The new retail entity will apply existing tariffs until new ones are approved by

the Polish regulator. The purpose of the amendments is to enhance transparency of the

wholesale market and the liquidity of the power exchange market by adding credibility to the

price set by the market.

Changes expected to the Polish Renewable Energy Sources Act

The draft act establishing a new regime for renewable energy sources is still being processed

by the Polish Parliament and will be submitted to the second chamber’s vote during 2015. The

current support system relies on green certificates, which represent tradable instruments

certifying energy volume generated from renewable sources. Under the current support

scheme, energy traders and producers have a legal obligation to obtain a pre-determined

percentage of electricity from renewable sources. Electricity companies can meet this

obligation by acquiring green certificates and having them redeemed by the Polish energy

regulator. The new support regime would replace the green certificates by an auction system

pursuant to which support (in the form of feed-in premiums or contracts for difference between

strike and market prices) will be awarded to pre-qualified suppliers of renewable energy in a

competitive bidding process. It is expected that the new support scheme will come into force

on 1 January 2016 and that both the green certificate system and the auction-based scheme

will co-exist until 2035 or, for off-shore wind farms only, 2040.

Romania

New Insolvency Law

The new Romanian insolvency code, passed as law no. 85/2014 (the Insolvency Code),

entered into force as of 28 June 2014. The Insolvency Code was created following the

Constitutional Court finding that the Emergency Ordinance of the Romanian Government No.

91/2013 on insolvency was unconstitutional. A number of provisions from the

unconstitutional Ordinance have been maintained. The Insolvency Code consolidates the vast

majority of the insolvency provisions in Romanian legislation (there is slightly less

consolidation in relation to pre-insolvency matters) in relation to corporates, credit institutions,

insurance and reinsurance companies, as well as cross-border insolvency proceedings.

The Insolvency Code only applies to insolvency proceedings opened after 28 June

2014. Proceedings commenced prior to this date continue to be governed by the previous

legislation, namely Law no. 85/2006.

A key aim of the Insolvency Code is to cut down abusive use of the insolvency proceedings by

the participants (debtor, creditors and official receivers); and to provide a clear framework and

procedures for the judiciary and participants. A minimum debt threshold for establishing

insolvency proceedings has been introduced at RON 40,000 (approximately EUR 8,900) which

must be due and unpaid for 60 days.

RASDAQ Market Activity to Cease

Law no. 151/2014 on the clarification of the legal status of stock traded through the RASDAQ

Market or through the unlisted securities market in Romania entered into force on 27 October

2014. According to the law, the activity of the RASDAQ Market and trading of stock on the

unlisted market shall cease within 12 months of its entry into force.

The executive boards of the companies who hold shares on RASDAQ or on the unlisted stock

market are obliged to summon and hold extraordinary shareholders’ meetings within 120 days

as of the entry into force of the law, in order to debate the situation which is reported to have

arisen from the lack of a clear legal framework for RASDAQ. Should the shareholders fail to

reach such a decision, they have the right to withdraw from the company. Furthermore, if the

shareholders approve taking the legal steps to have the shares admitted for trading on a

regulated market which is authorized by the Romanian Financial Supervisory Authority (FSA),

the company must present the FSA with an admission project for approval and, should the FSA

reject the admission of the stock on the regulated market, the shareholders have the right to

withdraw from the company.

The law, albeit controversial, comes after a long period of time of uncertainty concerning the

legal status of RASDAQ following the evolution of the capital markets legislation, also in line

with European Union law. To the extent the companies previously listed on RASDAQ comply

with the relevant requirements, it is envisaged that they will be listed on the Bucharest Stock

Exchange or on an alternative trading system.

Energy Efficiency

Law no. 121/2014 on energy efficiency (EE Law) entered into force on 4 August 2014. The EE

Law aims to create a legal framework for the development and implementation of national

policy in Romania on energy efficiency in order to achieve the national target for increasing

energy efficiency. A target is to reduce energy consumption by 19% by the year 2020. In

implementation of the law, an Energy Efficiency Department was established under the

Romanian Regulatory Authority for Energy (RAE), by order of the President of the RAE.

In order to encourage investment in renovation of residential and commercial buildings, both

public and private, the EE Law establishes a long-term strategy which focuses mainly on the

energy performance of buildings. The EE Law also envisages the adoption, between 1 January

2014 and 31 December 2020, of energy efficiency policy measures aimed at achieving energy

savings each year of 1.5% of the total volume of annual sales of energy to consumers (who

purchase from all distributors or providers), and calculated as an average for the 3 years

immediately prior to 1 January 2013.

Energy policy measures include: independent energy audits; training energy auditors; energy

efficiency training and education of consumers; standards and rules aimed at improving

energy efficiency products and services, including buildings and vehicles; energy labelling

schemes; regulations or voluntary agreements aiming at the application of technology or

techniques for energy efficiency; development of energy efficiency service ESCo companies;

setting up a special fund for investments in energy efficiency; and systems and tools for

financing or tax incentives that lead to the application of technology or techniques for energy

efficiency.

New Competition Rules

The Romanian Competition Council has revised its merger control rules, having amended the

Regulation on Economic Concentrations through Order no. 438/2014. The new rules are

aimed at reducing the administrative burden for applicants and the Romanian Competition

Council. It is anticipated that the number of mergers would increase following the simplified

procedure. The new rules emphasise the importance of pre-notification discussions, for

example, it is recommended that the merging parties engage in prior discussions with the

Romanian Competition Council at least two weeks prior to submitting the notification.

Russia

Concessions

Concession Agreements: on 21 July 2014 the President issued Federal Law No. 265-FZ

amending the Law “On Concession Agreements” and certain other legislative acts (the “Law”).

The Law aims to ensure more favourable treatment of private investments in projects carried

out in the Russian Federation on the basis of concession agreements concluded between a

private investor and a public partner (grantor).

The Law gives the concessionaire pre-emptive rights to purchase a concession facility if it is

included in the forecast privatization plan after expiry of the term of the concession agreement.

This right is not subject to an assignment and is subject to the appropriate performance by the

concessionaire of the terms of the concessions agreement.

The law changes the status of mandatory model concession agreements to guidelines thereby

cancelling their mandatory application.

The Law now allows the grantor’s payment (which is currently allowed only with respect to

highways and related infrastructure facilities) to be included into a concession agreement with

respect to any concession facility if this is determined in the tender criteria. Moreover the Law

abolishes previously existing provisions according to which a concessionaire is not allowed to

charge the ultimate users of the concession facility if the grantor’s payment applies.

The Law allows assignment or a concessionaire’s rights under a concession, with prior consent

of the grantor at any stage of the implementation of the concession agreement. Prior to the

Law it was only possible after putting the concession facility into operation.

The law now clearly states that a concessionaire can pledge its rights under a concession

agreement if it attracts financing to perform its obligations under the concession agreement.

Currency Laws/Securities

On 21 July 2014 the President signed Federal Law 218-FZ on amendments to a number of

legislative acts, including the Currency Law and Securities Law.

The Currency Law amendments expand the list of allowed credit operations in respect of

overseas accounts of Russian residents. Resident individuals will now have to report to the

Russian tax authorities on the movement of funds on their overseas accounts (in effect from 1

January 2015).

The amendments to the Securities Law relate to (i) the rights of nominee holders and foreign

organisations acting as record keepers; (ii) placement and circulation of securities of foreign

issuers in Russia and (iii) placement and circulation of exchange and commercial bonds.

Corporate/Civil Code

On 18 August 2014 the Central Bank issued a Letter on certain issues related to the

application of provisions of the Civil Code on joint stock companies, including (i) the traits of a

public joint stock company; (ii) the certification of the minutes of the general meeting of

shareholders; (iii) the adjustment of a joint stock company’s charter in line with the provisions

of the amended Civil Code and (iv) the payment of a joint stock company’s charter capital.

The traits of a public joint stock company are defined as public placement and public

circulation of the companies’ shares.

Non-public companies (limited liability and joint stock companies) shall confirm by notarial

certification the adoption of decisions by the general meetings of their

participants/shareholders and the list of participants present at the meeting. On 1 September

2014 the Federal Notary Chamber issued the Letter providing for the guidelines on the

procedure of such certification. The guidelines clarify that the certification is not needed for

companies with a sole participant/shareholder and make it clear that the notary shall be

present at the meeting following the attendance of which he can issue the certificate.

The charters of companies need to be amended to be brought in compliance with the

amended Civil Code together with the first (after 1 September 2014) decision on amending the

charter.

On the payment of the charter capital: the Letter clarifies that the founders must pay cash

when contributing towards the minimum charter capital in the amount prescribed by the JSC

Law. The shares to be placed later on may be paid in kind by property (including certified

securities), stocks, state and municipal bonds, intellectual property rights and licence contract

rights having monetary value.

Securities

New Issue Standards: On 11 August 2014 the Central Bank issued Regulations No. 428-P On

the standards of issues of securities, the procedure for state registration of an issue

(additional issue) of serial securities, state registration of reports on the results of an issue

(additional issue) of serial securities and registration of the Prospectuses (the “Regulation”).

The Regulation was issued in connection with the recent amendments made to the Securities

Market Law (in force from 1 July 2014), specifically, with respect to the regulation of issues of

bonds with pledged based security and with security provided by a specialised company as

issuer. The Regulation does not apply to issues of government and municipal securities and

the Central Bank bonds. The regulation came into force on 16 October 2014.

“Deoffshorisation” measures

On 24 November 2014 the Russian President signed the Federal Law On Amending Part 1 and

Part 2 of the Tax Code of the Russian Federation (in the part related to taxation of profits of

controlled foreign companies and income of foreign companies) which enters into force on 1

January 2015. The Law is aimed at preventing the abuse of “offshore” structures and

introduces new rules in the following areas into the Tax Code: taxation in Russia of controlled

foreign companies’ profits; disclosure of participations; tax residency of foreign companies;

“actual right to” (beneficial ownership of) income; taxation of income from disposal of property

rich shares and additional condition for tax exemption for free of charge receipts of property

from affiliates. The Law requires group structures to be reconsidered, in particular, with regard

to the purpose of foreign companies, their function and substance and the form of their

presence in Russia and in the relevant foreign country.

Serbia

The new Privatisation Act

The new Privatisation Act was adopted in August 2014 (Zakon o privatizaciji, "Official Gazette

of RS" no. 83/2014), and introduced 'strategic partnership' as one of the privatization

methods. 'Strategic partnership' can take the form of a corporate joint venture between the

state and an investor or the form of acquisition of shares by strategic investor in exchange for

fresh contributions or debt to equity swap. Both forms of 'strategic partnership' are now further

regulated by the Decree on Strategic Partnership (Uredba o strateškom partnerstvu, "Official

Gazette of RS" no. 129/2014) ("Decree"). The exact form of 'strategic partnership', the

qualification criteria and the main elements of a future contract, including post-closing

obligations and remedies in case of non-compliance) are determined by the Government.

Amendments to the Law on Civil Procedure and New Law on Mediation

On 23 May 2014, the National Assembly of Serbia adopted amendments to a set of laws in the

area of civil procedure, specifically the Law on Civil Procedure (Zakon o izmenama i dopunama

Zakona o parničnom postupku (Official Gazette of the Republic of Serbia no. 55/2014))

(“LCP”) and the Law on Non-Contentious Proceedings (Zakon o izmenama i dopunama Zakona

o vanparničnom postupku (Official Gazette of the Republic of Serbia no. 55/2014)) (“LNCP”).

http://www.bdklegal.com/bdknowledge/newsletter/m-a-and-corporate/583-serbia-new-privatisation-act

The amendments are applicable as of 31 May 2014, except for the provisions of LNCP related

to public notaries, which shall become applicable on 1 September 2014.

The National Assembly has also passed a new Law on Mediation, which has become

applicable on 1st January 2015.

New Media Laws

The Electronic Media Act, along with two other media laws that came into force in August

2014, the Public Information and Media Act and the Public Service Media Act, brings the

following main changes to the regulatory framework for electronic media services:

alignment with the EU regulatory framework i.e. the Directive 2010/13/EU

(“Audio-visual Media Services Directive”) with respect to the categories of services and

their providers, as well as new licensing regime;

redefinition of restrictions aimed at protection of media pluralism; and

mandatory privatisation of media in public ownership.

Amendments to the Insolvency Act

As of mid-August 2014, the Serbian Insolvency Act applies in its amended form. The

amendments enhance the principles of transparency and cooperation. They provide for on-line

publication of all court decisions rendered and parties’ submissions made in insolvency

proceedings. Insolvency administrators are now obliged to make the insolvency debtor’s books

and records available to the consultants engaged by a member of the board of creditors. The

duty to provide information and records on the debtor to the insolvency administrator is

extended to encompass the members of the insolvency debtor’s executive board and the

controlling shareholders. Commercial banks of the insolvency debtor are obliged to provide to

the insolvency administrator the data on all debtor’s bank accounts and the transactions

carried our via those bank accounts (the relevant amendment fails to specify the transaction

period), as well as all agreements with the insolvency debtor on money deposits and safe

deposits. Public registries are obliged to deliver to the insolvency administrator the data on the

debtor’s assets pertaining to the period of five years preceding the opening of insolvency

proceedings.

The amendments also introduce new duties on the bankruptcy administrator – he/she is now

obliged to challenge the insolvency debtor’s transactions concluded within the vulnerable

periods if the challenge is likely to increase the value of the bankruptcy estate. This power was

previously discretionary.

Amendments to the Planning and Construction Act

Serbia has chronic issues with the duration of the procedure for issuance of construction

permit. According to the latest ranking by World Bank's Doing Business, in Serbia it takes on

average 264 days to obtain a construction permit, which places the country on the 186th place

among the total of 189 examined countries. The latest amendments to the Planning and

Construction Act, which came into force in December 2014, seek to address this problem.

New Insurance Act

The new Insurance Act (Zakon o osiguranju, "Official Gazette of RoS" 139/2014) substantially

overhauls regulation in this area. The majority of new provisions shall come into effect on 27

June 2015 (vacatio legis) while some of the provisions will come into effect only once Serbia

joins the World Trade Organization.

Slovak Republic

Amendments to the Income Tax Law

Act No. 595/2003 Coll. on Income Tax Act

On 30 October 2014 the Slovak Parliament passed amendments to Act No. 595/2003 Call. on

Income Tax. With effect from 1 January 2015, the previous transfer rules that related only to

foreign related parties, will be extended to local related parties; tax deductibility of interest on

loans provided between related parties will be limited by 25% EBITDA (this restriction will not

apply to financial institutions, leasing companies and entities administrating collective

schemes); the number of tax depreciation groups will be increased from four to six and also tax

depreciation periods of some assets will be extended; the contractual sanctions will be

considered as tax non-deductible expenses for debtor and as taxable income for the vendor

after being recognised; reserves for uninvoiced supplies and services, the preparation, review

and publishing of financial statements and annual report and tax return will not be tax

deductible; an additional amount at the total of 25% of real costs incurred on research and

development will be deducted from the tax base. Other changes introduced by the

amendments mostly relate to tax-deductible expenditures and depreciation of tangible assets.

Amendments to the Anti-Competition Law

Act No. 136/2001 Coll. on Protection of Economic Competition

On 14 May 2014 the Slovak Parliament adopted an amendment (Act No. 151/2014 Coll.) to

Act No. 136/2001 Coll. on Protection of Economic Competition (the “Anti-Competition Law”),

which came into force on 1 July 2014. The amendment aims to address the problematic

application of certain provisions of the Anti-Competition Law and to ameliorate these concerns

in pro-business ways that can be summarised as follows:

More attractive leniency program

The Slovak Antimonopoly Office (the “AMO”) may reward a cartel participant by not

imposing a fine or by reducing it up to 50% when that participant proactively provides

relevant cartel evidence to the AMO on its own initiative. The new rule, taken together

with the already existing criminal immunity for cooperating cartel participants, offers

such cartel participants protection against administrative, criminal as well as private

consequences of a breach of the Anti-Competition Law.

New whistle-blower program

Individuals providing the AMO with evidence of a cartel may be financially rewarded if

the following conditions are met: (i) the whistle-blower does not have the status of an

undertaking under the Anti-Competition Law; (ii) the whistle-blower is not an employee

of an undertaking that had applied for participation in the leniency program before the

whistle-blower submitted the relevant evidence to the AMO; and (iii) the whistle-blower

was the first person who has submitted to the AMO a conclusive piece of evidence

about the cartel agreement. The reward will be paid out of the fines imposed on the

cartel participants and will amount to 1% of all imposed fines, up to a maximum of EUR

100,000. Provision of information to the AMO may not be considered a breach of the

relevant statutory or contractual confidentiality obligation on the part of the

whistle-blower.

Supervision of concentration

The thresholds relevant for determining a concentration will no longer be calculated on

the basis of the last closed accounting period, but on the basis of the last accounting

period, even if such period was not closed yet. For those wishing to notify the AMO of a

concentration a simplified questionnaire was introduced.

Settlement as a form of alternative dispute resolution

Settlement shall replace the former valid non-binding guideline and shall apply when

facts sufficiently justify the assumptions that the Anti-Competition Law was violated.

The AMO will be entitled to negotiate for the purpose of reaching a settlement, either ex

officio or on the basis of the entrepreneur’s proposal.

Slovenia

Pension Reform

Recently issued regulations have raised the retirement age in Slovenia to age 65, provided

that the retiree has at least 20 years of service. Prior to that age, only those over the age of 60

with 40 years of service are able to retire with a pension. These latest changes follow the

adoption of pension reforms at the end of 2012, when the retirement age in Slovenia had been

age 57 for women and age 58 for men.

Enforcement Act Amendments

Recent amendments to the Enforcement Act entered into force in July 2014 and introduced

changes that are particularly important for the enforcement of real estate mortgages. To

expedite enforcement, the amendments have:

Limited rights of the parties to postpone enforcement;

Permitted creditors to publicly announce sale orders;

Introduced a new sale process pursuant to which binding offers are collected; and

Decreased the minimum purchase price for which real property may be sold in

enforcement proceedings.

Secured creditors are also required to more actively participate in the sale process to preserve

their rights, including by notifying their claims and submitting land debt certificates to the

court.

Tajikistan

Tajikistan expected to join the Apostille Convention

Tajikistan is completing the process of joining the Hague Convention Abolishing the

Requirement for Legalisation for Foreign Public Documents (the Convention).

The interagency Working Group on joining the Convention that has been set up with the

technical support of the International Finance Corporation (IFC) has reportedly completed legal

analysis of the documents and Tajikistan’s lower chamber (Mahjlisi Namoyandagon) has

drafted a resolution on ratification of an agreement on joining the Hague Convention

Abolishing the Requirement for Legalization for Foreign Public Documents.

Two competent bodies for dealing with issuing Apostilles would be set up at the Ministry of

Foreign Affairs and the Ministry of Justice in Tajikistan in the near future.

The Convention is an international treaty drafted by the Hague Conference on Private

International Law. It specifies the modalities through which a document issued in one of the

signatory countries can be certified for legal purposes in all the other signatory states. Such a

certification is called an apostille (French: certification). It is an international certification

comparable to a notarisation in domestic law, and normally supplements a local notarisation

of the document. The Hague Conference on Private International Law (HCCH) is the

preeminent organization in the area of private international law. The HCCH was formed in

1893 to “work for the progressive unification of the rules of private international law.” It has

pursued this goal by creating and assisting in the implementation of multilateral conventions

promoting the harmonisation of the conflict of laws principles in diverse subject matters within

private international law. The Conference has developed thirty-eight international conventions

since its Statute was completed in 1951.

Tunisia

Micro-finance

Law No. 2014-46 of 24 July 2014 amended Decree No. 2011-117 of 5 November 2011 on the

activities of micro-finance institutions. Pursuant to the new law, micro-finance institutions

must be established as (i) a joint stock company (société anonyme) with a minimum share

capital of TND 3 million or (ii) an association, complying with Decree No. 2011-88 of 24

September 2011 on associations, with a minimum endowment of TND 50,000. Associations

previously licensed as micro-finance institutions in accordance with Law No. 1999-67 of 15

July 1999 on micro-credits granted by associations will remain licensed as micro-finance

institutions provided that they comply with the new law by December 2016.

Islamic Insurance

Law No. 2014-47 of 24 July 2014 amended the insurance code, introducing a new set of

provisions governing sharia-compliant insurance, also known as “takaful”. Takaful insurance

is an arrangement whereby the members of a group undertake to indemnify each other upon

the occurrence of a certain event, using the proceeds of “donations” paid into a fund that is

managed by a takaful insurer. The takaful insurer must manage the fund in accordance with

the sharia (e.g., with respect to investments) and may not carry out conventional insurance

activities. The takaful insurer must establish an independent supervisory committee, which

will monitor compliance with the sharia and whose decisions will be binding on the takaful

insurer. The new law also sets out specific accounting rules, which are aimed at ensuring that

fund assets are kept separate from any other assets, and lists those mandatory provisions that

each takaful insurance agreement must contain.

Tunisian Asset Management Company

Law No. 2014-54 of 19 August 2014 established the Tunisian Asset Management Company

(“Société Tunisienne de Gestion d’Actifs”), a state-owned joint stock company the main

purpose of which is to take over, and enforce or restructure, non-performing loans made by

state-owned banks to the tourism industry and, possibly, other sectors. A draft law governing

the management, financing, operations and powers of the Tunisian Asset Management

Company was submitted to the Parliament on 21 August 2014.

Turkey

Communique on the Squeeze-Out and Sell-Out Rights

Communiqué on the Squeeze-Out and Sell-Out Rights, prepared in accordance with the Capital

Markets Law No. 6362 entered into force on 12 November 2014 (the “Communique”). The

Communiqué changed the principles for the use of squeeze-out and sell-out rights in public

companies, including thresholds for voting rights and methodology for calculating the price

paid to exiting minority shareholders.

Accordingly, should a majority shareholder’s voting rights in a public company constitute 98%

of the total voting rights in such public company, the majority stakeholder shall have the right

to purchase the minority shareholders’ shares (i.e., squeeze out). Similarly, in such scenario,

minority shareholder(s) shall have a right to sell its (their) shares (i.e., sell-out) to the majority

shareholder. The sale or purchase price, which should be paid fully and in cash in Turkish Lira,

shall be determined in accordance with the Communiqué. A threshold of 97% of voting rights,

which triggers the squeeze-out or sell-out rights, shall be applied as until 31 December 2017. Amendments to Turkish Commercial Code

On 11 September 2014, the Parliament has enacted a new law amending certain provisions of

the Turkish Commercial Code (the “Commercial Code”). One of the important amendments is

the newly introduced procedure for the appointment of authorised signatories for joint stock

and limited liability companies. The board of directors in joint stock companies or general

assembly of limited liability companies is required to adopt an internal directive regulating

delegation of representation powers provided that the charter of such company explicitly

allows delegation of such powers. If not, the companies shall amend their charters accordingly.

Only after the adoption of such internal directive can the representation powers of a company

be delegated to certain persons by introducing monetary thresholds and subject matter

limitations.

Regulation on Procedures and Principles regarding Fees Collected from Consumers

The Turkish Banking Regulatory and Supervisory Authority (the “BRSA”) published a new

regulation on the procedures and principles regarding fees collected from consumers of

financial institutions on 3 October 2014 (the “Regulation”). The Regulation regulates the

principles for fees and commissions which banks, card issuers and other financial institutions

may charge consumers in connection with loans, financial products and other services. The

Regulation applies to agreements entered into after 3 October 2014 as well as transactions

completed after this date under existing agreements. The insurance and securities-related

services and products offered to consumers or to non-consumer products and services do not

fall within the scope of the Regulation.

An exhaustive list of products and services for which a fee or commission may be charged to

consumers as well as the types of permissible fees and commissions are set out in the

Regulation. BRSA’s approval is required for any new fee or commission for new or existing

products and services.

According to the Regulation, customer approval must be obtained before providing any product

or service for which a fee or commission is charged. Any fee increase more than 1.2 times an

increase in the consumer price index in any given calendar year for products or services

provided on an ongoing basis also requires advance consumer consent. For other increases,

the consumer must be notified at least 30 days in advance. Consumers are entitled to cancel

the delivery of products and services within 15 days of receiving notification of an increased

fee. Institutions offering consumer loans and mortgage loans can only request an arrangement

fee, which cannot be higher than 0.5% of the loan's principal.

Turkmenistan

Law on International Commercial Arbitration to come into force in Turkmenistan

Turkmenistan adopted a law on international commercial arbitration, which will come into

force on 1 January 2016.

The new law will regulate the establishment and operation of international commercial

arbitration and will apply to contractual and other civil law disputes arising from foreign trade

and other forms of international business transactions when the business of at least one of the

parties to the dispute is outside of Turkmenistan as well as disputes involving companies with

foreign investments and disputes involving international organisations established on the

territory of Turkmenistan.

Law on Environmental Impact Assessment

Turkmenistan adopted a law on environmental impact assessment which is understood to be

associated with the development of the Trans-Caspian Gas Pipeline project, which is supposed

to deliver Turkmen gas via Azerbaijan to Europe.

The new law aimed at preventing the negative impact of the planned economic and other

activity on the environment and human health.

Law on Electric Power Industry

Turkmenistan adopted a law on electric power industry. The new law introduces the legal,

economic and organisational basis of the electric power industry and is aimed at building

capacities of electric power system of the country on the basis of the further modernisation of

the industry, use of innovative energy-saving technologies and equipment. According to the

law the facilities of the energy system of Turkmenistan are considered as the state property.

Law on Foreign Economic Activity

Turkmenistan adopted a law on foreign economic activity. The new law’s main objectives are to

provide conditions for the effective integration of Turkmenistan into the world economy, to

stimulate the development of the national economy and to ensure its economic security.

In accordance with the law, the foreign economic activity means the totality of the practical

actions of public authorities, other legal entities and individuals, aimed at establishing and

developing of mutually beneficial economic relations with foreign states, their legal entities

and individuals and international organisations.

One of the articles of the law states that a special regime of foreign trade activities (customs,

currency, tax, and pricing regime) for free economic zones (free economic zones, tourist areas)

can be established on the territory of Turkmenistan.

Law on Regulation of Internet Development

Turkmenistan adopted a law on regulation of the development of the internet and rendering

internet services in Turkmenistan. The new law states that it is intended to ensure free access

to the worldwide web for the country's internet users but the new law imposes certain

restrictions such as it bans Turkmenistan's internet users from accessing pornographic sites

and makes it illegal to insult the President of Turkmenistan in postings on the web. The

restrictions also apply to accessing information that contains material encouraging minors to

use narcotics, alcohol, tobacco products or view sites that reject family values, foment

disrespect for parents or justify illegal behaviour.

Ukraine

Creation of free economic zone “Crimea”

On 27 September 2014 the Law of Ukraine “On Establishment of Free Economic Zone

“Crimea” and on Specifics of Doing Business in the Temporarily Occupied Territory of Ukraine”,

dated 12 August 2014 (the “Law”) became effective. It established the free economic zone

“Crimea” (“FEZ”) on the territory of Autonomous Republic of Crimea and the city of Sevastopol

for 10 years (which term may be extended or shortened by another law). According to the law

the transfer of goods to/from FEZ is to be provided in accordance with Ukrainian laws for

cross-border export/import of goods. For the term of temporary occupation of Crimea all the

companies and individuals registered in Crimea are treated as non-residents of Ukraine for tax

and customs purposes. The specificities of currency transfers from FEZ to inland Ukraine are

established in the resolution of the National Bank of Ukraine, No.699 dated 03 November

2014 (“NBU Resolution 699”). NBU Resolution 699 declares that commercial agreements

between the persons registered in Crimea and the persons registered in inland Ukraine have

the status of cross-border contracts, and thus, could be settled in UAH or foreign currency. Also

the National Bank of Ukraine has imposed a number of restrictions on use of Crimean

residents’ accounts maintained in the inland Ukraine.

Changes in FX Controls

Starting from early 2014 the National Bank of Ukraine commenced issuing temporary

resolutions establishing currency control restrictions. Each such resolution has been effective

for 3 months only and upon its expiry another consecutive resolution of similar nature was put

into place. The latest actual resolution of that kind is the National Bank of Ukraine Resolution

No. 758, dated 1 December 2014 (effective from 3 December 2014 until 3 March 2015)

(“NBU Resolution 758”). The key restrictions provided in NBU Resolution 758 include: 90

calendar days deadline for settlements under export/import transactions, mandatory sale of

75% of foreign currency proceeds (subject to number of exceptions), prohibition on early

repayment of cross-border loans, capping the amounts of foreign currency purchase

transactions for individuals with the equivalent of UAH 3,000 per one banking institution per

day etc.

Restrictions on Repatriation of Foreign Investments

On 22 September 2014 the National Bank of Ukraine imposed restrictions on repatriation of

foreign investments from Ukraine (Resolution No. 591, dated 22 September 2014). Originally,

these restrictions were imposed until 2 December 2014, but later they were extended until 3

March 2015. The restrictions prohibit repatriation of dividends, proceeds from

over-the-counter sale of Ukrainian securities (except for the government bonds) and proceeds

from sale of equity not formed into shares (e.g. equity in Ukrainian limited liability companies).

Such prohibitions violate international obligations of Ukraine under a number of investment

treaties, but the National Bank of Ukraine is keen to have them until the foreign currency

market in Ukraine stabilizes. Respectively, it is very likely that the above restrictions will be

further extended after 3 March 2015.

Changes in Taxation

The Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Legal Acts of

Ukraine", dated 31 July 2014 (effective from 3 August 2014) has imposed a 1.5% military tax

on individual income. The tax was expected to expire on 1 January 2015, but further it was

extended until the law on completion of reform of the Military Forces of Ukraine is effective.

On 28 December 2014 the parliament adopted the Law of Ukraine “on Amending the Tax Code

of Ukraine and Certain Legislative Acts of Ukraine on Tax Reform” (effective from 1 January

2015) (“Tax Reform Law”). As a result of the Tax Reform Law the number of taxes and levies

was decreased from 22 to 9, however, it is mostly achieved by combining several taxes under

one name. Given that tax base, effective rates and other tax elements mostly remain

unchanged, such unification neither minimized the overall tax burden, nor significantly

improved the tax administration. The rates of the personal income tax have been increased.

Also the Tax Reform Law introduced new tax on real estate and transport tax on automobiles

with engine volume exceeding 3 litres.

Uzbekistan

Law on Trade (Commercial) Secret.

A new law "On Commercial Secrets" came into effect in September 2014. The law provides a

detailed definition of a "confidential commercial secret" and clarifies the rights of its

proprietors. The law regulates a disclosure regime for the information constituting a

commercial secret and imposes certain obligations on the third parties (including state

authorities) in term of disclosure (or protection from disclosure) of the commercial secrets. The

law also provides an exhaustive list of scenarios when disclosure of commercial secrets is

mandatory.

Law on Stock Exchanges and Law on Securities Market.

A new version of the law "On Stock Exchanges and Stock Exchange Activities" was approved in

October 2014. The amended law provides a clarified regime for the regulation of the financial

and commodity exchanges in Uzbekistan. The law provides separate regimes of regulation for

commodity and financial exchanges and introduces a number of measures for the purposes of

fraud prevention and evasion of price manipulation on the stock exchanges. To complement

this amended law, the Parliament also approved a set of amendments to the existing Law on

Securities Market. The main purpose of these amendments was to facilitate electronic

circulation of securities on stock exchanges and create an effective mechanism for the

electronic transactions with securities. The amendments also clarify certain rules on

anti-money-laundering for the professional participants on the securities market.

New Law on Investment Activity.

A law "On Amendments and Additions to the Law on Investment Activity" came into effect on

December 10. The law introduced an improved regime for participation of private sector

investors in investment processes and created additional incentives for investments in

modernisation, technical and technological re-equipment. The amended law regulates the

investment activity for capital; innovation and social investments and provides a general

framework for regulating private and state investments in Uzbekistan.

New Procedure of State Property Privatization.

In August 2014 the government approved new procedures for the privatisation of state-owned

facilities at the "zero" purchase price where the purchaser commits to make additional

investments in the privatised objects during the agreed period of time. The sale of state

property at the "zero" purchase price shall be carried out either via auction or through direct

negotiations with the investor subject to the decision of the state authorities. The list of state

facilities proposed for sale at the "zero" price shall be approved by the Cabinet of Ministers. If

the purchase of the object is made by a foreign investor, the regional competition authorities

shall consider the proposal in respect of its adequacy and reasonableness, and the proposed

plan on modernization and restoration of solvency and sustainable development of the

privatized property object. The term for the investment obligations shall not exceed 5 years.