COVID-19

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It is apparent that the extraordinary situation around the COVID-19 generates a number of various and quite often complex legal issues in a broad range of areas such as employment, contracts, damages, data protection, state aids etc.

PETERKA&PARTNERS is addressing this timely and adequately and therefore, we decided to create a COVID-19 Help desk, which could be used as a centralized and efficient tool for clients to cope with all legal matters arising in these special circumstances.

All local contacts in our offices throughout the Central and Eastern Europe remain fully available for assistance and, in addition, we are offering through the COVID-19 Help desk a central point of contact on all related matters.

The COVID-19 Help desk will include experts from all our offices and assistance may be provided under the law of the various jurisdictions in the CEE region where PETERKA&PARTNERS operates and we will further cover matters with cross-border implications or origin. Support will be provided in all languages usually used.

Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com

Related Legal Information

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forcemajeure

With the Covid-19 pandemic spreading throughout the world, and the perfect storm on the global markets, it is the proper time for businesses to consider certain legal aspects relevant for their contractual relations in this context.

A major issue, in particular, is the concept of force majeure and its application in the light of recent events, i.e., how the outbreak of the virus and related government actions affect the legal position of each company in its business relationships, whether as a client or a supplier, and to what extent companies may be liable or exempt from liability depending on the specific circumstances in the inevitable economic disruptions.

A number of elements should be taken into consideration in such assessment, among others, these are:

  • the law governing the contract; what is the level of detail of the relevant provisions of the governing law and to what extent are such provisions imperative or do they allow companies to deviate in their contracts from the statutory concepts; 
  • the existence of a force majeure clause in the respective contract and the language used in this respect, whether the clause is broader or narrower;
  • whether an event is a force majeure event, and what precisely could actually qualify as a force majeure event;
  • evidencing of force majeure events, whether certificates are issued to this end by certain authorities or organizations, and what their value in the particular legal relationship is;
  • which contractual obligations are affected by the force majeure, in other words what failure to perform contractual obligations is exonerated as a result of the force majeure;
  • the conduct of the parties to the contract – whether they have taken or they should take certain steps in view of the force majeure provisions/clauses, whether they have taken action to mitigate any related damages, etc.;
  • for how long the effect of the force majeure lasts and whether at some stage the contract should be considered terminated or could be terminated by one or both parties and what the consequences of such a development are.

The answers to these and other questions may have major economic implications for businesses and it is recommendable to address them in a timely manner in order to mitigate the effects of the undergoing turmoil.

Please feel free to contact us at covidhelpdesk@peterkapartners.com for further assistance on the matter above and any other COVID-19 related matters.

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PETERKA & PARTNERS brings you a guide with an overview of the main employment issues arising in the context of COVID-19 pandemic covering nine jurisdictions in Central and Eastern Europe. The guide includes, among others, information about general emergency status in the countries concerned, health and safety, quarantine issues, home office and leave. For more details please click here.

Please do not hesitate to contact our COVID-19 Help desk should you have any questions related to the legal aspects of the coronavirus at covidhelpdesk@peterkapartners.com.

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COVID-19 in Belarus: Mandatory isolation rules

Against the backdrop of the aggravated situation in the world in regards to COVID-19, Belarus has imposed mandatory isolation rules for people entering the country. Such measures were stipulated by the Decree of the Council of Ministers of the Republic of Belarus of March 25, 2020 No. 171.

People who have arrived in Belarus from countries where cases of COVID-19 infection are registered, for 14 calendar days from the date of arrival:

  • must be self-isolated at home;
  • are not allowed subsequent passage through the border of Belarus (until the expiration of the period of self-isolation).

These measures do not apply to:

  • employees of diplomatic missions, consular institutions of foreign states in the Republic of Belarus and those accredited with residences in other countries, international organizations and their representative offices located in the Republic of Belarus, as well as members of their families;
  • heads and members of official delegations;
  • drivers of vehicles when performing international road transport of goods;
  • crew members of aircraft, inland watercraft;
  • transport, train crews, locomotive crews of international railway transport;
  • foreigners transiting through the territory of the Republic of Belarus to return to their places of residence.

We note that apart from the above measures, no quarantine inside the country or other specific restrictive regime has officially been announced by the Republic of Belarus to date.

Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

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The COVID-19 outbreak in Bulgaria and the subsequently declared state of emergency by the Parliament (‘State of Emergency’) have already affected various aspects of doing business. Many businesses are concerned about the potential financial impact of the outbreak on their activities.

In this extraordinary situation, checking available insurance policy(-ies), is a step a company can take, among others, towards managing the risks of exposure to potential damages related to the COVID-19 outbreak, for example, when reorganizing its business processes.

Below, we have outlined our thoughts on a few of the topics that are likely to be considered as some of the main insurance-related questions being raised nowadays.

Non-payment of Premium instalments

It could not be excluded that because of the current circumstances some businesses may experience difficulties with payments of the instalments due under their insurance contracts. According to Bulgarian law, in case of a default on even one premium instalment with more than 15 days after payment is due, the respective insurance company can terminate the insurance contract. Often the general terms and conditions of the insurance policy provide even for an automatic termination of the contract in case of such non-payment. In this case, the law does not require any additional action from the insurance company in this regard.

It should be noted, however, that the recently-adopted legislation on the measures during the State of Emergency (‘New Law’. Act on theMeasures and Actions during the State of Emergency Declared with a Decision of the National Assembly as of 13 March 2020, promulgated with the State Gazette as of 24 March 2020) states, among other things, that the consequences of a default on contract payments (including penalties for late payment, cancellation of contracts, etc.) will not apply during the State of Emergency. Although it is not completely clear from the wording of the legal act, a possible interpretation of that provision is that it applies to insurance contracts as well. Therefore, it seems that insurance policies will not be terminated due to non-payment of premium instalments during the State of Emergency (as of today, the State of Emergency covers a period of 1 month, i.e., until 13 April 2020).

Nevertheless, in case of inability to pay a premium instalment, it seems recommendable for a policyholder to approach its insurance company in advance and try to re-negotiate the terms of payment in order to mitigate potential complications in this regard.

Force majeure

The Bulgarian Insurance Code does not provide specific requirements for the application of the concept of force majeure to insurance contracts. The New Law also does not prescribe any specific rules in this regard.

Thus, in order to assess whether force majeure will apply in a particular insurance relationship, one must consider the general legal rules governing force majeure events as well as the wording of the force majeure clauses (if any) of the respective insurance policy (for example, in the general terms and conditions) in light of the particular circumstances. Since the assessment of these questions may have a significant impact on the insurance relationship, it seems recommendable to address them in a timely manner in order to mitigate the risk of denied insurance coverage.

Insurance of company’s property/equipment when used outside of business premises

Nowadays, employers are not only entitled but even encouraged to introduce a remote form of work where possible (for example, home-office). In practice, although this is not a new concept for Bulgarian employment law, for many employers the option for such remote work is rather new and its establishment is performed ad hoc. Among the issues that should seriously be considered by the employers in this regard is the use of the companies’ property/equipment (for example, laptops) during the remote work. As we see it, an important aspect of this issue is the question whether this equipment is insured when used outside of the business premises.

This question is not explicitly regulated by the applicable insurance legislation. In practice, insurance companies have adopted different approaches when dealing with such situation – for example, some require an advance notification by the respective company in case the insured property is moved outside the business premises, while others simply provide coverage in such cases (i.e., no notification is needed), however, usually for an additional premium.

In view of the above, when introducing the option for remote work, it seems highly recommendable for the respective company to check, among others, its insurance contract(s) in order to be in compliance with the insurer’s requirements and, if necessary, to discuss potential amendments to the policy so that it ensures coverage to its business property, e.g., when used by the employees while working from home.

Filing of insurance claims

Other difficulties businesses may face in these extraordinary times are related to the filing of claims for insurance compensation. Basically, under the law, policyholders must notify the respective insurer within 7 days after becoming aware of an insured event. However, a particular insurance contract may provide for another appropriate term but no less than 3 days after becoming aware of an insured event. In certain cases (for example, theft or burglary) this deadline may be limited to 24 hours.

Nevertheless, in practice, nowadays, the approach adopted by many insurers on the market is to prolong these deadlines for some of their products (for example, property insurance) in view of the State of Emergency. The prolonged deadlines however are not applicable for all risks.

Given the above, and since it is recommendable to stay at home in order to avoid unnecessary trips/visits, it seems recommendable for policyholders to become acquainted with the deadlines adopted by their insurance companies and apply them accordingly. Additionally, it should be noted that many insurers have limited face-to-face meetings with clients, and thus, this should also be considered if planning a trip to such office.

General remarks

Generally, some insurance products available on the market afford insurance coverage in case of financial losses due to a decrease in income, unexpected expenses, lost/destroyed information/data, etc., i.e., products that may provide coverage in case of business disruption. However, these products are quite specific. Thus, it is rather impossible to apply a general approach towards them. Since there are also no general rules in the applicable legislation (including in the New Law), the particular provisions of those contracts should be considered in light of potential COVID-19-related damages.

Apart from the above matters, companies may be facing other additional unclarities in relation to their insurance contracts (for example, establishing whether an insured event has occurred or whether certain damages are covered under their policy).

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

This document is for informational purposes only and may not be considered a legal opinion or advice.

 

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Following several days of discussions with trade unions, employers’ organizations and other stakeholders, the Bulgarian government has announced the final parameters of the local scheme aimed at the preservation of jobs in companies affected by the COVID-19 pandemic operating in the country. 

The form of support remains as per the initial plan, i.e., payment by the state of 60% of the social security income of employees affected by the crisis for the period of the state of emergency (or part of it) but in any event for no longer than three months.

Payments shall be made to employers if they have:

  • suspended work of the whole company or of particular employees as a result of a specific order from the public authorities on the closure of certain businesses; this applies to the list of sectors attached to the government decree introducing the scheme, e.g., certain retailers, tourism and transport businesses, restaurants, cultural and sports activities, certain education services, and the organisation of congresses and exhibitions;

    or
  • suspended work of the whole company or of particular employees or reduced the working hours as a result of the declared state of emergency; this applies to companies that are able to evidence a drop in revenues of 20 % or more compared to a reference period (March 2019 as a rule); this generally applies irrespective of the economic sector concerned but certain sectors are excluded, e.g., agriculture.

The requirement to retain subsidized employees for at least 3 months after the expiry of the
period of support from the state has been dropped. As per the final rules adopted, the employer should retain the subsidized employees during the period of receipt of state support. Dismissal of other employees on certain grounds should not be undertaken either.

Further conditions apply. Applications and accompanying documentation should be filed to the Employment Agency by all employers interested in the measure.

Compensation shall be paid after the scheme receives the green light from the European Commission in accordance with the state aid rules. It seems though that this is not an obstacle to filing applications beforehand.

It is worth mentioning here that support under the described scheme will not be provided for employment that is already otherwise supported through public resources.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

This document reflects the status as of March 30, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice.
  

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The Bulgarian state has already taken certain steps in view of cushioning at least to some extent the economic impact of COVID-19.

In broader terms, we could outline in this respect:

  • the postponement of certain time limits such as the postponement till 30 June 2020 of the time limit for the filing of annual corporate income tax returns and for payment of such tax;
  • the prohibitions during the period of the state of emergency (declared for the time being until April 13, 2020) for initiation of new enforcement proceedings for the collection of public liabilities and the undertaking of enforcement measures within existing procedures of the same kind.

In terms of direct financial support, the Bulgarian parliament has approved payment by the state for up to three months of 60% of the social security income for certain employees. The government should further elaborate the criteria to be met by the beneficiaries of such support and the respective procedures.

On the basis of the initial draft of the government decree, it seems that such support would be limited to several sectors, i.e., retail, tourism, transport, restaurants, and cultural and sports activities. Employers, within this scheme, should have suspended the work of at least 50% of their personnel and would be obliged to retain the subsidized employees for at least 3 months after the expiry of the period of support from the state. Further conditions are envisaged. It is to be seen in the very near future whether these conditions and the respective procedure for receipt of state support will remain as currently suggested.

Support for SMEs can be further expected from the Bulgarian Development Bank. The precise conditions and forms of support are to be clarified and formalised but it seems that the bank would intervene indirectly through the commercial banks on the market, e.g., via credit guarantees.

A step that may also be considered by businesses at some stage, especially those that would not qualify for other support measures above, is the possible filing of an application to the tax administration for approval of deferred payment or payment in instalments of public liabilities. Such possibility has been existing for years in the law but it might be used more actively now given the circumstances.

Such procedure does not apply to all public liabilities (e.g., VAT amounts can only be covered by this measure if already fixed after a tax audit), in some cases companies would have to pay interest for the period of deferral at the rate of 10% per year, companies should be ready to provide collateral and there are certain other requirements that should be met. Nevertheless, this instrument could be useful for some companies, especially if the tax authorities show more flexibility in the application of the rules.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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Following the state of emergency declared in Bulgaria effective, for the time being, between March 13, 2020 and April 13, 2020 (“State of Emergency”), the Bulgarian Supreme Judicial Council (“SJC”) adopted measures related to the work of Bulgarian courts, among which include suspension of most criminal, civil and administrative trials, limitation of access to court premises, etc. Should the State of Emergency continue after April 13, 2020, we expect the SJC will issue an additional statement/decision in this regard.

Affected Proceedings

According to the SJC decision, there will be no court hearings in civil and commercial cases except for the following: securing future or pending claims, securing of evidence, exercising parental rights in relation to interim measures, permits for withdrawal of child deposits and certain cases under the Domestic Violence Protection Act.

Hearings on administrative cases will be suspended as well. The exceptions here include, among others, cases for provisional enforcement and enforcement suspension under the Administrative Procedure Code, enforcement suspension under the Tax and Social Security Procedure Code and securing of future or pending claims.

With respect to criminal trials, only limited cases (basically involving urgent actions, for example, regarding supervision measures) will continue to be reviewed.

Consequences

Basically, court hearings will be postponed until after the end of the State of Emergency. During that time access to court premises is generally prohibited.

However, the courts will continue to accept motions, petitions, evidence and other documents but only if those are sent by post/courier or by electronic mail. For the time being, all time limits for the filing of such documents should be observed.

No new cases will be initiated apart from the exceptions indicated above.

Further, during the State of Emergency no summons, messages and/or any other court papers (including rulings) will be served. Summons, messages or court papers related to the exceptions above will be communicated over the phone or by e-mail. Checks regarding pending cases can also be made only over the phone or by e-mail.

Awaiting new legislation

A new draft law is currently pending in the Parliament and, among other things, it states that time limits, whether set by the law or by a judicial/administrative/enforcement body, shall not be running during the State of Emergency. The deadlines for newly requested actions will be considered prolonged with the period of the State of Emergency. Further, enforcement proceedings under the Civil Procedure Code and under the Tax and Social Security Procedure Code will be stayed for that time.

It is to be seen whether the draft will be passed as submitted or the measures suggested will be modified by the Parliament.

While closing courtrooms and staying procedures makes sense for reasons of public health, certain legal issues may arise (for example, delays in the issuing of court decisions/rulings, missed deadlines, etc.). For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help Desk at covidhelpdesk@peterkapartners.com.

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30/3/2020 Economic measures for entrepreneurs proposed by Slovak Government – details here.

25/3/2020 Measures and recommendations of the new Slovak Government being discussed; if approved, they will be enacted – details here.

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MOST IMPORTANT RESTRICTIONS CURRENTLY APPLIED BY STATE

  • Proclamation of an extraordinary situation and state of emergency (in the area of health providers) by the Slovak Government from March 16, 2020 6 a.m. for a period of 14 days
  • Prohibition of retail sale in shops, sale of services in establishments from March 16, 2020 6 a.m. for a period of 14 days, with exceptions, including the sale of food, hygienic products, medicaments and animal feed; opened may be also tobacco and newspaper shops, textile cleaning services, gas stations, auto services, towing services, banks, insurance companies, telecommunication operators, post offices, veterinary ambulances and funeral services; e-shops, food takeaway and delivery services in general are not restricted. It is planned that the above list of stores and services will be closed on Sundays. It will be a sanitary day, as well as a day off for staff.
  • Prohibition of various public and private events, such as spectacles, sport events, markets, exhibitions and many others
  • Prohibition of the presence of the public in restaurants (food delivery may remain operational) and other establishments
  • Strict travel restrictions to/from Slovakia, including the total closure of borders and relaunch of border checks
  • Temporary closing down of schools and universities
  • Cancellation of air traffic
  • Mandatory quarantine of persons arriving/returning from abroad (14 days).
  • Spreading coronavirus is a crime

The above measures are only examples, the list is not exhaustive. The situation is evolving very rapidly, as are the extraordinary measures being taken by the Slovak Government and Administrations. Constantly checking the current state of affairs and updates is necessary.

CIVIL PROCEEDINGS

The Ministry of Justice of the Slovak Republic and Slovak courts have adopted preventive measures in relation to the COVID-19 pandemic with the aim of preventing the unnecessary presence of people in their institutions. Despite this, the Slovak judicial system runs uninterruptedly. 

The chairperson of the Slovak Bar Association addressed an official letter to the Prime Minister asking him to consider suspending all ongoing litigations (all hearings cancelled and no new hearings summoned) and the suspending of all procedural and material time-limits. The new Government (appointed on 21 March) announced it will adopt some measures in this regard (e.g., suspension of time limits), however, these have not yet been officially adopted.

POSTPONEMENT OF DEADLINE FOR FILING INCOME TAX RETURNS

The newly-formed Slovak Government has adopted the postponement of the standard deadline for filing an income tax return and the payment of the tax by three months to June 30, 2020, for all taxpayers, due to COVID-19 and the financial difficulties many individuals and entrepreneurs may face.

OTHER MEASURES IN PREPARATION

The Slovak Government is planning a number of other measures for individuals and entrepreneurs aimed at overcoming the current situation; however, the introduction of these measures requires the adoption of appropriate legislation, which may take some time.

This summary is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case. The summary reflects the status as of March 23, 2020.

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

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NEW EMPLOYMENT MEASURES English version here.

NEW EMPLOYMENT MEASURES version française ici.

NEW EMPLOYMENT MEASURES slovenská verzia tu.

23/03/2020 Frequent COVID-19 issues faced by employers – details here.

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IMPACT OF ANTI-EPIDEMIOLOGICAL MEASURES ON CONTRACTUAL RELATIONS

The Coronavirus pandemic has resulted in extensive measures being taken by the Slovak Government in order to limit the spread of the virus. Closed borders, restrictions on transport, closed stores, business operations and schools, a ban of public events and the associated lack of large numbers of employees have made many entrepreneurs unable to meet their obligations, and they face liability for damages.

The inability to fulfil contractual obligations can have serious consequences in the long run, in the worst case leading to insolvency or indebtedness which entails additional statutory obligations. Slovak law does not provide for direct financial support or damages to be paid by the Government to entrepreneurs affected by measures ordered thus far, therefore, it is important that entrepreneurs that cannot meet their obligations communicate with their business partners as soon as possible and review their mutual contracts, in particular the existence and applicability of a force majeure clause or change-in-law clause (if any), renegotiate contractual terms if necessary or, as the case may be, the possibility of termination of the contract.

Force Majeure (vis major)

Force majeure in general may be interpreted as an extraordinary unforeseeable event or circumstance, out of the reach and control of the parties, that results in the impossibility of performance or impracticable performance of contractual obligations. Since Slovak law does not have a precise legal definition of force majeure, its definition in a contract (if any) is important and binding for contractual parties.

Lack of legal definition also means that it cannot be undoubtedly declared that the actual COVID-19 protection measures ordered by the Government are force majeure despite the fact that such opinion may be reasonable and generally accepted.

Depending on the wording of the force majeure clause, it may allow the parties, for example, to temporarily avoid contractual obligations and liability for damages due to failure to fulfil contractual obligations (delay), and to change or terminate the contract.

Therefore, if a contract includes a force majeure clause, attention needs to be paid to what it implies under the contract, which contractual obligations are affected by the force majeure and what steps in view of the force majeure provisions should be taken (e.g., notification of the other party about the occurrence of the force majeure event and its consequences for impossibility of performance of the contract).

Termination of commitments and liberation from liability for damage

If a business contract does not have a force majeure clause, liability for damages caused by the breach of contractual duty (not the contractual duty itself) may be avoided by claiming circumstances excluding liability under the liberalization provisions of the Slovak Commercial Code; such provisions are applicable if the breach of contractual duty was caused by an obstacle that occurred independently of the intent of the obliged party and that prevents the party  from fulfilling its obligation, if it may not be reasonably assumed that the obliged party could have averted or overcome this obstacle or its consequences, or that it could have foreseen this obstacle at the time when the obligation was established (e.g., force majeure).

In addition to the above, depending on the nature of the contract, performances resulting therefrom and other circumstances, a permanent situation such as, for instance, unpredictable obstacle or force majeure may cause the expiry of an unfulfilled obligation by law (e.g., due to the subsequent impossibility of fulfilment of a contract or frustrating the purpose of a contract). Each contract and the related circumstances need to be considered on a case-by-case basis.

Unlike the Czech Republic, in Slovak law there is no “hardship clause”, i.e., a concept known as “substantial change in circumstances” enabling a party to claim the renegotiation of a contract with the other party if the conditions stipulated by law are fulfilled.

This summary is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case. The summary reflects the status as of March 23, 2020.

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

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31/3/2020 Updated measures related to employment – details here.

23/3/2020 Measures related to employment approved by the Czech Government on March 19 and 23, 2020 – details here.

 

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BANKING & FINANCE with regard to the current COVID-19 crisis

Measures adopted by the Czech National Bank

On March 16, 2020, the Czech National Bank (“CNB”) lowered the two-week repo rate to 1.00%, the Lombard rate to 2.00%, and the discount rate to 0.05%. 

The CNB also, as a preventive measure, amended the rules of the liquidity-providing monetary policy operations introduced in October 2008 to support the domestic financial market during that period's global financial crisis. Starting March 18, 2020, these liquidity-providing repo operations are now announced three times a week (on Monday, Wednesday and Friday) instead of the normal weekly frequency. Banks' bids in these liquidity-providing repo operations will be fully satisfied at a fixed rate corresponding to the two-week repo rate, i.e., with a zero spread. 

It is also confirmed its readiness to further cut interest rates and take measures to resolve potential liquidity problems in the Czech financial sector.

Furthermore, the CNB confirmed its readiness to react to any excessive fluctuations of the koruna (the Czech crown) exchange rate using its instruments, in line with the managed float exchange rate regime. 

The CNB Bank Board also decided to decrease the countercyclical capital buffer rate for exposures located in the Czech Republic to 1% with the effect from April 1, 2020. At the same time, the CNB also agreed it was ready to release fully the countercyclical capital buffer in case of an increase of unexpected losses of the banking sector. 

Due to high uncertainty regarding further economic developments, the CNB invited commercial banks, insurance companies and pension companies to refrain from any dividend pay-outs or any other steps that might jeopardise individual institutions' resilience until both acute and longer-term consequences of the new coronavirus epidemic fade away.

Although the CNB does not prescribe banks the strategy and rules which they should adopt for the provision, administration and recovery of existing credit, it expressed that in cases where a client's loss of income is only temporary due to the coronavirus infection or the related preventive measures, the postponement of instalments is an appropriate way to ensure the repayment of the entire receivable in the future. Such a postponement need not lead to reclassifying a bank's liability as a classified, or non-performing, receivable under the applicable rules. However, the overall assessment will depend on the duration of the loss of income and on the extent to which a client's ability to continue repaying the loan will be affected.

Measures adopted by the Czech-Moravian Guarantee and Development Bank

Small and medium enterprises (SME),including individual traders, can get a loan of from CZK 500 thousand to CZK 15 million with a zero interest rate from the Czech-Moravian Guarantee and Development Bank (the “CMGD”) within the COVID I Program. Loans are granted for up to 90% of eligible expenditure, with a maturity of two years, including the possibility of deferred repayment for up to 12 months. As of March 20, 2020, the receiving of loan applications has been temporarily suspended due to the extreme interest in obtaining loans and CMGDB's inability to process them.

Moreover, the COVID II Program, in the form of CMGDB's quarantees for loans granted by commercial banks should be introduced in the upcoming days. CMGDB indicates that it should provide quarantees for commercial loans to small and medium enterprises (SME), including individual traders, from CZK 10,000 to CZK 15 million. A quarantee should likely cover 80% of the principal amount and the applicant should also be able to draw a financial contribution of up to CZK 1 million to pay accrued interest. The expected duration of the quarantee will be 3 years.

 

INSURANCE
 with regard to the current COVID-19 crisis

There are no specific measures adopted in this area.
Entrepreneurs should bear in mind that most insurance policies do not provide for any coverage in case of force majeure events. However, as “force majeure” is not specifically defined in the Czech law (see chapter Corporate for more details), it always depends on the definition of force majeure in each particular policy; we recommend reviewing insurance policies, in particular to check for insurance exclusions.


This document reflects the status as of March 27, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case
.

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CONTRACT MANAGEMENT
with regard to the current COVID-19 crisis

Due to the current situation, the majority of businesses are faced predominantly with supply disruptions and liability for damages caused by such disruptions. The first recommendation is to review all major client contracts and contracts with suppliers, in particular as far as it concerns the existence and applicability of a force-majeure clause (if any), the possibility of termination or renegotiation of certain contracts if necessary, etc.

Despite the above, businesses remain generally liable for their commitments and should take into account that the possibility of their termination or renegotiation is only exceptional. Potential defaults with the fulfilment of contractual obligations towards business partners, which could occur due to the current situation, should be treated very seriously as they could lead eventually to insolvency.

Force Majeure

There is no specific definition of “force majeure” in Czech law. Its definition is based only on legal theory and a few court resolutions. The generally acceptable definition of force majeure is “a legal event objectively unpredictable and objectively unavoidable and independent of the will of the respective party”.

The current “state of emergency” and related governmental measures due to the spread of the COVID-19 disease could be considered force majeure within the generally acceptable interpretation of this term, but we may not exclude that local courts might have a different opinion.

However, force majeure may influence the contractual obligations of parties only to the following limited extent:

  • force majeure might be a liberating ground against claims for damages for breach of contractual obligation (such as damages for late delivery) and
  • force majeure might be a substantial change in circumstances giving right to a contract change or termination.

We stress that the definition of force majeure and its possible consequences on the obligations of the contractual parties stipulated in the contract prevails over general legal regulation.

If the consequences of force majeure:

  • are stipulated in the contract, the contract regulations apply;
  • are not stipulated specifically by the parties, the affected party can be liberated from payment of damages for breach of its contractual obligations and terminate the contract or agree on its change due to substantial change in circumstances. Nevertheless, the other contractual party is entitled to terminate the contract due to breach of the contractual obligations by the party affected by force majeure.

Substantial change in circumstances

Czech law contains a concept of what is known as “substantial change in circumstances”, which could help businesses deal with the current situation.

If there is such a substantial change in circumstances creating gross disproportion in the rights and duties of the parties by disadvantaging one of them either by disproportionately increasing the cost of the performance or disproportionately reducing the value of the subject of performance, the affected party has the right to claim the renegotiation of the contract with the other party if the conditions stipulated by law are fulfilled.

However, asserting this right does not entitle the affected party to suspend the performance.

The affected party must claim the renegotiation of the contract with the other party within a reasonable time after it became aware of the change in circumstances. This time limit is presumed to be two months. If the renegotiation is not claimed within this limit, the affected party loses the right to submit a lawsuit to the court.

Remedies

Czech law provides for the general obligation of the Czech Republic to reimburse affected natural persons and legal entities any damage that has arisen in connection with measures taken under the Crisis Act, which includes governmental measures as a consequence of the current “state of emergency” due to the spread of the COVID-19 disease declared under the Crisis Act.

However, each claim for reimbursement always needs to be assessed on a case-by-case basis.

Threat of insolvency

Under Czech insolvency law, a debtor is considered bankrupt if:

  • it has several creditors;
  • it has due and payable debts for more than 30 days; and
  • it is not able to fulfil them.

Therefore, all businesses should keep up-to-date records about due payments and remaining periods.

Once the company is bankrupt, its directors have to file an insolvency petition. If they fail to do so, they shall compensate creditors for the damages amounting to the difference between the amount of receivables registered and the amount received by the creditor in the insolvency proceedings.

The current and the former directors may become a guarantor of the debts of the bankrupt company toward its creditors, or be required to return all benefits received from the company within the two preceding years, if it is decided that the company is insolvent, and they had known, or should have known, that the insolvency was imminent.

If directors breach their duties, they must compensate the company for any damage or harm caused to the company resulting from such breach.

Directors must summon a shareholders’ meeting immediately once they become aware that the insolvency of their company is imminent, and suggest appropriate measures as to how to face such a situation. They should request instructions for business management from the shareholders at the meeting, which does not fully limit their liability, but can serve as proof that the company became aware and approved the directors’ actions. This could be considered a mitigating factor.

 

The document reflects the status as of March 19, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

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EMPLOYMENT
with regard to the current COVID-19 crisis

With the coronavirus outbreak and the spread of the COVID-19 disease, employers are facing new challenges and are obliged to adapt themselves quickly to the evolving situation in the areas of health and safety, remote work, special regimes of obstacles on both sides (the employer´s as well as the employee´s), and especially in the area of crisis management. Due to governmental decisions many establishments were closed for the public and other entrepreneurs are suffering losses due to a lack of staff, and a decrease in demand for their products or services.

The Czech government decided on the state of emergency and recommended explicitly that employers:

  • use to the maximum extent distant work if employees can work from home;
  • encourage paid holidays and other paid leaves;
  • limit work not substantial for the operations of the employer.

Below are listed selected employment issues reflecting the current situation.

Mandatory quarantine

Quarantine is ordered by the hygiene inspectorate or a physician (not the employer).

An employee is obliged to notify his/her employer of his/her absence and is entitled to receive salary compensation of 60% of adjusted average earnings, in the first 14 days, from the employer.

Subsequently, sick leave allowance is paid by Social Security.

Violation of the quarantine is strictly sanctioned (including a financial penalty up to 3M CZK).

Paid leave (holidays)

A unilateral order to take paid leave can be issued in writing at least 14 days prior to start of paid leave.

With the employee’s agreement the paid leave (holiday) can start immediately.

During paid leave, the employee is entitled to get 100% of his/her average earnings.

Home-office

Home-office is the preferred method of dealing with the current situation, if such mode of work is possible with respect to the nature of the work and if it is accepted by the employee. Home-office cannot be ordered.

Costs incurred by the employee are to be paid by the employer, for example, internet connection, electricity, etc.

Security and hygiene at work must be assured even at home and other aspects such as reporting, cybersecurity, etc., are to be taken into account by the employer.

The employee is paid with his/her salary.

Changes in working schedules

Rescheduling of shifts can be considered within weekly working hours planning, provided that the employee must be notified about any modification of his/her shifts based on such planning 2 weeks in advance at the latest (1 week in case of account of working hours), unless there is another agreement (general/ad hoc) with the employee.

Accepting employees´ requests for specific work arrangements

Requests from employees for unpaid leave or for supplementary spare leave which will be made up for in the future can be accepted. These measures cannot be imposed by the employer.

Care leave

Employers are obliged to allow employees caring for children up to 13 years old and disabled persons living in a common household to take care leave if their children cannot attend school due to school quarantine or if the school or the establishment caring for disabled persons has been closed (for reasons of epidemic).

The employees are paid through Social Security during the care leave as in the case of sick leave or quarantine.

Care leave compensation shall be paid during the entire duration of extraordinary measures related to the COVID-19 epidemic.

The corresponding act needs to be adopted by the Czech Parliament; however, the payment will be made retroactively.

Obstacles on the employer’s side

In case of obstacles on the employer’s side causing that the employee cannot work, the employee is entitled to receive compensation of salary, unless transferred to other work:

  • Minimum 80% of average earnings, if the obstacle consists in a temporary breakdown of machinery or equipment which not caused by the employer, in a problem with the supply of raw materials or power (energy) or some other operational causes (unless an employee is transferred to other work).
  • 100% of average earnings in case of other obstacles (this is according to the Ministry of Labour and Social Affairs, the case if the establishment was closed due to the recent governmental measure).
  • Minimum 60% of average earnings in case of partial unemployment: if the employer is not able to assign work to its employees to the extent corresponding to the weekly amount of hours because of the temporary reduction of demand in the employer´s products or services and if there is an agreement with the trade unions about the amount of salary compensation, the employee is to receive such salary compensation whose amount cannot be lower than 60% of average earnings. In case of no presence of trade unions, the agreement can be replaced by the issuance of internal rules.
  • Minimum 60% of average earnings, if the obstacle consists in a work disruption caused by adverse climatic conditions or a natural disaster (the pandemic is not considered as a natural disaster thus far, a legislative change will be necessary in this respect).

Measures related to employment approved by the Czech Government

The Czech Government has approved the ANTIVIRUS Programme measures. Employers whose business activities will be threatened because of the spread of the COVID-19 virus will be granted a contribution covering fully, or partially, the compensation of the salaries paid to employees due to obstacles on the side of the employee and on the side of the employer.

The contribution shall be paid by the Labour Administration. Details on how to request the contribution have not yet been communicated. For more details, please see our ANTIVIRUS Programme section.

 

The document reflects the status as of March 23, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

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IMMIGRATION & CROSS-BORDER WORKERS
with regard to the current COVID-19 crisis

Traveling restrictions

As a consequence of the proclamation of a state of emergency for the entire territory of the Czech Republic, the Czech government decided on the following travel restrictions (in force since March 16, 2020):

  • An entry ban on all foreign nationals (not only from risk areas) with the exception of foreign nationals with permanent residency or permitted temporary stay of over 90 days in the territory of the Czech Republic; this does not apply if the entry of these foreigners is in the interest of the Czech Republic,
  • A ban on citizens of the Czech Republic and foreign nationals with permanent residency or permitted temporary stay over 90 days in the territory of the Czech Republic from leaving the territory of the Czech Republic (not only entering risk areas); this shall not apply if an exemption is granted from this measure.

The Minister of the Interior granted exemptions from the above ban for:

  • international transport,
  • cross-border workers,
  • critical infrastructure service,
  • humanitarian and urgent cases, unforeseeable emergencies,
  • diplomats, officials, etc.,
  • repatriation and family reunification.

Temporary reintroduction of the protection of the internal borders of the Czech Republic

The Ministry of the Interior introduced border control by the Police of the Czech Republic along the entire internal land border with Germany and Austria and on the air border from March 14, 2020.

Internal borders with Germany and Austria may be crossed only at specified main border crossings with a 24/7 regime. Cross-border workers otherwise regularly crossing internal borders with Germany and Austria at least three times a week and working within 100 km from the national border may cross the internal land borders also at a few other border crossings between 5:00 and 23:00.

Similar measures along the internal borders with Slovakia and Poland have not been introduced, as they were introduced by Slovak or Polish authorities respectively.

Residency and work of foreign nationals in the territory of the Czech Republic

Foreign nationals, who were staying legally on the territory of the Czech Republic at the moment of the declaration of the state of emergency (March 12, 2020) for whatever reason, may continue to remain in the territory for the duration of the state of emergency without any need to resolve their residency status issues. Foreign nationals willing to travel from the Czech Republic to their home country during the state of emergency should immediately contact their embassies and tell them their interest in returning home. Entry to the territory of foreign states cannot be guaranteed due to possible emergency measures on the borders of neighbouring states.

Expiring work visas and work permits are automatically prolonged so that they do not expire sooner than 60 days after the cancellation of the emergency state. Foreign nationals residing in the territory of the Czech Republic on the basis of an Employee Card, Blue Card or Intra-Company Employee Transfer Card and who fulfil conditions for their extension, must submit a request for extension by post and they can reside and work legally until the final decision on the request.

Accommodation of foreign nationals until they leave the Czech Republic, and foreign nationals with work permits in the Czech Republic, is exempted from the general prohibition on the sale of accommodation services (i.e., accommodation in hotels and hostels).

All persons who do not have permanent or temporary residency in the Czech Republic or who do not work in the country (in particular, tourists) are obliged to undergo a check for symptoms for infectious diseases upon entering the Czech Republic.

 

The document reflects the status as of March 27, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

 

cz150

REAL ESTATE
with regard to the current COVID-19 crisis

Due to the current situation, almost all retailers have had to close their shops and many offices remain empty as the employees work remotely.

The first recommendation to tenants is to review their lease contracts, in particular as far as it concerns the existence and applicability of a force-majeure clause (if any), the possibility of termination or renegotiation of certain contracts if necessary, etc.

Despite the above, tenants remain generally liable for their commitments and should take into account that the possibility of their termination or renegotiation is only exceptional. Potential defaults with the fulfilment of contractual obligations towards business partners, which could occur due to the current situation, should be dealt with very seriously as they could lead eventually to insolvency.

Unless agreed expressly in the lease, as a potential remedy, Czech law contains a concept of what is known as “substantial change in circumstances”, which could help businesses deal with the current situation.

The COVID-19 pandemic may represent such substantial change in circumstances creating gross disproportion in the rights and duties of the parties by disadvantaging one of them either by disproportionately increasing the cost of the performance or disproportionately reducing the value of the subject of performance; the affected party has the right to claim the renegotiation of the contract with the other party if the conditions stipulated by law are fulfilled. However, asserting this right does not entitle the affected party to suspend the performance.

Therefore, tenants very likely have some leeway to obtain at least some concessions from landlords if they do not have a direct claim for any rebates or damages.

However, tenants should look for legal advice before contacting their landlords in order not to worsen their negotiating position.

Remedies

Czech law provides for the general obligation of the Czech Republic to reimburse affected legal entities for any damage that has arisen in connection with measures taken under the Crisis Act, which includes governmental measures as a consequence of the current “state of emergency” due to the spread of the COVID-19 disease declared under the Crisis Act. However, each claim for reimbursement always needs to be assessed on a case-by-case basis.

Insurance

Tenants should review their insurance policies to see if they provide for any coverage of damages and loss of profits in relation to closure of their shops. The coverage is usually conditioned by deterioration of the leased premises but some policies do not include such condition.

 

The document reflects the status as of March 20, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

cz160

RETAIL
with regard to the current COVID-19 crisis

Due to the current situation, almost all retailers (except alimentary, grocery, drugstores and pharmacies) must have their shops closed.

The first recommendation to retailers-tenants is to review their lease contracts, in particular as far as it concerns the existence and applicability of a force-majeure clause (if any), the possibility of termination or renegotiation of certain contracts if necessary, etc.

Despite the above, tenants remain generally liable for their commitments and should take into account that the possibility of their termination or renegotiation is only exceptional. Potential defaults with the fulfilment of contractual obligations towards business partners, which could occur due to the current situation, should be dealt with very seriously as they could lead eventually to insolvency.

Unless agreed expressly in the lease, as a potential remedy, Czech law contains a concept of what is known as “substantial change in circumstances”, which could help businesses deal with the current situation.

The COVID-19 pandemic may represent such substantial change in circumstances creating gross disproportion in the rights and duties of the parties by disadvantaging one of them either by disproportionately increasing the cost of the performance or disproportionately reducing the value of the subject of performance, the affected party has the right to claim the renegotiation of the contract with the other party if the conditions stipulated by law are fulfilled. However, asserting this right does not entitle the affected party to suspend the performance.

Therefore, tenants very likely have some leeway to obtain at least some concessions from landlords if they do not have a direct claim for any rebates or damages.

However, retailers should look for legal advice before contacting their landlords in order not to worsen their negotiating position from the very beginning.

Remedies

Czech law provides for the general obligation of the Czech Republic to reimburse affected legal entities for any damage that has arisen in connection with measures taken under the Crisis Act, which includes governmental measures as a consequence of the current “state of emergency” due to the spread of the COVID-19 disease declared under the Crisis Act. However, each claim for reimbursement always needs to be assessed on a case-by-case basis.

Insurance

Retailers are well advised to review their insurance policies to see if they provide for any coverage of damages and loss profits in relation with closure of their shops. The coverage is usually conditioned by deterioration of the leased premises but some policies do not include such condition.

 

The document reflects the status as of March 20, 2020.
This document is for informational purposes only and may not be considered a legal opinion or advice on how to proceed in a particular case.

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TAX LIBERATION PACKAGES
English version here.

DAŇOVÉ LIBERAČNÍ BALÍČKY
česká verze zde.

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Measures proposed by Polish Government to overcome crisis caused by spread of COVID-19

The Polish Government has prepared new regulations aimed at limiting the negative effects of the COVID-19 epidemic, including support for the Polish economy, entrepreneurs, employers and employees. The new regulations were adopted on March 31 and (with some exceptions) they are effective from April 1.

The package of measures, known as the “Anti-Crisis Shield”, focuses on protection and support of the labour market, granting instruments to improve financial liquidity for entrepreneurs and provides for relief in public law liabilities.
Among others, the following measures will be implemented on the basis of the “Anti-Crisis Shield”:

Relief in the payment of Social Security Contributions
Self-employed and micro entrepreneurs (employing up to 9 employees) – at their request – may be released from the obligation to pay unpaid contributions for compulsory social insurance, due for the period from March 1, 2020 to May 31, 2020.
In the event of a positive decision to postpone the payment deadline or to divide into instalments payments of social security contributions due for the period from January 1, 2020, on the basis of an application submitted to the Social Insurance Institution during the period of the state of epidemic or within 30 days following its cancellation, no prolongation fee will be charged.

Tax relief
In the event of a positive decision to postpone the payment deadline or to divide into instalments payments of taxes, on the basis of an application submitted to the tax authorities during the period of the state of epidemic or within 30 days following its cancellation, no prolongation fee will be charged.

New regulations enable CIT and PIT taxpayers who bear the negative consequences of COVID-19 to deduct the loss incurred in 2020 from operating income earned in 2019. The deduction of "loss" from income by deducting loss achieved in 2020 from the income of 2019 will be possible provided that in 2020 the taxpayers achieve revenues lower by at least 50% compared to 2019. Based on the general provisions, it is possible to deduct the loss from business activities in a given year from the income achieved in the next five years.
In order to make the deduction, the taxpayer is obliged to submit a correction of the tax return for 2019.

Changes in functioning of companies

  • introducing the statutory instruments providing for the possibility of remote operation of the companies’ organs, i.e., management board, supervisory boards and shareholders of companies by enabling participation in meetings via means of distance communication and adopting resolutions;
  • extension for 3 months (for 2 months in the case of entities conducting supervised activities) of the deadline for preparing the financial statements and approving them, including holding ordinary shareholders’ meetings/general meetings in commercial companies under a regulation of the Minister of Finance.

Co-financing of remuneration for employers who will maintain employment
Employers forced to announce the interruption of work or reducing working time which will not reduce employment may obtain financial benefit from the Guaranteed Employee Benefits Fund to co-finance the employees’ remunerations. The benefit will be available for:

  • entrepreneurs affected by a decline in economic turnover of not less than 15% during any two consecutive calendar months, falling after January 1, 2020 to the day preceding the day of submitting the application for co-financing, compared to the total turnover from the corresponding two consecutive calendar months of the previous year,
  • entrepreneurs affected by a decline in economic turnover of not less than 25% in any calendar month indicated after 1 January 2020 to the day preceding the day of submitting the application for co-financing, compared to the turnover from the previous month.

The co-financing may be granted to support the payment of the remuneration of employees whose remuneration was not higher than 300% of the forecasted average monthly gross remuneration in the national economy in 2020 in the month preceding the month in which the application for co-financing was filed.

In the case of an announced interruption of work, the employees’ remuneration is co-financed from the Guaranteed Employee Benefits Fund, in the amount of 50% of the minimum remuneration for work determined on the basis of the provisions on the minimum remuneration for work, with respect to the working time.

In the case of reduced working time, the employees’ remuneration is co-financed from the Guaranteed Employee Benefits Fund, up to 50% of the remuneration, but no more than 40% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office, effective as of the date of submission of the application for co-financing.

Reduction of working time will be possible by 20%, but to no more than 50% of full working time and the paid remuneration may not be lower than the statutory minimum remuneration.

Applications for co-financing should be submitted to the Directors of Voivodship Labour Offices.

Each of the benefits will be due for a total period of 3 months from the date of signing the agreement. In order to overcome the economic effects of COVID-19, the Council of Ministers may extend this period, taking into account the period of the state of epidemic threat.

Expiry of mutual obligations under lease agreements
During the prohibition on operating in large scale commercial facilities (with a sales area of over 2,000 m2) the mutual obligations of the parties to the lease agreement under which the commercial space is used shall expire.

Postponement of certain obligations under Anti-Crisis Shield:

  • temporary extension of the deadline for submitting a notification of payment to an account not included in the list of VAT taxpayers from 3 days to 14 days,
  • extension of the deadline for submitting annual income tax returns and payment of corporate income tax and personal income tax due for 2019 until 31.05.2020,
  • postponement of the date of advance payment for income tax due to the remuneration paid in March and April (until 01.06.2020),
  • postponement of the deadline for payment of the annual fee for perpetual usufruct until 30.06.2020,
  • facilitating VAT settlement by postponing of entry into force to 01.07.2020 of a new Standard Audit File for Tax,
  • postponing to 13.07.2020 the deadline for companies to register in the Central Register of Beneficial Owners,
  • extension of the deadline for submitting information on transfer prices to 30.09.2020,
  • postponing the obligation to create Employee Capital Plans (PPK) in medium-sized enterprises, by postponing the deadline for conclusion of an agreement for management of PPK until 27.10.2020 and conclusion of an agreement for operating of PPK until 10.11.2020,
  • extending the period of preparation of paper waste record documents to 31.12.2020,
  • deferring the tax on retail sale until 1.01.2021.

Other important facilities granted by Anti-Crisis Shield:

  • temporary suspension, however, not longer than until 30.06.2020, of the deadline for reporting domestic tax schemes,
  • introducing new procedures regarding the organization of the work of courts – in the event that the court has completely ceased operations due to the spread of COVID-19, another court shall be appointed to hear urgent cases. The catalogue of urgent cases dealt with by courts during the cessation of activities is listed in the new regulations,
  • the opportunity for "small taxpayers" to refrain from paying the simplified income tax advances paid for March-December 2020,
  • during the period of the epidemic and during the 30 days following its cancellation, with the exception of Sundays on which a holiday falls, the prohibition on performing trade-related activities consisting in unloading, receiving and displaying goods of first necessity and entrusting an employee or employee with such activities is lifted,
  • exemption from charging contractual penalties for delays in the execution of tenders related to the epidemic,
  • co-financing of part of employee remuneration costs and due social security contributions by the Starosta in the event of a decrease in economic turnover,
  • co-financing of a part of the costs of running a business in the event of a decrease in business turnover for entrepreneurs who are natural persons and do not employ employees,
  • one-off loans of up to PLN 5,000 for micro entrepreneurs,
  • payment from the Social Insurance Institution of a new kind of benefit, i.e., a downtime benefit in the amount of 80% of the minimum remuneration for work in 2020 (for people employed under civil law contracts) and in the amount of 50% of the minimum remuneration for work in 2020 (for self-employed),
  • the possibility of reducing uninterrupted daily and weekly rest for employees, and introducing an equivalent working time system to preserve the level of employment,
  • extension of legal stay and work permits for foreigners.

For more details on the measures provided by the “Anti-Crisis Shield”, as well as for information on any legal matters arising out of these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

ru100

Non-working week in Russia. Who is exempted? – details here.

Guidelines on compliance with non-working week. Extension of deadline for filing financial and statistical reportsdetails here.

ru110

Support measures in Russia due to COVID-19

The Government and the Central Bank of the Russian Federation are taking prompt measures against the economic impact of the coronavirus and aimed at supporting businesses. The Russian Government has prepared a plan to support the economy in connection with COVID-19 (please see the Plan of priority measures (actions) to ensure sustainable economic development in the face of a worsening situation due to the spread of the coronavirus infection – on the website of the Russian Government: http://static.government.ru/media/files/vBHd4YRxpULCaUNNTFLVpPSZbMCIA2Zq.pdf)

I. General measures

  • Creation of a financial reserve fund of up to 300 billion rubles;
  • Creation of a guarantee fund for loan restructuring;
  • Support measures for public state contracts;
  • Etc.

II. Business support measures

1. Measures were taken in relation to all business entities:

  • until May 1, 2020, all on-site scheduled and unscheduled tax inspections are postponed at the Federal level (with some exceptions), and inspections that have already been initiated have been suspended;
  • the Russian Ministry of Economic Development was instructed to (i) submit a draft Federal Law to the Government of the Russian Federation by April 1, 2020, providing for the possibility of introducing a moratorium on bankruptcy applications, and (ii) speed up the approval, and submit to the Government of the Russian Federation, a draft Federal Law introducing a procedure for restructuring the debts of organizations;
  • the possibility to be released from liability for non-repatriation of currency proceeds due to COVID-19 (to be considered in each particular case).

2. Measures for certain industries: aviation, transport, tour operators, developers, pharmaceutical companies, etc.

3. Measures to support small and medium-sized enterprises: concessional lending, deferred lease payments for three months (for tenants of state or municipal property), refinancing of small and medium-sized enterprises’ loans, tax deferral benefits, and measures to stabilize their financial state during the pandemic. It is planned to introduce a mechanism for non-application of penalties, the possibility of extending the terms and adjusting prices in 2020 for public procurement, etc.

4. Measures for other industries and sectors of the economy: at the stage of adoption, they will primarily concern the industries that are most seriously affected.

Separate support measures may be introduced in different regions of Russia, however Moscow is taking a lead by having introduced the following measures (https://www.mos.ru/mayor/themes/12299/6382050/):

1. The deadline for advance payments of corporate property tax and land tax for the first quarter of 2020 has been extended until December 31, 2020.
This applies to taxpayer-companies operating in the fields of public catering, tourism, culture, sports, hotels and entertainment.

2. The deadline for payment of the trade fee has been extended until December 31, 2020.
This item will come into effect from the date of entry into force of the Federal Law, according to which local authorities will have the right to extend the dates of payment of regional and local taxes and fees themselves.

3. Partial exemption from rent payments.
This applies to companies in the fields of culture, physical activities and sports, exhibitions, entertainment and educational activities that lease land and premises in city (Moscow) ownership. At the same time, the lease will be reduced only if the company was forced to stop working due to high-readiness for pandemic arrangements. They will not be charged for all of the time they spent idle.

4. Until December 31, 2020 rent payments for April, May, and June 2020 under lease agreements for land plots and premises in city ownership can remain unpaid.
This applies to companies in the fields of hotel services, catering and tourism. The same deferrals and exemptions from rent will be given to city enterprises and institutions that themselves lease land and premises.

5. A 50% reduction in fees for contracts with a trade permit.

This applies to non-stationary retail outlets (stalls, pavilions) of small and medium-sized businesses in underground (subway) passages and lobbies. The fee will be reduced for the entire duration of the high-readiness for pandemic arrangements.
Please note that on Wednesday March 25, 2020, the President of Russia introduced additional measures aimed at supporting people and certain categories of businesses (mainly for small business), so there may be further developments in this field. PETERKA &PARTNERS is following the measures closely and will keep you updated in case of any news. Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

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Considerations for Shareholders’ Meetings due to COVID-19

In light of the fact that the current situation with COVID-19 and that the recommendation to avoid large gatherings coincide with the annual meeting season for companies, we would like to briefly outline key issues with respect to holding general meetings of shareholders of Russian companies.

1. General information on holding general meetings of shareholders (“GMS”) in limited liability companies (“LLCs”)

As a rule, GMS in LLCs are held in presence  (“In Presence GMS”) with notarization of the minutes of such shareholders’ meetings in Russia in line with the formalities provided by Russian law, unless an alternative method of confirmation of shareholders’ resolutions (e.g., signing of the minutes by all shareholders) is set forth in:

a.   the registered Charter of the company, or
b.  established by resolution of the shareholders, which shall be also notarized.

Generally, even if the charter of an LLC provides for “on-line” options of holding In Presence GMS, such as videoconferencing, Skype, etc., such options are not considered as an exemption from the obligation to issue minutes of GMS  (either notarized or in a form as set forth by the alternative ways of decisions making). Moreover, taking into account that it is not possible to notarize minutes of In Presence GMS abroad and in a view of the current ban on foreign citizens from visiting Russia and self-isolation requirements applicable to everyone upon arrival to Russia, the solution could be in holding a meeting via absent voting (“Absent Voting GMS”). Under the general requirements the procedure for absent voting shall be set forth either in the Charter or in the special bylaws of the company. Usually Absent Voting GMS require the preparation and exchange of a package of documents, including voting ballots from each of the shareholders, minutes confirming the results of the absent voting of shareholders prepared based on the ballots, a list of the counted votes, etc.

However, it shall be noted that the absent voting solution is not applicable to the obligatory annual GMS of LLCs, during which inter alia annual reports and financial statements are approved, which may take place only in presence.

2. General information on holding GMS in joint stock companies (JSC)

Similar to LLCs, resolutions of JSCs may be held either in presence or by absent voting, while the obligatory annual GMS of LLCs, during which inter alia annual reports and financial statements are approved, as well as GMS to be held for the purposes of the election of the board of directors, revision commission and auditor cannot take place by absentee voting. Adoption of resolutions of GMS of JSCs shall be confirmed: (i) in the case of a public JSC by a registrar, and (ii) in the case of a non-public JSC by a notary public or registrar.

Please note that in light of the current situation with COVID-19, amendments to the Federal Law on Joint Stock Companies have been adopted, allowing for the holding of annual general meetings of shareholders in joint stock companies by absentee voting (Federal Law No. 50-FZ, adopted by the Russian State Duma dated March 12, 2020). Nevertheless, at the current moment there are no similar liberalization rules for adopting decisions for LLCs. Taking into account that the annual GMS of LLCs in 2020 shall take place between March 1, 2020 and April 30, 2020, Russian companies incorporated in the form of an LLC are recommended to review, urgently, their charters and take a decision on the most appropriate way of holding general meetings of shareholders.

PETERKA & PARTNERS remains at your full disposal should you need any assistance in this respect. Please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

ro100

The Ministry of Economy, Energy and the Business Environment of Romania has regulated the conditions under which the economic operators affected by the SARS-COV-2 pandemic can obtain emergency situation certificates (“ESC”) to benefit from the facilities provided by Government Emergency Ordinance no. 29/2020 on some economic and fiscal-budgetary measures and Government Emergency Ordinance no. 30/2020 for the amendment and the supplementation of some normative acts, as well as for establishing measures in the field of social protection in the context of the epidemiological situation generated by the spread of SARS-CoV-2.
Order no.791/2020 regarding the granting of emergency situation certificates to economic operators whose activities are affected by the SARS-CoV-2 pandemic (“Order”), that entered into force as of 25 March 2020, regulates the conditions under which the Ministry of Economy, Energy and the Business Environment issues emergency situation certificates to those economic operators whose activities have been affected by the SARS-COV-2 pandemic.
The Order regulates two types of ESC:

  • Certificate type 1 (BLUE) – issued to applicants that interrupted their activities, totally or partially, during the state of emergency, as a consequence of the decisions taken by the competent public authorities;
  • Certificate type 2 (YELLOW) – issued to applicants that register a decrease in revenue in March 2020, of a minimum of 25% of the average revenue in the period January-February 2020.

Please note that applicants are allowed to file a request for only one type of emergency situation certificate.
An ESC can be used either in relation with a public institution, with the purpose of obtaining certain benefits/support measures, or in commercial relations.
In order to obtain an ESC, applicants shall upload, on http://prevenire.gov.ro/ (“Online Platform”), the following documents, having attached the electronic signature of the economic operator’s legal representative or of a proxy:

  • Identification data of the applicant;
  • An affidavit on the liability of the legal representative (his/her own liability) stating that all of the information and documents underlying the application for obtaining the ESC are true and correct and comply with the legislation in force in relation to the type of certificate requested.

Applicants that are not registered with the Trade Registry Office shall submit documents attesting the authorization of the activity.
An ESC is valid without a signature and stamp and can be verified on the above-mentioned Online Platform.
In case of inspection and control performed by competent bodies, the documents underlying the issuance of the above-mentioned affidavit on a legal representative’s own responsibility shall be verified.
The Ministry of Economy, Energy and the Business Environment will issue the emergency situation certificates only during the state of emergency in Romania.
For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

 

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First set of economic and tax-budgetary measures in context of COVID-19 epidemic

The Romanian Government has adopted the first set of measures to support entities and individuals affected by COVID-19. The Government Emergency Ordinance no. 29/2020 on certain economic and tax-budgetary measures, as published in the Official Gazette no. 230/21.03.2020 (“GEO 29/2020’’) provides for certain types of direct or indirect aid for small and medium-sized companies, professionals and/or individuals.

Please find below, a brief summary enclosing the measures:

  • Postponement of the first deadline for the payment of local taxes (i.e., tax on land, buildings and means of transportation)

For 2020, the deadline of March 31 has been extended to June 30 (until when the 10% bonus for payments in advance will be applicable).

  • Postponement of deadlines for benefiting of fiscal restructuring

A debtor intending to restructure its fiscal obligations has to notify the competent fiscal body on its intention by July 31, 2020, under the revocation of its right to benefit from the restructuring of the budgetary obligations.

The request for restructuring can be submitted until October 30, 2020, under the sanction of revocation.

  • Exemption to pay interest/suspension of enforcement

No interest and penalties shall be calculated, or become due, for the fiscal obligations due starting with the date of the entry into force of GEO 29/2020 and unpaid until the passing of 30 days as of the end of the state of emergency. The above tax obligations are not considered as outstanding fiscal obligations.

In addition, the enforcement measures applied for the recovery of budgetary debts have been suspended or not started, except for the enforcement applied for the recovery of those budgetary debts established by court decisions in criminal matters. The enforcement shall be suspended by credit institutions or third parties, through the effect of the law, without any other formalities from the tax authorities.

  • Facilities for profit tax payers applying quarterly prepayments

Taxpayers applying the system of declaration and payment of the annual profit tax with quarterly prepayments can make quarterly prepayments for the year 2020, at the level resulting from the calculation of the current quarterly profit tax. The calculation method is maintained for all quarters of the fiscal year 2020.

  • Other facilities for small and medium-sized companies ("SME")

Among the facilities granted to SME, the following may be noted: deferred payment for utilities (electricity, natural gas, water, telephone and internet services, as well as the rent for buildings for social headquarters and secondary offices), non-applicability of delay penalties for SME under the contracts with the public authorities for the duration of the state of emergency, and the possibility to obtain loans secured by the state with subsidized related interest.

  • Postponement/suspension of submission of UBO statements for companies, associations and foundations

The deadline for the submission of the UBO statement with the Trade Registry for companies, and with the Ministry of Justice for associations and foundations (i.e., 21 July 2020), has been prolonged by 3 (three) months to the end of the state of emergency. At the same time, during the state of emergency, the submission of the UBO statements for companies/associations/foundations has been suspended.

For any further information and assistance with respect to the above and any other COVID-19 related legal matters, please do not hesitate to contact us at covidhelpdesk@peterkapartners.com.

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Covid -19 in Romania: Temporary amendments in the field of prescription and termination of rights terms

The Decree no. 195/2020 instituting the state of emergency on the territory of Romania (the “Decree”) lays down, among others, certain measures in the field of prescription and termination of rights, attempting to uphold, under the special and restrictive circumstances of the COVID-19 pandemic, the legitimate rights and interests of creditors facing bad debts, and of other persons, whose legal actions might be prevented due to the current practical limitations.

Article 41 of the Decree provides that “prescription and termination of rights terms do not begin to lapse, and, if they have begun to lapse, they will be suspended during the entire duration of the emergency state instituted under this decree”.

This provision would imply the fact that, temporarily, and during the entire duration thereof, the “state of emergency” has been added to the cases of prevention of start of lapse and suspension of lapse of prescription and termination of rights terms.

It is worthwhile adding that the Civil Code does not provide for such state of emergency as a cause with any impact in the fields of prescription and termination of rights. However, the Romanian Civil Code provides, as a general rule, that, actually, force majeure is a case during which prescription does not start to lapse. In addition, force majeure is a case of preventing the start of the lapse of and suspending the course of termination of rights terms.

According to the Romanian Civil Code, force majeure is “any external, unpredictable, absolutely invincible and unavoidable event”, and it must be emphasized upon the fact that the state of emergency cannot be equated with force majeure, the former lacking the afore-mentioned characteristics.
Nonetheless, it seems that the drafters of the Decree assimilate, on a temporary basis, the state of emergency with force majeure, because the article of the Decree quoted above goes on to provide that ...” the provisions of article 2532 point 9, 2nd thesis of the Civil Code will be temporary inapplicable”.

The above-mentioned text of the Romanian Civil Code provided that “force majeure, as long as it is temporary, does not constitute a case of suspension of prescription, unless it occurs in the last 6 months before the expiry of the prescription term”. 

Thus, under the Decree, any prescription term in the course of lapsing at the beginning of the instituting of the state of emergency, will be automatically suspended, even if it is not in the last 6 months before the expiry of the term, for the course of the entire duration of the state of emergency, the latter being assimilated to force majeure.

However, the Decree does not go on to temporarily amend any other effects of the suspension of prescription and termination of rights terms, which will remain applicable, as stated in the Romanian Civil Code.

As a last remark, it must be noted that the assimilation of the state of emergency to force majeure operated in the text of the Decree will be applicable exclusively in the field of prescription and termination of rights terms. It must be, therefore, stated, that the state of emergency will not be invoked as a case of force majeure in the case of the performance of contracts, unless other derogatory legislative texts come into force in the next period.

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com

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