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CEE
Year 9, Issue 7
August 2022
Legal Matters
In-Depth Analysis of the News and Newsmakers That Shape
Europe’s Emerging Legal Markets
Across the Wire: Deals and Cases On the Move: New Homes and Friends The Buzz A Look at the Engine for ESG: Finance
ESG Talks: M&A Trends and the Future of Due Diligence – A CEE Legal Matters Round Table
ESG Talks: Finance Goes Green – A CEE Legal Matters Round Table Experts Review: ESG in CEE
The Confident Counsel: What’s Up with Those Slides?
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PRELIMINARY MATTERS AUGUST 2022
EDITORIAL: THE ESG DIRTY WORD

By Radu Neag
I worked on a couple of “Women in Tech” research pro- While this might seem time- and resource-in-
jects recently, helping companies understand whether a Pink tensive – indeed, everyone could alternatively
Strategy or a Gender-Blind Strategy would be more suitable be trained in productivity-related tasks – other
for them attracting and retaining female tech talent. Pink solutions were a lot simpler but faced signifi-
would mean focusing on the inclusion and promotion of those cantly more pushback. Which brought about
benefits that correlate highly with female employees’ prefer- the notion of an ESG dirty word: “the gender
ence for a particular workplace. Gender-Blind would focus on pay gap.” This single issue received more
identifying and eliminating any roadblocks standing in the way company pushback than all other matters
of workplace equality. combined.
The general aim of those tech companies was increasing their We faced a problem – female talent was potentially being
proportion of female employees. Overall, such a goal aligns paid less than comparable male talent for the same job. Yet
nicely with ESG concerns. And some of the means of getting those companies were still paying not-insignificant amounts
there align as well: a better work/life balance; an emphasis of money on “Women in Tech” research projects, events, and
placed on medical insurance, paid leave, and childcare facilities; whole departments tasked with finding and attracting female
fair and quantifiable performance reviews, regardless of gen- tech talent. “So, stop spending all that money and pay your
der, sexual orientation, or other criteria; college scholarships women experts more,” we said. They couldn’t: salaries were
encouraging more women to study tech. calculated based on the initial interview negotiations, internal
procedure-based increments, and promotions. “But your whole
Just like with ESG, some of the roadblocks seem more management team seems to be on board – change those damn
ethereal than others. One of the most frequently mentioned procedures,” we insisted. To this day, those tech companies are
workplace issues were meetings. Everyone found them, at still fighting an uphill hiring battle. And spending good money
times, either time-consuming or ineffective. But female tech on conveying important related messaging, just not the crucial
experts feared, and indeed expected, they would be talked over, one: “We pay our experts the same, regardless of gender.”
interrupted, dismissed, or ignored – frequently, all within the
same meeting. This was the case for meetings both within and Some ESG issues are indeed complex and complicated. The
outside the organization (with partners, suppliers, or clients). reasons why women demand less than men for the same job
The worst example – which best illustrates the problem – is (in interviews and performance reviews) are even more so:
having a female expert come up with a solution to a question their confidence is eroded by years of having to conform to
only to be ignored, for the discussion to move on, and for the still-traditional gender roles (with school, family, and the media
same solution to be resubmitted by a male expert (frequently as primary culprits), or they may fear appearing confronta-
more junior) 10 minutes later – to be picked up enthusiastically tional or shrill when negotiating harder. No company can
by the (still predominantly male) group of participants. single-handedly take on the institutions of family, school, and
media. And indeed, they don’t have to. They should simply
Congratulations follow on the one side, and anger, resent- stop lowballing their female employees in negotiations, just
ment, and sadness abound on the other. It was harder to find a because they can.
clear-cut solution to such an issue: “Train all your senior staff
to be aware of it and prevent it from happening when running Keep the research money for more complex matters – and
meetings. Train the rest of your staff to avoid such recurring stop fretting about messaging – the solution is simple: for
mistakes. Train everyone in communication-related soft skills.” substantially equal jobs, pay your experts the same!
CEE
Impressum:
CEE Legal Matters Kft.
The Editors:
Radu Cotarcea
Letters to the Editors:
If you like what you read in these pages (or even if you
Legal Matters
Szechenyi utca 10, radu.cotarcea@ceelm.com don’t) we really do want to hear from you. Please send
1054 Budapest, Hungary Radu Neag any comments, criticisms, questions, or ideas to us at:
+36 1 796 5194 radu.neag@ceelm.com press@ceelm.com
CEE LEGAL MATTERS 3

AUGUST 2022 PRELIMINARY MATTERS
Removing obstacles
on the path to your success
4 CEE LEGAL MATTERS

PRELIMINARY MATTERS AUGUST 2022
TABLE OF CONTENTS
PRELIMINARY MATTERS
3 Editorial: The ESG Dirty Word
ACROSS THE WIRE

6 Across The Wire: Deals and Cases
14 On The Move: New Homes and Friends
LEGAL MATTERS
18 The Buzz
18 Croatia Says Bye to the Kuna: A Buzz Interview with Damir Topic of Divjak, Topic, Bahtijarevic & Krka
19 Good Hot and Bad Hot Times in Greece: A Buzz Interview with Yanos Gramatidis of Bahas Gramatidis & Partners
20 Lithuania’s Legal Transformation: A Buzz Interview with Vilma Sabaliauskiene of Ilaw Lextal
21 Judicial Gridlock and New Highways in Montenegro: A Buzz Interview with Danilo Radulovic of
Doklestic Repic & Gajin
22 Turkey Rallying (for) the Lira: A Buzz Interview with Zahide Altunbas Sancak of Guleryuz Partners
23 Bosnia and Herzegovina Buoyant Despite the Challenges: A Buzz Interview with Zlatan Balta of Legal Partners
24 The Bounce in Latvia’s Step: A Buzz Interview with Dace Silava-Tomsone of Cobalt
25 Drafting the Playbook in Serbia: A Buzz Interview with Andjelka Todorovic of Wolf Theiss
26 Shiny and New Tax Legislation in Austria: A Buzz Interview with Michaela Petritz-Klar of Taylor Wessing
27 Bulgarian Lawyers Catch a Break: A Buzz Interview with Dafinka Stoycheva of Gugushev & Partners
28 A Look at the Engine for ESG: Finance
ESG TALKS
32 ESG Talks: M&A Trends and the Future of Due Diligence – A CEE Legal Matters Round Table
38 ESG Talks: Finance Goes Green – A CEE Legal Matters Round Table
EXPERTS REVIEW
46 ESG in CEE
THE CONFIDENT COUNSEL

62 What’s Up with Those Slides?
CEE LEGAL MATTERS 5

AUGUST 2022 ACROSS THE WIRE
ACROSS THE WIRE:

DEALS AND CASES
CEE Legal Ticker:
Full information available at:
Did We Miss Something?
We’re not perfect; we admit it. If something slipped past us,
Legal Matters
www.ceelegalmatters.com and if your firm has a deal, hire, promotion, or other piece of
Period Covered: news you think we should cover, let us know. Write to us at:
June 16, 2022 - July 15, 2022 press@ceelm.com
Date
Firms Involved Deal/Litigation Value Country
Covered
17-Jun Noerr; Schoenherr, working with Noerr, advised the BTV Multimedia Group on its N/A Austria
Schoenherr acquisition of STW Spleisstechnik West. Solo practitioner Georg Justich
reportedly advised STW.
20-Jun DLA Piper DLA Piper advised Knorr-Bremse and its subsidiary Knorr-Bremse Systeme EUR 200 Austria
fur Nutzfahrzeuge on their EUR 200 million acquisition of a 55% stake in million
Cojali.
24-Jun Freshfields Freshfields Bruckhaus Deringer advised German state-owned bank KFW EUR 9.8 Austria
on a revolving credit line of up to EUR 9.8 billion for the former Gazprom billion
Germania.
27-Jun Binder Groesswang; Brandl Talos advised Austrian battery diagnostics start-up Aviloo on an N/A Austria
Brandl Talos; equity investment by the European Innovation Council Fund and Raiffeisen's
PHH Rechtsanwalte Invest Unternehmensbeteiligungs AG. Binder Groesswang advised the EIC
Fund and PHH advised Invest AG.
27-Jun Cerha Hempel Cerha Hempel advised Red-Stars.com Data company Freeeway on a EUR 3 Austria
financing round leading to the closure of its pre-series A round. million
4-Jul Beira; Schoenherr advised Caverion Oesterreich on the acquisition of Porreal and N/A Austria
Schoenherr its subsidiary Alea. Beira Rechtsanwaelte reportedly advised Porr AG on the
sale.
16-Jun Buterin & Partners; Schoenherr advised Wienerberger on its acquisition of Vargon. Buterin & N/A Austria;
Schoenherr Partneri reportedly advised the sellers on the deal. Croatia
5-Jul Deloitte Legal; Wolf Theiss, working with Ropes & Gray, advised Bain Capital Tech USD 150 Austria;
Ropes & Gray; Opportunities on its USD 150 million investment in Ataccama, a unified million Czech
Wolf Theiss data management platform provider. Deloitte Legal reportedly advised Republic
Ataccama.
24-Jun CMS; CMS advised a group of investors on a Sofina-led EUR 220 million series EUR 220 Austria;
Linklaters; D financing round for the Rohlik Group. White & Case advised the Rohlik million Czech
Pierstone; Group. Linklaters reportedly advised Sofina. Pierstone reportedly advised Republic;
White & Case some of the investors. Hungary;
Romania
6 CEE LEGAL MATTERS

DEALS AND CASES AUGUST 2022
Date
Covered
15-Jul CMS CMS advised Austria's Alpla on its acquisition of Polish pharmaceutical N/A Austria;
packaging producer Apon. Poland
20-Jun Sajic Sajic advised M-Energetika on its EUR 3 million acquisition of the Energo EUR 3 Bosnia and
Company in Republika Srpska, BiH. million Herzegovina
22-Jun Sajic Sajic successfully represented the interests of Elektroprenos BiH in a BAM 30.5 Bosnia and
commercial dispute worth over BAM 30.5 million with Elektroprivreda million Herzegovina
Hrvatske Zajednice Herceg Bosne before the Republika Srpska Supreme
Court.
21-Jun Tsvetkova Bebov & Tsvetkova Bebov & Partners advised on the preparation of the new Bulgarian N/A Bulgaria
Partners Covered Bonds Act.
4-Jul Boyanov & Co; Djingov Gouginski Kyutchukov & Velichkov advised Maple Bear on its EUR EUR 100 Bulgaria
Djingov, Gouginski, 100 million investment program for the CEE region through a partnership million
Kyutchukov & Velichkov with Vantage Capital. Boyanov & Co reportedly advised Vantage.
14-Jul Komarevski Dimitrov & Komarevski Dimitrov & Partners advised the Bulgarian subsidiary of the N/A Bulgaria
Partners Kone Corporation on its acquisition of Liftkom Service.
8-Jul KPMG Legal; Schoenherr, working with Legance, advised Nexi on its agreement with EUR 180 Croatia
Legance; Privredna Banka Zagreb and Intesa Sanpaolo-controlled company PBZ Card million
PwC Legal; to purchase PBZ Card’s merchant acquiring business in Croatia for EUR 180
Schoenherr million. Reportedly, PwC Legal and KPMG Legal advised Intesa Sanpaolo.
14-Jul Brick Court Chambers; Queritius and Wolf Theiss, working with Dechert, successfully represented USD 230 Croatia;
Dechert; the interests of the Mol Group in a USD 230 million ICSID arbitration case million Hungary
Peters & Peters; against the Republic of Croatia. Reportedly, Weil Gotshal & Manges, Peters
Queritius; & Peters, and Brick Court Chambers also represented Mol.
Weil, Gotshal &
Manges;
Wolf Theiss
16-Jun Weinhold Legal Weinhold Legal advised the Czech Viamilk cooperative on its merger with N/A Czech
Moravian Morava to form the Mleko.cz cooperative. Republic
21-Jun Ferenc & Spol; Weinhold Legal advised investment company Amundi Czech Republic on N/A Czech
Weinhold Legal the sale of its former headquarters in Prague’s Dlouha Street. The Ferenc & Republic
Co law firm reportedly advised the buyer.
28-Jun Clifford Chance; Clifford Chance advised Europa Capital on the acquisition of the D2 Logistics N/A Czech
Dentons Park project together with partner White Star Real Estate. Dentons advised Republic
the undisclosed seller.
29-Jun Weinhold Legal Weinhold Legal advised Prague-based litigation financier LitFin on its entry N/A Czech
into a strategic investment partnership with a US-based fund. Republic
7-Jul Havel & Partners; Weinhold Legal advised the Jamp Group on the share deal acquisition N/A Czech
Weinhold Legal of the 2747 Konevova Street building in Prague from Raiffeisen Stavebni Republic
Sporitelna. Havel & Partners reportedly advised the sellers.
13-Jul Taylor Wessing Taylor Wessing advised S+B Gruppe developer company S+B Plan & Bau Prag N/A Czech
on the redevelopment of the Via Una office building in Prague. Republic
15-Jul Havel & Partners; Havel & Partners advised venture capital funds Atmos Ventures, Lighthouse EUR 18 Czech
Mavericks Ventures, and Tera Ventures on an EUR 18 million investment round into million Republic
Czech logistics-focused fintech company 4Trans. Mavericks Legal advised
4Trans.
CEE LEGAL MATTERS 7

Date
Covered
13-Jul Clifford Chance; Clifford Chance, Selih & Partnerji, and Divjak Topic Bahtijarevic & Krka CZK 1 Czech
Divjak Topic advised Ceska Sporitelna and Ceskoslovenska Obchodni Banka on the billion Republic;
Bahtijarevic & Krka; refinancing of Kofola. Onisko & Holesova, Planinic Soljic & Partners, and solo Croatia;
Onisko & Holesova; practitioner Klemen Ticar advised Kofola. Slovakia;
Planinic, Soljic and Slovenia
Partners;
Selih & Partners
27-Jun Baker Mckenzie; DLA Piper advised the Avallon MBO Fund II and the Genesis Private Equity N/A Czech
DLA Piper Fund III on their sale of Stangl Technik Holding to Spie Central Europe. Baker Republic;
McKenzie advised the buyer. Poland
30-Jun Baker Mckenzie Baker McKenzie advised Argo-Hytos Group owners Christian Kienzle and N/A Czech
FSP Capcellence on selling a 79.5% stake in Argo-Hytos to the Voith Group. Republic;
Poland
27-Jun BDO Legal; Schoenherr advised Ondrej Zita on his sale of OptimNet Solutions and N/A Czech
Schoenherr OptimNet Solutions SK to the Hellmann Worldwide Logistics group. BDO Republic;
Legal reportedly advised the buyer. Slovakia
6-Jul Dentons; Dentons advised the Dr. Max Group on its EUR 940 million loan for the EUR 940 Czech
White & Case refinancing of its bank debt and further growth. UniCredit Bank Czech million Republic;
Republic and Slovakia and Komercni Banka led the 14-bank strong Slovakia;
consortium. White & Case advised the banks. Romania
16-Jun PwC Legal PwC Legal advised certification service provider SK ID Solutions on a five- N/A Estonia
year concession contract with the Estonian Information System Authority
to continue the Mobile-ID service.
20-Jun Pohla & Hallmagi Pohla & Hallmagi successfully represented Estonian official distributor of N/A Estonia
Electrolux professional industrial kitchen appliances Farwell Kaubandus
before the Estonian Public Procurement Dispute Board.
4-Jul PwC Legal PwC Legal advised LimeWire on raising USD 10.4 million in a private sale of USD 10.4 Estonia
its native token, LMWR, in a round led by Kraken Ventures, Arrington XRP million
Capital, and GSR.
12-Jul Grant Thornton; Triniti advised UG Investments on its acquisition of a 50% stake in Fourings N/A Estonia
Triniti from Tallinn-headquartered Decem. Reportedly, Grant Thornton advised
Decem on the deal.
13-Jul Bird & Bird; Cobalt advised Asuntosalkku on its listing to the Nasdaq First North Growth N/A Estonia
Cobalt Market in Finland. Bird & Bird reportedly also advised Asuntosalkku.
14-Jul Sorainen Sorainen advised Estonia-based startup 99math on its USD 2.1 million USD 2.1 Estonia
investment round led by Play Ventures, with existing shareholders Flyer One million
Ventures and Change Ventures participating.
7-Jul Sorainen Sorainen advised IK Partners and the Renta Group on the acquisition of the N/A Estonia;
Uprent Group. Latvia;
Lithuania
11-Jul Cobalt Cobalt advised vehicle parts distributor Meko on its EUR 122 million EUR 122 Estonia;
acquisition of spare parts and services provider Koivunen. million Latvia;
Lithuania
22-Jun Kyriakides Kyriakides Georgopoulos advised Danone SA and Numil Hellas SA on their N/A Greece
Georgopoulos corporate restructuring, with Numil Hellas absorbing Danone's business in
Greece.
14-Jul Dentons; Dentons advised Raiffeisen Bank on a USD 200 million five-year syndicated USD 200 Hungary
Kinstellar green loan facility for Volta Energy Solutions Hungary. Kinstellar advised the million
borrower.
8 CEE LEGAL MATTERS

Date
Covered
17-Jun Cobalt Cobalt successfully represented Food Union group company Rigas Piena N/A Latvia
Kombinats in a court dispute against a former employee regarding the
invalidation of the termination notice and the recovery of unpaid wages.
17-Jun Sorainen Sorainen’s Latvian office successfully represented Sia Prolux in challenging N/A Latvia
the negotiation procedure for the “Delivery and installation of kitchen
equipment at the Jelgava state municipality educational institution Jelgava
Technology Secondary School” at Meiju Road 9, Jelgava, organized by the
Jelgava city municipality and held at the Procurement Monitoring Bureau.
22-Jun Skrastins & Dzenis Skrastins & Dzenis successfully represented the insolvent PNB Banka in five EUR 50 Latvia
arbitration proceedings at the London Court of International Arbitration, million
with the bank's claims against its shareholders amounting to about EUR 50
million.
6-Jul Cobalt Cobalt advised Hepsor on its EUR 3.6 million acquisition of the 30,624 EUR 3.6 Latvia
square-meter Ganibu Dambis 17A commercial property in Riga from million
unidentified sellers.
6-Jul TGS Baltic TGS Baltic advised BlackSheep Ventures on its planned EUR 2 million EUR 2 Latvia
investment into geospatial advertising platform developer Roibox. million
14-Jul Cobalt; Cobalt advised the BaltCap Latvia Venture Capital Fund and other N/A Latvia
Garrigues shareholders on their sale of Vendon to Azkoyen. Garrigues reportedly
advised the buyer.
15-Jul Ellex (Klavins); Ellex Klavins advised GoCardless on its acquisition of Nordigen. Sorainen N/A Latvia
Sorainen advised Nordigen.
7-Jul Cobalt Cobalt successfully represented AirBaltic and the Riga International Airport N/A Latvia;
before the Supreme Court of Lithuania against antitrust claims brought by Lithuania
bankrupt carrier FlyLAL.
20-Jun Sorainen Sorainen successfully represented basketball club Zalgiris in a case N/A Lithuania
against the Lithuanian Competition Council before the Vilnius Regional
Administrative Court.
28-Jun Fieldfisher; Motieka & Audzevicius, working with Osborne Clarke, advised the Orion EUR 7 Lithuania
Motieka & Audzevicius; Private Equity Debt Fund I on the EUR 7 million acquisition of secured million
Osborne Clarke mezzanine bonds issued by Austrian real estate developer Soini Asset to
finance its real estate projects in Germany. Fieldfisher reportedly advised
Soini Asset.
1-Jul Sorainen Sorainen advised fashion retail platform Farfetch on its acquisition of N/A Lithuania
augmented reality startup Wannaby. The transaction closed in April 2022.
4-Jul Motieka & Audzevicius Motieka & Audzevicius successfully defended Veolia's Lithuanian partner EUR 240 Lithuania
ICOR Group and other Lithuanian respondents before Court of Appeal, from million
a EUR 240 million claim filed by the Republic of Lithuania.
6-Jul TGS Baltic TGS Baltic advised Valstybes Investicinis Kapitalas on a EUR 25 million note EUR 25 Lithuania
issuance. Luminor Bank was the sole manager and bookrunner. million
14-Jul Walless Walless provided legal support to Reverest Asset Management on receiving N/A Lithuania
the authorization to operate as a management company for collective
investment undertakings for informed investors from the Bank of Lithuania.
15-Jul Sorainen Sorainen advised Lords LB-managed Atsinaujinancios Energetikos EUR 10 Lithuania
Investicijos on a second four-year green bond issuance. Luminor Bank was million
the main distributor of the EUR 10 million issuance.
CEE LEGAL MATTERS 9

Date
Covered
28-Jun Allen & Overy; ODI Law advised NeoGames on the acquisition of Aspire Global through a N/A North
Baker Mckenzie; recommended public offer. Reportedly, Latham & Watkins, Herzog Fox & Macedonia
Camilleri Preziosi; Neeman, Hannes Snellman, Allen & Overy, and Camilleri Preziosi advised
Hannes Snellman; NeoGames as well. Baker McKenzie reportedly advised Aspire Global.
Herzog Fox & Neeman;
Latham & Watkins;
ODI Law
29-Jun ODI Law ODI Law advised REDI Development on a EUR 1 million term loan to EUR 1 North
microcredit foundation Horizonti Skopje. Dentons Luxembourg reportedly million Macedonia
advised REDI as well.
16-Jun SSW Pragmatic SSW Pragmatic Solutions advised Polish private equity firm Spire Capital N/A Poland
Solutions Partners on the acquisition of a controlling stake in Thulium.
16-Jun White & Case White & Case advised Poland's Grupa Pracuj on its approximately EUR 118 EUR 118 Poland
million acquisition of Germany-based Softgarden eRecruiting. million
17-Jun Dentons; Greenberg Traurig advised Invesco Real Estate on the sale of a logistics park N/A Poland
Greenberg Traurig in the vicinity of the Gdansk international airport to EQT Exeter. Dentons
advised the buyer.
20-Jun Greenberg Traurig; Greenberg Traurig advised Rentokil Initial's Polish subsidiary on its N/A Poland
Jonak i Partnerzy acquisition of Polish disinfection, disinsectization, and deratization services
provider Vaco. Jonak i Partnerzy advised the sellers.
22-Jun Norton Rose Fulbright Norton Rose Fulbright advised PGE Polska Grupa Energetyczna subsidiary N/A Poland
PGE Energia Odnawialna on its recent renewable energy sector acquisition
of three onshore wind farms in Poland with a total capacity of 84.2 megawatts
– Scieki, Jozwin, and Radzyn.
23-Jun CMS; Norton Rose Fulbright advised mBank on its financing for the construction N/A Poland
Norton Rose Fulbright of the 40-megawatt Pozarowo PV portfolio in Poland, sponsored by Afcon
Renewable Energy. CMS advised Afcon.
24-Jun Domanski Zakrzewski Greenberg Traurig advised HDI International and the Meiji Yasuda N/A Poland
Palinka; Life Insurance Company on the acquisition of the remaining shares in
Greenberg Traurig Towarzystwo Ubezpieczen Europa from Getin Holding and the Getin Noble
Bank. Domanski Zakrzewski Palinka reportedly advised the sellers.
24-Jun Greenberg Traurig; Greenberg Traurig advised ZE PAK Group company PAK-Polska Czysta N/A Poland
WKB Wiercinski Energia on the acquisition of the Great Wind project from Neo Investments
Kwiecinski Baehr company Neo Energy Group. Wiercinski Kwiecinski Baehr advised the seller.
27-Jun Allen & Overy; Clifford Chance advised a consortium of lenders including DNB Bank, N/A Poland
Clifford Chance PZU, and Santander Bank Polska on a facilities agreement with DIF Capital
Partners-owned SPVs for the construction and operation of a 108-megawatt
wind portfolio consisting of four wind farms. Allen & Overy advised DIF
Capital Partners.
28-Jun FPS Fritze Wicke Seelig; Soltysinski Kawecki & Szlezak, working with Freshfields Bruckhaus EUR 939 Poland
Freshfields; Deringer, advised Xior Student Housing on the Polish leg of its EUR 939 million
Moalem Weitemeyer; million acquisition of 5,341 residential units from the Basecamp Group and
Paul Hastings; European Student Housing Funds I and II. Paul Hastings advised Basecamp.
Soltysinski Kawecki & Denmark's Moalem Weitemeyer and Sweden's Vinge reportedly advised
Szlezak; Xior as well, while Germany's FPS Fritze Wicke Seelig reportedly advised
Vinge Basecamp.
29-Jun Kondracki Celej; Wiercinski Kwiecinski Baehr advised the Avallon MBO Fund on its acquisition N/A Poland
SSW Pragmatic of a majority stake in Globema, together with the company's managers.
Solutions; Kondracki Celej advised Globema's shareholders. SSW Pragmatic Solutions
WKB Wiercinski advised Bank Polska Kasa Opieki on financing the acquisition.
Kwiecinski Baehr
10 CEE LEGAL MATTERS

Date
Covered
30-Jun Anwaltsgemeinschaft Noerr advised the Aurelius Group on its acquisition of dental distributors N/A Poland
Stuttgart; Dental Bauer and Pluradent. Binder Groesswang and Homburger reportedly
Binder Groesswang; advised Aurelius. Anwaltsgemeinschaft Stuttgart reportedly advised Dental
Grub Brugger; Bauer, with Grub Brugger reportedly advising Pluradent.
Homburger;
Noerr
30-Jun Slaughter and May; Wiercinski Kwiecinski Baehr, working with Slaughter and May, advised N/A Poland
Sullivan & Cromwell; Schneider Electric on the disposal of its Eurotherm business unit to the
WKB Wiercinski Watlow Electric Manufacturing Company. Reportedly, Sullivan & Cromwell
Kwiecinski Baehr advised Watlow.
4-Jul Adacta; Wiercinski Kwiecinski Baehr and Wolf Theiss, working with Fredrikson & N/A Poland
Chiomenti Studio Byron, advised Odyssey Investment Partners and its portfolio company
Legale; PIP Global Holdings on the acquisition of Industrial Starter and its local
Fredrikson & Byron; subsidiaries in Europe. Perez-Llorca and Chiomenti Studio Legale reportedly
Perez-Llorca; also advised the buyer. Adacta reportedly advised the seller.
WKB Wiercinski
Kwiecinski Baehr;
Wolf Theiss
4-Jul DLA Piper; Partners-You-Trust advised a consortium of investors led by FF Venture N/A Poland
Partners You Trust Capital and RKKVC on their investment in ReSpo.Vision. DLA Piper advised
the founders of ReSpo.Vision on the seed round.
5-Jul Clifford Chance; Wiercinski Kwiecinski Baehr advised Energix on a PLN 288 million financing PLN 288 Poland
WKB Wiercinski from the EBRD and mBank for the construction of a 56-megawatt wind farm million
Kwiecinski Baehr in Poland. Clifford Chance advised the lenders.
7-Jul Baker; Greenberg Traurig and Baker McKenzie advised Echo Investment on the sale EUR 100 Poland
Greenberg Traurig of the MidPoint 71 office building in Wroclaw to the Trigea Real Estate Fund. million
8-Jul Linklaters Linklaters advised InfraVia Capital Partners on the PLN 1.775 billion PLN 1.775 Poland
acquisition of a 50% stake in Play Group subsidiary FiberForce. billion
8-Jul Clifford Chance Clifford Chance advised the Getin Noble Bank on the synthetic securitization PLN 500 Poland
of its housing communities portfolio worth over PLN 500 million. million
8-Jul Chajec; Partners-You-Trust advised the founders of the Marketlab Group on the N/A Poland
Partners You Trust investment from a Value Quest-managed private equity fund. CDZ Chajec
& Partners reportedly advised Value Quest.
11-Jul DB77 Tax & Legal; Partners-You-Trust advised EEC Magenta on its investment in robot N/A Poland
Moskwa Jarmul Haladyj platform DBR77. Moskwa Jarmul Haladyj reportedly advised investor
i Wspolnicy; Level2Ventures. DB77 Tax & Legal reportedly advised DBR77's founders.
Partners You Trust
12-Jul Allen & Overy; White & Case advised joint lead managers Banco Santander, Erste Group EUR 500 Poland
White & Case Bank, Landesbank Baden-Wuerttemberg, PKO BP, and UniCredit Bank on million
PKO Bank Hipoteczny's EUR 500 million issuance of mortgage-covered
bonds. Reportedly, Allen & Overy advised PKO Bank Hipoteczny.
13-Jul B2RLaw; Kondracki Celej advised Credo Ventures and 500 Startups on participating in EUR 3.4 Poland
Kondracki Celej a EUR 3.4 million investment round in the Village Network. B2RLaw advised million
the Village Network.
14-Jul Deloitte Legal; Wiercinski Kwiecinski Baehr advised PKO and mBank on a financing for N/A Poland
WKB Wiercinski Electrum Concreo in the form of bilateral multi-product lines. Deloitte Legal
Kwiecinski Baehr reportedly advised Electrum Concreo.
15-Jul Wardynski & Partners Wardynski & Partners advised Bergs Timber on the acquisition of Pinus from N/A Poland
company owners and founders Jerzy and Mariusz Smolarczyk.
15-Jul JDP J DP Drapala & Partners advised the Dutch SanoRice Group on its investment N/A Poland
in a new production plant in Nowa Sol, Poland.
CEE LEGAL MATTERS 11

Date
Covered
11-Jul Linklaters; Linklaters and Paksoy advised the Qatar Investment Authority on the N/A Poland;
Paksoy acquisition of an approximately 20% interest in the D.ream International fine Turkey
dining group from parent company Dogus Group, a Turkish conglomerate.
16-Jun CMS; MPR Partners advised GreenVolt subsidiaries V-Ridium Solar 45 and EUR 83 Romania
Herbert Smith Freehills; V-Ridium Renewables on their EUR 83 million acquisition of a photovoltaic million
MPR Partners; project from the Samsung C&T Corporation. Schoenherr and, reportedly,
Schoenherr Herbert Smith Freehills advised the seller. CMS reportedly advised a
consortium of banks on financing the acquisition.
17-Jun Dentons Dentons successfully represented Bibus Metal’s Romanian subsidiary Bibus N/A Romania
SRL in a customs dispute before the Ploiesti Court Appeal in Romania.
20-Jun Tuca Zbarcea & Tuca Zbarcea & Asociatii advised Morgan Stanley Real Estate Investing on EUR 10 Romania
Asociatii the EUR 10 million technical and aesthetic refurbishment and modernization million
process of the America House office building in Bucharest.
20-Jun Glodeanu & Associates Glodeanu & Partners advised INVL Asset Management's INVL Renewable N/A Romania
Energy Fund I on the acquisition of two companies developing solar power
plants in Romania with a capacity of 166 megawatts.
20-Jun Dentons; Radu Taracila Padurari Retevoescu advised the Engie Group on its sale of an N/A Romania
RTPR 80% stake in Flashnet to the Lucy Group. Dentons advised the buyer.
24-Jun Ijdelea & Associates Ijdelea & Associates provided legal assistance to Black Sea Oil & Gas and its N/A Romania
co-venture partners in obtaining the Upstream Pipeline Operating License
for the Midia Gas Development Project (MDG) from the Romanian Energy
Regulatory Authority (ANRE).
30-Jun Dentons; Dentons advised Asseco Group company Asseco SEE on its acquisition of a N/A Romania
Ionescu & Sava majority stake in Bithat Solutions. Ionescu & Sava advised the seller.
1-Jul PeliPartners PeliPartners successfully represented the National Union of Insurance and N/A Romania
Reinsurance Companies of Romania (UNSAR) before Romania’s High Court
of Cassation and Justice in a dispute against the Romanian competition
authority.
5-Jul Stratulat Albulescu; Stratulat Albulescu advised the Indotek Group on its acquisition of the One N/A Romania
The Law Chamber Victoriei Center office building in Bucharest. The Law Chamber reportedly
advised the Element Group on the sale.
7-Jul Vlasceanu, Nyerges & Vlasceanu Nyerges & Partners advised Essensys Software on its merger N/A Romania
Partners with mReady.
13-Jul Tuca Zbarcea & Tuca Zbarcea & Asociatii advised Electrica on its EUR 600,000 acquisition EUR Romania
Asociatii of Green Energy Consultancy & Investments from shareholders Vlad-Mihai 600,000
and Tudor-Nicolae Ungureanu.
13-Jul Luther; Nestor Nestor Diculescu Kingston Petersen, working with Luther, advised N/A Romania
Nestor Nestor Staffbase on its acquisition of the Romanian Dirico entity from 247Grad
Diculescu Kingston Labs. Schoenherr, working alongside Taylor Wessing's German office,
Petersen; advised the sellers.
Schoenherr;
Taylor Wessing
14-Jul CEE Attorneys CEE Attorneys Boanta Gidei si Asociatii supported Sparking Capital in N/A Romania
obtaining a self-managed alternative investment fund license registered
with the Financial Supervisory Authority of Romania.
16-Jun Harrisons Harrisons advised the EBRD on its RSD 1.2 billion loan to Serbian commercial RSD 1.2 Serbia
bank 3Bank for on-lending to eligible sub-borrowers. billion
17-Jun Harrisons Harrisons advised the EBRD on a EUR 30 million loan facility to ProCredit EUR 30 Serbia
Bank in Serbia. million
20-Jun Harrisons Harrisons advised the EBRD on a EUR 15 million loan to UniCredit Leasing EUR 15 Serbia
Serbia for on-lending to small and medium-sized enterprises in the country. million

Date
Covered
21-Jun Harrisons Harrisons advised the EBRD on a senior unsecured loan amounting to EUR EUR 8 Serbia
8 million for on-lending to eligible women-led small and medium-sized million
enterprises.
24-Jun CMS The Walt Disney Company and Disney DTC EM Limited appointed Petrikic & N/A Serbia
Partneri in cooperation with CMS Reich-Rohrwig Hainz as their Serbian Data
Protection Representative.
30-Jun Zivkovic Samardzic Zivkovic Samardzic advised OTA Sync on its latest investment round with N/A Serbia
the TS Ventures Fund, the DSI Business Angel Group, and Startup Wise
Guys.
5-Jul NSTLaw NSTLaw advised both Lotika Mokra Gora and TMB Diamond Vocar Pancevo N/A Serbia
on their partnership for the production of organic food and beverages.
6-Jul Harrisons; Harrisons, working with Norgren Legal, advised Claret Capital Partners on EUR 12.25 Serbia
MBM Commercial; its EUR 12.25 million investment in Devtech. MBM Commercial reportedly million
Norgren Legal advised Devtech.
7-Jul NKO Partners NKO advised CTP on its acquisition of land in Kac, the suburb of Novi Sad, N/A Serbia
intended for industrial development.
14-Jul BDK Advokati; BDK Advokati advised Epam Systems on the acquisition of IP assets and N/A Serbia
Drazic Beatovic & Stojic takeover and integration of employees of Serbian IT company Vivify Ideas.
Drazic Beatovic & Stojic reportedly advised sellers Goran Prijic, Nedeljko
Damnjanovic, and Milos Janjic on the deal.
27-Jun CMS; Ulcar & Partners and Zivkovic Samardzic advised the TCH Industrial Group N/A Serbia;
Luther; on the sale of Cimos and its subsidiaries to Mutares. CMS and, reportedly, Slovenia
Ulcar & Partnerji; Luther advised the buyer.
Zivkovic Samardzic
7-Jul ODI Law; ODI Law advised Gorenjska Banka and SKB Banka on a cross-border N/A Serbia;
Selih & Partners syndicated project financing and debt refinancing for the Don Don Group. Slovenia
Selih & Partnerji advised Don Don.
24-Jun Clifford Chance; Clifford Chance advised Atrium European Real Estate on its divestment EUR 118 Slovakia
Krnac, Koncok & of the Optima shopping center in Kosice to the joint venture of two million
Partners; Slovak shopping center investors for EUR 118 million. Taylor Wessing and,
Taylor Wessing reportedly, Krnac Koncok & Partners advised the buyers.
21-Jun Kinstellar Kinstellar announced it is providing pro bono legal advice to public charity N/A Ukraine
organization Soborna Ukraine on implementing its programs across the
country.
28-Jun Redcliffe Partners; Redcliffe Partners, working with Simmons & Simmons, advised the EBRD on EUR 24 Ukraine
Simmons & Simmons a EUR 24 million short-term unsecured loan to Ukrainian poultry and grain million
producer MHP.
29-Jun Asters; Asters, working pro bono with Quinn Emanuel Urquhart & Sullivan, advised N/A Ukraine
Quinn Emanuel the Ministry of Justice of Ukraine on the inter-state proceedings being
Urquhart & Sullivan brought by Ukraine against the Russian Federation before the European
Court of Human Rights.
CEE Legal Ticker:

Full information available at:
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We’re not perfect; we admit it. If something slipped past us,
Legal Matters
www.ceelegalmatters.com and if your firm has a deal, hire, promotion, or other piece of
Period Covered: news you think we should cover, let us know. Write to us at:
June 16, 2022 - July 15, 2022 press@ceelm.com

ON THE MOVE:
NEW HOMES AND
FRIENDS
Turkey: Karaduman & Esin Opens Doors Bulgaria: Eversheds Sutherland Enters Bulgaria by
in Istanbul Incorporating Tsvetkova Bebov & Partners
By Teona Gelashvili (June 16, 2022) By Radu Cotarcea (June 23, 2022)
Partners Ozan Karaduman, Merve Karaduman, and Filiz To- Eversheds Sutherland has announced it is combining with So-
prak Esin have announced that the Karaduman Law Firm and fia-based “long-standing relationship firm” Tsvetkova Bebov
Esin Legal have merged in May 2022 and will operate under & Partners, as of June 22, 2022.
the Karaduman & Esin Law Firm brand.
The TBP team joining Eversheds is led by Irina Tsvetkova,
Specializing in IT and telecoms, data privacy, and corporate specializing in M&A, commercial, and corporate law, and
and M&A, Ozan Karaduman was a Partner at the Karaduman Nikolay Bebov, specializing in capital markets, banking, finan-
Law Firm between 2020 and 2022. Earlier, he spent over 13 cial services, and M&A, and includes Partners Damyan Leshev,
years at Gun+Partners, having first joined as an Associate specializing in capital markets and banking, and Victoria Tzon-
in 2007, and being promoted to Senior Associate, Managing kova, specializing in commercial transactions, litigation and
Associate, and Partner in 2012, 2015, and 2018, respectively. dispute resolution, insolvency, and employment law matters, as
well as 15 further lawyers.
Merve Karaduman has expertise in litigation and dispute
resolution and was previously a Partner at the Karaduman Law “The firm is committed to growing across Europe and is now
Firm, from 2014 to 2022. Before joining the firm, she was an present in 23 countries,” Eversheds Sutherland Chair for Eu-
Attorney-at-Law at Gun+Partners from 2009 to 2014. rope Ian Gray commented. “We are delighted to be working
more closely with the Bulgarian practice which will expand our
Esin specializes in corporate and M&A, competition law, and Central Eastern European presence.”
anti-corruption and compliance matters and founded Esin
Legal in 2021. Earlier, she spent over 15 years at Gun+Part- “By joining forces with Eversheds Sutherland and having the
ners from 2006 to 2021, having first joined as an Associate and weight of a global brand behind us, we will be able to drive
being promoted to Senior Associate, Managing Associate, and the further growth of our practice across CEE,” Eversheds
Partner in 2013, 2015, and 2020, respectively. In 2010, she also Sutherland Bulgaria Managing Partner Irina Tsvetkova added.
worked for AstraZeneca Turkiye, on secondment, as a Legal “This is a very important step for us. Our people, our clients,
Counsel. and our communities will all benefit from our more visible
presence in the market. Our lawyers will be able to further
“All three partners have the same educational background develop their skills and knowledge across multi-jurisdictional
in Galatasaray University and years of experience working sectors, our national and international client base will benefit
together in one of the largest law firms in Turkey previous- from inbound and outbound opportunities in new markets,
ly, they have the same vision and discipline in working with and the feedback from our community is one of huge excite-
international clients and are sure of their harmony and ability ment that Eversheds Sutherland, with its strong global brand
in providing high-quality services in various practice areas,” the and reputation, will be established in Sofia.”
new firm announced.

ON THE MOVE AUGUST 2022
Hungary: Oppenheim Announces New Management Board

By Radu Cotarcea (June 29, 2022)
Oppenheim has announced the leadership of the firm will be handed over
to its three newly-appointed board members – Jozsef Bulcsu Fenyvesi, Aron
Laszlo, and Istvan Szatmary – with Fenyvesi and Laszlo to hold non-execu-
tive roles and Szatmary to take over the role of Managing Partner on July 1,
2022.
The three take over from Partners Ulrike Rein, Tamas Eless, and Zsolt
Cseledi.
Focusing on corporate and commercial law, Fenyvesi has been with the for-
mer Freshfields Hungarian office since 2005, making Partner in 2010. Prior
to that, he was an Associate with Szalay Gabor Law Firm.
Focusing on IP/IT and trademarks and design, Laszlo also worked with
Freshfields in Hungary between 2002 and 2005. He then worked for SBGK,
between 2005 and 2013, to rejoin the Oppenheim team in 2014 as the Head
of Trademarks and Designs. He was appointed to Partner in 2017.
Szatmary, who will be serving as the firm’s Managing Partner going forward,
joined the team this year as its Head of Antitrust, Competition, and Trade
(as reported by CEE In-House Matters on May 2, 2022). He returned to pri-
vate practice earlier this year after serving as Mediaworks Hungary’s General
Counsel for three years. Prior to him moving in-house, he worked with DLA
Piper in Hungary for 21 years, where he was last a Senior Counsel and Head
of Antitrust.
“After more than one and a half decades of leadership, I am happy to sup-
port the new generation of talented professionals in the transition process
and wish them all the best in their new roles,” Rein commented, with Eless
adding: “The appointment of the three experienced, yet dynamic partners
into the top-level leadership of the firm will bring in new management initia-
tives that quickly respond to the current challenges of businesses.” From the
former leadership’s side Cseledi concluded that “the operational model built
by the management team in the last 15 years is a strong foundation for the
new members, and they can use it as a stable basis for their future work.”
On the new management side, Laszlo commented: “I am personally very

devoted to bringing the organization to the next level while preserving its
unique values,” with Fenyvesi noting that his “many years of experience
in leading the corporate and M&A team of the firm can be well utilized
when dealing with firm-wide issues.” The new Managing Partner, Szatmary,
concluded that he sees his executive role as a “service that should be for
the benefit of the firm’s staff at all levels, and should improve operational
efficiency whilst preserving all those characteristics of Oppenheim that have
made this successful team unique in the market.”

Albania: Founding Partner Returns to 2007 to 2022. Prior to that, he was an Attorney-at-Law, work-
Kalo & Associates ing as a sole practitioner, from 2000 to 2007.
By Radu Cotarcea (June 30, 2022) “Gokalp Arslan is founded in Istanbul by myself and Alp-
er Arslan, having more than twenty years of experience as
Founding Partner Perparim Kalo has returned to his epony- attorneys and legal counsels,” Gokalp commented. “We offer a
mous firm Kalo & Associates after serving for two years as a broad range of legal services in relation to Turkish law matters
Justice of the Constitutional Court of Albania. to our domestic and international clients through our partners
focusing on diversified but complementary practice areas, in
Kalo established the firm in 1994 and served as its Managing particular M&A and Dispute Resolution.”
Partner until December 2020 when he was appointed to the
court. “His appointment makes history as only now the Con-
stitutional Court is functional, after two years and a half of Ukraine: Ilyashev & Partners Announces
dysfunction due to the missed quorum required by law,” stated Cooperation with Glimstedt
a Kalo & Associates press release announcing his appointment
on December 28, 2020, adding that his “appointment does By Teona Gelashvili (July 14, 2022)
also mark the satisfaction of the sole precondition imposed
Ilyashev & Partners has announced it has started a cooper-
on Albania for opening the integration negotiations with EU.
ation with Glimstedt to expand the firm’s capabilities in EU
This high-level appointment is an appreciation for his contri-
countries.
bution, not simply as a lawyer, but also as a man with addition-
al values, including involvement in social affairs like Corporate According to Ilyashev & Partners, “meeting the new challeng-
Social Responsibility, support for art and culture, civil society es facing Ukraine and foreign businesses in connection with
causes, etc. Many lawyers who have been working in the firm the war in Ukraine, Ilyashev & Partners and Glimstedt, which
see this appreciation as appreciation for them, too.” has 13 offices in Sweden, Estonia, Latvia, and Lithuania, have
joined efforts to provide the widest range of services to their
When he moved to the Constitutional Court, Kalo passed on clients.”
the reigns to Co-Managing Partners Aigest Milo and Eni Kalo.
“The new partnership significantly widens the range of oppor-
In 2017, Kalo received the CEE Legal Matters Market Makers tunities for Ilyashev & Partners in terms of provision of legal
award, being identified by peers as being most influential, most services to its current clients in the Baltic Region, where the
important, most uniquely responsible for having created Alba- firm has had a presence since 2016,” the firm stated. “At the
nia’s modern commercial legal market. same time, the offices of Ilyashev & Partners in Kyiv, Kharkiv,
Dnipro, and Odesa will be able to ensure coordinated joint
consulting on projects of the clients of Glimstedt in Ukraine.”
Turkey: Gokalp Arslan Opens Doors in Istanbul
“Close cooperation with Glimstedt will allow us to provide
By Teona Gelashvili (July 13, 2022) additional services to our clients and assist Baltic and Scandi-
navian companies in coming to Ukraine for its post-war recon-
Burcu Dal Gokalp and Alper Arslan have announced the struction,” Ilyashev & Partners Managing Partner Mikhail
establishment of their new firm in Turkey: the Gokalp Arslan Ilyashev commented. “Our teams, as well as our clients,
Law Firm. believe in the prospect of Ukraine’s EU membership and see
the opportunities opening before them.”
Gokalp specializes in corporate and M&A, contracts law,
and competition law. Previously, she was a Legal Counsel at “We are willing to ensure our presence in the countries that
Eczacibasi Holding, from 2011 to 2021. Gokalp also worked seem most promising to our clients,” Glimstedt Partner Randu
as an Associate with Paksoy, from 2005 to 2011, and with the Riiberg added. “Partnership with the largest legal network
Yildirim Law Fim, from 2003 to 2004. and the leader of Ukrainian court dispute resolution practice
opens opportunities for complex support of the projects in
Specializing in dispute resolution, Arslan spent over 15 years our jurisdictions, providing our clients with a clear competitive
with Cosar Avukatlik Burosu as an Attorney-at-Law, from advantage.”

ON THE MOVE AUGUST 2022
PARTNER MOVES
Date Name Practice(s) Moving From Moving To Country
Constitutional Court of
30-Jun Perparim Kalo Litigation/Disputes Kalo & Associates Albania
Albania
29-Jun Manuela Maurer-Kollenz Real Estate Mueller Partner Rechtsanwalte PwC Legal Austria
29-Jun Simone Maier-Huelle Real Estate Mueller Partner Rechtsanwalte PwC Legal Austria
6-Jul Philipp Zumbo Corporate/M&A Fellner Wratzfeld & Partner Taylor Wessing Austria
23-Jun Irina Tsvetkova Corporate/M&A Tsvetkova Bebov & Partners Eversheds Sutherland Bulgaria
23-Jun Nikolay Bebov Capital Markets Tsvetkova Bebov & Partners Eversheds Sutherland Bulgaria
23-Jun Damyan Leshev Capital Markets Tsvetkova Bebov & Partners Eversheds Sutherland Bulgaria
23-Jun Victoria Tzonkova Litigation/Disputes Tsvetkova Bebov & Partners Eversheds Sutherland Bulgaria
Dominika Ramirez-
7-Jul Tax Arena Advisory Gessel Poland
Wolkiewicz
20-Jun Gheorghe Buta Litigation/Disputes Musat & Asociatii Popescu & Asociatii Romania
16.Jun Ozan Karaduman TMT/IP Karaduman Law Firm Karaduman & Esin Turkey
17.Jun Merve Karaduman Litigation/Disputes Karaduman Law Firm Karaduman & Esin Turkey
18.Jun Filiz Toprak Esin Corporate/M&A Esin Legal Karaduman & Esin Turkey
Kolcuoglu Demirkan
7-Jul Hasan Yasar Capital Markets Pekin & Pekin Turkey
Kocakli
13-Jul Alper Arslan Litigation/Disputes Cosar Avukatlik Burosu Gokalp Arslan Turkey
PARTNER APPOINTMENTS
Date Name Practice(s) Firm Country
28-Jun Vice Mandaric Corporate/M&A Schoenherr Croatia
28-Jun Ivan Einwalter Corporate/M&A Schoenherr Croatia
6-Jul Martin Raz Real Estate Havel & Partners Czech Republic
6-Jul Dalibor Kovar TMT/IP Havel & Partners Czech Republic
15-Jul Marton Kocsis Competition Cerha Hempel Hungary
6-Jul Daniel Chojnacki Environmental Law Domanski Zakrzewski Palinka Poland
6-Jul Piotr Jackowski Corporate/M&A Domanski Zakrzewski Palinka Poland
6-Jul Sylwia Kuca Corporate/M&A Domanski Zakrzewski Palinka Poland
6-Jul Damian Szczygielski Corporate/M&A Domanski Zakrzewski Palinka Poland
15-Jul Krzysztof Cieplinski TMT/IP Gide Loyrette Nouel Poland
8-Jul Engin Sahin Corporate/M&A Postacioglu Law Firm Turkey
IN-HOUSE MOVES AND APPOINTMENTS

Date Name Moving From Company/Firm Country
7-Jul Srdjan Sisic Solo Practitioner One Crna Gora Montenegro
24-Jun Joanna Knozowska-Castens Allegro Brainly Poland
13-Jul Burcu Dal Gokalp Eczacibasi Holding Gokalp Arslan Turkey

AUGUST 2022 LEGAL MATTERS
THE BUZZ
In “The Buzz” we check in on experts on the legal industry across the 24 jurisdictions of Central and
Eastern Europe for updates about professional, political, and legislative developments of significance.
Because the interviews are carried out and published on the CEE Legal Matters website on a rolling
basis, we’ve marked the dates on which the interviews were originally published.
Croatia Says Bye to the Kuna: which is already record-high in Croatia.” On top of that, as
A Buzz Interview with Damir Topic of of January, next year, Croatia will also be a part of Schengen,
resulting in easier travel and exchange of goods and services.
Divjak, Topic, Bahtijarevic & Krka “This will have a huge impact on businesses and our lives,” he
By Teona Gelashvili (July 25, 2022) explains. “Rating agencies have already lifted the credit rating
of the state by two notches, meaning that we are now a decent
area for investment. We feel that there are plenty of reasons to
Despite economic fore- be optimistic and happy.”
cast-related fears, there is Despite that, Topic points out, “everyone seems to be quite
plenty to be optimistic scared about the winter, considering energy prices forecasts.
about in Croatia, with Yet, we are a relatively small country with a rather low de-
the country joining mand for gas, and that, together with the access to the LNG
the eurozone and terminal on island Krk which allows us to transport gas from
Schengen area next anywhere in the world, is a good ground to feel optimistic
year, according to about the future.” Overall, Topic adds that he doesn’t expect
Divjak, Topic, Bahti- that crisis in Croatia will be as bad as before. “In the past,
jarevic & Krka Senior Croatia was one of the last EU countries to formally end the
Partner Damir Topic. crisis, but this time, we expect to be the frontrunners to come
“It is a surprisingly busy out of it.”
period for the legal industry in One noteworthy recent trend, Topic notes, is the moves and
Croatia,” Topic says. “We experienced a bit of a slowdown in spin-offs in Croatian law firms. “This is a common trend
May, which was clearly related to the war in Ukraine. However, among all major Croatian firms, like in other CEE jurisdic-
the situation changed rather suddenly to an extent that at the tions, but contrary to the western world where law firms are
moment, we expect that we will not have a decent break in rather merging,” he says. “It could be explained by factors
summer. The overall sentiment in Europe was that the busi- such as generational change or the absence of proper internal
ness sector was pushing the break to understand what happens structures, but still, we all tend to struggle to maintain lawyers
first. Still, now we feel that the situation is calming down.” and face constant spin-offs.”
Among the busiest sectors, Topic says, “driven by concerns
regarding the energy supply after the cut of gas supply from Other than that, Topic highlights that the Croatian parliament
Russia, there is a special interest in energy, in particular, in will be very busy after the summer break. “There are thou-
transactions related to hydro, solar, and wind plants.” sands of laws and bylaws, referencing Croatian Kuna as a cur-
rency, which will cease to exist in five months,” he points out.
“As of January 1, 2023, Croatia will become a member of the “For that reason, the legislative body is busy amending these
eurozone,” Topic notes, adding: “Our currency – the Croatian laws to reflect the values in euros. This alone creates plenty of
Kuna will be replaced by the euro. This will have an interest- work for the parliament to prepare for January 1, 2023.”
ing effect, as introducing the euro normally leads to inflation,

LEGAL MATTERS AUGUST 2022
Good Hot and Bad Hot Times in Greece:

A Buzz Interview with Yanos Gramatidis of Bahas Gramatidis & Partners
By Teona Gelashvili (July 26, 2022)
“Very relevant to the tourism industry are commercial aircraft

With the pandemic slowly leasing projects, with Aegean airlines, as well as several small
fading away, the Greek carriers, increasing their fleet in order to meet increased
economy is reviving demand,” Gramatidis notes. “As a result, there is a lot of work
with a large number related to commercial aircraft leasing.” According to him, the
of projects in the in- airlines tend to assume that there is no prospect for further
frastructure, tourism, lockdowns, with the pandemic slowing down and becoming
and energy sectors, less lethal.
according to Bahas
Gramatidis & Partners
Partner Yanos Grama- Greek law firms are increasingly engaged
tidis. in ESG programs. Interestingly, this is not
primarily driven by the modern European
”
“In Greece, there is a lot of legal trend toward implementing ESG require-
work in relation to the design and implementation of various ments, but rather by the sensitivity of the
infrastructure projects launched by the Greek government – Greek people toward environmental disas-
especially projects by the Hellenic Asset Management Fund ters that have been taking place, including
which owns the real properties,” Gramatidis says. “The cur- the wildfires from last summer and this
rent projects include the protection of forests, the establish- summer.
ment of industrial parks, and the exploitation of various real
estate belonging to the Greek state.” Among these projects,
according to Gramatidis, “are the Olympic installations, which Further, Gramatidis says, “there are big groups from Europe
have been built for the 2004 Olympic Games, but have mostly looking at Greece to acquire energy projects that are either
been abandoned ever since. Now, there is a push for these already licensed or about to be licensed. Greece has a lot to
areas to be used for commercial purposes. In addition, there offer, considering its capacity to produce energy, especially
is a rise in work generated by privatization, including ports, solar and wind power.”
marinas, casinos, and others.”
“As for the legislative updates, the biggest novelty is related to
Gramatidis says, that another busy area is the tourism sector. the new development law,” Gramatidis adds. “It gives incen-
“There have been a lot of transactions related to the acquisi- tives through grants and tax holidays for companies wishing to
tion of hotels – not only 4 and 5-star hotels, but also boutique invest in Greece. Commercial legislation has also been recently
hotels. Many foreign companies are looking for investments modernized, now allowing one to set up a company in one
in this area, keeping law firms busy, in particular, in relation to day,” he says, adding that “we are still evaluating its impact on
hotel franchises and management contracts. Once the hotel the business sector.”
has been acquired, the new owners are trying to make sure
that they enter into a reputable hotel chain.” The biggest play- “Finally, Greek law firms are increasingly engaged in ESG
er at the moment, according to Gramatidis, is Marriott due to programs,” with the partner pointing to his firm’s project of
the strong brand its portfolio possesses. “In relation to tour- planting olive trees in the areas affected by the fires these past
ism, we also saw many projects of creating and modernizing years. “Interestingly, this is not primarily driven by the modern
marinas for private yachting,” he adds. Finally, Gramatidis says European trend toward implementing ESG requirements, but
that there is a great demand by non-EU nationals to acquire rather by the sensitivity of the Greek people toward environ-
either bonds or real estate in order to secure a golden visa of 5 mental disasters that have been taking place, including the
years renewable. wildfires from last summer and this summer,” he concludes.

Lithuania’s Legal Transformation:

A Buzz Interview with Vilma Sabaliauskiene of Ilaw Lextal
By Andrija Djonovic (July 26, 2022)
“The reforms, which are to be implemented over the course

of the next two years, seek to do a number of things. Firstly,
The Lithuanian legal
the scope of the real estate tax is to be extended to all real es-
landscape is being
tate properties and is to be applied to all natural persons,” she
transformed, with no-
says. So far, the real estate tax had a value threshold beneath
table changes taking
which the properties were not taxed, but the reforms will
place in the energy,
amend this.
tax, corporate, and
employment sectors, “Secondly, the dividends tax will be applied only in the case
according to Lextal of dividends being distributed and paid, akin to the system in
Partner Vilma Sabaliau- Latvia, Estonia, and Poland.” Finally, Sabaliauskiene says that
skiene. the reforms will also “extend fewer benefits to the income tax
paid by the citizens.”
“Major changes are taking
place in the energy law sector,” The corporate sector did not go unnoticed, with Sabaliausk-
Sabaliauskiene begins. Lithuania has just passed an energy law iene reporting that a new company law is in the pipeline for
legislative package dubbed the “breakthrough package,” and Lithuania. “The new law will regulate remote shareholder
she says that it puts the Baltic country ahead of the curve in meetings, create a procedure for minority shareholder buyout,
the European Union. “The changes make it easier to construct as well as lower the minimum statutory capital requirements
renewable energy power plants, primarily solar and wind-pow- for the incorporation of limited liability companies – from
ered.” EUR 2,500 to EUR 1,000,” she explains. Additionally, start-
ing in August, Lithuania will establish a registry of ultimate
beneficial owners, with “companies having to declare accurate
Debt collection and insolvency cases information and submit it to the relevant registries,” she adds.
increased. This is already a trend and,
“
with the way things are right now, and The labor code was also changed, with the legislative frame-
the fact that EU sanctions on Russia are work “finally including the definition of mobbing,” Sabaliau-
impeding certain contracts from being skiene shares. “Also, the changes will further take care of the
performed, I only expect it to continue. employees, extending the protections to non-work hours as
well, especially in those instances where the employers can
extend their influence beyond business hours,” she explains.
For example, Sabaliauskiene shares that solar and wind power
Reflecting on the high number of legislative updates, Saba-
plants can now be constructed on agricultural land as well,
liauskiene adds: “in Lithuania, we always enjoy creating and
without any need for implementing sanitary zones. “This
changing laws – it’s the subsequent implementation that is a
package of laws is quite similar to the upcoming EU Renew-
challenge!”
ables Energy Directive, so it’s a good move for Lithuania to
have passed it, both from a legislative standpoint and, also, on Finally, Sabaliauskiene says that, with inflation levels reaching
account of decreasing the dependency on fossil fuels.” More- 20% in July, “debt collection and insolvency cases increased.
over, she reports that pollution taxes and corporate fines for This is already a trend and, with the way things are right now,
environmental breaches have been increased, further seeking and the fact that EU sanctions on Russia are impeding certain
to prevent damaging the environment. contracts from being performed, I only expect it to continue,”
she concludes.
In addition to the energy sector, Sabaliauskiene reports that
the tax system is due for comprehensive reform this autumn.

Judicial Gridlock and New Highways in Montenegro:

A Buzz Interview with Danilo Radulovic of Doklestic Repic & Gajin
Montenegro has reached a deadlock in appointing members of the judiciary, with

cases being significantly delayed, while the government is on the verge of a vote
of no confidence, according to Doklestic Repic & Gajin Attorney-at-Law Danilo
Radulovic.
“Montenegro is in a very specific predicament at the moment with regards

to the judiciary,” Radulovic begins. “Key bodies responsible for appointing
new judges are unable to operate since politicians cannot agree on who to
nominate for the Judicial Council – the highest institution that selects judges.
Despite some members of the old council still being in power, the council is
not able to appoint the judges in different instances of the courts, including the
Supreme Court.”
“Consequently,” Radulovic says, “a large number of cases are on hold, with only
critical ones being processed. The latter include criminal charges as, unlike the Judicial
Council, the Prosecution Council is already formed. Major civil litigations, on the other hand, are
significantly delayed. EU officials have recently acknowledged this deadlock and have called for a
response to unblock the judicial system.”
Shifting gears, Radulovic says that “Montenegro recently completed its first highway project,
which was inaugurated around one month ago.” The new highway will connect Montenegro from
the center to the north, including to Serbia and Romania. “The project was quite controversial
initially, as the major source of funding was a Chinese bank and investors, compromising Mon-
“
tenegro’s relations with the EU. Eventually, the EU re-invested in the project to not be fully de-
pendent on Chinese funds,” he notes, adding that the new 43-kilometer highway passing through
the mountains is very promising for the tourism sector.
“The recent noticeable trend in terms of business activities is that, following the war in Ukraine, For the first time,
a large number of companies are relocating to Montenegro,” Radulovic points out. “The majority Montenegro will
of these companies operate in the IT sector and employ freelance workers. So far, the trend is
adopt regulations
particularly noticeable among Russian IT companies, which cannot receive payments due to the
sanctions regime.” requiring specific
individuals to jus-
Other than that, Radulovic notes there is a rather important legislative update on the horizon. tify the source of
“For the first time, Montenegro will adopt regulations requiring specific individuals to justify the
source of their funds,” he says. “Notably, this update has more focus on anti-bribery and less on
their funds. No-
anti-money laundering regulations.” tably, this update
has more focus on
“With regards to political life, the opposition recently made the suggestion to initiate a vote of no anti-bribery and
confidence against the current government,” Radulovic says. “Interestingly, if the vote is suc-
cessful, a new government would have to be elected without new elections, considering that new less on anti-money
elections are not in the interest of any of the political parties. At the moment negotiations are on- laundering regula-
going but, despite that, there’s a lot of uncertainty about the upcoming period,” he concludes. tions.

Turkey Rallying (for) the Lira: A Buzz Interview

with Zahide Altunbas Sancak of Guleryuz Partners
Strong efforts to protect the lira while keeping the economy healthy and vibrant
in a time of global turmoil and uncertainty is the name of the game in Turkey,
according to Guleryuz Partners Partner Zahide Altunbas Sancak.
“The overall financial situation and the depreciation of the Turkish lira
have led to a number of legislative updates seeking to protect it,” Altun-
bas Sancak begins. “The financial situation directly impacts the political
climate – of course, the reasons for this are many: the global crisis, rising
inflation, and supply chain issues, to name but a few,” she says. “The
Turkish government has instituted a number of protection measures for
keeping the lira healthy, including implementing currency appreciation
controls until the end of this year,” she explains.
“Furthermore, there were credit restrictions imposed on borrowing in Turkish

lira – if a company is holding more than TRY 15 million in foreign currency, it can no
longer borrow in lira.” According to Altunbas Sancak, the idea of this control is “to pre-
vent foreign currency speculation,” but she argues that the regulation “threads dangerously
closely to capital control measures.” Additionally, the current status of the financial ecosys-
tem in Turkey is influenced by the upcoming elections that should normally take place next
year but are expected to happen sooner, in the face of opposition pressure. However, “no
official communications have been made yet as to when they will occur.” Altunbas Sancak
also reports there has been a legislative update regulating assets. “Now, if unregistered
assets are brought into the country, for example, money – it can be registered with a bank
with a minimal tax burden without any inquiries made by the bank concerning the source,”
she says. This measure, applicable until March 2023, seeks to encourage people to “intro-
duce foreign assets into the local economy.”
“
Moreover, the war in Ukraine, the EU and US Russia-sanctions-related fallout, and the
increase in e-commerce sector volume have led to “more regulatory updates to the Turkish
ecosystem,” Altunbas Sancak explains. “As for the ongoing war in Ukraine and its impact
on Turkey – the country had previously been acting and will continue to act as a trade
The government is at- corridor of sorts between Russia and western countries,” she says. The war has no doubt
tempting to implement a disrupted trade in the area, and “some legislative measures have been announced on the
new competition frame- restriction of certain exports, such as some food items”, she adds, stressing that there has
work for intermediate been a surge of client inquiries related to the war and, “especially, on Turkish multinational
companies’ standing on US and EU sanctions.”
service providers, as
well as vendors – there Finally, Altunbas Sancak says that the “legislator has started to take action with regulating
will be licensing require- the rapidly growing e-commerce sector. The government is attempting to implement a new
ments which will differ- competition framework for intermediate service providers, as well as vendors – there will
be licensing requirements which will differentiate between the size of these platforms,” she
entiate between the size explains. “Some of these changes will take hold by the end of the year, while others will be
of these platforms. implemented by 2024 and 2025 – although we have already started receiving client inquir-
ies,” Altunbas Sancak concludes.

Bosnia and Herzegovina Buoyant Despite the Challenges:

A Buzz Interview with Zlatan Balta of Legal Partners
Resolving the political dead- of the largest tunnels in Europe, the 10.5-kilometer Prenj
lock in one of the Bosnian tunnel.” Additionally, he says, the EBRD is financing large
entities, tackling infla- projects in public transportation in Sarajevo.
tion, and a shortage of
workers are among “Energy remains our largest export product, and there are
the most recent quite a few energy projects underway,” Balta adds. “The pro-
challenges in Bosnia ject of the Tuzla power plant seems likely to fail, with General
and Herzegovina, Electric withdrawing and the Chinese contractors left hanging,
according to Partner but still, there are many, mostly privately funded, wind and
Zlatan Balta of Legal solar park projects in the pipeline, as well as two hydroelectric
Partners, in cooperation power plants.” Notably, he says that Bosnia and Herzegovina’s
with Deloitte Legal. IT and tourism sectors are also developing rapidly.
“The political atmosphere in Overall, “Bosnia and Herzegovina is a good place to invest, es-
Bosnia and Herzegovina remains strongly influenced by the pecially in keeping with the near-shoring trends resulting from
upcoming general elections in October 2022,” Balta begins. recent global events. The country has a great location close
“The specific political structure of the country adds additional to the EU, a good workforce, and lower costs, which makes it
complexity to the matter – we have weighty discussions on a great choice for establishing manufacturing plants, for EU
introducing amendments to the electoral law and the Consti- companies, for example.” Despite the challenges, “the vast
tution of the Federation of Bosnia and Herzegovina in order majority of foreign investors are happy with their investment
to resolve the political deadlock therein. Just a few days ago, in Bosnia and Herzegovina,” Balta points out.
we had large demonstrations with thousands of people in Sa- According to Balta, there are also some developments in the
rajevo protesting electoral changes by the Office of the High tax regime. “There were recent amendments to the VAT rule-
Representative.” books of the authority,” he notes. “The new regime introduces
“The Bosnian economy was hit hard by current global events,” an obligation for foreign transport companies to register and
he explains. “We have the highest inflation rate in the region, pay VAT when transiting the country. Additionally, foreign
with transportation, energy, and food prices drastically increas- digital service providers have to pay VAT for streaming ser-
ing. The country has a problem of semiskilled or mid-skilled vices purchased by users in Bosnia and Herzegovina and have
labor emigrating to Western European countries – recently recently begun registering for this obligation.”
this trend also includes highly skilled workers from the IT Balta highlights the backlog in legislative activities. “Republika
sector who, despite having a decent income, chose to relocate Srpska is a bit more flexible and quicker in terms of adopting
due to the political climate and better opportunities abroad.” legislation, however, the Federation still faces some challeng-
Consequently, he notes, there is a shortage of workers in sec- es,” he says. “There are many amendment proposals – on
tors such as construction, with construction companies having enforcement proceedings, on administrative proceedings, on
to rely on foreign workers for some projects. energy, electricity, and renewable energy sources, and also the
“However, aside from the inflation, the Bosnian economy is personal income tax and the contributions law.” Unfortunately,
improving compared to previous years,” Balta points out, add- “some of the existing laws are very old school (lacking imple-
ing that the main projects carried out in the past few months mentation of electronic signatures, requiring the filing of hard
include infrastructure and energy. “The largest infrastructure copies of documents, etc.) and the proposed amendments
projects in the country included investments in highways and, look to resolve some of those issues, but it is not clear when
recently, a tender was announced for the construction of one they will be adopted, mostly due to the upcoming elections”
he concludes.

The Bounce in Latvia’s Step:

A Buzz Interview with Dace Silava-Tomsone of Cobalt
After a bit of a slowdown following the start of the war in Ukraine, the
Latvian markets bounced back, with the financial and energy sector being
particularly active, according to Cobalt Partner Dace Silava-Tomsone.
“The onset of the war in Ukraine has introduced a brief hiccup in the
transactional markets, with some deals being suspended or canceled
altogether,” Silava-Tomsone begins. “Currently, however, the markets
have bounced back, and there is quite a lot of investments taking place in
various industries – finance and energy in particular.”
When it comes to finance, Silava-Tomsone reports that transactional efforts

are “dominated by fintech company acquisitions and various startups chang-
ing hands.” Additionally, there is a surge in AML work, she reports, mostly when it
comes to “companies checking their counterparties for compliance with respect to the
sanctions regime” and “work on more comprehensive compliance programs for larger
companies.” The former also supplies work to commercial and dispute resolution
lawyers when the agreements have to be terminated. She indicates that the markets
have reached a point where “AML is an integral part of all work, especially in light of
the sanctions.”
Moreover, Silava-Tomsone reports that the real estate market in Latvia has “been per-
“
forming a bit slower when compared to last year. However, there is still strong interest
from a number of funds – mainly Baltic based – in completed commercial property
projects. Likewise, developers are actively looking for opportunities, notably in the
residential sector,” she says.
The onset of the war in
Ukraine has introduced “Understandably, with markets being busy battling the unprecedented hike of prices
and supply chain disruptions – delays and limited supplies – commercial work has
a brief hiccup in the
grown.” Silava-Tomsone points out that she has been pleasantly surprised that
transactional markets, “most of the market players are quite ready to renegotiate their contracts, taking into
with some deals being account new realities and finding a new commercial balance.” As a consequence, she
suspended or canceled reports that there have not been a lot of disputes, nor restructuring or insolvency pro-
altogether. Currently, ceedings. “I do believe that this might change, however, in the autumn, when growing
energy prices start to coincide with energy deficits,” she stresses.
however, the markets
have bounced back, and Finally, Silava-Tomsone shares that, with the parliament in summer recess, there has
there is quite a lot of not been a lot of legislative activity in Latvia. Moreover, “with the parliamentary elec-
investments taking place tions coming up this autumn, I believe that politicians are careful about making any
moves that might reverberate poorly among their voters.” She concludes by adding
in various industries – that “a number of institutions are preoccupied with unearthing alternative energy
finance and energy in sources, in terms of supply, and with devising social programs to be deployed to ease
particular. the pressure on households.”

Drafting the Playbook in Serbia:

A Buzz Interview with Andjelka Todorovic of Wolf Theiss
Preparedness and adaptabil- ever, is on telecoms. “We have been waiting for the new law
ity are the Serbian keys for ages,” she reports. “The drafts that are in development
to doing business in a are quickly outdated and have to be revised again before they
changing and chal- even go into the procedure.” The average income in Serbia
lenging environment, has gradually increased over the years, she says, and “we have
according to Partner become a market for smart homes and connected cars. Both
Andjelka Todorovic the regulator and we, as lawyers, apply European best practices
of Law Office Mi- – and have even created our own – because our current laws
roslav Stojanovic, in do not correspond to the needs of these new technologies.”
cooperation with Wolf
Theiss.
Both the regulator and we, as lawyers,
”
“The overall feel in the apply European best practices – and have
Serbian market is that we have a even created our own – because our cur-
certain level of preparedness in case of disruption,” Todor- rent laws do not correspond to the needs
ovic begins. “Globally, we are still on the back end of the of these new technologies.
COVID-19 pandemic, the world is affected by the conflict in
Ukraine and, with the evolving energy crisis, these are not very
promising circumstances. Our local market is therefore having Speaking about the reliance on European standards, Todorovic
to constantly adapt, but Serbs are good at doing business in a says a key area of interest in Serbia is ESG. According to her,
changing environment – you can even call it a cultural trait.” “you will not get financing unless your business meets EU
thresholds, which is a complex task.” There are no regulations
According to Todorovic, one of the things the country has to in Serbia dealing with ESG as it is known at the European
deal with is that, many months after a parliamentary elec- level, she says. “However, as with everything, we made a play-
tion, there is still formally no government. She explains: “We book of our own out of the environmental and social regula-
do not expect a change in government, but we are in limbo tions that we do have.”
politically. A lot of legislative action which will affect project
development and investment is waiting for the appointment Finally, Todorovic gives a personal view of a shift she sees in
of new ministers.” client work. “Over the years, Serbia was known for privatiza-
tions and public-to-private transactions that were the highest
“Still, a positive example of moving forward, even with a value transactions in the market, but that era is ending,” she
delay, comes from the Ministry of Mining and Energy,” says. “There will always be public infrastructure projects and
Todorovic points out. “We now have almost a complete set of there are still a few stubborn public companies in need of a
renewable energy legislation that introduces auctions for pre- professional investor. However, the value and overall per-
miums and makes way for prosumers.” The timing of the first centage of private-to-private transactions we work on is ever
auction is in the air at the moment, she notes, “but developers increasing.”
are ready for the 400-megawatt wind power projects that have
been approved for a new round of incentivized investment in “It is not news that Serbia has become fertile ground for com-
renewables. I am pleased to see regulation on biomass kicking panies in innovative sectors, communications, and software
into gear and being implemented at a utility-scale, as this is a development. I expect to see some very interesting M&A deals
resource with a lot of untapped potential in Serbia.” for private hospitals and in the pharmaceuticals sector, in ag-
riculture and food production, and, of course, the automotive
Where Todorovic would like to see more movement, how- industry,” Todorovic concludes.

Shiny and New Tax Legislation in Austria:

A Buzz Interview with Michaela Petritz-Klar of Taylor Wessing
Tax legislation updates are the zeitgeist in Austria right now, according to Taylor
Wessing Partner Michaela Petritz-Klar, with the energy sector, cryptocurren-
cies, and online platforms being at the forefront of overhaul efforts.
“From a pure tax perspective, there are a number of issues that are in-
tensely discussed in Austria right now,” Petritz-Klar begins. “As part of a
green tax initiative with the aim to incentivize more carbon dioxide-neu-
tral energy usage and tax fossil fuel sources more heavily, the scope of
an exemption from electricity duty was widened and now also includes
self-produced energy from renewable energy sources.” Furthermore, she
says a carbon dioxide duty “shall be introduced for importers/producers or
other entrepreneurs placing fossil fuels on the market.” However, due to the
war in Ukraine, the carbon dioxide duty is to be postponed until October 2022.
Focusing on a more Austria-specific issue, Petritz-Klar reports that the country has intro-
duced a flat tax of 27.5% on all cryptocurrencies. “The tax is already in place and covers
any kind of crypto-related income while excluding NFTs and asset tokens,” she says.
“This is a more favorable framework compared to before, when crypto-related activities
could be taxed as high as 50%, which adversely affected frequent trading,” she explains.
Furthermore, Petritz-Klar highlights that, by the start of 2023, “DAC 7 compliant disclo-
sure and reporting obligations will be implemented for specific platform operators. As
of 2023, operators of online platforms will have to enable sellers to liaise with users
regarding, for example, the renting of immovable property, personal services, or the sale
of goods, and will have to implement adequate due diligence procedures to identify the
“
relevant sellers,” she explains. “The platform operators will now have to ensure that rel-
evant seller data is delivered to the tax authorities in time. Right now, it is envisaged that
first reports will need to be filed by end of January 2024, thereby still leaving a bit of
The tax is already in time for online operators to get acquainted with the new regime,” Petritz-Klar elaborates.
place and covers any More of an EU-wide issue is the implementation of the new Anti-tax Avoidance Di-
kind of crypto-related rective 3, Petritz-Klar says. “This targets, in particular, shell companies with little or no
income while excluding substance. The timeline for its implementation is the end of June 2023, with the rules to
NFTs and asset tokens. enter into force as of 2024,” she says.
This is a more favorable Finally, as an interesting recent development in the sphere of litigation, Petritz-Klar
framework compared to shares that there has been an increase in COVID-19 subsidies-related disputes. “For law-
before, when crypto-re- yers, it is in between civil law and public law and has a lot of constitutional law aspects,
meaning that it is interesting to litigate,” she shares. “The longer the COVID crisis went
lated activities could be
on, the more stringent the approach of the government became, and subsidies applica-
taxed as high as 50%, tions started getting denied,” Petritz-Klar explains. “Now, a lot of applicants are seeking
which adversely affected to litigate to enforce the approval of their application, leading to more work in this
frequent trading. regard,” she concludes.

Bulgarian Lawyers Catch a Break:

A Buzz Interview with Dafinka Stoycheva of Gugushev & Partners
Several legislative updates growth, as the current threshold is BGN 50,000. The amend-
will support the legal ment was accepted at first reading, however, a mandatory
profession in Bulgaria, derogation from the EU is required to bring it into action,”
according to Gugushev she explains.
& Partners Partner
Dafinka Stoycheva, As for the politics, Stoycheva notes “the current climate in
with the push toward Bulgaria is a bit complicated. We are yet again moving toward
green energy, (anoth- the election of a new government, probably in October, which
er) pending govern- would be the fourth time in the last year and a half.”
ment change, and a
landmark CJEU decision
also at the top of the agen- The government increased the legally rec-
da for lawyers in the country. ognized costs of lawyers. This is a good
”
update, considering that, during the COV-
“During the past year, a lot has changed for the legal profes- ID-19 pandemic, our profession suffered
sion,” Stoycheva begins. “The old legislation concerning the with courts being closed and businesses
legal profession was a bit outdated. Many outstanding propos- holding off on their disputes, while law
als were in place, for a while now, from lawyers’ associations,” firms still had their expenses going.
she adds, with the amendments being “timely, since there is
a high number of jurists per capita in the country, and there
were a number of challenges they were facing.” According to Stoycheva, in Bulgaria, like elsewhere, energy is a
hot topic. “Some of the most important challenges are related
“To begin with, the government increased the legally recog- to the shifting focus on renewable energy. There are significant
nized costs of lawyers,” Stoycheva points out, adding that the efforts to reduce the dependence on fossil fuels.” She adds,
taxes will be lower, compared to previous years. “This is a that “the EU Commission proposal suggests that increasing
good update, considering that, during the COVID-19 pan- renewable energy by 45% is the target for 2030. Bulgaria will
demic, our profession suffered with courts being closed and also strive to achieve a 27% share from renewables in gross
businesses holding off on their disputes, while law firms still final consumption by 2030.”
had their expenses going. For more than two years the lawyers
looked forward to this change,” she notes. Finally, Stoycheva highlights a recent decision of the CJEU
that introduced changes in Bulgarian legislation: “the dispute
Another big update is that, since 2021, lawyers can establish was related to the registration of geographic indications for
sole law firms, with the ban on being executive directors and/ agriculture products,” she notes. “Following the CJEU ruling,
or managers in companies also lifted, Stoycheva says. “This the Bulgarian supreme court confirmed that the registration
will enable lawyers to be more competitive and not be limited for agricultural products is admissible only at the EU lev-
by the law if they want to grow other services or be leaders in el – and not at a national one. The decision was followed by
the businesses of tomorrow.” introducing changes to legislation, having an impact on all the
companies in the Bulgarian market. This was one of those rare
Something else, talked about not only by lawyers, is that the cases when Bulgaria applied to the CJEU to settle a dispute
VAT registration threshold could be raised to BGN 100,000, and is an important precedent for that reason as well,” she
from 2023. “This will be a big relief for many small business- concludes.
es and professions, including lawyers, who have the burden
to have their own accountant in a very early stage of their

A LOOK AT THE ENGINE FOR ESG:

FINANCE
By Andrija Djonovic
Between sustainability-linked loans and, more recently, green bonds, the finance
world has been one of the early adopters and promoters of the ESG movement. We
spoke with CMS Partners Ana Radnev, Cristina Reichmann, Ihor Olekhov, and Rafal
Zakrzewski to check in on the status of ESG in this crucial sector.

Still Defining ESG The Taxonomy is the

mere beginning; now
“The main question remains, still – what is ESG and how comes the hard work
will the regulators adapt to it by creating a common language of building on top of.
around it,” Radnev begins. She continues by saying that
investors are “facing pressure, for example, from sharehold- There are technical
ers, financial institutions, or asset managers, to place a higher standards being
accent on ESG and disclose their policies.” worked on, which are
expected by the tax-
In terms of “the greatest promoters of the ESG push,” onomy. Overall, a more
Radnev points to “how the approach of commercial and consistent and intensive
development banks and international corporates to create a regulatory work was spurred by it.
dedicated ESG position is spilling over into other areas of – Ana Radnev, Partner, International Finance /
the market. These roles, essentially, seek to develop the entire Head of Finance, CMS Romania
business operation of a company with sustainability in mind.”
Zakrzewski chimes in noting that “development banks have
had ESG-related aspects affixed to their activities for decades A critical element in ensuring that businesses are “appropri-
now.” ately positioned to evaluate the impact of ESG issues and to
factor them into business decisions is the role that boards of
Radnev continues: “until recently, finance transactions, like directors play in the current and long-term stewardship of the
loans or bond issues, placed a high accent on the environ- companies they run,” Reichmann pitches in. “Elevating the
mental side of things, however these days, transactions are ESG agenda to the boards is not a matter of choice; it is an
evolving in the direction of including ESG-related projects integral part of directors’ fiduciary duties,” she says.
linked more broadly to other factors improving sustainability.”
This, of course, further branches out to cover other corpo- “This means that, as part of their fiduciary duties, directors
rate aspects, Radnev explains, including analyzing one’s overall have a responsibility to adopt an integrated, strategic ap-
environmental impact and reporting obligations. proach for material ESG issues, to ensure these risks are iden-
tified and have been adequately addressed and that oppor-
Echoing the notion that “E” is the more focused on, as tunities are maximized,” Reichmann continues. “Integrating
opposed to the “S” and the “G”– at least until recently – is ESG into business strategy and company planning is part of
Olekhov. “Since the war began in Ukraine, the focus has a sound risk management, and directors who fail to compre-
shifted somewhat, and both the sustainability and the gov- hensively and systematically consider ESG matters as part of
ernance elements have become more prominent,” he says. their responsibility could well be deemed to be negligent in
“Governance, in particular, has come to the forefront of the performance of their fiduciary duties.”
ESG-conscious companies and financial institutions because
of massive violations of international law rules by Russia and Furthermore, Reichmann points out that, “with the grow-
the related risks for companies and financial institutions to ing focus on ESG of regulators, investors, consumers, and
continue to work in Russia and with Russian counterparties,” wider society, it could be considered that these developments
Olekhov adds. “Most international companies left Russia and reframe climate-related risks as financial risks, rather than just
are completing the process of leaving Russia or of dealing non-financial or reputational concerns, which may impact the
with Russian counterparties, because of the risk to find them- balance sheet and profitability.”
selves in breach of generally accepted governance rules and
even ethical rules of conducting business.” The Taxonomy – A Solid Foundation To Build Upon
Moreover, Olekhov says that many businesses in Ukraine With the focus still very much on defining what ESG is and
began assessing what their rebuilding efforts would entail and how ESG-related risks should be looked at, Radnev and Ole-
“seek to mold their operations to accommodate ESG.” khov agree that the Taxonomy was a necessary stepping-stone
for creating a unified approach and a common language for

With the growing focus The ESG Drive Riding Out the Storm
on ESG of regulators,
investors, consumers, Between the war in Ukraine, the ongoing energy crisis, and
and wider society, it high inflation rates, some argue that the ESG agenda is inev-
could be considered itably going to lose some of its momentum. Zakrzewski, for
that these develop- one, believes that “we are heading towards economic turbu-
ments reframe cli- lence, with high inflation and energy price spikes, and that
mate-related risks as this might impact ESG, especially because the markets have
financial risks, rather become used to high liquidity and a lot of readily available
than just non-financial or funding.” He fears that ESG development efforts might be
reputational concerns, which impacted if the situation changes adversely in that way.
may impact the balance sheet and profitability.
Radnev, however, indicates that the focus will remain where it
– Cristina Reichmann, Partner, Head of Capital is and that the regulatory framework shouldn’t change in light
Markets & Structured Finance, CMS Romania of current developments: “ESG is here to stay. On the one
hand, I believe that full compliance is still a couple of years
away for most businesses. On the other hand, I don’t think
ESG. “The Taxonomy is the mere beginning; now comes the that there will be any regulatory efforts that will have a slow-
hard work of building on top of,” Radnev says. “There are down effect on ESG developments, as a consequence,” she
technical standards being worked on, which are expected by says. Radnev reports that “assessing the sustainability impact
the taxonomy. Overall, a more consistent and intensive regu- is now a necessary part of any new investment or restruc-
latory work was spurred by it,” she says. turing of existing businesses, and having an ESG rating or
being able to link growth to ESG KPIs as well will facilitate
“The Taxonomy underlines which areas are open for further unlocking liquidity,” she believes.
development,” Olekhov adds. “It provides the groundwork
for behavior within certain industries, for instance – treating Olekhov chimes in, sharing that, despite the ongoing war
nuclear as green or not or the way of producing methanol.” in Ukraine, the reconstruction and rebuilding process has
Moreover, Olekhov believes that the Taxonomy has provided already started. It will “involve many areas, including the
an excellent yardstick for the ESG projects and is aimed at infrastructure, energy, real estate, and construction industries.
protecting against greenwashing. “It will continue to evolve Importantly, the Ukrainian government understands that any
with time and with the advent of new technologies and pro- reconstruction and rebuilding of Ukraine must embrace ESG
cesses in various areas. Before the Taxonomy, the rules were principles, because the funding for these purposes would be
ambiguous for ESG requirements.” provided by either public sources that have worked with ESG
rules for a long time, or by private funds that focus on ESG
rules now to a great extent.”
Since the war began in Ukraine, the focus has shifted somewhat, and both the
sustainability and the governance elements have become more prominent.
Governance, in particular, has come to the forefront of ESG-conscious com-
panies and financial institutions because of massive violations of interna-
tional law rules by Russia and the related risks for companies and financial
institutions to continue to work in Russia and with Russian counterparties.
– Ihor Olekhov, Partner, Head of Banking & Finance and Capital Markets,
CMS Ukraine

Development banks have Hopeful Look Forward

had ESG-related as-
pects affixed to their In terms of what he’d point to as his one wish-list item for
activities for decades ESG in finance in CEE, Zakrzewski believes that consisten-
now. cy in approach would be the most important. “This would
increase the investors’ familiarity with market products and
– Rafal Zakrzewski, promote cost-effective deal execution. If different institutions
Partner, International go in different directions, there is likely to be a lot of inef-
Finance, CMS Poland ficiency,” he says. Still, he believes it “will more be a matter
of the unification of market approaches than a top-down
regulatory effort.”
Looking at the region as a whole, Radnev believes that ESG
will be an unavoidable metric when it comes to restructuring.
“A strong accent is likely to be placed on ESG elements, espe- Olekhov, on the other hand, says that “regulators would need
cially concerning looking at supply chains. The way compa- to be more active in creating softer capital requirements for
nies behave with their suppliers, how they predict consumer ESG-related loans, but that this has been lacking in many
trends, how they commercially engage in certain areas – all jurisdictions as of yet.” With the increasing numbers of
will be affected,” she shares. ESG-related financial instruments, he feels the banks will
“have more relaxed rules, but only if the regulators lead by
their own example. As more market players realize the bene-
Olekhov adds that, in the context of Ukraine, “there is a high fits of ESG, so too will there be more understanding from all
likelihood of seeing a large number of ESG-related innova- parties involved.”
tion projects, focusing on new types of transport and energy
storage solutions. Financing for all kinds of ESG projects is
likely to come to fruition.” He feels that ESG is, as Radnev Reichmann pointed out that in some sectors, “mainly for
put it earlier, “here to stay for a very long time” and that “all credit and financial institutions, listed companies, and car-
of the market turbulences and volatilities in energy prices” bon-intense sectors, regulators have already imposed manda-
are only more likely to “spur ESG projects to develop more tory requirements with respect to ESG risks, as part of the
than ever.” risk management and risk appetite framework.” She believes
that irrespective of the sector, “directors must be mindful of
the interplay between ESG factors and the discharge of their
Radnev does concede that there is one element that might fiduciary duties and therefore ESG issues should be a key part
lead to a slight drop when it comes to the volume of ESG-re- of board agendas.” To fulfill their duties, Reichmann says that
lated transactions. “With the level of focus and scrutiny being boards “need to be fully aware of the implications of climate
applied to ESG claims, there might be a drop in terms of change” as well as to have the skills to assess their company’s
the number – for example, where there might have been ten, current ESG posture and “develop strategies, policies, and
there will now be two – but these will be far more rigorously internal controls for producing consistent, transparent, and
vetted,” she explains. “It will no longer be a matter of what measurable sustainability performance data.”
you put into a loan agreement but also how you prepare trans-
actions and monitor them.” The dedicated ESG roles she
mentioned previously come into play here. “These profes- Agreeing with Reichmann, Radnev concludes that, ultimately,
sionals will be able to alert their employers about which KPIs the markets must continue educating themselves about the
are to be set, monitored, and reported on.” crux of what ESG is, instead of just riding the zeitgeist wave:
“While you do not need every loan to be green, you do have
to understand the core values of ESG as a concept. Only in
Reichmann, again, turns to the boards and emphasizes that this way can progress be achieved.”
company boards should be “strategic in evaluating ESG
issues, as part of their risk management duties, in line with
international guidelines and regulations.” This way, they can
ensure “the development of policies and strategies to address
ESG matters, internal control, and auditing mechanisms.”

AUGUST 2022 ESG TALKS
ESG TALKS: M&A TRENDS AND THE FUTURE

OF DUE DILIGENCE – A CEE LEGAL MATTERS
ROUND TABLE
By Andrija Djonovic
On July 7, four leading lawyers from Austria, the Czech Republic, Hungary, and Ukraine sat down for
a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the
increasing prominence of ESG issues and their impact on M&A transactions, due diligence procedures,
and the role of the lawyers themselves.
Round Table Participants:

Florian Kranebitter, Partner, Fellner Wratzfeld & Partner
Mihaly Barcza, Corporate M&A Partner, Oppenheim
Milan Sivy, Senior Associate, PRK Partners
Mykola Stetsenko, Managing Partner, Avellum
What does ESG mean to you and in your jurisdiction? finance, this was not that surprising.” Nowadays, he says that
the entire spectrum of ESG is being considered, “both from
“ESG means different things to different people,” Sivy the perspective of the government and the citizens. Our firm
begins, “While, to me personally, it means mainly clean air does the same thing, approaching the matter in a manner that
and water, to investors it’s rather about assessing the risks and is not just client-centric, but also seeking to be aware of ESG
benefits of the envisaged investment and projected values needs ourselves.”
following an acquisition,” he says, explaining how assets’ value
might change post-closing due to changing ESG regulations. For Barcza, the rising tide of ESG represents an opportunity.
“In the Czech Republic, ESG is a major discussion topic, “For the short and medium-term, this is an opportunity for
with financial institutions being the key drivers behind it,” growth. In Hungary, there hasn’t been much pioneer work on
he continues. “It will only become more focal as more EU ESG. However, we do observe both the NFRD and SFDD
regulations get passed.” directives in addition to the accounting framework having
certain sustainability aspects,” he shares. “The Budapest Stock
Kranebitter shares how, in Austria, “the discussion initially Exchange and the National Bank of Hungary have been
revolved more around the ‘E’ in ESG than anything else. dealing with green finance via reports for over a year now,”
Focusing primarily from the perspective of funding and Barcza says. However, he adds that this was mostly done with
a “comply or explain approach, meaning that the rules are not
really mandatory. Listed and public companies are impacted
We don’t really see any new investors the most, but even these have a way of getting an exemption
moving in, operating solely from an ESG from reporting.”
“
perspective. There has been, however, a
large number of investors seeking sus- According to him, ESG as a concept is still in its early stages
tainable investment opportunities, but in Hungary. “As Milan said, the financial sector plays an
more as a matter of shifting focus. important role here. Still, in Hungary, the data are not as
promising as in other European countries – the market share

M&A TRENDS AUGUST 2022
of ESG transactions is at 1.8%, which is not much compared

to the EU average of 42%.”
Ukraine, similarly to Hungary, is experiencing ESG as “some-

thing relatively new,” according to Stetsenko. “We are lagging
a bit but, at the same time, as a fresh EU candidate member,
we will have to pick up the pace on account of harmonization
endeavors,” he says. “There were, of course, movements in
this direction before the war – DTEK, an electricity producer
in Ukraine, issued green bonds a year and a half ago.”
As far as the emphasis of the discussions goes, Stetsenko

Florian Kranebitter
reports that, in Ukraine, “the ‘E’ is the key, as well as the ‘G.’ I
think that people are still digesting the social element of ESG
and how it could develop.” He adds that, while the coun-
try has elaborate environmental legislation, there is still no
“classification used to distinguish companies based on their
impact.”
How much has ESG influenced investor decisions so

far? Is it still a buzzword, or is there a direct impact on
investor decisions?
“We don’t really see any new investors moving in, operating
Mihaly Barcza
solely from an ESG perspective,” Kranebitter says. “There
has been, however, a large number of investors seeking
sustainable investment opportunities, but more as a matter of
shifting focus.” Building on what Stetsenko and Barcza said,
Kranebitter adds that, “while ESG is a global matter, different
countries are at different stages, which opens up the opportu-
nity for more cross-border corporate actions.” He adds that
many companies seek to “enhance their ESG profiles by, for
example, replacing or acquiring their suppliers, or even team-
ing up with them via joint ventures,” to exert more control
over their supply chain or other business needs.
Milan Sivy
Sivy agrees with Kranebitter and says there are not a lot of
new investors in the Czech Republic on account of ESG.
“Rather, it is a focus shift that depends also on the nature
of the investor. For example, private equity funds are more
sensitive to sustainability-linked investments and ESG-related
transaction aspects,” he says. “Additionally, it could depend on
the source of the financing, with banks pressuring the clients
that borrow from them to address ESG.”
Sivy further adds that, in the case of M&A transactions, there

has also been an interesting development concerning law
firms. “It was revealing to see how cross-border transactions Mykola Stetsenko


M&A TRENDS AUGUST 2022
involving clients from the US or the UK include an interest- only the ESG impact that has to be taken into account while
ing question – what our ESG compliance policies and levels transacting.” He adds that, without having any hard data
are – especially over the past 18 months,” he explains. available, it appears it could be problematic for “companies
to hold onto some of their assets – if they wish to retain or
“While I do not know the ratio of new to old money when it improve their ESG position – and thus the companies may
comes to ESG-related investments,” Barcza says, “I can say wish to divest those, which could be another driving factor
that we see signs that the markets are adjusting, with almost for M&A transactions. Offloading these types of assets,
all mortgage banks having issued green mortgage bonds, for which could prove problematic from an ESG perspective,
example.” He adds that there was even a green corporate might be difficult,” he explains. Still, he believes there isn’t
bond issuance and that “all of these instruments are bench- “much greenwashing in the Czech Republic, not in its strictest
marked, which means that the infrastructure exists, however definition at least.”
infant it may be.”
He adds that the “new CSRD directive proposal is expected We are not operating in an isolated ESG
to pass, which will deal more with the due diligence processes world. All business decisions have to take
”
in this regard, though the role of lawyers is not yet clear.” into account also a broader context, such
He believes that, as the proposal moves forward, “we will see as the geopolitical situation, inflation, etc.
more inquiries about the ESG aspects of due diligence work. This means it’s not only the ESG impact
I think the Big 4 will lead the pack on this front, as these that has to be taken into account while
companies already emphasize ESG.” transacting.
Looking at the market, do sellers also see

ESG potential? In Hungary, Barcza says that their firm is yet to come across
transaction clauses that are directly influenced by ESG. “As
“It depends on the sector, really,” Kranebitter says. “When it far as greenwashing goes, both the Hungarian competition
comes to deciding to sell or not, based on ESG, this is already authority and the consumer protection authorities have
present in quite a number of transactions we see on market.” announced that they will be focusing on greenwashing – so
He says that, “in some due diligence processes, we already developments are yet to occur,” he explains.
see ESG aspects being present – this puts investors at ease
that the target will be in a position to comply with reporting “We still do not know what greenwashing is, other than the
requirements post-closing or that, at least, it will be possible company attempting to communicate it is being eco-friendly,”
to restructure it in a way that will make it compliant and ready Kranebitter says. He believes that the upcoming Directive on
for the migration and post-closing phase,” he explains. Unfair Commercial Practices will shed further light on this matter
with the “expansion of its blacklist. In the future, any and all
He adds that, specifically, sustainability aspects are present unfounded statements on a company being green will bear
with “representations and warranties within SPAs related to consequences, something to be taken into account starting
ESG issues. From the seller’s perspective, this shall be safely now,” he says.
negotiated because ESG is still considered ‘soft law’, and
there is still wiggle room.” Comparing ESG to technical innovations, Kranebitter says
that, “while in the tech world you have to be ahead of the
How much greenwashing is there, currently, regulatory curve to be innovative, when it comes to ESG the
in your jurisdictions? regulations are still a few years off – and you’re ahead of the
curve if you anticipate them and are compliant in advance.”
“I’d agree with Florian and add that we are not operating in He shares that he expects there to be an increase in “rep-
an isolated ESG world,” Sivy says. “All business decisions resentations and warranties seeking to protect companies
have to take into account also a broader context, such as from the upcoming sustainability-related regulations.”
the geopolitical situation, inflation, etc. This means it’s not

When ESG first started becoming a reality, lawyers into the lawyers’ sphere as well, probably through their affili-
started considering an ESG due diligence process be- ate law firms first.”
coming a reality – how far are we from that? With the
taxonomy providing a few tangible metrics, how much What is the one element that is most important for
did it help, and what is the outlook? lawyers to develop to be better individual profession-
als and to thrive in the new ESG world?
“I do not think that the ESG due diligence is yet part of the
customary due diligence, but the legal due diligence work “With respect to corporate M&A work, I think that lawyers
already covers certain aspects,” Sivy says. Still, he agrees that will have to rethink the entire due diligence process, from the
ESG expands and modifies the scope and reporting of M&A point of view of helping clients identify risks and helping
due diligence processes. “I expect that more focus will be them continue with their business operations post-closing,”
placed on the operational aspects, like supply chains, and that Kranebitter stresses. “Moreover, I think it important to
new regulatory requirements will impact both due diligence guide the clients through what makes their business have the
of the target as well as its supply chain,” he explains. highest impact on sustainability but – most importantly – it’s
crucial to be authentic,” he explains. “We must lead by exam-
Furthermore, Sivy says that contractual and actual obligations ple and be mindful of our own ESG impact.”
might lead to ESG making a dent in more areas. “For exam-
ple, if a Tier 1 supplier intends to acquire a Tier 2 supplier, it Stetsenko agrees with Kranebitter, adding that the one thing
should properly verify that the target complies with the ESG lawyers must keep in mind is, “again, project management
requirements applying to the purchaser,” he explains. “The skills. Our clients, and the market, will keep pushing us to
role of lawyers will be interesting in the due diligence process expand beyond our usual roles – it is up to us to be even
– I think we should be involved in the ESG side of things as better.”
well, especially as regards the review, how to report on all of
it, and projecting the outcomes in the transactional documen- “I think it is important to keep up with the pace of ESG
tation,” he stresses. developments,” Sivy chimes in. “Right now, we are flying in
an airplane that is still being built – we have to be prepared to
navigate all emerging rules and thousands of pages dedicated
I think it important to guide the clients to ESG,” he says.
through what makes their business have
“
Finally, agreeing with Sivy, Barcza says that being open to
the highest impact on sustainability but
changes and “following the business reasoning of the clients”
– most importantly – it’s crucial to be
will be paramount. “We need to understand their rationale
authentic. We must lead by example and
and follow their notions to be as efficient as possible,” he
be mindful of our own ESG impact.
concludes.
Stetsenko, for one, has a more focused line of reasoning. “I

think that we will see a change in the approach in the next CEE
five years, due to the clients themselves pushing us towards it. Legal Matters
With lawyers getting into more and more roles – for example,
project management – it is likely that multidisciplinary co- You can listen to the full re-
operation will have to happen, so I agree with Milan: we will cording of this round table
have to coordinate with ESG experts,” he explains. conversation on Spotify or
ceelegalmatters.com.
Barcza too agrees with Sivy, adding that, “while the lawyers
will not be the drivers of ESG due diligence, we will definitely
partake in it at some point.” He explains that, with “the Big 4
driving the ESG change, this type of work will seep through

Making it sustainable.
That’s law.
Fellner Wratzfeld & Partner

Rechtsanwälte GmbH
Schottenring 12, 1010 Vienna
T +43 1 537 70-0
E office@fwp.at
fwp.That’s law. www.fwp.at

ESG TALKS: FINANCE GOES GREEN – A CEE

LEGAL MATTERS ROUND TABLE
By Radu Neag
On July 12, four leading lawyers from Croatia, Lithuania, Poland, and Romania sat down for a virtual
round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the latest in
ESG developments with a focus on green financing, its regional and local drivers and roadblocks, its
impact on non-financial reporting, and what it all means for the legal profession.
Round Table Participants:

Karolina Lapinskaite, Senior Associate, TGS Baltic
Malgorzata Motyl, Senior Associate, Penteris
Mihai Dudoiu, Partner, Tuca Zbarcea & Associatii
Vedran Kopilovic, Senior Associate, Kinstellar
How green would you assess finance to be in your talking about, and being interested in, green financing. Big
jurisdiction at the moment? Where do you see it five players – the larger commercial banks and the authorities –
years from now? have issued programs and statements, but things are still in-
cipient, to a large extent.” He says that Raiffeisen and Erste’s
“Croatia has a legislative framework securing a platform and BCR have issued green bonds but, “compared to the size of
structure for green financing,” Kopilovic begins. “We have an the market, it’s still a tiny level of activity.”
accountancy act that transposes the most relevant directives –
on financial reporting and the Sustainable Finance Disclosure Reg- As for banking and finance, Dudoiu says loans have also seen
ulation – for market participants and financial advisors.” While some interest, having worked with the banks on “a couple
the legal framework is solid on paper, he says that, particularly of green loan transactions” and putting out “some offers for
in the last few months, “the reality of inflation, the war in financing for energy projects – to be probably resolved as
Ukraine, and even the pandemic have created setbacks.” green loans.” Overall, he stresses that “things are just starting
to move,” with the “expectation to see this growing – a lot
Still, there has been some progress, he reports, “and a certain – in the following years, across multiple industries: from real
amount of sustainability-linked loans were offered by com- estate, where larger and residential buildings have a big impact
mercial banks in Croatia, closely linked to ESG factors. And on the environment and energy consumption, to renewables,
the Croatian Bank for Reconstruction and Development has to plastics (where we’ve done our first green loan last year),
also initiated a green financing program for entrepreneurs.” and paper manufacturers (an ongoing project, for green facili-
ties in a larger structure).”
In the next few years, looking past the recent setbacks,
Kopilovic expects things to develop, “particularly with the He’s also optimistic that the trend will pick up speed – “de-
new directives and EU green bond standards, which would spite the concerns over inflation, recession, the pandemic, or
mean additional focus on green financing and the green bond the war – as there is also regulatory pressure supporting it.”
market.”
Poland, on the other hand, is “not as green as it seemed a few
The situation in Romania is not much different, Dudoiu months ago,” according to Motyl, “as 2021 financial state-
reports: “On paper, it looks green enough, with everyone ments were the first ever to have regulatory requirements on

FINANCE GOES GREEN AUGUST 2022
ESG.” She says that “many companies found out on the day
of release that they needed that extra data. The topic of ESG
reporting is quite new, and even the larger companies were
unaware of the new requirements on ESG issues – this being
the first example to describe the situation in Poland.”
“Then, there’s the banks’ attitude – it’s a very complicated

time for the banking sector right now, with growing inflation,
less liquidity, and regulatory changes – so banks are very cau-
tious on loans for companies or entrepreneurs and even on
mortgage loans,” Motyl continues.
Karolina Lapinskaite
But it’s a confusing time all-around, she notes: “In order to
reduce dependence on Russian fossil fuels we’re going back
to coal, looking into nuclear, and trying to promote green
energy. There’s legislation in the works on financing for green
projects and renewable energy – so a lot of back and forth,
trying to repair the damage done in 2016 to the wind and
solar industry.” Still, that means “a huge change is coming,”
she says, with energy independence the end goal and green
thinking the way to reach it.
To no one’s surprise, Lapinskaite says Lithuania is quite active

in green finance. Yet “the current level of capital being raised Malgorzata Motyl
for such investments is not sufficient in the long term,” she
believes. There were large green financing transactions in the
country, even before the ESG regulations: “Lithuania was well
known for its multi-apartment renovation program, aiming
to reduce greenhouse gas emissions. And also, we had some
green bond issuances under the International Capital Markets
Association green bond standard. More recently, the country
had its debut sustainability-linked bond issuance, also a Baltic
first.”
“Currently, financial market participants are starting to in-

Mihai Dudoiu
troduce green financing possibilities, like green guarantees,”
Lapinskaite notes, but a lot still has to be done. “Half a year
ago, Lithuania introduced the sustainable finance action plan,
aiming to become the regional hub for sustainable finance
– through, for example, the establishment of a sustainabili-
ty database – as complete and accessible data is essential in
assessing the compliance of companies with ESG criteria.”
In five years’ time, she believes that such “local initiatives,

especially targeted to SMEs, and the EU-level regulations will
help with the plan’s implementation, to make green financing
in Lithuania an even more frequent and common sight.” Vedran Kopilovic

It’s obviously a common denominator to look at a top- says, “which, as a huge infrastructure project, may play a role
down approach – especially looking at EU Directives in developing green financing as well.”
and Regulations – but there is considerable difference
between the market realities. What have been the She highlights there are “only two commercial banks focus-
largest drivers? ing on green issues, with a portfolio to match. They support
green projects and energy, and environmental sustainability –
“Regulation is indeed playing the key role in driving green but that’s still only two banks in the whole country.”
financing,” Lapinskaite says, noting that “businesses need to
decide if they will implement the changes and take advantage What particular roadblocks is your jurisdiction facing?
of the opportunities, or take the risk of being left behind.”
For the banking sector, she says “the same regulatory require- For Lapinskaite, the biggest roadblock to implementation is
ments will push the banks towards more green financing, so “the lack of understanding about ESG requirements, espe-
they will need to include those ESG assessments in their risk cially among corporates which are not directly compelled
management system and publish reports about the extent to under the Taxonomy or the NFRD, as well as the lack of data
which their balance sheets support economic activities that to calculate taxonomy alignment.”
substantially contribute to reaching the EU net-zero targets.”
Dudoiu says “it takes time to absorb it all – the Taxonomy is
Agreeing on the incentives, Dudoiu says “the EU remains a complicated and, while the principles are clear, there is some
big factor.” The larger Romanian banks are mostly part of resistance to the novelty. But that’s where we come in – as
EU financial groups. So, “their policies at the group level are consultants we educate ourselves and then pass on our knowl-
coming to Romania – they were the first to come to market edge to clients.”
with such programs, implemented by local subsidiaries,” he
notes. Banca Transilvania – a local player – “will probably fol- Kopilovic agrees the Taxonomy is a roadblock, “being too
low suit soon, as they need to protect their market share.” He complicated and still needing interpretation to get some
expects that, “once the lending starts and the image is build- clear standards.” Most companies in Croatia are making a big
ing, others will join in, reinforcing the energy of the move- effort, he says, and incurring a lot of costs, just to stay up
ment, because of branding and public perception needs.” to date and remain compliant on ESG: “it is exhausting for
their legal and financing teams. Maybe if it were all simpler,
Another factor, Dudoiu notes, is the EBRD and other IFIs, companies that are not legally required to would also file
“making facilities available for commercial banks that will, in those reports.”
turn, on-lend to residential and commercial projects and local
authorities for green projects and ESG in general.” Motyl circles back to politics as the biggest roadblock for
Poland. “2023 will be a big challenge, for the country and the
Adding to what was said, Kopilovic notes that “the driver for voters. We’ll be deciding for the future, not only on green
the green transition, in theory, should be the goal of having issues, but our future within the EU as well.”
a sustainable circular economy. But that’s not the reality. The
major driver is still the better green financing terms available. Looking at the level of progress that has been
And companies caring about their green reputation – invest- achieved – despite the slow speed or any blockages –
ing in sustainable technologies – to attract capital market in terms of greening up financing flows: Where do you
investors.” see more progress? Was it banks or capital markets,
and why do you think that was?
For Poland, it’s (geo)politics first. “We have elections next
year,” Motyl stresses, “the most important election since Dudoiu points out it was actually the banks of both fronts in
1989.” So, the country is focusing on internal matters instead Romania: “Banks were the first to issue and list green bonds
of EU challenges. “Sadly, all the green initiatives are coming (BCR Erste, Raiffeisen) and first on loans as well. They are
from the EU, she says, resulting from EU legislation and trying to make products available for clients, and educate
requirements.” The government (and probably future ones) them with incentives and better margins, and explaining their
will be “focusing on developing nuclear power plants,” she conditions for green loans. So, going through the financial



system, and the banks in particular, remains an important tool were just marketing and no substance.” While other players
– both IFIs and commercial banks are doing a good job and were taking things very seriously: “at a conference last year,
were the first to react.” one of the biggest real estate investors in Romania, investing
millions and millions in the green aspect of their projects,
Kopilovic joins in, saying that’s also the case in Croatia, with expressed frustration at rampant greenwashing.” Still, he says
the banks as major players in green financing. “They have in the long run things should course-correct, with “banks
green financing products and green share or bonds portfolios. having filters on both project selection and implementation,
If you look at any green financing in the country, you’ll find and only associating with real projects. So, things will become
the banks there – also some broker companies focusing on more rigorous, for the larger projects at least.” And those not
green investment and financing programs – but those seem to taking things seriously “will suffer in the long run.”
be much smaller in scale.”
That’s partially true for Croatia as well. There is some
For Lithuania the difference isn’t that large between banks progress in that regard, Kopilovic says, citing data for the
and capital markets, Lapinskaite says, but “there’s bigger pub- past few years showing that “40% of the companies that
licity about the capital markets. And the Lithuanian energy published non-financial reporting weren’t required to do so.”
sector was quite active – issuing green bonds previously – and So, they see the opportunity to encourage a sustainable way
issuing sustainability-linked bonds recently.” Speaking about of business – and to promote themselves and attract inves-
the volumes, she says capital markets probably lead the field, tors, he notes. As for the banks and how they look into ESG
but there are also some “large banking financing transactions, reporting for green financing, he says that, “for sustainabil-
especially with support from the EBRD, EIB, and other insti- ity-linked loans, they are required to do so, and they should
tutional investors.” have strict criteria. It might not always happen, but much
more attention will be paid in the future.”
“Banks still have a priority role in Poland, providing green
financing for companies interested in introducing green busi- In Lithuania, listed companies and large corporations are
ness solutions,” Motyl points out. But she finds the capital the ones currently preparing ESG reports, Lapinskaite says.
markets more interesting: “Some private investment funds “Other companies prepare such reports on a need-to basis, in
describe themselves as very ESG compliant. Even three or case they need to attract funding from institutional investors,
four years ago we had investors pulling out of deals on envi- for example. Usually, the banks are providing their clients
ronmental grounds. So, while banks may be more active on with some ESG due-diligence questionnaires, to better under-
volume, private investors are more aware of ESG issues and stand underlying ESG risk and for the banks’ internal scoring
discerning. So, the change is starting from private investors, and risk assessment.”
holding potential target companies to a high standard.”
And what was the impact of the Taxonomy on report-
Just how active have companies become in reporting ing? Has it helped so far? Has it clarified any ambigui-
on ESG to date? ties your clients were facing on ESG reporting?
ESG reporting is not widely known right now, Motyl says. The Taxonomy will help to improve the quality of such ESG
“Last year’s requirements were a surprise, catching companies reporting, Lapinskaite continues. “The requirement for the
unaware. We’ll need to specify the criteria for such reporting, banks to disclose their green loans, bonds, and other expo-
as they’re either unclear or nonexistent. Everyone just wrote sures – in order to claim that their balance is green, and how
whatever they wanted, and we ended up with junk data. So, green – they will need to gather such data from their clients,
we’ll need to standardize reporting for the whole market first, so this will substantially contribute to ESG reporting.”
to then be able to focus on analyzing the reported data.” In
the end, she says it all needs to be “useful as one of the fac- It was a necessary starting point, for everyone to speak the
tors considered when evaluating the worth of the company.” same language, Dudoiu says. “To have some definitions and
concepts to operate with. But the regulations are still com-
It’s all incipient, Dudoiu says. “But we’ve seen projects, plicated – and banks might be overwhelmed with all sorts of
especially on real estate, where the advertised green projects regulations. But the process will settle in, and I suspect the

banks will start building departments specializing in green for the transition is needed in most economies.”
financing. They will become more and more familiar with the
issues, and things will start to flow.” And the same can be said “We should reshape our thinking about the world and envi-
for the advisors as well, in his opinion: “the first green loan ronment,” Motyl says. “To believe that this legislation has a
might be harder, but once you’ve done ten, you’re a natural. wider goal: taking care of our economy and our world. Green
There’s still some effort to digest ongoing.” financing and products are making our world better – so
implementing them not because of the requirements, but
For Kopilovic, the Taxonomy is a great classification tool, because it’s the right thing to do.”
“to allow all participants to reach a standardized form of
reporting. And it’s good for the government and the regulator “We need balance between things being forced on people and
to provide these participants with the right way in develop- those people believing in what they do,” Dudoiu says. “Too
ing and investing funds – to encourage a sustainable circular much regulation may become counterproductive – but left
economy.” to the free market, the system doesn’t have enough energy to
make things move as far as they need to.” So, the regulations
side is doing well, he concludes, “those should not be over-
cooked. And then it’s up to society and the system to put in
The driver for the green transition, in
the effort and digest. There will slowly be more incentives as
“
theory, should be the goal of having a
well as requirements, and the system will develop and amplify
sustainable circular economy. But that’s
the movement. I’m quite interested to work on these projects
not the reality. The major driver is still the
– not just for the fees, but because we all need it.”
better green financing terms available.
For Kopilovic, the top wish is also for people to start “re-
shaping their thinking in terms of the positive impacts of a
What do you assume the impact of ESG is on the role sustainable economy and green financing.” And on the legal
of lawyers? side, what’s needed is “for companies and other undertakings
active on the market to have some level of compliance with
“As external advisors, we are exposed to multiple projects ESG requirements. And then stricter rules for financing and
from multiple clients,” Dudoiu notes. “So, we have the chance clear criteria that must be met in order to access funds.”
to, and must, educate ourselves. We then pass on whatever
legal information and insight, and we can help of course, by “It’s no good to push people or companies to go green. We
doing research and looking into specific future legislation, as should rather incentivize them into changing their way of
things are being implemented. To give clients time to adapt, in doing business, by using the available legal framework and
an ideal world.” tools,” he concludes.
“Legal advisors are also participants in the system,” Kopilovic

highlights. First of all, “lawyers should be the ones educating
and providing any assistance to the client, when required, on
ESG compliance. And they should also take care that clients CEE
are aware of their obligations to have non-financial reporting Legal Matters
and any benefits that may apply.”
You can listen to the full re-
Name one wish list item that would help promote ESG
cording of this round table
in financing.
conversation on Spotify or
ceelegalmatters.com.
Lapinskaite notes that the “progress at the EU level is very
welcome,” and she looks forward to seeing “better recog-
nition of investments for intermediary steps on the path
towards sustainability. This is necessary since usually financing


AUGUST 2022 EXPERTS REVIEW
EXPERTS REVIEW:
ESG
This issue’s Experts Review section focuses on ESG. The articles

are presented ranked by the Gender Gap Index – examining the gap
between women and men in Economic Participation and Opportunity,
Educational Attainment, Health and Survival, and Political Empower-
ment – according to 2021 World Bank data. The highest possible score
is 100 (full equality) and the lowest possible score is 0. Any ties were
ranked alphabetically.
The article from Lithuania leads the section, with 80 points, followed
by the articles from Austria and Latvia, tied with 78 points each. The
articles from Romania, Hungary, and Turkey wrap up the issue, scoring
70 or fewer points in the Gender Gap Index.
Country Gender Gap Index 2021
Lithuania 80 Page 48
Austria 78 Page 49
Latvia 78 Page 50
Bulgaria 75 Page 51
Slovenia 74 Page 52
Croatia 73 Page 53
Estonia 73 Page 54
Czech Republic 71 Page 55
Poland 71 Page 56
Slovakia 71 Page 57
Romania 70 Page 58
Hungary 69 Page 60
Turkey 64 Page 61

ESG AUGUST 2022

LITHUANIA: ESG REQUIREMENTS FOR COMPANIES

NOT OPERATING AS FINANCIAL MARKET
PARTICIPANTS OR FINANCIAL ADVISERS
By Lauras Butkevicius, Partner, and Evelina Nedzinskaite, Associate, EY Law
Constantly expanding and becoming Large public interest companies, whose

increasingly diverse, complex, and average annual number of employees
risk-laden, the environmental, social, during the reporting financial year ex-
and governance landscape affects ceeds 500 on the last day of that year,
and challenges most businesses. shall include in the annual report a
New laws and regulations are having social responsibility report containing
broad implications for organizations. the information specified in Article 8
According to EY Global Law Leader of EU Regulation 2020/852 (Taxonomy
Cornelius Grossmann, “we are seeing a Regulation): in particular, information
major pivot from a world in which sustainability on the proportion of the turnover, capital
was about messaging and voluntary commitments, to a expenditure, or operating expenditure of such
world in which implementation is key and reputational risks are becoming more large non-financial companies that is associated with environmentally
acute.” Nowadays, society no longer expects companies to simply do sustainable economic activities. Social responsibility reports must also
no harm, but also expects them to appropriately address environ- include the following information: a brief description of the compa-
mental and social matters. In order for those matters to be properly ny’s business model, a description of the company’s policy including
addressed, it is crucial to focus on legal requirements for compliance the control over the implementation of this policy, the results of
in terms of ESG. the company’s policy, information on the main risks related to the
company’s activities and how the company manages those risks, and
According to the laws currently in force in Lithuania, companies, in non-financial key performance indicators related to specific activities.
addition to annual financial reports, must also prepare an annual pub-
lication that must include an analysis of non-financial performance, While it would be disproportionately burdensome to extend such a
inter alia information related to environmental protection, personnel, requirement to smaller companies, those companies may voluntarily
etc. These requirements are mandatorily applicable for those entities decide to publish such information.
which fall under the definition of large companies, public interest
companies, and state or municipal companies. The CEO and members of the management and supervisory bodies
are responsible for the preparation and publication of the company’s
A company is considered to be large if at least two of the following annual report and separate social responsibility report, in accord-
indicators are confirmed on the last day of the financial year: (1) ance with the procedure established by law. CEOs and members of
the value of assets indicated in the balance sheet exceeds EUR 20 the management and supervisory bodies who do not perform their
million; (2) the net sales revenue during the reporting financial year duties according to the competence assigned by law, or perform them
exceeds EUR 40 million; (3) the average annual number of employees improperly, must compensate the company and/or other persons for
during the reporting financial year exceeds 250 employees. all the damage caused.
A public interest company is defined as a company whose activities Under the Taxonomy Regulation, the European Commission had to
are important to the public, in terms of scale or nature, due to the come up with the actual list of environmentally sustainable activities
number of its customers. Public interest companies are those whose by defining technical screening criteria for each environmental objec-
securities are traded on the regulated market, commercial banks and tive through delegated acts. As long as those are not issued yet, many
the Central Credit Union, financial brokerage companies, collective large companies in Lithuania prepare their reports on non-financial
investment undertakings, pension funds, occupational pension funds, activity by following alternative soft law rules such as guidelines,
and management companies that manage at least one aforementioned recommendations, or standards – for instance, the GHG protocol, GRI
entity, as well as associations of participants of occupational pension standard, etc. Implying that, despite ambiguous guidance from regu-
funds, insurance companies, and reinsurance companies. State and lators, stakeholder pressure and competing goals within the business
municipal companies may qualify as public interest companies under itself put a huge amount of pressure on organizations in relation to
certain conditions established by the law. ESG compliance.

ESG AUGUST 2022
AUSTRIA: (STILL) A LONG WAY TO A

GREEN BOND STANDARD
By Christoph Moser, Partner, and Angelika Fischer, Attorney at Law, Schoenherr
The voluntary application of the EUGBS

should be considered one of the main
elements. Mandatory application of
the EUGBS, which was subject to
Even though the Austrian green intense discussions in late 2021 and
bond market has not been very early 2022, seems to be off the table.
active, issuers like Uniqa, Hypo Noe, However, labeling a bond as a “sus-
Verbund, and the Republic of Austria tainable bond”, “sustainability-linked
have taken the first steps toward the bond”, or “environmentally sustain-
new asset class. The main feature of such able” will most likely trigger additional
bonds is the intention and/or commitment disclosure requirements for issuers in the
to invest the proceeds of the issue in green projects. Most issuers future. Such changes are expected to be implemented into the EU
initially established stand-alone green bond frameworks based on vol- Prospectus Regulation framework, which also applies in Austria, thereby
untarily applied market standards. An Austrian green bond standard setting new standards in terms of ESG disclosure. As it stands, ESG
has not yet been developed. Frameworks used in Austria are usually disclosure in an Austrian issuer’s prospectus is often limited, even in
based on published guidelines, like the International Capital Market the case of sustainable or green bonds.
Association’s (ICMA) Green Bond Principles. Issuers do consider the
upcoming standards of the European Union, too – particularly, the EU member states are currently negotiating the main elements of the
EU Green Bond Standards (EUGBS) and the so-called EU Taxonomy. EUGBS. Austria supports the EU Sustainable Finance Strategy and the
EU Taxonomy Regulation and has published its commitment to ensur-
In a challenging market environment following the Russian invasion ing that they will not be diluted. Nevertheless, the Austrian Federal
of Ukraine, the development of a European green bond stand- Ministry for Climate Action, Environment, Energy, Mobility, Inno-
ard – also providing for clear guidance for Austrian issuers – could vation, and Technology has expressed its position that technologies
be slowed down. This important element of the EU’s intention to such as nuclear energy and fossil gas cannot be classified as green.
support the development of green bonds has marginally slipped out
of the focus of investors. On the one hand, green bonds have already Codifying a European standard for green bonds will be a relevant
become a relevant investment class and are playing an increasingly tool for increasing transparency in relation to a product class that
important role in financing assets needed for the low-carbon tran- has seen numerous individual configurations in recent years, and not
sition. On the other hand, recent negative trends in capital markets only in Austria. At present, investors cannot compare the different
have also affected the marketability of green instruments. As with types of instruments in a meaningful way, due to the diverse levels
other bonds, fewer green bond offerings were conducted. For now, of disclosure and presentation. Whether the EUGBS will in fact
the green trend has come to an unexpected halt, also given the focus be the green market standard in Austria is difficult to assess, as the
on securing energy supply irrespective of a green cause. However, the green finance market is still in its developmental phase. In the current
political developments will most likely boost the mid- and long-term political environment, the legislative proposals – which exclude
pace of the energy transition in Europe. Green bonds will play an the financing of gas and nuclear power generation – already seem
important part in financing such a transition. outdated given the current short-term sentiment and the pressure to
secure the European gas and power supply. Ultimately, it will be the
The current outlook is that the EUGBS will follow the same path as investors deciding on the success of the EU and, consequently, the
existing market standards, such as the ICMA’s Green Bond Principles. Austrian green bond story.
The Commission’s proposal for the EUGBS provides for voluntary
applicability. Issuers will decide whether to commit themselves to the
EUGBS to use the EU Green Bond designation. The EU Green Bond
designation will only be available if they comply with the designated
minimum standards. This includes aligning the allocation of net pro-
ceeds of EU Green Bonds to EU Taxonomy-compliant use cases and
providing a high level of transparency on the use of funds.

LATVIA: GREEN PUBLIC PROCUREMENT

By Liene Cakare, Partner, EY Law
Green Public Procurement (GPP) is a Firstly, it is necessary to ensure that the technical specifications relate to
process whereby public authorities seek the requirements of the work, supply, or service being purchased in-
to procure goods, services, and works stead of the general capacities or qualities of the operator, to prohibit
with a reduced environmental impact unjustified obstacles to competition. The procurement directives do
throughout their life cycle, to achieve not allow for insistence upon a production process that is only availa-
environmental policy goals relating to ble to one supplier – or to suppliers in one country or region.
climate change, sustainable consump-
tion, etc., ensuring that tenderers abide Secondly, it is necessary to ensure that a functional specification describes
with a minimum level of compliance the desired result and outputs expected. The tenderer is free to pro-
with environmental legislation. pose the most appropriate solution which meets the certain minimum
requirements identified.
The field of public procurement (PP) is one of the most important
sectors of the single market, as government expenditure is around Thirdly, it is necessary to ensure that predetermined award criteria
15% of the Latvian GDP and PP opens public markets and increases allow deciding which tender is the best – and must never confer
competition between private parties. As a result, PP is highly linked an unrestricted freedom of choice on contracting authorities – to
to competition law. provide an objective basis for distinguishing between tenders and be
specific to ensure effective competition.
GPP differs from ordinary procurement with a needs assessment,
resulting in reduced sizes of procurements and savings for the In 2020, Latvia registered a failure of tenderers to meet 45% of re-
budget, with a life-cycle cost analysis. That is why one fundamental quirements, which significantly reduces the competition and increases
principle of GPP is the creation of reasonable requirements to obtain the purchase price. Consequently, so that the introduction of exten-
not only a mandatory result but also an additional determined desired sive green requirements does not distort the competitiveness of the
result by choosing the most economically advantageous tender. market, it is useful to have knowledge of that market. But, in Latvia,
Therefore, there is an urgent need to create rational criteria of green wide-ranging market research has not been carried out.
requirements, based on specific circumstances and/or priorities of
The objective of competition law rules is to protect competition in
the institutions developing them, as the strict introduction of broad
the market and to assess anti-competitive effects and benefits made
green requirements beyond institutions’ possibilities can distort the
within this market. In the preparation phase, the Latvian government
competitiveness of the market.
needs to analyze the demand and conduct a preliminary market con-
EU legislation provides mandatory requirements for the procurement sultation to avoid restricting competition and have more tenderers in
of specific goods and services, hence the GPP action plans of EU the procedures to be conducted because of progressive greening.
member states also include changes reflecting the specific circum-
GPP, viewed from a competition point of view, is legitimate until
stances or priorities of the institutions developing them. Still, Latvia
the general principles of non-discrimination, proportionality of
has taken over only seven mandatory GPP standards, although the
requirements, equal treatment, and transparency have been violated.
EU proposes way more. As a result, the use of GPP in the country is
Consequently, to achieve a successful GPP, the Latvian government
very low – in only 15% of instances.
must ensure equal access to the tender by operators from all EU
The reasons why procurement specialists in Latvia rarely include en- countries and from countries with equivalent rights; tender opportu-
vironmentally friendly criteria in PPs are their lack of knowledge and nities must ensure competition; and the procurement decision-mak-
experience to establish specific requirements and identify problems. ing process must be transparent. At the same time, the government
Besides, in Latvia, the culture is dominated by a conservative predis- must speak publicly about the positive contribution of GPP, promote
position and there is low awareness of the benefits of environmen- a new culture of work that would encourage innovative thinking, and
tally friendly products and services. As a result, the government must organize wide-ranging market research to establish appropriate and
work carefully and gradually on the implementation of criteria for action proportionate requirements for tenderers prior to the GPP – so that
plans drawn up for a particular product, as it may distort equivalent the introduction of green criteria would happen gradually and would
competition of companies in GPP. Therefore, there is a need for not distort a market that is not yet ready for the introduction of
safeguards. extensive green requirements.

ESG AUGUST 2022
BULGARIA: ESG? WHAT IS THAT?

By Svetlin Adrianov, Partner and EY Law Leader for Bulgaria, Albania, and North Macedonia
Obviously, the introduction of the rules of the forthcoming Corporate

Sustainability Reporting Directive (CSRD) will significantly enlarge the
cohort of affected entities by putting in scope all large companies
and listed companies (except for listed micro-enterprises), while also
This seems like a relevant question pushing for mandatory audits, and the business world is generally
in Bulgaria in the summer of 2022. aware of that. However, this is still perceived as yet another compli-
While the chatter has been intensi- ance requirement in an ever-growing line of such that businesses will
fying lately, it has been mostly taking have to endure. What escapes the attention of the average Bulgarian
place in specialized business-oriented entrepreneur are the implications of such reporting and disclosures
media and, by far, not as much in any beyond the immediate cost and administrative burden of compliance.
mainstream source of information for the
general public. For once, the disclosures may have an impact on the financing
opportunities of the companies. Some banks are already signaling
Indeed, the concept of non-financial reporting is not completely that their financing decisions going forward would be strongly based
foreign to Bulgarian business. Listed companies have been required on sustainability considerations. The EU policies are geared towards
by the Public Offering of Securities Act (POSA) to report on compliance sustainable finance as a means of promoting and supporting the
with internationally recognized good corporate governance stand- achievement of the goals of the Green Deal and EU climate and
ards ever since 2007. This obligation transformed, in 2016, into an sustainability objectives, meaning that, through enforcement of the
obligation to publish a statement of corporate governance, which is policy, the ESG criteria would be having a decisive role in private
essentially a declaration of conformity by the issuer with a chosen financing decisions too.
publicly available Code of Corporate Governance, or otherwise, an expla-
nation for the failure to apply one and the reasons for that. As of the While the CSRD will only affect a few large businesses, it will indi-
same year, the Accountancy Act (AA) extended by reference to POSA rectly affect their smaller suppliers, service providers, and all kinds of
this obligation to certain Public Interest Entities (PIEs), including business partners, the interactions with whom might have an impact
undertakings whose transferable securities were admitted to trading on the disclosures of the reporting companies.
on a regulated market in any EU member state, credit institutions,
insurers, and re-insurers. Finally, because of the Green Deal and climate-related considerations
used most often when talking about sustainability, the general per-
As of 2017, in line with the Non-Financial Reporting Directive (NFRD), ception is that ESG is mostly environment-related, green compliance.
all PIEs which are also large undertakings pursuant to the AA and This could lead to underestimating the other two pillars and especially
whose number of employees exceeds 500 have also been required to social considerations, which could present no smaller of a challenge,
include in their activity reports a non-financial statement, including especially in an economy that has been facing a lot of challenges for
the information necessary to understand the development, results, years.
condition of the enterprise, and the impact of its activities, as a min-
imum relating to environmental and social and employee issues, re- With all the above, it is time for Bulgarian businesses to raise their
spect for human rights, and the fight against corruption and bribery. awareness and to address ESG as the complex matter that it is, rather
than as the next level of compliance. It would also help a lot if the
While it may seem like quite a large circle of mandated entities government invested some time and effort in communicating all the
because the definition list of PIEs includes – besides the above-men- relevant aspects and helping businesses find their way through the
tioned EU-listed companies, credit institutions, and insurance com- variety of mostly vague and inconsequential messages from various
panies – pension insurance companies, investment intermediaries, experts and consultants in the online space.
collective investment schemes, financial institutions qualifying as large
undertakings pursuant to AA, energy trading companies qualifying as
large undertakings, etc., the threshold of 500 employees along with
the PIE scope limits the mandated companies to a very small number
indeed and, therefore, renders the direct exposure of businesses to
non-financial reporting practically insignificant.

SLOVENIA: A SHORT HITCHHIKER’S GUIDE THROUGH

THE ESG GALAXY
By Ales Lunder, Partner, Senica
family-owned) and management support ESG and are prepared to

invest in it and small companies are seriously engaging with ESG,
while mid-sized companies and a lot of state-owned or controlled
companies have not yet started to do so.
ESG is undoubtedly one of the hot-
test topics not only in the compliance We also increasingly see the use of ESG-related clauses in share pur-
community but also in the legal one. chase and facility agreements, mainly driven by foreign investors and
lenders, as well as, to a limited extent, in some public procurement
Last month, I participated in a round
procedures, where the tendering body is far from fully exploiting the
table organized by the European In-
ESG potential at its disposal.
stitute of Compliance and Ethics on the
future and challenges of sustainable business, While there are some positive developments and efforts in the private
exclusively attended by compliance and business ethics profession- sector, the Slovenian legislator is not exactly excelling in implement-
als from Slovenia. The initial main topic was the proposed Directive ing and actively supporting the further development of ESG.
on Corporate Sustainability Due Diligence and how to prepare for it,
however, the discussion soon moved to more current ESG-related Traditionally, the Slovenian legislator is not the fastest in imple-
topics, due to the early stage of the directive legislative process and menting directives – which again proves to be true in relation to the
its expected date of implementation at the earliest in 2026. Whistleblower Directive. To date, the directive has not been implement-
ed and whistleblowers in Slovenia are protected by more than eight
According to one of the lecturers, currently both the Regulation on the specific uncoordinated sectoral statutes, which limit the definition of
establishment of a framework to facilitate sustainable investments (the Taxon- irregularities to certain areas and only cover certain types of persons.
omy Regulation) and the Sustainable Finance Disclosure Regulation (SFDR) It should be further noted that there are no penalties or other conse-
are causing significant problems in practice in Slovenia, as both are, quences for employers who fail to implement the reporting structure
to some extent, still works-in-progress with quite a few open ques- under current legislation.
tions, whereas, from a practical point of view, the main problems are
the technical standards of both regulations and the determination of Likewise, the legislator concentrated, in its recent overhaul of the
key performance indicators for the Taxonomy Regulation. Construction Act, rather on procedural changes and did not use the
opportunity to implement any significant changes in relation to the
One of the lecturers at the round table coined the phrase “green sustainable use of natural resources. While on the one hand this goal
regulatory reporting tsunami,” as, apart from the above-mentioned was programmatically written into the law, nothing has been done on
regulations and directives, in April 2021, the EU Commission has the ordinance level to enable that goal to be achieved.
adopted additional relevant regulations, where the practical imple-
mentation is a moving target. Further, we observe advertising campaigns that are already very rem-
iniscent of greenwashing, in terms of their content. So far, we are
From a Slovenian bank compliance manager’s point of view, the missing greenwashing court cases in Slovenia, like the Alcantara case
whole situation is reminiscent of a Hitchhiker’s Guide through the in neighboring Italy, the Dutch KLM case, or the very recent Rawson v.
ESG galaxy. Aldi case in the US, and, unfortunately, we do not expect that we will
get any in near future.
Fortunately, we also spoke about positive developments, almost
all based on voluntary actions and commitments. As laudable as In conclusion, there are many problems and challenges associated
voluntary commitments are, they are not risk-free. Companies with an active ESG environment and policy but, while the road to get
should be very careful when formulating targets and commitments there might be long, there certainly is a drive in the right direction.
toward climate actions (specifically net-zero strategies and climate
pledges) through advertisements, internal policies, or otherwise. At
a minimum, they should review, on a regular basis, what steps have
been taken to achieve those goals. Our observation in Slovenia is
that large multinational companies where the shareholders (mainly

ESG AUGUST 2022
CROATIA: THE S IN ESG IN CONTEXT OF THE TECH

TALENT WAR
By Mojmir Ostermann, Managing Partner, and Marta Jelakovic, Senior Associate, Ostermann
It should come as no surprise that positive

social impact equates to higher job sat-
In the past decade, the tech industry isfaction, enhancing the chances of an
in Croatia has been growing at four employer attracting and retaining key
times the rate of the entire Croatian talent. This requires strong and ef-
economy, according to research by fective policies around work-life bal-
the Croatian Chamber of Economy. ance, as well as family-care policies,
Despite all the obvious positivity of which is one of the most important
its high growth, the Croatian tech scene job elements for over 20% of Croatian
has been facing a challenge of its own: developers, according to above research.
talent gaps.
Almost half of developers value health benefits and a flexible sched-
Due to rising demand for talent, individuals with specialized technol- ule as the most important job factors, as reported by Croatia-based
ogy skillsets have become more selective when it comes to choosing online recruiting software company TalentLyft. This is a clear sign
employers. Given that employees can perform their jobs from any- that Croatian tech companies aiming to develop knowledgeable and
where in the world, Croatian tech employers face not only local but reliable teams should acknowledge these values and incorporate
also global competition. Despite having a strong tech start-up scene them in their business policies. Furthermore, recognizing the need
and two unicorns, Croatia has not started producing enough highly for privacy can also enhance corporate reputation and boost the
educated tech experts, and retaining the existing ones is becoming ESG rating. Corporations are socially and legally obligated to protect
ever more difficult. Croatia is one of the three EU member states the personal information of their employees, whereas increasingly
that recently reported a decrease in the number of ICT experts. And frequent data breaches have a substantial negative impact on a com-
this certainly enhances the risk of investments moving to other coun- pany’s reputation.
tries that do not have such a shortage. As even the most profitable
Croatian tech employers often cannot compete with the financial The costs of attracting talent are significantly lower for employers
benefits offered to employees in other jurisdictions, it might be time with a strong brand image, as they attract targeted candidates more
to focus on the non-material aspects. easily and quickly. Companies with a poor brand image have been
known to pay their employees up to 20-30% more than their compet-
To be clear, ping-pong tables and Mimosa Fridays are no longer itors, as candidates don’t perceive them as desirable employers. This
enough to attract the best talent. A large part of the tech talent trend seems to be here to stay, as the post-pandemic priorities of em-
pool are Gen Z and care about nothing less than solving the world’s ployees are now set on social corporate responsibility and sustainable
problems. A recent survey from Deloitte showed that this generation business, more than ever before.
is extremely concerned about sustainability issues, with as many as
28% of respondents claiming that saving the environment is their top According to some estimates, the IT industry might soon account
concern. for a larger share of Croatia’s GDP than tourism. However, talent
attraction and retention issues present a burden to this highly profita-
Besides the obvious goal to go green, companies should now also ble sector of the Croatian economy. Considering the upcoming IPO
strive to achieve social sustainability. The next generation of technol- of the first Croatian unicorn, Infobip, the rise of the first electric
ogy workers will consider an employer’s social impact before coming hypercar unicorn, Rimac, and the many rising start-ups in Croatia,
on board and are more likely to work for employers that align with the demand is likely to keep increasing. A sustainable approach and
their social values. a healthy work environment can help employers stand out, create
superior teams, and focus on their core business.
According to Croatian software company Leapbit’s recent report
What do Developers Want, around 30% of software developers in The next generation has already made it clear they want to work for
Croatia have quit their jobs due to poor corporate culture and bad organizations which contribute to the community. This is a chance
interpersonal relations. The same share of respondents found these for corporations to score some “S” points by showing they are going
factors to be among the top five reasons for choosing a new employ- beyond the minimum legal requirements and creating a business that
er. puts people first.

ESTONIA: ESG – A JOURNEY FROM A NICE-TO-HAVE

TO A MUST-HAVE
By Mervet Kagu, Head of ESG, and Siim Vahtrus, Senior Associate, Cobalt
ESG has moved from conference halls to SFDR in Estonia is sporadic and confu-
a daily function for many companies sion abounds, this should improve as
worldwide. In Estonia, stakeholder ex- the FSA is currently boosting its ESG
pectations for corporate ESG are still capabilities to monitor compliance.
evolving, yet rising. Some companies Furthermore, the EU introduced
are already incorporating ESG into six delegated acts that add ESG-re-
their daily business, as they under- lated responsibilities to MiFID II,
stand its value. Along with stakeholder AIFMD, UCITS, Solvency II, and IDD.
expectations, regulatory scrutiny is also The ECB, EBA, and EBRD have also
increasing, showing a dramatic increase in introduced ESG requirements that mostly
ESG reporting requirements worldwide. credit institutions need to comply with.
The EU has taken a leading role in driving the UN Sustainable Devel- Taxonomy Regulation: The Taxonomy Regulation (TR) establishes
opment Goals (SDGs) throughout its member states. The SDGs are a classification system, which provides companies with a common
reflected in the Estonia 2035 development plan, designed to power language to identify whether a given economic activity should be con-
the sustainable development agenda in Estonia. Many NGOs, think sidered environmentally sustainable or not. While the TR is primarily
tanks, and universities are helping to incorporate ESG in everyday a classification tool, it also requires NFRD/CSRD and SFDR-scoped
public and private sector activities, with organizations such as the entities to disclose information concerning the degree of alignment
Responsible Business Forum Estonia sharing practical know-how. of their activities with the TR. For transparency and uniformity, the
EU issued the TR together with delegated acts, detailing technical
From NFRD to CSRD: In Estonia, the Non-Financial Reporting
criteria for companies to classify their activities. Criteria for climate
Directive (NFRD) was transposed into law by the Accounting Act, which
change adaptation and mitigation have been published, with criteria
applies to public-interest entities with over 500 employees. Currently,
regarding water, the circular economy, pollution prevention, and bi-
only a handful of companies in Estonia fall within the scope of the
odiversity to follow. The TR uses EU-wide rules as a benchmark for
NFRD. However, the proposed Corporate Sustainability Reporting Di-
classification, to ensure common language and substantive criteria.
rective (CSRD) will bring significant changes, by extending the scope
However, some localization is necessary as many of these rules are
of the NFRD to large and regulated market-listed companies (except
issued as EU directives requiring national transposition, and some
micro). According to the impact assessment, the CSRD will affect
technical criteria allow equivalent national rules as a benchmark.
around 260 undertakings in Estonia. The CSRD requires audits and
TR-scoped companies will need to examine their activities, including
sets more detailed reporting requirements, including digital tagging,
materials used and supply chains. Some cases require additional and
whereby information is machine-readable and feeds into a single Eu-
more detailed data to categorize activities as sustainable. Striking a
ropean access point, as envisaged in the capital markets union action
balance between data sufficiency and avoiding over-administration is
plan. Considering that 99.8% of firms in Estonia are SMEs, Estonia
a challenge for many companies.
proposed to the EU that the CSRD should only apply to large
companies that meet all three threshold criteria in the directive, to not Key Takeaways: ESG is here to stay – through regulatory and
overburden SMEs, and that listed SMEs should report voluntarily. stakeholder scrutiny. Currently, financial market participants, large
The CSRD is expected to enter into force in 2024 for companies al- companies, and public interest entities are in the limelight – but the
ready subject to the NFRD, in 2025 for large companies not presently scope is widening – while compliance monitoring capabilities are also
subject to the NFRD, and in 2026 for listed SMEs. Sanctions for improving. However, a noticeable lack of awareness, leadership, re-
non-compliance will depend on the member state, however, Estonia sources, and know-how prevails. ESG is often delegated to PR/com-
is unlikely to impose strict fines. munications, legal, or compliance teams without properly focusing on
the need to implement ESG throughout the whole company, while
Regulatory Tsunami in the Financial Sector: The Sustainable
not abandoning responsibilities towards supply chain(s), as required
Finance Disclosure Regulation (SFDR) lays down sustainability disclosure
by the proposed Directive on Corporate Sustainability Due Diligence. As the
obligations for certain financial advisors and market participants who
topic is novel, learning from peers, consulting relevant ESG profes-
provide certain financial services and products. The aim is to reduce
sionals, plus hiring competence from abroad could help Estonian
greenwashing and increase the comparability of investment products.
The Estonian Financial Supervision and Resolution Authority (FSA) companies to catch up.
will supervise SFDR compliance. Although compliance with the

ESG AUGUST 2022
CZECH REPUBLIC: ESG FROM A CZECH POINT OF VIEW

By Marek Prochazka, Partner and Head of ESG, and Jaroslav Seborsky, Associate, PRK Partners
ESG is often misunderstood. We try to

explain to our clients that it is not just
a new piece of legislation. Companies
do not understand that, in many
ways, they already comply with ESG
Over the past few years, the phe- requirements. Industry is the back-
nomenon of ESG has grown in bone of the Czech economy. Many
importance at a breathtaking speed. industrial producers have focused on
Originally an instrument in the financial the eastern markets for their exports.
markets allowing investors to better as- These markets have now collapsed due to
sess the risks in their investments, ESG has the war in Ukraine and the growing skepticism
further evolved into a major legislative effort of the towards China. These companies need to export to more developed
European Union. In countries with significant financial markets, ESG countries, which in turn requires a product that is ESG-compatible.
has become the market standard in recent years. In Central Europe, Without ESG compatibility in production and a high quality of their
where financial markets are less developed and where less emphasis products, traditional Czech companies may face difficulties in their
is placed on sustainability by society and politics, the focus has lied business undertakings. Such changes are beneficial and offer new
elsewhere. In any case, this appears to be changing. Nowadays, we opportunities. And this is particularly true for Czech companies.
observe a substantially increased interest in ESG matters, be it from
our clients, the public, newspapers, or social networks. ESG is the new
thing everybody focuses on. Another argument often used in the Czech Republic is that ESG
is just another expense to the company. This is simply not correct.
Currently, we have seen several studies showing that ESG-compliant
Why has Central Europe been lagging behind? There seems to be no companies generate more profit, are healthier in the long term, and
simple answer to this complex question. In the case of the former investors are keener on providing them with their funds and support.
Eastern Bloc countries with centrally planned economies and state- The European Commission also made it very clear that it would
owned means of production, the adaptation to the so-called “capital- provide generous funds to support its carbon-neutral policies and
ist” economy was certainly a challenge, as privatizations were often industrial reform.
executed inefficiently. This single challenge may have put Central Eu-
ropean countries behind in all of the ESG categories, perhaps with
the exception of social matters – which may be the legacy of socialist To conclude, our current experience proves that ESG has arrived in
labor codes. Other factors that may have delayed ESG development the Czech Republic. The business judgment rule requires decision
include the reliance on heavy industry, fossil fuels dependency, and makers in the companies to base their decisions on all information
inability to conduct reforms. These issues, however, appear to finally available and to always decide and act for the benefit of the com-
have been overcome. pany. Decisions that do not take ESG into account do not comply
with the business judgment rule. ESG is part of the duty of care of
a manager towards their company. ESG is already implemented in
As to the development of ESG in the Czech Republic, there is a several pieces of legislation (e.g., the Accounting Act, the Act on Public
significant increase in the number of companies and businesses Procurement). ESG is here to stay – and we are ready for it.
focusing on the environment. The media coverage of ESG has also
increased. Only in July 2022, dozens of ESG seminars and confer-
ences took place. These conferences help explain to Czech business-
men that ESG is not just another piece of legislation. Czech people
are generally very skeptical when it comes to change. EU legislation
is often understood as a complication to businesses. In our practice,
we often hear clients complain that legislation is too complicated and
wonder who will benefit from it or how it is going to help them. This
last question is the most important one in our view. In the case of
ESG, the answer is: “ESG may save your business.”

POLAND: ESG REPORTING AND

SUSTAINABLE INVESTMENT
By Ewa Rutkowska-Subocz, Partner and Europe Head of Public Law & Regulatory, Dentons
tal objectives, according to science-based criteria. Once published, the

sustainability reports are made available to the public and to financial
Although the term ESG (Environmen- market participants (including financial advisors, insurers, investment
tal, Social, and Governance) has been funds, etc.). From the perspective of investors, EUT-aligned activities
around for years, its full application constitute sustainable investments that contribute to environmental
is still quite daunting. Companies or social objectives while doing no significant harm.
face the challenge of integrating ESG
values into their strategy, operations, To measure this positive contribution (or lack of harm), companies
and decision-making processes in order disclose key resource efficiency indicators on factors such as the use
to respond to the increasingly influential of renewable energy and raw materials, greenhouse gas emissions,
voice of stakeholders: citizens, consumers, and labor relations – to name just a few. Obviously, data varies de-
NGOs, governments, and investors. pending on the sector in which the company operates – for example,
while chemical manufacturers may provide data on land and water
ESG is not a pret-a-porter solution that can be applied uniformly to contamination or industrial accidents, such data is not relevant to
any company. It must be a tailored risk-management strategy that gaming companies. If a financial product includes shares in sustaina-
considers the global outlook, industry sector, and company specifics. ble investments, the issuing financial institution should provide taxon-
Country matters, too: the war in Ukraine and around 1.2 million omy key performance indicators of the investee companies in its own
Ukrainian refugees are on the top of Polish minds, with the energy disclosures. Moreover, market participants must inform how their
transition and women’s rights galloping behind. investments may impact the environment and society by considering
the principal adverse impact of sustainability risks in their due dili-
The common element of any ESG program is a non-financial report,
gence process. In other words, they must report on what percentage
which outlines the company’s long-term sustainability goals as well
of their investment portfolio aligns with the EUT.
as achievements to date. Investors have a great interest in the public
disclosure of ESG data, which they analyze when making financial This chain is being gradually implemented in Poland, but the legisla-
investment decisions. The impact ESG rankings and reports have on tion is in no way harmonized and coherent. Progress is slow, as the
investors’ perception of company value and investment potential is government is rather reluctant to introduce any ESG-aligned legal
rapidly increasing. In Poland, almost 90% of investors have reported changes, even with the business community rambling on sustainabil-
that ESG factors are becoming increasingly significant in their deci- ity. Optimism sparked in 2019, with the introduction of the WIG-
sion-making process. ESG stock market index of the 40 largest companies on the Warsaw
Stock Exchange, weighed against the reports prepared by Sustain-
While transparency is at the core of the ESG concept, there are yet
alytics. Today, roughly 300 listed companies are required to publish
no universal standards of sustainable reporting. This makes it diffi-
non-financial data under the NFRD and, with the introduction of
cult to create reliable ratings and comparisons, which investors need
the SFRD, this number will increase tenfold. There are, however, no
to assess the sustainability of their investment.
unified reporting criteria: the Warsaw Stock Exchange has issued an
The European Commission is taking steps to remedy the situation. It ESG-reporting guideline just in May 2021, in which adherence to
has set out the ambitious EU Sustainable Finance Strategy, composed of standards made by the Global Reporting Initiative or Value Reporting
the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy Foundation was advised. Still, the sustainability reports of the biggest
Regulation (EUT), and the proposed Corporate Sustainability Reporting Polish players vary in their approach – some are diligent, while others
Directive (CSRD), which shall replace the Non-Financial Reporting barely touch on the topic. Most place greater focus on ESG challeng-
Directive (NFRD). es in day-to-day management than on reporting.
A chain is created: the NFRD (to be replaced by CSRD) compels Poland is at a turning point, in which a better balance between profit
large companies and listed companies to disclose (in sustainability and socio-ecological goals must be stricken. Companies must shift
reports) the current and future percentage of their revenues derived towards more EUT-aligned activities and implement ESG strategies
from activities aligned with the EUT. The EUT is a classification sys- to stay attractive to Polish investors, staying ahead of the govern-
tem of activities that make a significant contribution to environmen- ment’s actions.

ESG AUGUST 2022
SLOVAKIA: ESG TRANSFORMING THE MARKET

By Sona Hankova, Partner, CMS
The laws under preparation will introduce mandatory corporate

sustainability due diligence requirements, such as the obligation to
The Slovak market is undergoing integrate due diligence into policies, update it annually, and publicly
an ESG transformation. As in most communicate on due diligence. The planned concept of direct Direc-
CEE countries, ESG is not yet reg- tor’s liability will put strong pressure on organizations. Therefore, many
ulated by a specific law in the Slovak companies in Slovakia are already considering how they would be
Republic. Nevertheless, the trend able to comply with the new requirements, if implemented. Many of
toward considering ESG issues has ap- them have discovered that they do have data available – but not in a
preciably increased in the last two years. comprehensive digital format and their collection might be time-con-
suming and complicated. Therefore, companies are currently putting
even more emphasis on implementing adequate systems to collect
ESG is the new GDPR. ESG requirements force data, digitalization, and automatization of processes.
Slovak companies to rethink their strategies, internal processes, and
manner of reporting and collecting data, just like it was a few years
ago when the topic of the GDPR popped up. When we, as lawyers, Companies for which ESG has not been at the forefront of cor-
spoke with our clients about the GDPR for the first time, it was a porate thinking so far are surprised as to how complex the ESG
major unknown for them and introduced many new obligations on agenda is and how many activities fall within the ESG umbrella.
their day-to-day agenda. Today, the GDPR is their common agenda There are practical questions to be answered: Should implementing
and history is circling back wearing ESG clothes. ESG require organizational changes in the company? Should it be
the role of compliance departments, financial departments, HR
departments, or lawyers? There are more ways to approach the issue.
It is now time to raise awareness of ESG-related topics in Slovakia. According to recent commercial surveys, there already are companies
The business community is creating various platforms to network, that have created a special ESG position, which is solely dedicated to
share know-how, and learn from each other on matters of ESG the area of sustainability and ESG projects. So far, more than half
disclosures and reporting regulations. The financial sector is playing of the companies only have a cumulative ESG manager function or
an important role in these endeavors, as businesses must take into do not have a special position. To avoid reputational damage, many
account sustainability if they want to obtain external financing from companies at least created ESG task forces focusing on developing
banks. a corporate ESG due diligence checklist and procedures on how to
report on sustainability claims and prevent greenwashing.
Those who are still hesitant toward ESG might be caught unprepared
by the planned new EU laws. The European Commission launched During the last few years, an increasing number of Slovak compa-
its proposals for a Corporate Sustainability Reporting Directive as well nies have changed their strategies to outperform competitors and to
as a Corporate Sustainability Due Diligence Directive. After the comple- show that the topic of sustainability is the crucial driver at the heart
tion of the legislative process, new sustainability obligations will of their business. The popularity of ESG is further enhanced by the
affect not only large companies but also their suppliers – small and generational shift of wealth to millennials, who are much more con-
medium-sized companies. As a part of value chains, smaller market cerned about climate change and social issues. They are increasing the
players will also have to comply, as much as possible, with the defined pressure on the business community to reflect their values.
sustainability standards. Otherwise, they may not be able to exploit all
business opportunities in the future.
However, there is still a high demand for educating the business
community about all the benefits of ESG implementation as a tool
The directives will impose many new reporting obligations, wherein for increasing financial returns, protecting investments, and as a part
compliance with them will require an extensive collection of data, of a broader approach to risk management.
monitoring, and change of the internal processes. It is expected that,
under the new rules, by 2024, approximately 50,000 companies in Eu-
rope will have to file non-financial reports, in line with the mandatory
EU Sustainability Reporting Standards. Some of the obligations will also
apply to non-EU companies.

ROMANIA: A BIRD’S EYE VIEW ON ESG – IS THE REAL

ESTATE SECTOR ESG-READY?
By Dan Borbely, Partner, and Raluca Chelaru, Managing Associate, Tuca Zbarcea & Asociatii
the core conventions of the International

Labor Organization, working condi-
Sustainability is no longer the respon- tions, respect for workers’ rights to
sibility of legal, public affairs, and be informed and consulted, health
corporate governance departments, and safety at work, actions taken to
but has become a top management ensure the protection and devel-
priority and a central element of opment of the communities. The
business strategy. One hundred years non-financial statement may also
ago, Henry Ford said that the two most include information on the prevention
important assets of society – reputation of human rights abuses, instruments for
and people – do not appear on the balance combating corruption and bribery, the fight
sheet of a company. Today, ESG standards come to measure precise- against food waste, and the fight against discrimination.
ly these two intangible assets.
In addition, a national level novelty is the project of the Romanian
Since 2017, at a European level and later at a national level, ESG-re- Sustainability Code, to be adopted in the near future. This is one of
lated legislation has been adopted, such as the regulation on taxon- the objectives of the project Sustainable Romania – Development of the
omy, or the regulation for financial market players on the disclosure strategic and institutional framework for the implementation of the National
of information on sustainable financing. Moreover, the European Strategy for Sustainable Development of Romania 2030. The reporting
Commission adopted a proposal for a Corporate Sustainability Reporting will be conducted through an interactive platform, and all forms of
Directive (CSRD), which would amend the existing reporting require- organization, which are not subject to the reporting obligation, will
ments of the NFRD Directive 2014/95/EU. The projected CSRD be able to apply the Sustainability Code, voluntarily.
brings two extremely important elements of novelty: the expansion
of companies required to submit a non-financial statement and the Moreover, the Bucharest Stock Exchange has recently published its
audit on ESG criteria. first ESG reporting guidelines for listed companies, developed with
the technical assistance of the European Bank for Reconstruction
ESG Framework in Romania and Development.
The ESG landscape is rapidly evolving. Fortunately, the Romanian ESG in the Romanian Real Estate Sector
business environment has also begun to consider ESG issues more
and more, realizing that they can play a major role in the long-term Construction, urban planning, public contracts, and real estate
success of the organization. According to a survey conducted by investments fall under the scope of ESG requirements. More and
PwC Romania, only 30% of respondent companies said they have more investors and public authorities are aware of the sustainability
implemented ESG sustainability standards, and two-thirds (63%) said requirements in real estate but, without a clear legislative framework,
they are not that familiar with them. Asked if the organizations they the implementation of the ultimate goals of ESG is rather unpre-
work for will include standards related to fiscal policies in the ESG dictable. Environment-related matters are more clearly determined
strategy, 26% of respondents answered in the affirmative, 5% said (e.g., requests in the process of authorizing construction works, for
no, and 68% said that this is not the case / they do not have or are example within the urban planning certificates). Moreover, Romanian
not aware of the implementation of such of strategies. public authorities request declarations – prior to an investor being
granted a public contract – of the observance of environmental,
Some of the requirements imposed by the European Union have social, health, and employment norms.
already been implemented at the national level by the recent amend-
ments brought to Order 1802/2014. The non-financial statement Only multidisciplinary teams will have the ability to depict full real
must contain, according to this legislative act, details of the current estate and corporate strategies since ESG is broadening its scope
and foreseeable impact on the environment, health and safety, use to cover all sectors – from energy, finance, and urbanism to tax.
of renewable and non-renewable energy, greenhouse gas emissions, Both multinationals and start-ups demonstrate an increased appetite
water use, and air pollution. With regard to social and personnel for better-quality non-financial disclosures and a clearer regulatory
issues – actions taken to ensure gender equality, implementation of landscape.

ESG AUGUST 2022

HUNGARY: ESG IN THE SUPPLY CHAIN –

WHY DOES IT MATTER?
By Veronika Kovacs, Senior Counsel and Head of CEE Public Procurement, CMS
ian company from the indirect losses of the company group. Dealing
with supply chain risks in advance can help minimize environmental
and social impacts while protecting the company’s brand. All the
companies in the examples above have since introduced robust sup-
The importance of ESG in business ply chain sustainability programs, which are now mandatory for all of
has become clearer as the moral and their suppliers.
ecological reasons are now obvious
to everyone. In theory, all companies Further pressure on ESG considerations comes from regulators and
support the idea of doing business in a other stakeholders. ESG issues are at the center of both business
more sustainable and climate-friendly way. and political agendas globally. Investors, business partners, the media,
However, in practice, companies usually only and consumers urge companies to conduct their businesses in a way
do something when they have to. In Hungary, there isn’t any binding that cares more about ESG issues. The above examples also show
ESG supply chain act in place yet, which could wrongly lead to the that these goals cannot be achieved if we look at the company as a
conclusion that the topic is unimportant. Yet considerations about standalone entity. Hungarian companies – wherever they stand in
ESG in the supply chain are no longer nice-to-have but have become the supply chain – must look closely at their value chains to foster
a must-have globally, and Hungary is no exception. There are various sustainable and responsible corporate behavior, by monitoring their
locally relevant reasons for which companies must start prioritizing every aspect and taking appropriate actions to meet ESG require-
the management of ESG risks in their supply chain. ments.
As an example, failing to meet ESG criteria at the manufacturing site Nevertheless, the legal framework for global supply chains continues
by using unacceptable working conditions puts the whole company to evolve. Soft law regulations are now being converted into hard law
at high exposure for reputational and other risks. This is relevant to provisions. An example is the German Supply Chain Act, whose effects
all suppliers in the chain, particularly given that, according to recent may extend to businesses headquartered outside Germany, such as to
studies, approximately two-thirds of the average company’s ESG their Hungarian affiliates. At the EU level, the Proposal for the Corpo-
footprint is generated by its suppliers. For a number of international rate Sustainability Reporting Directive would introduce detailed reporting
companies, Hungary is the seat of either their direct or indirect sup- requirements, confirming the crucial role of value chains in measur-
plier, whilst for several investors also the seat of their own producing a company’s carbon emissions and its complete environmental
tion facility. Hungarian companies cover each part of the ESG puzzle and product footprint. The Proposal for the Corporate Sustainability
and neither of these entities can afford to exclude the wider ESG Due Diligence Directive would impose a due diligence obligation on
picture any longer. companies to identify actual and potential adverse impacts on human
rights and the environment, including regarding the company’s value
There have been a few examples recently that highlight the impor- chain operations carried out by their established business relation-
tance of ESG across all elements of the supply chain. A scandal ships.
related to the horrible working conditions at a luxury brand owner’s
facility in India surfaced, and the company suffered serious damage The reporting and DD obligations will be burdensome for Hungarian
to its brand, although the company itself did not breach any laws. companies as well, and it is advisable to start preparations with plenty
Similarly, a tech giant attracted close scrutiny when many suicides of time to spare. The implementation of extended risk analysis tools,
were recorded at one of its Chinese factories. Subsequent investiga- preventive measures, and remedies against human rights and environ-
tions uncovered mandatory overtime, overcrowding, etc. The after- mental violations in the supply chain is not only recommended, to
math of the findings wiped almost USD 30 billion off the company’s prepare for upcoming laws, but is also required for the non-regulato-
value in a single day. ry related reasons mentioned above.
All these cases highlight that not managing ESG risks throughout the
supply chain can cause major financial and reputational losses, even
if the company itself does not breach any laws. In case of a similar
scandal, not breaching any Hungarian law wouldn’t save the Hungar-

ESG AUGUST 2022
TURKEY: RECENT DEVELOPMENTS AND

A COMPARISON ON ESG
By Nigar Gokmen, Head of Energy, Mining, and Infrastructure,
and Tugay Hanegelioglu, Associate, Esin Attorney Partnership
such as Turkey are still at an early stage.

One of the main reasons for this is
that, while sustainability reporting
is compulsory in many countries, it
Sustainability has been defined by the
is not mandatory in developing coun-
United Nations as “meeting the needs
tries yet.
of the present without compromis-
ing the ability of future generations Having said that, ESG has started to
to meet their own needs” and, in a play a more important role in Turkey
corporate context, it refers to a compa- since October 1, 2020, as the Capital
ny’s overall approach to managing a wide Markets Board (CMB) amended the Corporate
range of environmental, social, and governance Governance Communique to ensure that public compa-
risks and issues. Sustainability and ESG are increasingly becoming nies adopt the idea of sustainability and report their sustainability
part of companies’ board agenda, understood by companies through performance. With this regulation, the CMB also provided the Sus-
a regulatory, compliance, and risk management lens, and seen as tainability Principles Compliance Framework, which introduces the ESG
inextricably linked with a green light to operate. Companies engage principles. However, those principles are not compulsory for listed
in ESG not only to “do good,” but also due to a growing recognition companies. They are, however, required to report the justification
that taking a robust approach to managing these issues can mitigate for their non-compliance with the principles and the effects thereof.
risk and provide benefits such as enhanced consumer trust and loy- Even if the principles are operated on a comply-or-explain basis, for
alty, ability to attract talent, ability to meet stakeholder expectations the time being, this development is an important step for sustainabil-
and improve the company’s resilience, and profitability over the long ity studies for Turkey and it certainly attracts investors who take ESG
term. principles into account when selecting their investments. Further-
more, ESG principles are also one of the key consideration points in
Investing based on ESG principles is becoming very popular since
the country’s Eleventh Development Plan (for the years 2019-2023).
they help investors prevent losses by eliminating companies that
engage in risky or unethical practices that would likely cause investors In Turkey, it has been observed that many companies with foreign
to be held accountable. The criteria are also becoming crucial in the investments have certain business code of conduct practices in which
modern world as the negative effects of climate change, the necessity ESG criteria are sought in their business with their stakeholders.
of managing environmental risks, and the increasing importance These codes of conduct are typically aligned with the SDGs and seek
attached to human rights and ethical values are the most important to provide guidance to local companies and third-party suppliers.
issues lately. Companies in Turkey increasingly view diversity and inclusion as
a business imperative that fosters innovation and competitiveness
In this respect, the 2030 Agenda for Sustainable Development, adopted
and are working to achieve inclusive workplaces and diversity in the
by all members of the United Nations in 2015, provides a plan for
boardroom, as well as supporting the wider community in combat-
peace and prosperity for all people and the planet by submitting 17
ting inequality, in pursuit of the SDGs.
sustainable development goals (SDG) that are an urgent call to action
by all developed and developing countries. Accordingly, many com- All in all, for ESG efforts to work, aligned development needs to take
panies take SDGs into account when creating their ESG principles. place all around the world. Turkey needs to develop actions in line
Turkey, as a developing country, submitted its nationally determined with international standards and further include those actions in the
contributions in relation to the Paris Agreement on October 11, 2021, country’s development plans. As for companies, they should prepare
in which greenhouse gas emissions are envisaged to be reduced by up and improve their standards for a better, fairer, and more sustainable
to 21% by 2030. It is important to note that the EU’s commitment is future and constantly follow up on developments in ESG.
to reduce emissions by at least 40% by 2030.
While developed countries made considerable progress in environ-

mental accounting and environmental reporting, developing countries

AUGUST 2022 THE CONFIDENT COUNSEL
THE CONFIDENT COUNSEL:

WHAT’S UP WITH THOSE SLIDES?
By Aaron Muhly
When you get up to present at a So, take those slides and send them to the participants after your
conference, what is your goal? presentation. Actually, don’t just send them the slides. Send them
Since lawyers are addicted links to any additional resources that they might find helpful (e.g.,
to billable hours, you are related articles / reports prepared by your firm). With this approach,
probably gambling some you are definitely starting to look trustworthy and competent.
non-billable time with the
hope of landing some legal Step Two: Highlight and Delete
work. To accomplish this,
Next, you can make your original slides a lot more accessible for your
you want to sell yourself to
audience if you reduce each slide to one main concept. To accom-
potential clients as a compe-
plish this, just go through and highlight the key words on each slide.
tent, trustworthy, and mildly
After highlighting, delete everything else. You should have left just a
entertaining lawyer.
few key words – we’re talking bullets, not sentences.
If that’s the case, what’s up with
If you are concerned that you still have too much on a slide, just
those slides? You know what I’m talking
split up the information into multiple slides. Remember: no one
about. Those super-heavy slides filled wall-to-wall with dense legal ci-
is complaining about too many slides. We just want each slide to
tations that blow up the brains of your audience. (And no, sprinkling
communicate a simple concept, a concept that you will expand upon
in some bullet points isn’t saving the day.)
as you speak.
When lawyers smother their audiences with massive information
Step Three: Go for Images
dumps, they kill the sale. Not only do these burdensome slides
distract clients from appreciating your brilliance, but they also send As a final step, it’s time to use a much under-used skill of lawyers
the terrible signal that you will do the exact same thing when man- – creativity. If you can replace your words on a slide with a related
aging their matters. In other words, they should expect that you will image, you will create a much more powerful impact on your audi-
bombard them with excessively long emails that they don’t have the ence. You can use safer images like a timeline, graph, or pie chart.
patience to read. But, you can also unload a killer image by simply going to Google
Images and searching for an interesting picture. Naturally, you won’t
If you would like to avoid wasting these valuable opportunities to
be able to find image replacements for most of your slides, but even
generate business, you’ve got to simplify those slides. In this article,
a couple of non-textual slides can greatly improve the experience for
you will learn some helpful techniques for converting even the crue-
your audience.
lest sets of slides into something that clients can handle, and more
importantly, actually appreciate. Learn More
Step One: Preserving the Value If you are looking for a book to help you deliver cooler-looking
presentations, check out Resonate by Nancy Duarte. She is an expert in
If you are like many of my students, you use your slides as a form
creating impactful presentations via visual storytelling.
of notes for your presentation. You are filling your slides with bullet
points to help you identify all the pieces of information that you
would like to convey during your presentation. If so, that’s OK Aaron Muhly is an American lawyer who has been train-
because those slides are not only valuable to you, clients like them too ing European professionals on clear writing and effective
– just not during your presentation. When I talk to in-house lawyers communication for over 15 years.
about the slides of external lawyers, they oftentimes mention that
they find the detailed slides useful as a learning tool after presenta-
tions.

ESG AUGUST 2022
Thank You To Our Country Knowledge Partners For Their

Invaluable Input and Support
Bulgaria Croatia Czech Republic
Hungary Moldova Montenegro
Poland Romania Turkey
Ukraine

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CEE

High-powered, laser-targeted, dynamic business

CEELM Direct: The only dynamic legal directory of its

EDITORIAL: THE ESG DIRTY WORD

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ACROSS THE WIRE

14 On The Move: New Homes and Friends

28 A Look at the Engine for ESG: Finance

THE CONFIDENT COUNSEL

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ACROSS THE WIRE:

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CEE Legal Ticker:

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Hungary: Oppenheim Announces New Management Board

On the new management side, Laszlo commented: “I am personally very

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IN-HOUSE MOVES AND APPOINTMENTS

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Good Hot and Bad Hot Times in Greece:

“Very relevant to the tourism industry are commercial aircraft

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Lithuania’s Legal Transformation:

“The reforms, which are to be implemented over the course

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Judicial Gridlock and New Highways in Montenegro:

Montenegro has reached a deadlock in appointing members of the judiciary, with

“Montenegro is in a very specific predicament at the moment with regards

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Turkey Rallying (for) the Lira: A Buzz Interview

“Furthermore, there were credit restrictions imposed on borrowing in Turkish

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Bosnia and Herzegovina Buoyant Despite the Challenges:

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The Bounce in Latvia’s Step:

When it comes to finance, Silava-Tomsone reports that transactional efforts

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Drafting the Playbook in Serbia:

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Shiny and New Tax Legislation in Austria:

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Bulgarian Lawyers Catch a Break:

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A LOOK AT THE ENGINE FOR ESG:

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Still Defining ESG The Taxonomy is the

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Development banks have Hopeful Look Forward