OASIS

                        ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES

SLOVENIA DEVELOPMENTS 2009/2010

 Goran Kanalec, Kanalec Juzina Attorneys

The changes of the Public Procurement Act (ZJN-2) and the Public Procurement in Water Management, Energy, Transport and Postal Services Area Act (ZJNVETPS) shall enter into force in April 2010. 

Herein we shall concentrate on the changes relevant for tenderers who are mostly economic operators.

Consultancy Services for Contracting Authority 

Contracting Authorities can carry out the public procurement procedure by themselves or through a central purchasing body. Regarding the implementation of the public procurement procedure, the Contracting Authorities may transfer the Power of Attorney to other Contracting Authorities only. When the Contracting Authority itself implements the public procurement procedure, the persons in charge of the procedure and the decision making will need to pass an exam on public procurement.  

The Contracting Authority may always hire consultants to assist them in the implementation of the public procurement procedure. Attorneys or other consultancy firms are often hired as such. This is only possible in legal, technical and logistic consulting; such a firm cannot be given a Power of Attorney to make decisions in public procurement procedure. According to the recent changes in ZJN-2 and ZJNVETPS, for the services above 20.000 EUR (VAT excluded) the consultants are now required to provide the Contracting Authority with a performance guarantee. No payments can be made to the consultant before the public procurement procedure is brought to a conclusion, and the decision is final. The Acts, however, do not constitute such obligations for any other public services, public supply contracts or public works contracts. 

The performance guarantee covers timely completion of the services and the faultlessness of the services. Since these faults may be difficult to substantiate, concerns have risen regarding the faults in legal services. The faults may often be connected with decisions of the National Review Commission for Reviewing Public Procurement Procedures. Decisions of the Commission are not always predictable. Therefore it may be difficult to establish the consultant’s fault in a particular case. Although the deferred payment for the services is welcomed by the Contracting Authority, it is less desired by the consultants, especially if only partial consulting services have been conducted (as oppose to the whole procedure being carried out mostly by the consultant).

Records of Tenderers with Negative References 

In case of a well-founded suspicion that the tenderer has knowingly submitted untruthful statements or documents, a petition for a misdemeanour of the tenderer with the National Review Commission should be filed now. Violations of the provisions regarding direct payment to the subcontractors (see next Paragraph), and cases where the awarded tenderer rejects concluding the contract with the Contracting Authority without objective reasons, are also considered to be misdemeanours of the tenderer. In case of submitting untruthful statements or documents, and being found guilty of the misdemeanour, the tenderer is noted in the Records of Tenderers with Negative References and is eliminated from all public procurement procedures for a period of three years (in case the misdemeanour was committed in the public services procedure or the public supply procedure), or even for a period of five years (in case the misdemeanour was committed in the public works procedure). These measures may be considered as quite severe for those depending mainly on public procurement. 

This appears to be a better regulation of the Records of Tenderers with Negative References in comparison with the previous version of the Acts in which a tenderer could be noted in the Records of Tenderers with Negative References merely on the basis of Contracting Authority's findings (in case of submitting untruthful statements or documents). This explains why the records have been virtually empty for the past three years, no Contracting Authority wanted to risk tort actions on the tenderers' behalf.

Direct Payment to Subcontractors 

Due to the economic crisis and late payments, subcontractors often find themselves in an unenviable position. Renowned rules were therefore established in order to assure payments to subcontractors. The awarded tenderer must authorise the Contracting Authority to make direct payments to the subcontractor on the basis of confirmed bills. The subcontractor must submit his concordance with direct payments that will be made by the Contracting Authority. The tenderer must submit his bill together with a confirmed bill of the subcontractor to the Contracting Authority.

The Companies Act (ZGD-1) was changed  in 2009. The changes mainly reflect the economic crisis and relate to payments to the management and supervisory board of the public limited company. Other changes relate to the calling of the general meeting of the public limited company.    

Payments to the Management Board

v  When the supervisory board sets the payments for the management board, additional to the payments being proportional to the management board member tasks and financial status of the company, also policy directions of the payments must be followed.

v  Policy directions of the payments include the following:

o   sustainability of the company must be considered

o   the payments may consist of a fixed and a variable part; the scale for the variable part of payment must be predetermined

o   the severance pay can be paid only in the case of a premature cancellation of the contract, but not if the contract is cancelled by the management board member or in cases of revocation of the member due to the reason of guilt, incapability or a passed vote of no confidence by the supervisory board

v  The supervisory board can demand the return in whole or a partial return of the paid fee for a business success from a management board member in three years from the day of the payment

v  The return can be demanded based on two grounds:

o   nullity of the annual report in the part containing the basis for the fee

o   special revision report determining the incorrect use of the fee-scale 

Payments to the Supervisory Board

v  Members of the supervisory board cannot participate in the company’s profit-sharing

Calling of the General Meeting

v  The content that is demanded for the calling of the general meeting has been broadened (new obligatory elements: cut-off date relevant for determining the shareholders of the company, deadline for demanding supplementation of the agenda, procedure of electronic voting, procedure of mail voting).

v  Calling of the general meeting must be published in the Official Gazette of the Republic of Slovenia or in a daily newspaper. It must also be published in the company’s electronic media and the company’s webpage (provided the company has an electronic media or a webpage).

v  The company’s management is obliged to provide free information for the shareholders at the company’s seat from the day of the publication of the calling of the general meeting until the general meeting takes place (proposed resolutions, explanation of each point of the agenda, proposed statutory changes and other documents that must be presented at the general meeting according to law).

Electronic Voting

v  Electronic voting without physical presence is possible when so determined in the statute.

The changed Value Added Tax Act (ZDDV-1) valid from January 1, 2010 incorporates two EU directives – Council Directives 2009/69/EC of June 25, 2009 and 2008/9/EC of November 12, 2008 into Slovenian legislation. 

The main changes brought by the changed act are:

v  Changes in rules regarding the place of rendered services

o   Services rendered to persons liable for VAT payments are considered as being rendered in the place of the contracting authority’s seat (B2B)

o   Services conducted to persons not liable for VAT payments are considered as conducted in the place of the contractor’s seat (B2C)

o   There are a few exceptions to the rules (services regarding real estates, transportation...)

v  VAT reverse charge and obligations about reports regarding conducted services subject to VAT reverse charge

o   The goal is the prevention of tax evasions and assistance to smaller businesses (subcontractors) in overcoming the problem of late payments

o   The services subject to VAT reverse charge: construction services, job broking for construction services, supply of real estate...

o   VAT is paid by the contracting authority liable for VAT payments

o   Persons rendering such services or supplying such goods, and which are liable for VAT payments must give notification to tax authorities in 30 days after the first delivery, and must submit monthly reports regarding such services and supplies

The changes in the Attorneys Act came into effect in May 2009. 

The main changes are:

v  All attorneys must have a fiduciary bank account (separate to other bank accounts) to which they receive refunds of the legal expenses, or except payments on behalf of their clients

v  Before being accepted to the Bar Association, every attorney must pass a new exam which demands knowledge of the Attorneys Act, the Attorneys Tariff and Attorneys Codex.

Attorney limited liability companies became feasible in 2008. Many attorneys have decided to transform their offices to limited liability companies and many have branch offices across Slovenia. The ownership and the management of the company can only be in the hands of an attorney. 

Discussions have broken out between the Minister of Justice and the Bar Association regarding the attorneys’ tariffs. According to the questionnaire survey, many attorneys feel the present Attorneys Tariff Act is not always suitable and that its application sometimes causes problems. According to the changed Attorneys Act, the Attorneys Tariff is adopted by the Bar Association with the consensus of the Minister of Justice. The new Attorneys Tariff Act was the result of the previous government's opposition to the Attorneys Tariff valid from 2003 which was also adopted by the Bar Association with the consensus of the Minister of Justice. However, the Minister of Justice rejected the proposed Attorneys Tariff in 2009. According to the Bar Association management, the Bar Association will suggest the adoption of a resolution by the Association’s members which will treat the Attorneys Tariff as a recommended tariff for attorneys while Attorneys Tariff Act remains valid.

Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (ZFPPIPP) was changed twice in 2009. Publications and data on the procedure have been renowned and a few procedure details were changed. A new illiquidity reason was added to the list. The new illiquidity reason states that in case the legal person is more than three months late with monthly payments to the workers in the amount of minimum wage, or with payments of obligatory taxes and social security contributions due together with monthly payments. No evidence to the contrary is accepted.  

Due to the media attention devoted to generous payments received by some insolvency practitioners, the Minister of Justice was by the changed Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act obliged to define maximum payments to the insolvency practitioners. The rules implementing the changes in payments to the insolvency practitioners were adopted in 2009.

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