CROATIA Law and Practice Contributed by: Iva Basarić, Marija Gregorić and Matija Skender, Babic & Partners
Notably, in share deals involving a target com - pany that has both a management board and a supervisory board, the acquirer should consider that the Employment Act mandates that one supervisory board member must be an employ - ee 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 ( “Croatian Takeover Act” ) states that the target company’s management board must give a reasoned opin - ion on the takeover offer to the target company’s employee representatives or to the target com - pany’s workforce directly if there are no such representatives. The employee representatives 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 (disappear - ing) company’s management board must pre - pare a merger 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 affect - ed 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 employment contracts in general and in particular with regard to specific protect - ed categories of employees (such as pregnant
women, disabled persons, members of works council, senior employees, etc). 2.6 National Security Review In principle there is currently no national secu - rity review of acquisitions in Croatia, but it will be interesting to see the extent to which the anticipated FDI screening process will deal with national security requirements. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Most M&A deals in Croatia (especially larger scale deals) are subject to arbitration, and deci - sions in disputes involving M&A deals are typi - cally not publicly available due to the confiden - tiality of arbitral proceedings. In December 2019, a decision of the High Com - mercial Court of Croatia caused a stir in the local legal and business community in relation to M&A deals, particularly regarding the share transfer agreements required to effectuate and register a transfer of shares (ie, business quota) in Croa - tian limited liability companies. Under the law, these share transfer agreements must be made in a special form provided under Croatian laws before the Croatian notary public. Typically, in practice, the relevant agreements were signed locally on the basis of the powers of attorney on which the signature of the party (or the party’s representative) was notarised. However, the High Commercial Court decided that, due to general parity of form requirements, the power of attorney should be made in the same form as the share transfer agreement (ie, that it is not suf - ficient for the signature on the power of attorney to merely be notarised). The High Commercial Court’s decision did not set a precedent proper
527 CHAMBERS.COM
Powered by FlippingBook