Legal Acts in English

This Law shall govern the conditions and procedure for changing the ownership of socially-owned and state-owned capital and assets.

The terms used in this Law shall be understood to mean the following:

1. Privatisation, within the meaning of this Law, shall mean a change in the ownership of capital and assets of legal entities that operate socially and state-owned capital. Privatisation, within the meaning of this Law, shall also mean:

- sale of shares or interest which were, after the cancellation of a contract of sale of capital concluded in the privatisation procedure, transferred to and registered with the Registry of Shares and Interests Transferred after the Cancellation of a Contract of Sale of Capital Concluded in the Privatisation Procedure;

- sale of assets of enterprises wherein contract of sale of capital has been cancelled;

- sale of shares or interests of the Share Fund, as well as of the Development Fund of the Republic of Serbia and the Republic Fund for Pension and Disability Insurance * ;

2. State-owned Capital shall mean the capital of the Republic of Serbia, autonomous province and local government unit;

3. Subject of Privatisation shall be understood to mean:

- socially or state-owned capital and assets in enterprises and other legal entities, including public enterprises and state-owned capital declared in shares or interests;

- shares or interests after the cancellation of a contract of sale of capital;

- assets of enterprises wherein a contract of sale of capital has been cancelled;

- shares or interests of the Share Fund, the Development Fund of the Republic of Serbia and the Republic Fund for Pension and Disability Insurance, when sold together with shares or interests of the Share Fund;

4. Entities Undergoing Privatisation shall mean enterprises, companies and other legal entities undergoing a change of ownership, including public enterprises, for which an initiative for privatisation has been instituted;

4a) Large Entity Undergoing Privatisation shall mean an entity undergoing privatisation whose business revenues for the business year preceding initiation of the privatisation procedure amount to at least 50 billion dinars;

5. Models of Privatisation shall be understood to mean sale of capital, sale of assets, strategic partnership and gratis transfer of capital;

6. Methods of Privatisation shall mean public collection of bids with public auction and public collection of bids;

7. Participant in Privatisation Procedure shall mean a person who submitted an application for participation in the privatisation procedure;

8. Buyer shall mean a domestic or foreign legal entity or natural person who is declared the buyer or an entity or person with whom a contract of sale has been concluded;

9. Strategic Investor shall mean a domestic or foreign legal entity or natural person that has concluded a strategic partnership agreement with an entity undergoing privatisation or the Republic of Serbia;

10. Means of Payment shall mean dinar and foreign means of payment (foreign currencies and effective foreign money);

11. Letter of Interest shall mean expression of interest in a particular entity and  privatisation model, with basic information about the interested buyer or strategic investor and proposed indicative price, investment programme, the framework plan of operations and the number of full-time employees, as well as other information relevant to particular public invitation;

12. Fair Market Value shall mean fair value as defined by the International Financial Reporting Standard 13 - Fair Value Measurement;

13. Method of Public Collection of Bids with Public Auction shall mean a method of privatisation for the sale of capital and assets of an entity undergoing privatisation and its subsidiary companies by submission of bids and public auction of bidders;

14. Method of Public Collection of Bids shall mean a method of privatisation by submission of bids for the selection of a strategic investor as well as in the procedure of sale of capital of the large entities undergoing privatisation;

15. Starting Price for Sale of Capital or Assets shall amount to no less than one-half of the assessed value of capital or assets, and the new starting price at the second public collection of bids with public auction shall amount to at least one-third of the assessed value of capital or assets;

16. Sale of Capital shall mean a privatisation model wherein the subject of sale is state-owned capital or socially-owned capital to be privatised, shares or interests after the cancellation of a contract of sale of capital concluded in the privatisation procedure, and shares and interest of the Share Fund, as well as of the Development Fund of the Republic of Serbia and the Republic Fund for Pension and Disability Insurance * ;

17. Sale of Assets shall mean a model of privatisation whereby assets or parts of assets of an entity undergoing privatisation and its subsidiary companies are sold in the privatisation procedure;

18. Programme for Sale of Assets shall mean a programme for the sale of assets that is adopted by the entity undergoing privatisation and its subsidiary companies and accepted by the ministry competent for economic affairs, within the time limits specified by this Law;

19. Strategic Partnership shall mean a model of privatisation by means of an institutional relationship of domestic or foreign legal entities with the entity undergoing privatisation or the Republic of Serbia, implemented through a joint investment by establishing a new company or recapitalization of the existing entity undergoing privatisation;

20. Establishment of New Company shall mean establishment of a company founded by the Republic of Serbia and the strategic investor, wherein the investment of the Republic of Serbia consists of assets acquired by the Republic of Serbia on the basis of claims against the entity undergoing privatisation for which a decision on strategic partnership has been issued, by substitution of fulfilment;

21. Recapitalization of an existing entity undergoing privatisation shall mean an increase of the main capital of the entity undergoing privatisation for which a decision on strategic partnership was issued by the Government;

22. Strategic Partnership Agreement shall mean an agreement on the recapitalization of an existing entity undergoing privatisation concluded by the Republic of Serbia, the strategic investor and the entity undergoing privatisation, as well as agreement on the establishment of a new company concluded by the Republic of Serbia and the strategic investor;

23. Gratis Transfer of Capital to Employees shall mean transfer of capital in an entity undergoing privatisation with socially-owned capital under privatisation using the sale of capital model, by transferring up to 30% of capital in shares or interests to employees without compensation;

24. Gratis Transfer of Capital to Strategic Investor shall mean transfer of capital to an investor in the event of positive business results, in conformity with the regulations governing investment incentives, based on the decision of the Government;

25. Measures for Preparation and Relief of Liabilities of an Entity Undergoing Privatisation shall mean measures that may be taken by the Government when the entity undergoing privatisation is privatised by sale of capital or by recapitalization of the existing entity undergoing privatisation, under the terms of this Law;

26. Conditional Debt Write-off shall mean a measure of preparation and relief of liabilities of entities undergoing privatisation, whereby the Government creditors of an entity undergoing privatisation undertake to write off debt as at 31 December of the last business year against the entity undergoing privatisation with full or majority ownership by socially-owned or state-owned capital, i.e. capital that was, after the cancellation of a privatisation contract, transferred to and registered with the Registry of Shares and Interests Transferred after the Cancellation of a Contract of Sale of Capital Concluded in the Privatisation Procedure. Debt write-off shall be valid if the capital of the entity undergoing privatisation has been sold or if an agreement on recapitalization has been concluded;

27. Converting Debt of Entity Undergoing Privatisation into Permanent Investment (Conversion) shall mean a measure for the preparation and relief of liabilities of an entity undergoing privatisation whereby claims of creditors are converted into permanent stake in the capital of the entity undergoing privatisation;

28. Government Creditors shall mean: public enterprise, Tax Administration, Republic Fund for Pension and Disability Insurance, National Health Insurance Fund, Republic Directorate for Commodity Reserves, Development Fund of the Republic of Serbia and other government agencies and organisations, including the Autonomous Province of Vojvodina and local government units.

The Deposit Insurance Agency shall also be deemed a Government creditor when acting in the capacity of receiver for banks in bankruptcy and when dealing with claims of the Republic of Serbia stemming from assumed foreign debts, on behalf and for account of the Republic of Serbia.

29. Lien Creditors shall mean creditors whose claims are secured by a mortgage or lien on assets of an entity undergoing privatisation, as well as creditors who have secured the right to collect claims against movable and immovable property of an entity undergoing privatisation in an enforcement procedure;

30. Suspension of Procedure shall be applied upon learning of circumstances, unknown at the time the procedure was initiated, preventing the sale of capital or assets of an entity undergoing privatisation;

31. Supervision of Fulfilment of Buyer's Contractual Obligations shall mean supervision performed by the ministry competent for economic affairs with a view to verifying the performance of contractual obligations by the buyer;

32. Bankruptcy Proceedings for Completion of Privatisation shall mean bankruptcy proceedings initiated by the ministry competent for economic affairs  in relation to an entity undergoing privatisation when the conditions for instituting bankruptcy procedure are met, in accordance with the provisions of this Law and the Law on Bankruptcy, with the purpose of completing privatisation.

33. Registry of Shares and Interests Transferred after the Cancellation of a Contract of Sale of Capital Concluded in the Privatisation Procedure shall mean a registry to which the shares and interest are transferred and registered with after the cancellation of a contract concluded in the privatisation procedure, and kept by the ministry competent for economic affairs (hereinafter: the Registry). The Registry shall contain the name of the entity undergoing privatisation whose part of capital is registered with the Registry, information about the amount of capital, i.e. the number of shares that are being registered and other information.

The provisions of this Law shall apply to entities undergoing privatisation with registered office in the territory of the Republic of Serbia.

In the event that a matter governed by this Law is governed by another law in a different manner, the provisions of this Law shall apply.

Notwithstanding paragraph 2 of this Article, the provisions of this Law shall not apply to sports organisations, media publishers, enterprises for professional rehabilitation and employment of persons with disabilities and companies with the license for production of armaments and military equipment issued in line with the law governing the production and trade of armaments and military equipment, unless the laws governing the status of these enterprises provide for the application of the provisions of this Law.

The provisions of the law governing companies relating to the disposal of assets of high value shall not be applied in privatisation procedure, and special decisions on sale of assets shall not be issued.