Conflict of interests

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Conflict of interests
Ohrid,10-11 June 2004
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Corporate Law

• Conflict of interests
• Shareholders of the company and management of the
  company may enter into financial contracts with
  the company only with the approval of other
  shareholders and/or the Board of Directors or the
  Supervisory Board.
• Shareholders may not vote at the General Meeting
  of shareholders when deciding in all cases when
  the interests of the shareholder concerned are
  contrary to the interests of the company
  (conflicts of interests clause).
• Incompatibility of Functions in the case of
  linked enterprises
• The General Manager of a parent enterprise may
  not be the General Manager of a subsidiary.
• The General Manager of a subsidiary enterprise
  may not be the General Manager of the parent
  enterprise.
• The General Manager of a parent enterprise may
  not be the Chairman of the Board of Directors of
  a subsidiary.
• The General Manager of a subsidiary enterprise
  may not be the Chairman of the Board of Directors
  of a parent enterprise.

A new Corporate Law is expected to be adopted in
2004. Hopefully this will create the framework
for improved regulation of conflicts of
interests.
Conflict of interests
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Law on Securities Market (and by-laws)

• A broker-dealer company
• Cannot put its own interests in front of the
  interests of the client.
• Is obliged to present possible conflicts of
  clients interests and company interests, as well
  as interests of other broker-dealer company
  clients.
• Is obliged to organize its business in such a
  manner as to minimize possible conflicts of
  interests among its employees, clients, and other
  broker-dealer companies.

• The bidder has to point out in its takeover bid
• Data concerning persons who possess more than 10
  of votes in bidders General Meeting, or ten
  major shareholders with a right to vote, General
  Manager, Board of Directors and Supervisory
  Board,
• Data on the bidders participation in the capital
  of another legal entity and subsidiaries of the
  bidder,
• Data on important business deals and contracts
  concluded between the bidder and the targeted
  company,
• Data on possible negotiations between the bidder
  and management of the targeted company concerning
  the takeover bid as well as the outcome of those
  negotiations,
• Data on concluded contracts or protocols, or the
  intention to do so, between the bidder and the
  members of the target company management
  concerning payment of remuneration because of the
  previous recall or discharge of duties of
  companys management due to control overtake,
• Data on concluded contracts between the bidder
  and the targeted companys shareholders .

Conflict of interests
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Law on Prevention of Conflicts of Interests in
Performing Public Activities
Public officials

• Persons who perform public administrative
  activities, e.g. those who have been elected or
  appointed to such positions by the Republic of
  Serbia, Autonomous region, municipality, town,
  City of Belgrade and/or Public Enterprises
  founded by those entities, are deemed public
  officials.
• Every person who acts as a public official is
  obliged, in a time period of 30 days since the
  day he/she was elected or appointed, to transfer
  his/her management rights in a company to a legal
  or natural person, so that they could exercise
  these rights in their own name but on the public
  officials behalf, as long as the public official
  performs his/her public duties.
• Members of Parliament (National and City
  assemblies) may be General Manager, General
  Managers deputy or its assistant, member of
  Board of Directors or Supervisory Board, in only
  one institution, enterprise or any other legal
  entity with participation of state capital.
• In other commercial entities members may continue
  to exercise all of their rights, only if such
  activity would not affect their performing of
  public activity and if the nature of business
  activities of the company in question would not
  affect their objective performing of public
  activity.

Conflict of interests
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Law on Prevention of Conflicts of Interests in
Performing Public Activities (contd.)
Property report

• Property report is prescribed under the Law as
  one of the systems developed for preventing
  possible violations of the Law.
• The obligation of public officials to submit
  their and their closest relatives (spouse,
  ascendants and descendents) property reports is
  prescribed in several periods before, during and
  after performing public activity.
• The competent body for deciding on conflicts of
  interests is the Republic Board for Deciding on
  Conflicts of Interests (further Board)
  established under the Law.
• These measures do not include any fines and the
  Board has no power to discharge, sanction or
  withdraw public officials.
• Possible measures are non-public warning and
  recommendation for public officials discharge or
  resignation.
• However, the Board has not been formed yet.
• This is a completely new Law, enacted on 28 April
  2004, and therefore there is no practice in
  accordance with this Law at all.

Conflicts of interest
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Contact
Vladimir Dašic Attorney at law Bojovic
Dašic Makedonska 30 11000 Belgrade Serbia and
Montenegro
Tel [phone] Fax 381 11
3302 101 E-mail vladimir.dasic_at_yu.pwc.com Web
www.pwc.com/yu