Regional disqualifications

CRF 2015 Zvonko Obradovic & Andon Rumenov

Background

Regional Disqualifications

In 2005 both Macedonia and Serbia reformed the business registration process by moving it from a judicial procedure to an administrative procedure within a specialized agencies – Central Register of Republic of Macedonia and the Serbian Business Registry Agency

Disqualifications remained within the judicial system and since the information was not systematically exchanged with the Registries disqualifications were seldom if ever enforced.

This created a legal uncertainty and information void related to protection of creditors and third party interest

Regional Disqualifications

The ReformMacedonia

2009

Legacy of old System

2011+

Platform

2010

Establishment

Establishment of the Register of disqualified

entities within the Central Register

Platform for exchange of information

Register put in operation

2011

Achievement

2011+

Managing authority

Central Register as managing authority

• Courts (Criminal and misdemeanor charges and bankruptcies /liquidations)

• Tax authority – unpaid taxes• Banks (via Clearinghouse) –

locked bank accounts

Regional Disqualifications

Central Register

Blocked Accounts

The ReformMacedonia

Courts

Unpaid Taxes

•Criminal/ misdemeanor charges

•Bankruptcies/ liquidations

Regional Disqualifications

Scope of disqualifications

Ban on opening a new companyIn the duration of the disqualification

Ban on acting in certain capacity (director, board member, etc.), in a company in the duration of the disqualification

Ban on participation as a shareholder (with majority rights) and or being a founder in a new company (for legal entities) in the duration of the disqualification

Scope

Depending on the grounds for the disqualifications

ResultsMacedonia

Regional Disqualifications

Macedonia

37.00095%

Due to blocked accounts

Certificates of non-disqualification are used for protection of third party interest and as a condition for participation in public procurement processes

The disqualifications are updated real time and the numbers vary around 30.000 entities

MK - SRB

337.4777.5%

Imports / Exports ($)

498.157

The Reform - Serbia

Regional Disqualifications

Similar to Macedonia, the reform of the commercial registration was not initially followed up with the regime for disqualifications which were left in the courts

No institutional exchange of the information related to the disqualifications meant no real mechanism for enforcement of the disqualifications

April 2014, though a Norwegian funded project, SBRA launched the project for the implementation of the Register of disqualified entities

Regional Disqualifications

The ReformSerbia

Law on

disqualifications

Governmental procedure (expected to pass parliament in

March/April 2015)

SBRA

Company Register and managing authority of

the Register of disqualifications

Tax

Tax Authority

Institutions

National Bank of SerbiaCourts (Supreme Court)

Central Register of Stakeholders

The System

Expected2015

Grounds for disqualificationsSerbia

Regional Disqualifications

1Misdemeanor and criminal charges

(Court appointed)

2 Bankruptcy and liquidations (Courts)

3 Unpaid taxes (Tax Authority)

4Blocked bank accounts over 120 days –

National Bank

5Shareholder information – Central

Register of shareholders

The foreseen grounds for

disqualifications

Regional Disqualifications

Regional CooperationCross-border

Success

Exchange of corporate data

Exchange of financial data

Cross-Border initiative for

mutual recognition

Information on

disqualifications

Rationale

Regional Disqualifications

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Value of economic exchange between Macedonia and Serbia in the thousands of USD

Historical economic ties

Number of companies trading cross-border and establishing subsidiaries in the other country in the thousands

Institutional data exchange on a “need” basis, creating climate conducive for spill-over of “doubtful and fraudulent” business practices

Regional Disqualifications

Regional disqualifications

Disqualifications as

preventive measures on

national level

Disqualifications as

preventive tools on

regional level

Project initiation –

second half for 2015

Work started on drafting

an inter-registry

agreement on

cooperation

Article 33 EU Service

Directive

Ultimate goal: cross-

border recognition of

disqualifications

Thank you