The Law, which entered into force on 30 December 2016, regulates
the rules of financial business activities and the responsibilities
of the management and supervisory board in relation to business
activities of the entrepreneur. It further provides measures that
ensure liquidity, deadlines to perform pecuniary obligations
between entrepreneurs, as well as between entrepreneurs and public
law entities, the consequences of missing deadlines to carry out
pecuniary obligations, the nullity of specific provisions in
business transaction contracts, and the duties of entrepreneurs in
the event of lack of liquidity. Under the Law, an entrepreneur is a
legal entity established in accordance with the Law on Companies of
FBiH, as well as a natural person, which independently performs
commercial activity in accordance with the Law on Entrepreneurship
and Related Activities of FBiH.
The Law is not applicable to consumer contracts or to financial
institutions, banks, investment funds management companies, pension
funds management companies, insurance and reinsurance companies,
leasing companies and microcredit organisations.
Here are some important points:
Deadlines for performing pecuniary obligations
The agreed period of time to carry out pecuniary obligations may
not be longer than 60 days, unless the debtor issues a security
instrument with the capacity of an execution deed, but even then
the period of time may not be longer than 360 days. The following
are considered as security instruments: bank guarantees with the
"irrevocable", "unconditional", or
"without a right to protest" clause, as well as
guaranteed bills of exchange. Every provision of the contract
regarding the maturity date which is contrary to the above, is
considered null and void. In the event that the maturity date is
not stipulated, the pecuniary obligation must be performed within
30 days, without the need of any specific notification by the
Duties of entrepreneur when incurring lack of illiquidity
Illiquidity incurs in the event that: (i) the entrepreneur is
more than 60 days late in performing one or more short-term
obligations, which amounts to over 20% of the amount of his/her
short-term obligations published in the last annual financial
report; or (ii) the entrepreneur is more than 30 days late in
paying salaries and pertaining taxes and contributions.
The Law forbids payments of any kind to the illiquid
entrepreneur, except for those that are necessary for regular
business activities, as well as undertaking actions which could
cause harm or lead to the unequal treatment of creditors.
Inadequacy of capital
The capital of a company is considered inadequate if, on the day
of the drafting of the financial report, the loss in the current
year, together with the transferred losses, amounted to half of the
company's share capital. In such event, the management of the
company is obliged to undertake necessary measures, as follows: (i)
to analyse the causes of inadequacy of capital and to suggest
measures for achieving adequacy of the capital to the supervisory
board; (ii) to implement approved measures within its competence;
and (iii) to convene a general meeting of the company and suggest
measures within its competence.
Application of the law
The Law applies to contracts concluded after the Law enters into
force and to the business transactions concluded before 30 June
2016 yet whose realization has not begun by 30 December 2016.
Therefore, in the event that stipulated deadlines for performance
of pecuniary obligations in such contracts are longer than those
provided by the Law, it would be necessary to harmonise these
provisions with the Law.
Supervision of the enforcement
Supervision of the enforcement of the Law will be conducted by
the Tax Authority of FBiH, and the Federal Ministry of Finance
through budgetary inspection, within their competences.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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