CROATIA Law and Practice Contributed by: Iva Basarić, Marija Gregorić and Matija Skender, Babic & Partners
Investments in Croatia may also meet the thresholds for review under other merger control regimes, includ - ing the EU merger control regime and national merger control regimes for special sectors such as the media, electronic communications, credit institutions, insur -
ber must be an employee representative, facilitating their involvement in significant business decisions. In the context of a public takeover, the acquirer should also consider that the Croatian Act on the Takeover of Joint Stock Companies (the “Croatian Takeover Act”) states that the target company’s management board must give a reasoned opinion on the takeover offer to the target company’s employee representatives or to the target company’s workforce directly if there are no such representatives. The employee representa - tives or workforce may comment on the offer and their comments have to be attached to, and published with, the target’s management board’s reasoned opinion. In a cross-border merger, the target (disappearing) company’s management board must prepare a merg - er report (outlining the reasons and implications of the merger) and enable the entire workforce to review it and provide comments on the proposed merger, and must inform all affected employees of their transfer to the acquiring entity. Any employees’ comments on the merger must be enclosed with the merger report at the Annual General Meeting to decide on the merger. Employee Rights and Benefits The legislation to be considered by the acquirer as relevant in the post-closing period notably includes the provisions of the Employment Act regulating and restricting the employer’s ability to terminate employ - ment contracts in general and in particular with regard to specific protected categories of employees (such as pregnant women, persons with disabilities, mem - bers of works council, senior employees, etc). 2.6 National Security Review In principle there is currently no national security review of acquisitions in Croatia, but it will be inter - esting to see the extent to which the anticipated FDI screening process will deal with national security requirements.
ance and investment activities. 2.5 Labour Law Regulations
In the sphere of M&A, it is paramount for the acquir - ing party to meticulously evaluate the landscape of employment laws and regulations governing acquired rights, collective engagement requirements and employee entitlements. Both local statutes and per - tinent Collective Labour Agreements (CLA) can be implicated with respect to these issues, as can the internal policies of the target company. Acquired Rights Since the implementation of the European Acquired Rights/Transfer of Undertakings Directive, the Employ - ment Act provides that, in the transfer of a business unit as a going concern, all employment contracts per - taining to the transferring (part of a) business unit will transfer to the acquirer automatically by operation of law. Consequently, the acquirer will assume employ - ment contracts pertaining to the business unit to be transferred as they exist at the time of the transfer (including the full gamut of employment rights, ben - efits and entitlements). While the transferring employ - ees do not possess the right to object or refuse to such transfer, prior consultation with the employee representative body – be it a works council or, if there is no works council, an appointed union trustee – is mandatory. Collective Engagement Requirements Typically, a share deal will not trigger collective engagement requirements, unless there is a CLA or an internal policy at the target company providing for such a requirement, or if the share deal would result in the loss of benefits for the employees of the target company. Notably, in share deals involving a target company that has both a management board and a supervisory board, the acquirer should consider that the Employ - ment Act mandates that one supervisory board mem -
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