The Parliament of the Federation of Bosnia and Herzegovina (FBiH) adopted the new Law on Companies of FBiH, which came into force on 22 October 2015 and will become effective as of 21 December 2015.
The most important changes are as follows:
Entities with special obligations:
- Shareholders who hold over 20% of the total number of voting rights in a joint stock company are defined as significant shareholders. Shareholders who hold over 50% of the total number of voting rights are defined as control shareholders.
- Significant and control shareholders along with the members of supervisory board and management board, representatives and procurators have special obligations towards the company.
- Entities with special obligations are required to avoid realization of self-interests (conclusion of contracts with the company in their own name or on behalf of their related parties) and avoid conflict of interests (use of company’s property, use of non-public information, use own influence in the company, etc). The company can place lawsuits against entities with special obligations that have violated above legal provisions.
- The nominal value of shares cannot be lower than BAM 1. Previously the minimum nominal value was BAM 10.
- Shareholders capital can be increased by converting the company’s debt into shares, in line with the Law on Financial Consolidation of Companies in FBiH.
- The decision on cash dividend determines the total amount of cash dividend to be distributed, dividend per share and dividend distribution deadline, which have to be equal for all the shareholders.
- The Central Securities Depository (CSD) can perform the calculation and the distribution of cash dividends as well.
Shareholders meeting announcements:
- Announcement on ordinary shareholders meetings must be published in at least one newspaper widely spread in FBiH at the latest 21 days prior to the meeting. Announcement on extraordinary shareholders meeting must be published at the latest 14 days prior to the meeting. Previously, the deadline was set to 20 days prior to both ordinary and extraordinary meetings.
- Companies with only one shareholder are not required to publish the announcement.
- If the general shareholders meeting was not held due to lack of quorum, the announcement on the repeated meeting must be published within the following 3 days, and not earlier than 10 days prior to the recurring meeting.
Power of attorney:
- The power of attorney is valid for the repeated shareholders meeting and it can be issued to only one proxy.
- Corporate split-off is introduced. Total liabilities and assets of the respective company can be transferred to newly established companies or to existing companies. Shareholders of split company will obtain shares of new companies.
Impact on investors: Among others, the new Law on Companies introduces special obligations to significant and control shareholders, optional role of Payment Agent for cash dividend to CSD, changes in deadlines for general shareholders meetings announcements and corporate split-off.