In The Debrief, our Practice Leaders across CEE share updates on recent and upcoming legislation, consider the impact of recent court decisions, showcase landmark projects, and keep our readers apprised of the latest developments impacting their respective practice areas.
This House – Implemented Legislation
In Greece, the major novelty is the new Articles of Association model for incorporating companies entering into force on March 1, 2024, according to Drakopoulos Senior Associate Sofia Angelakou. “Decision No. 5186 issued by the Minister of Development was published in the Government Gazette on January 26, 2024, introducing the new Articles of Association model either through the One-Stop-Shop service or the electronic One-Stop-Shop service of the General Commercial Registry,” reports Angelakou, adding that it “aims to simplify the incorporation process and to achieve uniformity in the Articles of Association of companies under incorporation.” The new rules, according to her, will be available progressively, depending on the type of the company, with it being available for all types of companies by December 2024.
In Romania, “Government Emergency Ordinance no. 108/2023 entered into force in December 2023 seeking, inter alia, to amend Competition Law no. 21/1996,” Nestor Nestor Diculescu Kingston Petersen Partner Anca Diaconu explains. “Among the most notable changes was the express regulation of concepts such as the single economic unit, economic continuity, and legal continuity.” According to Diaconu, “perhaps the most controversial amendment concerned the treatment of legal professional privilege. As per the new provisions, competition inspectors are allowed during inspections to immediately read and copy documents where the undertaking failed to properly justify the privileged character of communications, by providing no justification or invoking grounds that cannot justify such protection or relying on manifestly erroneous facts.”
According to Nagy es Trocsanyi Partner Orsolya Kovacs, “significant regulatory changes were enacted at the beginning of the year, including, among others, to facilitate the construction of larger, so-called on-site power plants, which are typically aimed at serving the energy needs of industrial companies,” in Hungary. “According to this amendment, industrial operators are practically free to establish networks and microgrids behind the meter in a given geographical area, since the restriction requirement on one topographical number has been abolished.” Kovacs adds that regarding solar parks, “the rules on FDI have also been amended (tightened) further from January: the new law granted the Hungarian state the right of first refusal with respect to domestic strategic target companies that are to be acquired by foreign investors for the implementation of photovoltaic (solar) projects, excluding companies interested in small household power plants (i.e., below 50 kilo-volt-amperes).” Additionally, Kovacs highlights that “the government has also modified previous legislation concerning the development of wind power plants in order to expand wind power capacities.”
Musat & Asociatii Senior Associate Andrei Cristescu further notes that Romania has transposed EU-regulated class action institutions, coming into effect on December 23, 2023. “The Romanian legal landscape recently had the class action institution regulated by Law no. 414 of December 19, 2023, regarding the conduct of representative actions for the protection of the collective interests of consumers. In light of the new law, a legal non-profit entity (so-called “Qualified Entities”) can represent any number of consumers in class actions initiated before the Romanian courts of law against professionals such as corporations, banks, or other companies in order to obtain (i) damages and (ii) the discontinuation of illegal practices carried out in violation of the relevant consumer protection legislation.” With respect to procedural aspects, “the class actions initiated by Qualified Entities are exempt from the payment of judiciary fees and the first instance ruling is subject to appeal,” Cristescu adds. “If the respondent of the class action fails to respect the measures enacted by the decision rendered against it, Law no. 414/2023 regulates fines amounting to EUR 25,000.” According to Cristescu, “Romanian companies have begun conducting in-depth reviews of their internal policies and regulations to ensure compliance with all aspects of consumer protection legislation.”
As for Poland, Wolf Theiss Associate Marta Wasil highlights that “on February 19, 2024, the President of the Republic of Poland signed the act amending the Act on Assistance to Citizens of Ukraine in Connection with the Armed Conflict in the Territory of Ukraine. The new solutions entered into force on February 22, 2024.” The most significant change introduced by the amendment, according to Wasil, is the extension of the period during which the stay in the territory of the Republic of Poland by Ukrainian citizens who arrived in connection with the armed conflict in Ukraine is considered legal until June 30, 2024.” In addition, Wasil notes: “the validity period of national visas, temporary residence permits, residence cards, Polish identity documents for foreigners, and ‘tolerated stay’ documents issued or granted to Ukrainian citizens, the deadline for Ukrainian citizens to leave the territory of the Republic of Poland, etc.” are also extended until June 30, 2024.
This House – Reached an Accord
In Slovakia, as of February, there have been major developments in the criminal legislation that might affect corporate governance rules of corporations, Ments Partner Peter Makys points out. “Under the newly adopted regulation, actions of the perpetrator will not be attributed to the legal person if the legal person has made all efforts that can fairly be required of it, taking into account the latest knowledge in the fields of management supervision and decision-making or control processes, to prevent, avoid, or mitigate the risk of the criminal offenses. Furthermore, it is necessary to demonstrate that these effective control and prevention mechanisms are embedded as standard in the day-to-day operations of the legal person.” According to Makys, “the legislative amendment will contribute to the establishment of functioning, strong, and stable corporate governance rules and compliance programs that would mitigate the risks of criminal offenses and under which criminal liability will not be imposed on legal persons.”
This House – Under Review
Guleryuz Partners Partner Zahide Altunbas Sancak points to new amendments in energy legislation in Turkiye, allowing the establishment of electric generation on water bodies. “A proposed law presented to the Grand National Assembly on January 29, 2024, stipulates opening Turkey’s lakes, reservoirs, and seas for solar and wind power projects,” Altunbas Sancak adds. “This proposal, aimed at regulating floating photovoltaics and expanding renewable energy capacity by an estimated 80 gigawatts, represents a bold step toward sustainable development. However, from a legal standpoint, the amendments warrant a nuanced analysis, particularly for stakeholders in the energy sector.”
“The amendments, which will allow investors to establish wind and solar power facilities on aquatic bodies without the need for zoning plans, introduce a novel approach to utilizing natural resources for energy production,” she notes. “This is a significant departure from traditional land-based renewable energy projects and raises several legal considerations.”
This House – The Latest Draft
Asters Partner Oleg Boichuk highlights that “Ukraine has initiated a public discussion on the draft regulations on infrastructure, including the draft regulation of the Cabinet of Ministers of Ukraine on Certain Matters Related to Licensing of Construction of the Objects, which are Considered of Middle (CC2) or High (CC3) Risk Classes to open the national construction market to the new players.” In general, he notes, “all major construction works, including infrastructure construction, are subject to license in Ukraine, and since the respective licensing conditions were canceled in 2020, new construction licenses cannot be obtained.” This, according to Boichuk, “led to a market closure for new players, subject to the extraordinary declarations procedure applicable during martial law.” The new draft regulations, according to him, “should lead to the development and adoption of new licensing conditions and requirements, which, in turn, should enable local and international businesses to obtain construction licenses in Ukraine.”
Tuca Zbarcea & Asociatii Partner Catalin Baiculescu adds that on January 31, 2024, “the final version of Romania’s National Strategy for Artificial Intelligence was published by the Ministry of Research, Innovation and Digitalization.” According to Baiculescu, “the National Strategy for Artificial Intelligence is based on the concrete actions proposed at the level of the European Union (i.e., the AI Act), but it is also part of Romania’s wider efforts toward digitalization. As such, six general objectives were defined and correlated with the priority axes of action also pursued in the strategic documents of the EU: 1. Supporting education for research, development, and innovation and the training of specific AI skills; 2. Development and efficient use of infrastructure and data sets; 3. Development of the national system of Research - Development - Innovation in the field of AI; 4. Ensuring technological transfer through partnerships; 5. Facilitating the adoption of AI throughout society; 6. Development of a system of governance and regulation of AI.”
In the Works
Marohnic, Tomek & Gjoic Partner Josip Marohnic reports that, in Croatia, “activities related to the Hydrogen Valley North Adriatic project, which represents a result of regional cooperation, will continue,” in 2024. “The Ministry of Economy and Sustainable Development also announced the increase of the LNG terminal capacity and the construction of the Zlobin-Bosiljevo gas pipeline, which will further create the basic conditions for the additional supply to the EU.” Marohnic highlights that “there are currently seven exploitation fields and 28 exploration areas for geothermal water in Croatia, attracting both private and public entities. However, the development of geothermal power plants is hampered by bureaucracy because investors must pursue two lengthy and costly procedures, one for the exploitation of geothermal water and another for the production of electricity.”
Additionally, Dolea & Co Managing Partner Sorin Dolea notes that, after March 2024, “the Moldovan operator of electricity transmission and system network Moldelectrica will organize, together with the system operators from Romania and Ukraine, tenders for the allocation of intraday and monthly capacities for cross-border exchanges of electricity.” According to Dolea, “any supplier will be able to participate in the auctions, based on the new intraday capacity allocation rules at the Moldova-Romania border and the long-term and daily capacity allocation rules at the Moldova-Ukraine border.” with him reporting that “the rules were approved by the National Agency for Energy Regulation of the Republic of Moldova on February 9, 2024, and entered into force immediately in the case of Ukraine, having been approved by the National Regulatory Authority of Ukraine, on January 30, 2024. Meanwhile, the rules for the Moldova-Romania border will enter into force upon approval by the Romanian National Energy Regulatory Authority. Thus, the intraday auctions on the border between Moldova and Romania are expected to start in March.”
Regulators Weigh In
In terms of regulators, Marohnic stresses that in Croatia, “the beginning of the year was marked by the ongoing discussions about the Croatian energy regulatory agency HERA’s delay in deciding on the grid connection fee. This, coupled with the looming 15-day deadline for developers to obtain essential grid connection documents, is causing significant unease in the sector and is halting the progress of new renewable energy projects.”
In Romania, “the President of the Competition Council has recently presented a summary of the authority’s activity in 2023, with the significant actions taken being the highlight,” Diaconu reports. “The authority initiated the highest number of competition-related investigations in the last 12 years and organized more dawn raids than before. On top of that, particular attention was given to the food sector, where the competition authority monitored several state interventions.”
Picking a Fight
Komnenic & Partners Managing Partner Milos Komnenic highlights some disruptions in the Montenegrin market. The fact that “in the last 3.5 years, Montenegro has changed four governments,” has led to some uncertainties, according to Komnenic. “One of our client found themselves at the center of a complex dispute directly affected and influenced by politics, involving property rights, construction regulations, interactions with public authorities, and a media frenzy,” Komnenic notes, highlighting that “after four years of having a valid construction permit, undergoing numerous inspections, and receiving positive decisions from the Ministry of Spatial Planning, Urbanism, and State Property, that very same Ministry – under the new Government of Montenegro – annulled its previously approved preliminary design for a construction project.” He further adds that “due to the lack of clear legal consequences in case of terminating an approval for a preliminary design (particularly when such is done after a valid construction permit), this decision of the Ministry has not yet formally stopped construction activities but it has undeniably caused significant damage to the project’s construction and sales, and overall outcome, while final consequences are still to be estimated.” The outcome of this dispute, according to Komnenic, “will affect not just the client, but also Montenegro’s standing in terms of legal integrity and its efforts towards establishing a just business climate.”
In Related News
Finally, Marohnic highlights that at the beginning of the year, “Croatia also saw significant turbulence due to the expiry of a state aid program during which the ministry failed to allocate EUR 783 million in funds aimed at fostering renewable energy development. It has yet to be seen how and when the ministry will resolve the lack of state support without which further development of renewable energy projects is almost impossible.”
This article was originally published in Issue 11.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
