I GENERAL PROVISIONS
Subject of the Law
This Law regulates the conditions and procedures for change of ownership over socially owned and public capital and assets.
Certain terms used herein shall have the following meanings:
1. Privatization in terms of this law is the change of ownership over capital and assets of legal entities that operate with socially owned and public capital. Privatization in terms of this law also implies the following:
- Sale of shares and stakes that have been transferred to the Privatization Agency (hereinafter: Agency) after the termination of the agreement on the sale of capital concluded between the Agency and a buyer.
- Sale of assets in companies where the agreement on the sale of capital has been terminated.
- Sale of shares and/or stakes of the Shareholder Fund, as well as of the Development Fund of the RS and the Fund for Pension and Disability Insurance, when sold together with shares or stakes of the Shareholder Fund;
2. Public capital is the capital of the Republic of Serbia, autonomous province and local self-government units;
3. Subject of privatization is:
- Socially owned or public capital and assets in companies and other legal entities, including public companies and public capital in form of shares or interests;
- shares and/or stakes after the termination of the agreement on the sale of capital;
- assets of enterprises for which the agreement on the sale of capital has been terminated;
- shares and/or stakes of the Shareholder Fund, as well as of the Development Fund of the RS and the Fund for Pension and Disability Insurance, when sold together with shares or stakes of the Shareholder Fund;
4. Privatization entities are enterprises, companies, and other legal entities undergoing ownership transfer, including public companies initiated for privatization;
5. Privatization models are the sale of capital, sale of assets, strategic partnership and capital transfer free of charge;
6. Privatization methods are public collection of bids with subsequent public bidding and public collection of bids;
7. Participant in the privatization process is a person who submitted an application for participation in the privatization process;
8. Buyer is a domestic or foreign legal or natural person who has been declared a buyer or an individual with whom a sales agreement has been concluded;
9. Strategic Investor is a domestic or foreign legal entity that has signed an Agreement on Strategic Partnership with a privatization entity, in this case, the Republic of Serbia;
10. Means of Payment are domestic or foreign convertible currency;
11. Letter of Interest is expressed interest in a particular subject and model of privatization containing basic information on the interested buyer or strategic investor, with proposed indicative price, investment program, tentative plan of operations and number of full-time employees, as well as other relevant information set forth by Public Invitation;
12. Fair Market Value is a fair value as defined by International Financial Reporting Standards 13 - Fair Value Measurement;
13. Method of public collection of bids with subsequent public bidding is a privatization technique for the sale of capital and assets of privatization entity based on bid submission and participation in public bidding procedure;
14. Method of public collection of bids is a privatization method that envisages the submission of bids for the selection of strategic investor;
15. The initial price for the sale of capital and/or assets shall amount to at least one-half of the estimated value of capital and/or assets, while the new starting price at the second collection of bids and public bidding shall amount to at least one-third of the estimated value of capital and/or assets;
16. Sale of capital is a privatization model whose subject of sale is public capital or socially owned capital undergoing privatization, shares and stakes after the termination of the agreement on the sale of capital concluded between the Agency and a buyer, as well as shares and/or stakes of the Shareholder Fund, and the Fund for the Development of the RS and the Pension and Disability Insurance Fund, when sold together with shares or stakes of the Shareholder Fund;
17. Assets Sale is a model of privatization that envisages the sale of assets or part of the assets of the privatization entity in the privatization procedure;
18. Asset Sale Program is a program on asset sale rendered by privatization entity and adopted by Privatization Agency within the time limit specified by this law;
19. Strategic Partnership is a model of privatization based on institutional interaction between domestic or foreign legal entities and privatization entity, or in this case, the Republic of Serbia, which is implemented through a joint venture by establishing a new company or the capital increase of the current privatization entity;
20. Establishment of a new company is the setting up of an enterprise, founded by the Republic of Serbia and a strategic investor, with a stake of the Republic of Serbia being the property acquired as claims against the privatization entity selected for strategic partnership, via the “giving in payment” (datio in solutum);
21. Capital increase of the current privatization entity is the increase of basic capital in a company subject to privatization for which the Government of the Republic of Serbia (hereinafter: Government) has adopted a decision on strategic partnership;
22. Strategic Partnership Agreement is a contract on the capital increase of the existing privatization entity concluded by the Republic of Serbia, a strategic investor and privatization entity, as well as the agreement on the establishment of a new company concluded between the Republic of Serbia and a strategic investor.
23. Transfer of capital free of charge to employees is the transfer of capital in privatization entity with socially owned capital that is being privatized through a capital sale model by transferring up to 30% of the capital to employees free of charge, in shares or stakes;
24. Transfer of capital free of charge to a strategic investor is the transfer of capital to an investor in case of positive business results, in accordance with regulations governing incentives for investments and based on a Government decision;
25 Measures for disburdening and the preparation of privatization entity are measures that may be set by the Government in case of privatization of the entity through the sale of capital or capital increase of the existing privatization entity, under the terms of this law.
26. Conditional Debt write-off is a measure for disburdening and the preparation of privatization entity according to which the state creditors undertake to write off the debt of the privatization entity that is operating entirely with majority socially owned or public capital, as of 31/12/2013. Debt write-off shall be valid if the capital of the privatization entity has been sold, or if the agreement on capital increase has been concluded;
27. Debt-equity swap (conversion) is a measure for the preparation and disburdening the privatization entity according to which the claims of creditors are converted into a permanent stake in the capital of the entity to be privatized.
28. State creditors are as follows: public enterprise, Tax Administration, National Pension and Disability Insurance Fund, National Health Insurance Bureau, National Directorate for Commodity Reserves, Development Fund of the Republic of Serbia and other national authorities and organizations, including the Autonomous Province of Vojvodina and local self-government units.
The Deposit Insurance Agency shall also be considered a state creditor when performing the function of bankruptcy trustee during bankruptcy of banks and when administering on behalf and for the account of the Republic of Serbia, with claims of the Republic of Serbia arising from assumed foreign liabilities;
29. Secured creditors are creditors who have claims secured by a mortgage or lien on the assets of the privatization enterprise, as well as creditors who through a final court decision became entitled to be settled out of the entity’s movable or immovable assets;
30. Suspension of procedure is applied in case of awareness of circumstances unknown at the time of initiating the proceedings and which completely prevent the sale of capital and/or assets of the privatization entity;
31. Control of buyer's obligations under the agreement is control exercised by the Agency so as to verify the performance of the buyer’s contractual obligations;
32. Bankruptcy aimed at completing privatization is a bankruptcy proceedings initiated by the Agency against the privatization entity, with due reasons for bankruptcy under the provisions of this law and the Law on Bankruptcy, and for the purpose of completion of privatization.
Law on privatization (full version)