“The Government has responded timely to the crisis and I think that the economic measures it has put in place can have positive effects,“ states Boris Baklaja, Partner at Baklaja Igric Tintor in Belgrade. “The Decrees adopted on April 10 provide for legislative follow-through for some of the measures previously announced by the Government are designed to produce two types of effects: support to companies primarily by postponing the regular obligatory payments — such as the tax and social contributions which are due as part of the employee’s gross salaries and advanced payment of profit tax —due in this period, and a direct, minimum wage, non-refundable financial aid for employees’ salaries for March through May.”
However, these measures do not come without cost, Baklaja says. “Companies that opt to use this state support will have to accept certain restraints as part of the package, such as a moratorium on payment of dividends in 2020.” According to him, this may pose a problem, because “shareholders of private companies and businesses have a right to dividends from previous financial years and it is possible that they would try to dispute the legality of such an executive decision.” This places them in an “unfortunate position,” because “companies, businesses, factories … all of these economic units have planned budgets, term sheets, and so on. Most of them need to receive financial support and aid in order for them to be able to cover the operational costs at all.”
Baklaja says that the uncertainty of the entire COVID-19 crisis is inhibiting any chances of “getting a new normal going.“ According to him, “this is not likely to be an overnight switch to a new way of doing business, and some clarity and predictability would go a long way to help all those affected begin adapting to the new status quo.“
Finally, speaking about the legal market in Serbia, Baklaja says that “the first month of the crisis in Serbia was fraught with fear, doubt, and misunderstandings – a very clear adjustment period.“ However, as the second month of the state of emergency begins, “it would appear that clients are beginning to slowly come back to some regular volumes of work.“ As everywhere else, some practices are going to be more active than others. “I think that labor disputes, restructurings, bankruptcies, liquidations, and contract dissolution due to force majeure are probably going to spike and make the most work for lawyers in Serbia in the near future.“