Serbia: Recent News And Highlights - Macedonia - March 2013

Last Updated: 13 May 2013
Article by Miloš Vučković and Leonid Ristev

Corporate & Energy and Infrastructure

Legislative news

Amendments to the Company Law

According to recent amendments of the Company Law (2004) in Macedonia, the companies that have not performed any business activities in the last three years, will be declared as inactive by the Central Registry of the Republic of Macedonia and in cooperation of the Public Revenue Office such companies shell be deleted from the administered trade registry. According to the estimations announced in the media, this new amendment will bring an end to approximately 50,000 registered trade companies in Macedonia. The main goal of the amendment is to increase competition on the Macedonian market and to create a clear picture of functional and active firms in the country.

Aside the aforementioned change, the amendments tackle the approval of business deals with interested parties in listed joint stock companies ("JSC"). The amendments broaden the rights of the minority shareholders, enabling them to seek annulment before a competent court in a period of one year since the conclusion of agreements they find unfair and damaging for the company.

Mandatory Listing

Pursuant to recent amendments to the Securities Law (2005) (which envisages mandatory listing of all eligible JSC until 2018) the Macedonian Stock Exchange ("MSE") and the Ministry of Finance is preparing new Rules for Listing that would specify the conditions that the companies would have to meet in order to join the current 32 listed JSC. The expectations of the MSE are that the number of listed companies would double in the first year of application of the amendment. Although it was expected that the Rules would be ready and the obligation for mandatory listing would apply by the end of February 2013, there are still no likely prospects of that happening any time soon.

Together with the obligation for mandatory listing, the Parliament adopted amendments to the Law on Personal Income Tax (1993) which liberates capital gains achieved via trade with securities from the payment of subject tax in the following three years (as of 31 December 2015). Both legislative changes are due to the Government's determination to galvanize the MSE, achieving greater development of the Macedonian economy in general.

Upcoming & on-going projects

Chebren and Galiste Hydropower Plant

A new public tender for Chebren and Galiste hydropower plant was published by the Macedonia Government in late December of 2012 after six failed attempts to find a concessioner that would build the two hydropower plants over the past couple of years. The entire project is estimated to be worth around EUR 540 million. The deadline for submission of offers is 15 April 2013. The company that would offer greater participation for the domestic company "ELEM" in the newly formed joint venture (the minimal threshold is 39%).

Skopje's Underground Tunnel Project

The City of Skopje has announced its plans for the construction of a tunnel in the central area of the city. According to the Skopje City Major Mr. Koce Trajanovski, the whole road project is intended to be 1,300 meters long while the tunnel itself is supposed to be 900 meters long. An international tender has been published for the construction of the entire project. According to the Skopje City Major, the construction of the project is predicted to cost around EUR 32 million. The deadline for submission of bids is set for 10 June 2013.

Kicevo – Albanian Border Railway

The Macedonian Ministry of Finance recently announced a tender for the preparation of detailed design and tender documentation for a project involving the new railway section which is envisaged to be built from Kicevo (a town in western Macedonia) to the border with Albania. The railway will be part of the 1,500 kilometre Corridor 8, which goes from the Albanian port of Durrës to the Bulgarian port of Varna. The railway should contain a single electrified line from the existing railway station in Kicevo to the border with Albania. The length of the railway section is approximately 63 kilometres.

Regional and Local Roads Project

As part of the Project for Rehabilitation and Improvement of Regional Roads, financed by the European Bank for Reconstruction and Development ("EBRD"), the Macedonia Public Enterprise for State Roads, announced a tender for reconstruction of four (4) local roads in Macedonia (Lot 1, Lot 2, Lot 3 and Lot 4). Firms from all countries that meet the required criteria are eligible to apply for the tender. The deadline for submission of offers is 29 March 2013, at noon.

The total value of the Project for Rehabilitation and Improvement of Regional Roads is EUR 130 million, out of which EUR 50 million are financed with a loan from EBRD.

Privatisation (recapitalization) of JSC "Macedonian Power Plants"

The Government of Macedonia ("GoM") has announced its intention to privatise (recapitalize) JSC "Macedonian Power Plants" ("ELEM") by privatising 49% of the shares to a private investor. ELEM is a 100% state owned company which produces around 96% of the entire domestic production of electricity. According to unofficial information, KPMG has estimated that the current value of ELEM is EUR 750 million. According to media reports there are several potential models through which this project can be realised, however, it seems that most likely the privatisation (recapitalisation) will be realised through a new emission of shares. According to announcements from the GoM this project should move forward in the first few months of 2013. ELEM has already made an international public call for the selection of a consultant for the privatisation (recapitalization) procedure.

Highway sections Miladinovci - Stip and Kicevo - Ohrid

The construction of the highway section Miladinovci - Stip and the upgrade of the road section Stip - Kocani, as well as the construction of the highway section Kicevo - Ohrid and Ohrid St. Naum is said to be a priority infrastructure project which the Government of Macedonia is going to implement with the cooperation and support of the Government of the People's Republic of China. An intergovernmental agreement was signed in December 2012 between the Minister of Transport and Communications Mile Janakieski and the Chinese ambassador Cuj Dzhivei. The plan for financing the construction of the highway sections is to use part of the 10 billion euro that the Chinese government announced as support for the development of South East Europe, trough loans made by the Chinese Export Import Bank.

Privatisation of OHIS

The Ministry of Economy announced a public call for the collection of bids for the shares of the Republic of Macedonia and the Pension and Disability Insurance Fund in the former regional leader in the chemical industry OHIS AD Skopje (76,575% of the total shares). All domestic and foreign legal entities, whose individual or consolidated revenue for 2009, 2010 and 2011 exceeded EUR 2 million (for each year), that will collect the tender documentation and meet the required conditions are eligible to be future owners of OHIS. The tender documentation could be picked up until 16 April 2013, while the submission of offers closes on 19 April 2013.

Privatisation of 11 Oktomvri – Eurokompozit AD Prilep

Another public call was announced by the Ministry of Economy for the collection of bids for the state owned 100% shares in the company for production of composites 11 Oktomvri – Eurokompozit AD Prilep. All domestic and foreign legal/natural persons, whose individual or consolidated revenue for 2009, 2010 and 2011 exceeded EUR 2 million (for each year) are eligible to collect the tender documentation and participate in the bidding process. The tender documentation is available until 16 April 2013, while the submission of offers closes on 18 April 2013.

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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