Recent legislative developments
Anita Rubinic-Puller and Anela Kedic
Wolf Theiss
Zagreb
Anita Rubinic-Puller (Bio)
Anela Kedic (Bio)
The Enforcement over Monetary Funds Act (the Act) became law in Croatia effective January 1 2011.
Under prior law, in order to collect funds from debtors' bank accounts after obtaining an enforcement order (either a court judgment or a directly enforceable notarial deed), creditors were required to list exact bank account numbers. This did not represent a significant burden for company bank accounts, because such account numbers are a matter of public record and can be obtained from the Croatian Financial Agency (FINA) at a nominal cost. However, personal bank accounts were not publically available and disadvantaged creditors enforcing rights over individuals' assets.
In order to facilitate the uniform enforcement over monetary funds, the Act enables FINA to act upon enforcement orders over the bank accounts of all debtors (both legal entities and individuals).
Under the Act, once a creditor obtains an enforcement order, the creditor files a motion with FINA for the collection of funds from the debtor's bank account(s). FINA then issues further orders to the bank(s) holding account(s) for the debtor. The bank(s) receiving such orders are then required to immediately transfer the due amount to the account specified by the creditor. If a debtor has several accounts, collection is made consecutively until the full amount due is obtained.
If several motions for collection are filed by more than one creditor, FINA makes a priority list based on the exact time when the creditors filed their respective motions. Lower priority claims are settled only after the higher priority claims have been fully collected. It should be noted that certain statutorily defined exceptions to this rule continue to apply (such as child support payments).
In the case of insufficient funds, FINA issues an order to seize all bank accounts and bank deposits belonging to the debtor, preventing any payments until the due amounts are fully collected or the matter is otherwise settled. Such seizure will also encompass any new bank account a debtor might open. If a debtor subsequently goes bankrupt, the seizure of their bank accounts lapses and resolution of the matter then occurs in the bankruptcy proceedings.
A number of other changes to the Croatian enforcement system will come into effect January 1 2012, including the institution of a governmental agency specifically charged with conducting enforcements, amendments regarding territorial jurisdiction and postponement procedures, and limiting the grounds for appeal.
Competition law: new secondary legislation
The government promulgated a new regulation dealing with the block exemption of certain vertical agreements, and a new regulation on the block exemption granted to agreements on distribution and servicing of motor vehicles. Both regulations incorporate the statutory elimination of single exemptions in favour of block exemptions. The other change in these two regulations is that in order for new agreements to be exempt, the market share of both the supplier and the buyer/distributor have to be below 30% respectively. Agreements entered before the effective date of the regulations have to comply with the new rules by February 2012. The regulation concerning motor vehicles will expire in June of 2013, at which time distributors and servicers of motor vehicles will no longer enjoy the privileges of the prior block exemption.
Three other new regulations, the regulation on block exemption granted to certain categories of technology transfer agreements, the regulation on agreements of minor importance and the regulation on definition of relevant market, replaced the regulations enacted under prior law.
None of the new regulations deals with single exemptions, as current law no longer permits single exemptions.
Proposed changes of the Labour Act
The government is also considering a proposal to amend the Labour Act.
The statutory maximum 40-hour full-time work week remains unchanged. Shift workers can currently work more than 40 hours a week without overtime pay; however, additional working hours (exceeding 40) may not exceed 12 hours per month. Under the proposed amendment the 12-hour maximum would be increased to 24 hours a month. However, if, on a rolling 4-month-average basis, the total working hours of shift workers exceed the working hours of non-shift workers, the excess hours would be considered overtime work.
The amendment would enable workers in seasonal industries, such as tourism, to work 60 hours a week on a non-overtime basis (up from 56 hours under current law), if their collective bargaining agreement so provides and each covered worker consents in writing. Measured on a rolling 12-consecutive-months basis (the current law uses a calendar year), the total working hours of such workers cannot exceed the working hours of regular employees working 40 hours a week.
The amendment would enable night work to last a maximum of 12 hours, instead of the current 8 hours, if permitted under the collective bargaining agreement. This will again enable companies to arrange work in the once traditional and popular 12-24-12-48 shifts.
We expect the amendment to be enacted mid-2011.
Proposed investor incentives
The Croatian Government recently submitted for urgent parliamentary consideration proposed amendments to the Investment Incentives Act. The proposed amendments would extend the time period for meeting the minimum job creation requirements for projects that were approved pursuant to the Investment Incentives Act and which were started in 2007, 2008 or 2009. Such terms would be extended for two additional years.
The proposed amendments would also decrease the minimum investment threshold from €300,000 to €100,000 for technology, logistics and certain other projects, as well as the number of new jobs required to be created. Small and medium-sized companies would no longer be entitled to certain bonus incentives for projects worth more than €50 million. Additionally, infrastructure works are no longer eligible for incentives, except in municipalities with 20% or more unemployment. Certain employee training costs would also lose incentive eligibility.