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Bonds, Exits, and Compliance Make a Splash in Croatia: A Buzz Interview with Tomislav Pedisic of Vukmir & Associates

Bonds, Exits, and Compliance Make a Splash in Croatia: A Buzz Interview with Tomislav Pedisic of Vukmir & Associates

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A massive government bond program, an exciting local start-up exit to Google, and several recent and upcoming legislative updates are high on Croatian lawyers' agendas, according to Vukmir & Associates Managing Partner Tomislav Pedisic.

“The Republic of Croatia has recently issued bonds with a guaranteed 3.25% interest, in an effort to raise awareness of securities trading,” Pedisic begins. “This major endeavor on the part of the government was a big success – with about 45,000 individual citizens subscribing to the program, to the tune of EUR 1.35 billion – followed by a EUR 515 million institutional investor round.” According to him, the bonds, which stand to mature by March 2025, offer an excellent interest rate. “The next best interest rates, offered by banks, currently stand at 0.45%, so it is pretty obvious why this was so alluring to such a high number of people.”

Furthermore, Pedisic reports an exciting move in the Croatian start-up sector. “Recently, it finally became public that Google acquired Photomath, a mathematical equation-solving application, from a local start-up called Phootomath, which is itself a spin-off of another domestic company, Microblink.” The driving force behind Photomath and Microblink is Damir Sabol, a serial entrepreneur and known figure within the Croatian start-up community. As Pedisic reports, the Photomath sale was “recently cleared by regulators in the US and the deal is currently being vetted by EU regulators. It is expected that, if everything goes well, the clearance of the EU regulator will be issued by the end of the month. This latest transaction confirms Croatia’s status as the leading technology hub in the immediate region and a serial producer of success-story tech companies,” he says.

Turning to legislative updates, Pedisic provides an update on the transition efforts of companies, following the switch from HRK to EUR at the beginning of the year. “While it was initially envisaged that both stock companies and LLCs would have a limited period to make the conversion of their share capital to euros, in terms of amending their incorporation documents, some amendments were recently introduced.” According to him, such a vast administrative transition represented a massive cost point, especially for SMEs, which led to a legislative change that allowed for LLCs to “only have an obligation to adjust their documentation in case of changes to their incorporation documents or status changes – for example, carve-outs, mergers, and share capital changes – as opposed to having to do it within a strict window of time.”

Finally, Pedisic points to several upcoming legislative tollgates on the EU level that apply to Croatia. “With the recently passed Digital Services Act and the Digital Markets Act, somewhat of an overhaul of the European digital landscape took place,” he says. These acts stand to change how providers of digital services such as search engines and online platforms, and in particular gatekeeper online platforms – digital platforms with a systematic role in the internal market that function as bottlenecks between businesses and consumers – like Amazon or Google, operate and report on their compliance. “This will surely lead to a massive uptick of associated work for tech-law-focused law firms,” he notes.

“Not to mention the EU Corporate Sustainability Reporting Directive which entered into force recently,” Pedisic continues, saying the CSRD requires a number of large companies as well as listed SMEs to “comply with the EU rules about social and environmental information that companies need to report and to follow the European Sustainability Reporting Standards, which will be adopted during 2023. The first reports will be integrated into the 2024 financial year,” he explains, “meaning that we will see the fruits of these labors in early 2025.”

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