fall edition 2014 corporate and commercial law in emeia · · 2015-07-23• new law on insurance...

Corporate andCommercial Law in EMEIA

Fall edition 2014

Albania 1• New law on insurance and reinsurance activities

Austria 2• Transfer of corporate seat

Bulgaria 3• New rules for consumer loans

Cyprus 4• Alternative investment funds

Finland 5• New Finnish Foundations Act creates possibilities for reorganizations and

establishes new liabilities for the administration of foundations

France 6• Clarification of the legal regime governing redeemable preferred shares

Lithuania 7• Amendments to the Law on Companies

In this issue …

Corporate and Commercial Law newsletter

Luxembourg 8

• Law on patrimonial foundations

Netherlands 9• Restructuring and bankruptcy reforms in the Netherlands

Norway 10• Norwegian regulation on management of alternative investment funds

Poland 11• Changes in limited liability companies

Romania 12• New rules regarding insolvency procedures

Russia 13• Amendments on the Russian civil code

Spain 14• Improvement of corporate governance

This quarterly publication highlights a range of international corporate law matters and covers recent law developments in specific countries.

Corporate and Commercial Law newsletter1

Albania

New law on insurance and reinsurance activitiesOn 22 May 2014, the Albanian Parliament passed a new Law no. 52/2014 on insurance and reinsurance activity (Insurance Law), which replaced the previous law on such activities. The main aim of the Insurance Law is to implement the relevant EU directives in Albania. In this regard, an important novelty of the Insurance Law is the definition of high risks and redefinition of the life insurance classes. The concept of a risk-based supervision is introduced. Based on this

new concept the supervisory authority aims to pro-actively identify areas of high potential risk and imposes measures to the company’s management to mitigate such risk at acceptable levels.

The Insurance Law provides for new “fit and proper” criteria, which must be satisfied by persons holding crucial management functions in insurance companies, and also specific rules to prevent conflicts of interest by the latter during the performance of their duties, as well as prevention of transactions between related parties.

In addition, the Insurance Law aims at increasing transparency toward the consumer. In this respect, insurance companies will have to inform consumers on the terms and conditions of the relevant insurance policy before the documentation is signed. Under the Insurance Law, when Albania becomes an EU Member State, insurance companies of other EU Member States will be allowed to perform their activity directly or through their registered branches in the country.

Corporate and Commercial Law newsletter 2

Transfer of corporate seatOn 10 April 2014, the Austrian Supreme Court (Oberster Gerichtshof — OGH; decision 6 Ob 224/13d) has, for the first time, explicitly confirmed that an EU Member State company can transfer its corporate seat to Austria. Therefore, the OGH followed decision C-378/10 of the Court of Justice of the European Union (CJEU), dated 12 July 2012 (Vale), and the views of Austrian legal doctrine. Two months after this ruling, the first transfer of a corporate seat to Austria was recorded with the Austrian commercial register. An Italian limited partnership

has successfully changed its corporate seat from Freienfeld (Italy) to Steinach am Brenner (Austria), without disruption of its legal personality.

Therefore, according to the ruling of the OGH, a cross-border transfer of the corporate seat to Austria is permissible, should the following conditions be met:

• The transferring company is a company under the laws of a Member State of the EU.

• Not only the registered seat, but also the place of effective management has to be transferred to Austria.

• The company has to comply with all requirements under the laws of the exit state stipulated for this type of conversion into a foreign entity. In particular, the transfer without liquidation must be permitted under the laws of the exit state.

• The company has to meet all requirements under Austrian corporate law (especially in terms of articles of association, capitalization and appointment of board members).

Austria


New rules for consumer loansAs of 23 July 2014, new rules apply to all consumer loans in Bulgaria, regardless of their amount. The annual interest rate for consumer loans (including the so called “payday loans” which traditionally had three-digit interest rates) is now capped up to five times the Bulgarian National Bank’s basic interest rate for default payments, setting the cap at 50.2% APR. In addition, the lenders are explicitly forbidden to collect fees for administering and approving the consumer loans. Instead lenders are given the

opportunity to explore the possibilities to offer to their customers additional paid services related to the loan agreements.

The pre-contractual terms provided to the consumer borrowers in a standard European consumer credit information form, as well as the general terms and conditions of the consumer lenders shall be formatted in accordance with statutorily defined requirements. Lenders providing consumer loans with floating interest rates now have limited options to change the interest rate once the loan agreement is concluded. Unilateral change in the loan

conditions by the lender is now possible only provided that such a possibility is stipulated in the loan agreement and the circumstances that have led to the change in the loan conditions are out of the lender’s control. The lenders are required to set the APR as a combination of a basic index (such as EURIBOR, LIBOR, etc.) and a fixed margin that once agreed upon with the customer cannot be changed unilaterally by the lender during the loan’s term.

Bulgaria


Cyprus

Alternative investment fundsIn July 2014, Cyprus enacted the Alternative Investment Fund Law (AIF Law), which replaces and repeals the International Collective Investment Schemes Law of 1999 governing the establishment of private collective investment schemes. The AIF Law updates and modernizes the legal regime applicable to funds in Cyprus and completes the alignment of Cyprus legislation with the latest EU directives on asset management, with a focus on transparency and investor protection.

The AIF Law sets out rules for the authorization, ongoing operations, transparency requirements and supervision of alternative investment funds in Cyprus and regulates the roles and responsibilities of their directors, custodians and external managers. According to the AIF Law, an alternative investment fund is a collective investment undertaking, including investment compartments thereof, which raises capital from a number of investors with a view to investing it in accordance with a defined investment

policy to the benefit of those investors. It is noteworthy that alternative investment funds are not authorized as undertaking for collective investments in transferable securities (UCITS).


New Finnish Foundations Act creates possibilities for reorganizations and establishes new liabilities for the administration of foundationsThe Finnish Ministry of Justice has been planning to amend the Foundations Act since the 1930s. The new act, which will be enforceable as from January 2015, has finally been published.

It allows foundations to handle business activities, provided that the line of business at stake is closely related to the foundation’s core activity. In addition,

foundations will be allowed to handle fund-raising, unless expressly prohibited in their deed of formation.

The new act also amends the administration of foundations, which so far was mainly an internal matter. The act includes partly mandatory provisions on the function of the various organs of a foundation (such as the board of directors, managing director and the supervisory board) as well as on the privileges, duties and responsibilities imposed on the members of such organs. Furthermore, foundations will have to provide more detailed annual reports than before.

Foundations will still be able to merge with other foundations, as long as the merging foundations have a similar purpose. Nevertheless, the new act introduces a simplified merger regulation, available to those foundations holding the whole stake of their subsidiaries.

Finland


Clarification of the legal regime governing redeemable preferred sharesA Government Ordinance dated 31 July, 2014 strengthens the legal regime applicable to redeemable preferred shares. The new rules make now a distinction between (i) preferred shares that can be repurchased by the company upon the decision of the general meeting of the shareholders and (ii) redeemable preferred shares, the terms and conditions of which are laid down in the bylaws.

Following the decision of the shareholders’ general meeting, the rules governing buy-back are applied when preferred

shares are repurchased. These rules not only restrict the purpose for which buy-back can be sought, but also limit repurchases to 10% of the share capital — or even 5% in some instances. They also specify that reserves — including the statutory reserve — are at least equal in value to all shares held by the company.

As regards redeemable preferred shares, the terms and conditions of which are laid down in the bylaws, they are subject to specific rules which include first, the requirement for the company to have a distribution capacity equal to the amount of the nominal value of the shares to be purchased, or to use the proceeds of new issued shares for the purpose of redeeming

the shares. Secondly, it is required that the reserve, in addition to the statutory reserve (which is not distributable but can only be capitalized), be equal to the nominal value of the preferred shares to be purchased. Third in case the bylaws provide for the payment of a premium to the shareholders, such premium shall be taken from distributable amounts or from a specific reserve provided therefor. And last but not least, the buyback can be initiated by the company only.

Finally the new provisions set out the rules for the use by the company of the redeemable preferred shares once they are repurchased.

France


Amendments to the Law on CompaniesOn 17 June 2014, the amended Law on Companies came into force. The amendments are aimed at improving corporate governance, as well as implementing EU regulations.

The core of the amendments is the requirement for public stock companies to have, as from 1 July 2015, at least a board or a supervisory board as part of their management structure.

The amendments also allow expanding the roles of the board. To the extent allowed by the articles of association, the board is allowed to have not only management but also supervisory duties.

In the latter case, the following membership restrictions will apply: only half of the board members may be employees of the company and the managing director will be precluded from being a board member. The same limitations will apply with regard to membership in the supervisory board.

Furthermore, in case of conflict of interest of one of its members, the board may forbid its respective member(s) to vote, in order to ensure impartial decision-making.

Another amendment relates to a certain mitigation of the concept of financial assistance (i.e., the prohibition of financing by the company of the acquisition of its shares by a third party). This prohibition will not apply to the employees of the

company at stake, as well as employees of its parent company or its subsidiaries, acquiring such shares with the financial assistance of the company. Under certain circumstances, financial institutions will also benefit from the same exception.

Lithuania


Law on patrimonial foundationsA draft Law no. 6595 on patrimonial foundations was filed by the Minister of Finance. Its aim is the introduction of an orphan structure, called patrimonial foundation, which completes the array of existing corporate vehicles commonly used in the areas of patrimonial and inheritance structuring.

It can be used to mitigate the erosion of private wealth on the death of one of the family members and to ensure continuity in the management of a family business. It enables the dissociation of the economic ownership of the family wealth from the management of the family business.

The foundation will be an instrument dedicated to individuals or patrimonial entities whose goal is the administration of private wealth with the main exclusion of exercising any commercial activity.

The foundation will be incorporated by a special notarial deed to be published in the Official Gazette and extracts will have to be deposited with the Register of Commerce.

It shall be managed by one or more directors, responsible for the execution of the mandate they received and for the faults committed in their management function.

The foundation shall issue registered certificates linked to assets it shall own, and representing rights defined in the incorporation deed or other documents, to any individual or patrimonial entity acting in the scope of wealth management of one or more individuals.

The foundation will have to keep its own bookkeeping and establish annual accounts, which will not be filed publicly.

Luxembourg

9

Restructuring and bankruptcy reforms in the NetherlandsAfter Germany, France and Belgium amended their insolvency legislation to provide for more restructuring options and to preserve value, Dutch legislators also launched proposals to provide for more restructuring options.

A proposal for legislation has been published for the Dutch equivalent of the pre-packaged administration (which is a form of bankruptcy procedure whereby a restructuring plan of a given company declaring its insolvency is agreed in advance). Such pre-packaged administration is already taking place with the cooperation of the Dutch courts and now legislation is forthcoming to provide for a legal basis.

Furthermore, a proposal for legislation has been published to introduce a legislative framework for a forced judicial composition outside a bankruptcy situation. By doing so, creditors and shareholders may be forced to accept a composition offered.

Further legislation has been announced to introduce an obligation for suppliers to continue their supply in certain situations, even after a company has been declared bankrupt.

In addition, the legislator has increased interest in fighting fraud that involves bankruptcies. Legislation is forthcoming to create a legal framework to forbid a managing director, who has been found guilty of improper management, exercising a managerial function for a maximum period of five years.

In addition, imprisonment of directors is possible if they refuse to provide a bankruptcy trustee with the necessary requested information, if the accounts were not kept properly, if there was excessive spending or embezzlement or if a certain creditor is intentionally benefited above others.

Netherlands


Norwegian regulation on management of alternative investment fundsA new act and regulation on the management of alternative investment funds (AIFs) entered into force in Norway on 1 July 2014. The legislation implements what is expected to be the EEA-rules corresponding to Council Directive 2011/61/EC on Alternative Investment Fund Managers (the AIFM Directive) and supplementary rules to the AIFM Directive.

“Alternative investment” includes all forms of collective investment structures that are not traditional transferable securities funds (UCITS), including hedge funds, private

equity funds and real estate funds. The act regulates the managers of AIFs, not the funds themselves.

In line with the AIF Directive, the legislation contains rules on the access of managers to market AIFs to professional investors. However, it also allows the marketing of AIFs to non-professional investors, subject to enhanced investor protection safeguards.

The legislation imposes licensing obligations and organizational, reporting and other operational requirements on managers of AIFs. All managers of AIFs are subject to supervisory control by the Norwegian Financial Supervisory Authority

(FSA). Professionals who manage AIFs under certain thresholds are only required to register with the FSA and to comply with the reporting requirements. However, registered (as opposed to licensed) AIF managers may only market Norwegian AIFs to professional investors in Norway.

Investment fund managers who are engaged in activities regulated by the new act as at 1 July 2014 have until the end of 2014 to comply with the statutory requirements imposed by the new legislation, including the requirement to apply for a license from, or to register with, the FSA.

Norway


Changes in limited liability companiesOn 20 May 2014, the Council of Ministers adopted the guidelines to the draft law amending the code of commercial companies, which should be enacted at the latest in 2016. The main purpose of this law is to ease the creation of limited liability companies in Poland by enabling the setup of such companies with a share capital as low as PLN1 (approximately €0.24), while the minimum share capital currently amounts to PLN5,000 (approximately €1,200). This change will be made in connection with the introduction of a new type of shares in limited liability companies,

the so-called non-nominal shares, whose issuance will allow a quick recapitalization of the company. The recent economic crisis created the need for such a solution.

The minor importance of the notion of a company’s share capital going forward (which is a customary instrument for creditors’ protection) will be balanced by the introduction of new corporate mechanisms to ensure the company’s solvency, as stated in the Council of Ministers’ guidelines. The first one will be called the solvency test whereby, prior to any payments to the shareholders, the board of directors will have to prepare a statement on the current solvency of

the company. The second one will consist of the compulsory creation of additional capital as a reserve to offset potential future losses.

According to the terms of the Council of Ministers’ guidelines, three types of a company’s capital structure shall coexist: the traditional model with the share capital of the minimum of PLN5,000 (approximately €1,200), the new model with the non-nominal shares or the mixed model (traditional and non-nominal shares).

Poland


New rules regarding insolvency proceduresAs expected eagerly by many stakeholders, the new Insolvency Law no. 85/2014 entered into force on 28 June 2014 as part of the Romanian judicial reform project.

Some of the most important amendments within the new Insolvency Law are as follows:

• The scoring procedure for receivables, should such receivables comprise state-aid components, as introduced by the Court of Justice of the European Union case C-73/11/P

• The introduction of the priority principle, where certain creditors of a bankrupt debtor have the right to receive payments before other creditors

• The mechanics of the insolvency of a group of companies (defined as two or more companies interconnected by control or ownership)

• New provisions regarding the collective lay-offs

Also, the new law provides for special rules regarding the bankruptcy of credit institutions, the bankruptcy of insurance companies and the cross-border insolvency

regime. In addition, the rules relating to financial leasing agreements have been changed, and leasing companies now have the right to terminate the leasing agreements even after the insolvency procedure has been opened. In this respect, the leasing companies could opt for various termination methods with or without the repossession of the assets at stake.

Romania


Russia

Amendments on the Russian civil codeSeveral amendments to the provisions of the Russian civil code on legal entities entered into force on 1 September 2014. The main amendments are as follows:

• There are now public and non-public associations. Public associations include joint-stock companies whose shares are publicly floated (by open subscription) or are publicly traded and joint-stock companies whose charters and company names comprise reference to the fact that the company is public. Non-public associations include limited liability companies and joint-stock companies that are not vested with the features applicable to public associations.

• Closed joint-stock companies will cease to exist as a legal form of Russian company.

• The charter (otherwise known as articles of association) is the one and only foundation document of a given legal entity.

• A company can now have two or more directors who can act either jointly or independently.

• A company must be informed of the fact that its shareholders concluded a shareholders’ agreement governing their relationships. Nevertheless, the content thereof is not to be disclosed to the company at stake.

• A decision of a general meeting of shareholders and participants and the composition of the shareholders and participants that attended the meeting shall be confirmed either by a registrar, or by a Notary Public. However, the charter of a limited liability company can provide that certification of the minutes

by a Notary Public is not applicable. In this case the charter shall provide for a different procedure.

• The capital of limited liability companies shall be paid within four months after its registration. Therefore, the partial payment of capital prior to the registration of said companies is no longer required.

• As from 2 October 2014, all joint-stock companies shall appoint a professional licensed registrar to keep shareholders’ registers.


Improvement of corporate governanceThe draft Law no. 121/000097 plans significant amendments to Spanish corporate regulations. It should be approved by the Parliament in the coming months and enter into force in January 2015.

Certain amendments deal with the general shareholders’ meetings, which should be granted greater powers to strengthen its role and foster the involvement of the shareholders.

The remainder of the amendments relate to the board of directors. Such amendments are intended to enhance the attendance on boards and the control of its management. The duties of diligence and loyalty of directors, as well as the procedure for conflict of interest, are more accurately defined.

The remuneration of the board members and executives of companies is one of the most amended topics in the draft law. In particular, the remuneration of the board members must be aligned with market practice and the economic situation of

the company, and the bylaws shall fix a remuneration system depending on the directors’ management and executive duties. In listed companies, different categories of directors are regulated and their mandate term shall be reduced. In summary, the purpose of the draft law is to ensure transparency in the management of companies in order to encourage investment, which would require companies to adapt their internal regulations during the upcoming months.

Spain


Corporate and Commercial Law Services

Albania Jona Bica [email protected] + 355 42419575

Austria Helen Pelzmann [email protected] + 43 1 26095 2145

Belgium Philippe Ernst [email protected] + 32 2 774 9054

Bulgaria Boris Smolyanov [email protected] + 359 2817 7100

Cyprus Nicole Phinopoulou [email protected] + 357 2227 2501

Denmark Henrik Kany [email protected] + 45 732 33310

Estonia Ranno Tingas [email protected] + 372 611 4578

Finland Taina Pellonmaa [email protected] + 358 5054 22900

Contacts

Corporate and Commercial Law newsletter 1616Corporate and Commercial Law newsletter

France Frederique Desprez [email protected] + 33 1556 11973

Gabon Fatima-Kassory Bangoura [email protected] + 241 0530 1020

Georgia Ivan Khokhlov [email protected] + 995 3221 58811

Germany Christian F. Bosse [email protected] + 49 711 9881 25772

Greece Christina Koliatsi [email protected] + 30 210 288 6509

Hungary Peter Vaszari [email protected] + 36 1451 8616

India Tarun Gulati [email protected] + 91 011 3044 6726

Italy Gianroberto De Giovanni [email protected] + 39 068 556 7330

Kazakhstan Dinara S. Tanasheva [email protected] + 7 727 259 7210

Lithuania Julija Lisovskaja [email protected] + 370 5 219 9895

Luxembourg Stephen D’Errico [email protected] + 352 42 124 7188

Netherlands Sandra Van Loon [email protected] + 31 88 4070 423

Norway Jane Elizabeth Wesenberg [email protected] + 47 2400 2391

Poland Zuzanna Zakrzewska [email protected] + 48 225 577 816

Portugal António Garcia Pereira [email protected] + 351 226 066 366

Romania Dragos Radu [email protected] + 40 214 024 060

Russian Federation Alexey A. Markov [email protected] + 7 495 641 2965

Spain Miguel Angel Rodriguez-Sahagun [email protected] + 34 915 727 392

Sweden Jesper Grip [email protected] + 46 8 520 59454

Switzerland Urs Wolf [email protected] + 41 58 286 4425

Turkey Mehmet Kucukkaya [email protected] + 90 212 368 5724

Ukraine Albert O. Sych [email protected] + 380 44 499 2011

EMEIA Rutger Lambriex [email protected] + 31 88 407 0425

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fall edition 2014 corporate and commercial law in emeia · · 2015-07-23• new law on insurance...

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