Amendments to the Capital Market Law

Yesterday, the amendments to the Capital Market Law were published in the Official Gazette of the RS, No 153 of 21 December 2020. The Law on Changes and Amendments to the Law on the Capital Market comes into force on the on the eighth day following its publication in the Gazette, on 29 December 2020.

The Securities Commission as an independent regulatory and supervisory authority which oversees the application of the Capital Market Law, noted the need to facilitate the issuance of non-equity securities to companies, bearing in mind the conditions and difficulties in obtaining financial resources caused by the outbreak of Coronavirus (COVID-19) disease, and to specify the moment when a public company ceases to be public, thus decreasing space for manipulation on the market.
Previously, the Republic of Serbia Government adopted on April 10, 2020 the Regulation on the procedure for Issuing debt securities in the period of the state of emergency (Official Gazette of the RS, No 54/20). The Regulation’s objective was to facilitate companies’ access to finances, to simplify the procedure for issuing debt securities in Serbia and the approval process before the Commission for prospectuses for issues of corporate debt securities, by derogation from certain provisions of the Law on the Capital Market.
Therefore, the Law was adopted with the aim to facilitate companies’ access to financing, decreasing costs of issuance of debt instruments, simplifying the process of drawing-up a prospectus and of filing documentation to the Commission, accompanying an application for approval of a prospectus. Namely, the Law provides that the format and the minimum information to be included in a single prospectus for non-equity securities is regulated by the Commission’s bylaw and that an issuer is not under an obligation to include a summary. Moreover, it its allowed to incorporate information about the issuer by reference or by providing a direct link, provided the information is available in public registers and/or on the issuer's website, including information relating to financial and audit reports of the issuer.

The amendments also specify how to calculate liquidity, the time used for calculating the share trading volume. Instead of the day of the decision on removal of shares from the regulated market, the date of the decision to convene the general meeting of shareholders is used. In this way the creation of artificial liquidity is prevented. The real trading market volume of shares is used in lieu of the previous arrangement, as the period in which to calculate the share trading volume. 
The issuance of debt securities by companies is expected to provide quality trading material for the Belgrade Stock Exchange, significantly contributing to further development of the Serbian capital and financial market.

Law on the Capital Market