With the recent amendments to the Companies Law, legislators introduced the institute of convertible loans—an eagerly anticipated option for investors and startup companies in North Macedonia.

In 2022, through amendments to the Companies Law, lawmakers provided investors (third parties) with the ability to convert provided loans into shares. This conversion process involves increasing the company’s share capital by issuing new shares or, in other words, transforming the given loan into shares.

In this article, we will outline the procedure for augmenting the share capital by issuing new shares using convertible loans in a limited liability company.

Convertible loans

The process

The procedure for increasing the company’s share capital is governed by the Companies Law and is executed through the Trade Registry maintained by the Central Registry of North Macedonia.

A loan provided by a third party (investor) intending to convert it into shares must be paid in cash. The conversion of the loan into shares must be completed no later than the end of the third year from the signing of the loan agreement.

To implement this process, the Investor and the Company are required to undertake the following steps:

How can we help you in this process?

Tosic & Jevtic, attorneys and counselors-at-law, boast extensive experience and expertise in handling various procedures before the Trade Registry. Throughout our professional journey, we have successfully navigated numerous intricate procedures for trade company modifications, including the intricate process of augmenting company share capitals through the conversion of loans into shares.

Our esteemed Law Firm comprises seasoned lawyers ready to guide and support you throughout this process. With our wealth of experience, we assure efficient and effective assistance for our clients.

Conclusion

Prior to the recent amendments to the Companies Law, the conversion of loans into shares was limited to existing shareholders of the Company exclusively.

However, with the latest amendments to the law, this option has been extended to third parties investing in a company, providing them with the opportunity to convert their loans into shares of the Company.

This development presents a favorable option, particularly for startup companies in North Macedonia, as it allows them to attract investors by offering the conversion of loans as a form of security for the investment.

Convertible Loans

Ivana Jevtic Nikolova

The holder of a concession for the exploitation of mineral resources – the Concessionaire, during the duration of the concession granted by the state – the Grantor, may transfer the concession to another legal entity, respecting the procedure prescribed in detail by the law. The procedure for transfer of exploitation concession of mineral resources is in detail prescribed in the Law of Mineral Resources (“Official Gazette of Republic of Macedonia” no. 136/12, 25/13, 93/13, 44/14, 160/14, 129/15, 192/15, 39/16, 53/16, 120/16, 189/16 and “Official Gazette of Republic of North Macedonia” no. 7/19, 99/22, 129/23 и 253/23, hereinafter referred to as the “Law on Mineral Resources”).

According to the Law on Mineral Resources, the concession for the exploitation of mineral resources, can be transferred only entirety to another legal entity.

Аs provided in Article 47 of the Law on Mineral Resources, the procedure stars with the submission of a request for transfer of the exploitation concession by the Concessionaire to the Ministry of economy of Republic of North Macedonia.

Furthermore, the Ministry of economy prepares and sends a request for preparation of an assessment of the Concessionaire’s business venture to the Bureau of assessment within 15 days from the day of receipt of the request for concession transfer. The Bureau of assessment prepares the Assessment of the concessionaire’s business venture within 60 days from the day of receipt of the request for preparation of an assessment of the concessionaire’s business venture. The Assessment made by the Bureau of assessment is used in this procedure in order to calculate the compensation that the new Concessionaire will be obliged to pay.

After the receipt of the Assessment of the Concessionaire’s business venture, i.e. within 30 days of the day of receipt of the Assessment, the Ministry of economy prepares and sends a detailed proposal and decision for the transfer of the exploitation concession to the Government of the Republic of North Macedonia.

Within 30 days from the day of receipt of the detailed proposal and decision for the transfer of the exploitation concession from the Ministry of economy, the Government of the Republic of North Macedonia makes a Decision on the transfer of the exploitation concession. After making the Decision on the transfer of the exploitation concession to the new legal entity, the Government of the Republic of North Macedonia, as a grantor and the new Concessionaire will conclude an Agreement for transfer of the concession.

The new Concessionaire is obliged to make a payment of the compensation in the amount of seven percent of the estimated value of the exploitation concession according to the Assessment made by the Bureau of assessment, within 30 days from the day of conclusion of the Agreement for transfer of the exploitation concession with the Government of the Republic of North Macedonia. With the payment of the compensation, the procedure for transfer of the exploitation of mineral resources is finished.

Finally, in the Law on Mineral Resources, it is prescribed that automatically with the transfer of the exploitation concession, the rights and obligations arising from the issued permits and approvals by the competent authorities in the Republic of North Macedonia which are obtained by the old Concessionaire, are transferred to the new Concessionaire. With this guarantee prescribed in the relevant law, the new Concessionaire can pick up where the old Concessionaire left off, without unnecessary business interruptions.

Taking into account everything stated above, we can logically conclude that this administrative procedure is quite complex and long, and requires the consent and opinion of many competent institutions during its course. Therefore, we at Tosic & Jevtic Law Firm are at your disposal with our legal advice, tailored guidance and assistаnce in all procedures before the competent institutions.

Mineral Resources

Ljupka Naumoska Gjorgjievska

PART 2 – The NDA clause in North Macedonia

In the legal framework of Macedonia, particularly within employment law, there exists a fundamental legal obligation concerning the preservation of business secrets. This obligation is of utmost importance and is treated with significant gravity by the legislator in the realm of legal relationships between employees and employers.

This legal duty entails that employees are prohibited from utilizing, for their personal gain or disclosing to any third party, any data categorized as a business secret by the employer. Such categorization is determined by a special act established by the employer or through any other means of knowledge transfer.

As a result, employees are held accountable for any inadvertent release of a trade secret, whether they were aware of the confidential nature of the information or should have reasonably known about it. Additionally, all employees who come into contact with materials, information, and data classified as confidential are obligated to maintain strict confidentiality (NDA).

Furthermore, representatives of workers and any experts assisting them must refrain from disclosing any information related to the employer’s business interests that was shared with them in confidence, even after the termination of their mandate.

Our law firm strongly recommends that clients enact a dedicated legal instrument for safeguarding confidential information. This instrument serves to meticulously define the scope of information deemed confidential, establish explicit safeguards, delineate the prescribed marking mechanisms, and specify any unique categorizations for data warranting heightened confidentiality. Furthermore, this instrument will furnish precise guidelines and delineate circumstances under which a breach of the duty to protect confidential information is recognized, elucidating the corresponding consequences that may ensue in such instances.

Employees will receive comprehensive information regarding this obligation, and the existence of the aforementioned legal instrument will facilitate continuous reference and serve as a constant reminder of their responsibilities in this regard. This ensures that the workforce remains well-informed and cognizant of the stipulations outlined in the act, promoting adherence to the established protocols for the protection of confidential information.

In specific cases, and subject to conditions and limitations outlined by the law, there may be instances where the employer is not obligated to share information or seek consultation when such disclosure could significantly disrupt or cast doubt on the functioning of the employer, based on objective criteria.

An intriguing aspect to consider pertains to the temporal validity of this obligation under employment law. Specifically, does the obligation persist, and if so, for what duration following the termination of the employment relationship for the employee?

Addressing this, it is imperative to clearly stipulate the post-employment duration during which the obligation to protect confidential information remains in effect.

However, it’s noteworthy that the legislator does not specify any timeline regarding the duration of the employee’s obligation to maintain confidentiality after the termination of the employment relationship.

We, as a law firm, emphasize the significance of establishing a precise time frame for this obligation. It is advisable, in consultation with clients, to clearly define the duration of this commitment, even if it is intended to be indefinite.

Furthermore, the Macedonian legal system lacks clarity when it comes to outlining the consequences that may be imposed on employees who breach this confidentiality obligation. This is a significant legal gap that requires attention and resolution.

By incorporating a well-defined timeframe and consequences into the legal instrument, such as a (NDA) non-disclosure agreement, employers can establish the period during which former employees are bound by the duty to uphold confidentiality even after the cessation of their employment. This ensures a structured and legally sound framework governing the temporal scope of the confidentiality obligation beyond the termination of the employment relationship.

NDA

Ana Tosic Chubrinovski – Managing Partner