Published on 04.07.22

The “squeeze-out” of the minority shareholders in the companies in the Republic of North Macedonia will soon become a reality. The amendments to the Company Law, which plan to enable the compulsory purchase and sale of shares, as well as more detailed regulation of the holding and concern, are entering a new phase.

The proposed changes provide for the regulation of the compulsory purchase and sale of shares or the so-called “squeeze-out” in joint stock companies with a dominant and concentrated ownership structure where one majority shareholder owns over 95% of the voting shares, a matter that has not been regulated so far, except in the Law on Takeover of Joint Stock Companies where the “squeeze-out” can occur only after a successfully completed takeover procedure (only in a certain period of time). The regulation of the compulsory purchase and sale of shares in the Law is necessary to be done, primarily because, as a result of the concentrated ownership structure of certain joint stock companies there is low liquidity of their shares on the stock exchange, as well as there is a small share of publicly owned shares. According to the amendments, in the process of “squeeze-out” the obligations of the dominant shareholder are clearly prescribed and defined, which includes an obligation for compulsory purchase of shares of minority shareholders, i.e. properly prescribing the rights of minority shareholders to request compulsory sale of their shares to the dominant shareholder in a legal procedure that ensures fair, transparent and correct treatment.

The proposed changes also regulate in detail the holding, i.e. the concern as forms of relation between companies, due to the perceived need to regulate details and specifics for the functioning of the holding companies, i.e. the concerns, primarily from the aspect of their management, by concluding appropriate agreements between the companies, appropriate changes in the tax regulations, all in order to practically effect the benefits of the holding, following the example of the countries in the region, but also of the European Union.

Published on 09.06.22

The long-announced Law on Payment Services and Payment Systems was finally adopted and published in the Official Gazette of the Republic of North Macedonia No. 90 on April 12, 2022. This law primarily harmonizes domestic legislation with the EU Payment Services Directive (2015/2366 / EC) known as the “PSD2” Directive, as well as other current EU directives on electronic money and payment operations.

This law liberalizes the market for payment services by enabling the entry of payment institutions, which are not banks, and which, like the banks, will perform certain services in the payment operations and issuance of electronic money. On the Macedonian market, made upon EU standards, will be able to enter foreign payment institutions that already operate on the European market, but this will also encourage the establishment of domestic payment institutions, which will strengthen market competition and increase the supply of various innovative electronic payment services.

In view of the intensification of the use of electronic payment, the law provides specific rules for enhanced consumer authentication in order to reduce the risk of abuse and fraud.

Among other novelties, the law provides for new payment services such as a service for initiating payments and a service for providing information on payment accounts. The rights of consumers to be informed about the conditions for using the services are strengthened. Card payment schemes are regulated, and interbank fees with payment cards are limited.

The law enters into force on 01.01.2023 after which the Macedonian market of payment services is expected to be driven by the presence of new players, and thus the positive effects to be felt in other business segments.

Published on 09.06.22

Following the latest amendments to the Company law from April 2022, an extension to the debt-to-equity swap possibility in course of a procedure for increasement of the share capital of a LLC was introduced, previously such being exclusively available only to the loans provided by the single shareholder in a single shareholder LLC (while in practice, shareholders in a LLC with more than a single shareholder, were deprived of such possibility).

With the new changes, this opportunity is now presented also to third parties – investors i.e. lenders, providing them the possibility to become a shareholder of a LLC through a debt-to-equity swap procedure, by transforming the loans they have provided to the company, into a contribution in the company.

Such right of third parties to transform the provided loans to the company into contribution in the same will be limited to a term of three years as of the date of such loan agreement, and it will be subject to certain additional formalities as a precondition for conducting such debt-to-equity swap procedure. In any event, it remains to be seen how this new mechanism will affect the investment climate and the financing of companies in North Macedonia, especially the investor’s approach in respect to start-up companies.