Political stability and predictability, shake-ups for the corporate and banking legislative frameworks, and a solid economic situation despite the pandemic – these are the current highlights in Croatia, according to Divjak, Topic, Bahtijarevic & Krka Partner Martina Kalamiza.
"The political and media discourse is dominated by all the protests against COVID-19 passes and the new restrictive measures that aim to combat the virus, as well as the implied division of citizens based on their vaccinations status," Kalamiza begins, adding that it appears as though business activities in Croatia have been relegated to the background. "Still, we expect no major political changes that could impact the markets and the business sectors – the status quo is stable and predictable."
Speaking about legislative changes and updates, Kalamiza says that developments in energy and the wider corporate sector are of interest. "The Ministry of Justice has recently issued a request for public input on the proposed changes to the Companies Act. These changes seek to streamline and enable a number of procedures by allowing them to be completed remotely," Kalamiza reports. Another important change on the horizon is the "cancellation of the requirement to execute an agreement for the transfer of shares in the form of a notarized act, which will likely make cross-border M&A deals much easier," she says.
Furthermore, Kalamiza says that "by the end of this year or the beginning of the next one, a new EU Directive by the European Parliament and Council is expected to be adopted, focusing on credit services and collateral." This new Directive seeks to prevent the accretion of NPLs in bank books and to enable a more efficient way of NPL management. "Also, the Directive ought to contribute to the development of the secondary market for bad loans. After it’s adopted, there will be a two-year period for all EU member states during which the Directive is to be implemented in national legal frameworks."
Additionally, Kalamiza says that "fintech and ESG compliance could also become hot topics in the near future, seeing how the National Development Strategy of Croatia for 2030 seeks to direct all national and EU financing sources towards incentivizing sustainable business and societal development." This strategy also aims to increase battle-readiness for and resistance to crises, facilitate green and digital transitions, and balance out regional development for the next decade. "To that extent, I believe the Crypto-Assets Regulation will introduce a lot of innovations," she says.
Finally, describing the current status of the economy, Kalamiza says "all is quiet on the western front. Even though the pandemic implied an increase in the number of bankruptcy and insolvency proceedings, as well as restructurings, this was just not the case yet." She reports that the most active business sectors are real estate, IT, tourism, and renewable energy. "Also, it is important to underline two projects that have been completed recently: the long-awaited completion of the Peljesac bridge in the south of the country and the withdrawal of Sberbank from the CEE region that saw AIK Banka, Gorenjska Banka, and AGRI Europe Cyprus expand," Kalamiza concludes.