Overview
BiH enjoys a complex, multi-tiered bureaucracy rife with duplication and contradiction. At the heart of the state’s internal disharmony is the question of Republika Srpska (RS). A strong nationalist tendency in the Serbian entity had calmed in recent years, leading to a politically and socially stable RS developing into an attractive target for investment, with a subsequent maturation of the legal market. However, with the advent of the sovereign state of Montenegro in 2006 and Kosovo’s declaration of independence, emotions are again running high in the RS. The electoral victory in 2006 for the Alliance of Independent Social Democrats (SNSD) and the return to office of Prime Minister Milorad Dodik brought the question of an autonomous RS to the forefront yet again.
Dodik’s tough stance on RS independence has caused a political schism between the RS and the administrations of the Federation of Bosnia and Herzegovina and the federal BiH, both of which favour a unification agenda. The constitutional cockfight of the past year has done much to undermine investor confidence, particularly in the RS, and to unpick the fragile stability built up since the Dayton Agreement of 1995. The uncertain and fractious political climate has damaged the legal market considerably. There is a fundamental lack of the rule of law in BiH; political pressure is often brought into play during tendering processes, leading to their collapse. The susceptibility of the economy to political and civil unrest means that investors remain understandably cautious.
Yet, despite these difficulties, the legal market in BiH continues to grow and mature, albeit at a pace somewhat slower than might be desired. M&A, real estate and competition are booming, at least in relative terms. Growth is restricted, however, by the lack of internationally qualified and multi-lingual lawyers; the burgeoning demand for high-quality work is coming to outstrip the talent available in the domestic marketplace.
The legal market in BiH is necessarily small and continues to be dominated by the two leading domestic firms Lawyers Office Bojana Tkalcic-Dulic, Olodar Prebanic & Adela Draganovic and Maric Law Office. Regional players DLA Piper Weiss-Tessbach; in cooperation with local attorneys and Wolf Theiss are both growing their presence on the ground, whilst essentially being headed up by their respective Vienna offices. Given the Federation of Bosnia and Herzegovina’s greater economic clout and the relative volatility of the RS, it should come as no surprise that Sarajevo is home to the legal market of BiH. Outside the capital, Stevan Dimitrijevic Law Office in cooperation with Karanovic & Nikolic is the best-respected firm and operates from the unofficial capital of the RS, Banja Luka.
The past year has seen the application of a controversial new notary system in BiH. GTZ – the German-based development fund – had been pushing for a system in BiH similar to that adopted in the core Germanic jurisdictions, with which the BiH market has close regional working relationships. As well as harmonising the system with other regional markets, including Croatia, the objective behind instituting the new system was to help clear the court backlog in BiH’s greatly overstretched judiciary. Notaries in BiH now have the legal power to produce executable documents, bypassing the need for a court hearing. However, many within the legal market are considerably upset by the way in which notary licences have been awarded. The number of licences has been capped to provide approximately one notary per 20,000 capita in BiH; this has already created significant access problems for those outside major urban areas requiring the assistance of a notary. Importantly, lawyers feel increasingly aggrieved at the fees levied by notaries, particularly in instances when sector- or industry-specific knowledge is required in the drafting of a document. Specialist lawyers in M&A, banking and competition find they have a far greater understanding of their particular field of law and frequently are forced to pass documents and contracts to notaries who lack the necessary expertise to do little more than rubber stamp the paperwork for what is perceived by many in the market as an unjustifiably high fee. At the time of writing, the debate is still raging among legal professionals in BiH, with many hoping for a major reform or even revocation of the notary system.
Law developments worldwide
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The Implications of Substance over Form and the Re- Characterisation of a Floating Charge
The purpose of this Article is to consider the implications of the recent English case of The Russell Cooke Trust Company Limited and Elliott1. Following this case, insolvency practitioners, preferential creditors, and third parties dealing with a company in the belief that its assets are subject to a floating charge (rather than a fixed charge) will need to examine the substance of the charge before dealing with those assets. -
Finance Bill 2008
The Finance Bill 2008 (as initiated) was released yesterday 31st January 2008 and there have been some welcome amendments included to assist the funds industry in administering the 8 year deemed disposal rules. -
Ireland: A gateway to China and Japan
Ireland's favourable tax treaties with China and Japan, regarding capital gains, mean that it is increasingly seen as a jurisdiction of choice for making equity investments in those countries. While there are a number of tax efficient Irish structures available for making such investments, we have concentrated solely for the purposes of this article on Ireland's holding company regime. -
D&I Quarterly 2008: NEW CORPORATE GOVERNANCE CODE
A new Corporate Governance Code (the "Code") for companies listed on the Helsinki Stock Exchange (the "Helsinki exchange") has been published by the Finnish Securities Market Association. The Code will enter into force on 1 January 2009 and companies should, if necessary, amend their Articles of Association at their annual general meeting in 2009 in order to meet the new requirements. -
D&I Quarterly 2008: ISSUER AGENT MANDATORY AS OF 1 DECEMBER
The issuer agent, a representative appointed by the issuer, is in charge of the execution of an issue or a corporate action together with the Central Securities Depository (the "CSD") and the account operators. The concept of "issuer agent" was first introduced in Finland in the beginning of 2008 and is widely used in other European countries. -
D&I Quarterly 2008: COURT OF APPEAL CONVICTS STONESOFT OF SECURITIES MARKET OFFENCE
On November 15, 2008 Helsinki Court of Appeal (the "Court") handed down its decision in a criminal case concerning the alleged security markets information offence by a software company, Stonesoft Oyj, and three members of its management team. The Court held that two members of the company's board of directors and a former CEO through gross negligence had failed to give a profit warning in due time. All defendants were fined. The Helsinki District Court had acquitted the defendants one year earlier. -
D&I Quarterly 2008: REPORT ON COMPLIANCE WITH THE TAKEOVER
The Takeover Panel has issued a Report on the compliance with the Takeover Code recommendations in connection with tender offers (the "Report"), based on an examination of Finnish tender offers launched between 1 January 2007 and 30 June 2008. The examination was conducted based on public information relating to tender offers, i.e., the offer document and stock exchange notices. -
D&I Quarterly 2008: Court Adjustment of Rent
The ongoing financial crisis and the looming economic depression will not leave the real estate and rental markets unaffected. The experiences from the early 1990's clearly demonstrate that during times of recession many tenants are likely to grow dissatisfied with their rents and may even resort to legal action to try to correct the situation. As discussed below, Finnish law includes a provision enabling tenants to present claims of this kind against landlords, but the chances of success in court are very modest. -
New Memorandum of Understanding with Ukraine on Banking Supervision
30.12.2008 - The Central Bank of Cyprus (“CBC”) is responsible for the licensing and supervision of banks and for safeguarding the stability of the financial system in Cyprus. In this connection it pursues an active policy of signing Memoranda of Understanding for cooperation in the field of banking supervision and exchange of information with competent overseas authorities, particularly those whose banks operate in Cyprus. -
Change in tax rate for Cyprus semi-governmental agencies
29.12.2008 - A draft bill has been submitted to the Cyprus parliament reducing the rate of corporation tax paid by semi-governmental agencies such as the Electricity Authority of Cyprus, the Cyprus Telecommunications Authority and the Cyprus Ports Authority with effect from 1 January 2009.