Privatization – still an ongoing process in the Republic of Serbia

05.03.2021.

The most recent legal framework regulating the privatization process in the Republic of Serbia was adopted in 2014.

Certain changes have subsequently occurred in the sense that now the Ministry of Economy of the Republic of Serbia (“Ministry”) has a key role in the implementation of the process.

The Ministry inter alia implements the privatization process, controls the privatization process, sells public capital expressed in shares or stakes. The Ministry also performs other tasks in accordance with the Privatization Law (“Law”) and relevant secondary legislation.

As there are still more than seventy companies in the portfolio of the Ministry (http://www.priv.rs/vesti)  it would be useful to revisit the models and methods of privatization. Also, it would be useful to be reminded of the meaning of the term “Large Subject of Privatization” and the purpose of a letter of intent.

Privatization models are as follows:

• Sale of capital;
• Asset sale;
• Transfer of capital free of charge;
• Strategic partnership.

The method of sale of capital and/or assets is a public collection of bids with subsequent public bidding.

The capital of privatization entities expressed in shares may be sold:

• in accordance with the law governing the securities market;
• by accepting a takeover bid in accordance with the law governing the acquisition of joint-stock companies.

Methods of privatization via transfer of capital free of charge shall include:

• transfer to employees;
• transfer to strategic investors in accordance with the Law and regulations governing FDI incentives.

The method of privatization through strategic partnership implies a public collection of bids.

A combination of multiple methods and models may be applied in the privatization process for more efficient implementation of this procedure.

Within the scope of the first changes and amendments to the Law “Large Subject of Privatization” was introduces as a new term meaning a  privatization entity whose business income for the business year preceding the initiation of the privatization procedure equals at least 50 billion dinars.

The Government prescribes the conditions, manner, and procedure of sale of the capital of big subjects of privatization by the method of the public collection of bids.

An invitation to potential participants in privatization processes to submit letters of interest is a procedure introduced by the Law in 2014. A letter of interest is expressed interest in a particular subject and model of privatization containing basic information on the interested buyer or strategic investor, with proposed indicative price, investment program, tentative plan of operations and number of full-time employees, as well as other relevant information set forth by a public Invitation.

Please contact us if you have any queries in relation to the privatization process in the Republic of Serbia.