In our legal work in Montenegro, CMS has been engaged in a number of major mergers & acquisitions, representing both buyers and sellers, including Monte Rock’s acquisition of HIT Montenegro in connection with the Hotel Maestral in Budva-Przno, the Delhaize Group’s acquisition of food retailer Delta Maxi, KKR’s acquisition of SBB/Telemach Group, and OTP Bank’s acquisition of Societe Generale Montenegro.
Every spring DLA Piper publishes its annual M&A intelligence report. This past spring, we could only speculate on the effects of the pandemic as COVID-19 had just hit Europe. Informed by our experience of the past few months, we have recently published our updated M&A Global Report. Below we highlight a couple of trends that are impacting CEE.
Several years ago, certain amendments concerning the status of a CEO in Russia (in Russian corporate law, as a rule, this position is called General Director) were introduced to the Russian Civil Code as a part of a major reform of Russian civil legislation. Among these changes was the introduction of the ability to limit the liability of a CEO for damages he or she inflicted on the company, although this is still not widespread and is untested in practice. In this article, we address certain key issues regarding the civil liability of CEOs in Russia, including its potential limitation.
It has been a challenging year for the Bulgarian M&A market, with limited activity, just like in 2019. Undoubtedly, one of the reasons for the slowdown is that business is overshadowed by the coronavirus pandemic. Many acquirers abandoned expansion plans in order to focus on protecting both their financial stability and their employees, while waiting to assess the market environment and evaluate potential next steps. Many planned or already-started deals were cancelled at early stages (such as following a letter of intent or during preliminary due diligence) as uncertainty about the fulfilment of potential goals made the transactions risky.
One could argue that transparency and safeguard regulations in related-party transactions of companies should be well established and should not be an issue in M&As in the current environment. However, this is not the case with Section 59a of the Slovak Commercial Code, which found its way into the Code via the implementation of the Second Council Directive 77/91/EEC.
Foreign investors of all types were increasingly interested in Life Science (LS) companies even before COVID-19 emerged. It is no wonder that Slovenian LS companies are of particular appeal, since this highly innovative community significantly contributed to Slovenia being ranked 21st in this year’s Bloomberg Innovation Index. Some say COVID-19 catalyzed the new deals this year, but they were more likely fostered by the new investment opportunities that keep popping up with each innovative solution offered by the relatively small (and relatively inexpensive) companies in Slovenia. The race to acquire these innovative scale-ups and start-ups has become increasingly competitive.
Recently, in the second half of January 2021, a public debate was held with regards to the Draft of the Law on Amendments to the Bankruptcy Law (hereinafter: "the Amendments"). If all the changes proposed by the Amendments were to be summarized, what they altogether aim at in practice is to improve the efficiency and transparency of bankruptcy procedure as well as to reduce the costs of the entire process, which in practice has so far proved to be one of the largest problems for creditors and other interested parties in this procedure.
The expression “never a dull moment” could have been tailor-made to describe the ethics and compliance function and how it has evolved over the past decade or so. The well-publicized scandals that started to take place on the market (concerning, e.g., anti-money laundering or privacy incompliances) led the policy makers to pass sweeping legislation that called for increased regulation, greater transparency, and more rigorous scrutiny of corporations.
Hungarian National Tax and Customs Authority regularly publishes the list of major tax defaulters for failing to fulfil their tax obligations in Hungary. The list also contains private data of the defaulters, including, inter alia, information on tax arrears and debts and their home address. In a recent case (L.B. v. Hungary – 36345/16), European Court of Human Rights concluded no violation and confirmed the approach of Hungarian tax authority as justified.
First reports under DAC6 were due recently from those who are parties to a cross-border transactions. Concurrently, at the last possible moment, the Hungarian Ministry of Finance published a Guide on certain issues related to the fulfilment of the reporting obligation. It is advisable, in particular, for accountants, consultants, lawyers and banks to carefully study this 38-page document, as any of them could easily fall within the scope of the reporting obligation.
At the beginning of February 2021, a new decree of the Hungarian Minister of Finance (“Decree”) was published on the detailed rules of the execution of the Money Laundering Act for certain non-financial service providers and the development and the minimum requirements of the operation of the filtering system. The decree enters into force on 19 March 2021.
Allocation of liabilities between the parties in merger and acquisition (“M&A”) transactions is of utmost significance, in order to ensure that the buyer will be sufficiently protected, and the seller’s liabilities limited as much as possible. Under Turkish laws, the sellers` liabilities are subject to the provisions of the Turkish Code of Obligations No. 6908 (“TCO”). Having said this, Turkish laws are not designed to save commercial parties from a bad bargain, thus the parties often resort to adding certain clauses to their share purchase agreements (“SPA”) such as representations and warranties, indemnities, amount-based restrictions such as de minimis and baskets clauses, setting forth specific procedures and time limits for claims, and so on. Accordingly, this article aims to provide a general understanding as to the sellers’ liabilities in M&A transactions, the general liability provisions most commonly used in SPAs, and how they are dealt with under the Turkish laws.