COVID-19 – Effects on regulatory approvals in financial sector M&A transactions

22 April 2020 | newsletters

M&A and corporate transactions (including mere group-internal restructurings) in the financial sector often not only require profound corporate law documentation, but also financial regulatory approvals from the competent authorities/regulators. In the course of so-called "ownership control proceedings" the regulators assess the suitability of the proposed acquirer based on encompassing information and documents which need to be submitted to the regulator by the proposed acquirer. For such assessment, laws in most jurisdictions set out a fixed time period (in most cases approx. 60 business days). Due to the current COVID-19 situation, governments across Central and Eastern Europe have passed legislative measures, which may result in suspension or delay of the ownership control proceedings and assessment periods.

This table provides an overview on the legislative measures and delays, if any, concerning the ownership control proceedings across Central and Eastern Europe. Such potential delays should be taken into consideration when planning a corporate transaction in the financial sector. Also, it should be considered that the collection of required information (e.g. criminal register excerpts) could be strongly affected due to the measures taken to battle Covid-19. 

Country

 

 

Are legislative measures that may result in a suspension / delay of assessment periods of ownership control proceedings in place / planned due to COVID-19?

If the answer to question 1 is yes:
Have such measures been adopted specifically for financial regulatory assessment periods / deadlines or are they based on a general suspension/delay of all administrative periods/deadlines?

If the answer to question 1 is no:
Are delays regarding the ownership control assessment period expected despite no legal measures having been adopted so far?

How long will the ownership control assessment be suspended/delayed?

Does the local regulator accept ownership control filings and commence its assessment?

Austria
(last checked/updated on 22 April 2020)

Yes. According to Austrian COVID-19 legislation, the running of administrative assessment periods (including ownership control proceedings) are suspended until (at least) 30 April 2020.

Measures have not been adopted for the specific case of ownership control assessment periods. However, the general suspension of administrative assessment periods also affects the assessment period of ownership control proceedings.

The running of the ownership control assessment period is suspended until (at least) 30 April 2020.

Additionally, the assessment period of proceedings which have commenced before 30 April 2020 will be prolonged by another six weeks.

For Austria this means the assessment period of 60 business days will be prolonged by an additional six weeks.

Yes. The Austrian regulator (FMA) until further notice operates on a teleworking / home office basis, accepts filings and is reachable via e-mail or telephone.

Federation of Bosnia and Herzegovina

(Last updated on 21 April 2020)

Yes, there are planned measures. While there are no such measures in force yet, there is a draft law currently in the parliamentary procedure that may result in suspension of the deadlines and the review period by the Bosnian regulator.

If the law is adopted, it will likely relate to general suspension of administrative proceedings, rather than particular financial regulatory assessment periods.
If the measures are not adopted, we may expect a somewhat slower pace from the Bosnian regulator, due to the shorter working hours currently in place. 

Based on the publicly available information, the measures, if adopted, may be in force (and the deadlines be suspended) until the state of emergency in FBiH has ended. 

Yes. Currently there is no information suggesting that the regulator will not receive the filing or not commence the assessment.

Bulgaria

(Last checked/updated on 22 April 2020)

Arguably, no. Under art. 4 of the Measures and Actions during the Emergency Situation Act ( the "Act") "all statutory deadlines expiring during the emergency situation (declared by a resolution of the Parliament on 13 May 2020) that are connected with the exercise of rights or performance of obligations of private law persons shall be extended by one month following the  end of the emergency situation (i.e. by 13 June 20202). However par. 49, item 2 of the Final Rules to the Act provides that the deadlines under the Insurance Code shall not be amended. A conservative interpretation of the latter rule would mean no suspension and delay will be tolerated and no extension of deadlines shall be established under all procedures regulated by the Insurance Code.

Measures have not been adopted for the specific case of ownership control assessment periods. However, the rule as per the preceding column (establishing that the deadlines under the Insurance Code shall not be amended) arguably means no change in assessment periods shall be allowed.

Not applicable – see  preceding answer.

In light of the COVID-19 emergency situation, the Financial Supervision Commission published (on 12 March 2020) a request to send all documents/queries via post or email and restricted meeting arrangements.
Under art. 6a of the Act all State authorities (incl. the Financial Supervision Commission) may hold their meetings (i.e. including discussions on ownership control assessments) in a remote manner that guarantees direct and virtual participation as well as may take decisions (i.e. incl. decisions on ownership control assessments) in a remote manner, provided a protocol is prepared  for all such meetings and decisions.

Croatia

(Last checked/updated on 22 April 2020)

No.

Currently no delays are expected; however, please note that the Croatian regulators (HANFA/CNB) are working remotely so the assessment could easily change in due course. 

Not applicable – see preceding answer.

Yes. HANFA/CNB until further notice operate on a teleworking / home office basis, accept filings and are reachable via e-mail or telephone.

Czech Republic

(Last checked/updated on 22 April 2020)

No. To our knowledge, no specific legislative measures are currently planned.
However, based on the Opinion of the Ministry of the Interior, all State agencies should primarily concentrate their resources to sustain the crucial functions of the State, whereas in case they miss a statutory deadline to act or decide, the competent superior supervising body has to consider this while resolving any potential complaint of citizens.

Delays should be expected as the absolute majority of the employees of the Czech National Bank (CNB) are on home office and have difficulties accessing databases and documents in hard copies.

No official guidelines have been provided yet, however, the delay might take approx. two to four weeks based on our estimate.

Yes. The CNB operates on a combination of regular / teleworking and home office basis, accepts filings and is reachable via e-mail or telephone.

Hungary

(Last checked/updated on 17 April 2020)

No.

No.

Not applicable.

Yes.

North Macedonia

(Last checked/updated on 21 April 2020)
 

Yes. According to Macedonian COVID-19 legislation, the running of administrative assessment periods (including ownership control proceedings) is suspended for the duration of the state of emergency.

Measures have not been adopted for the specific case of ownership control assessment periods. However, the general suspension of administrative assessment periods also affects the assessment period of ownership control proceedings.

The running of the ownership control assessment period is suspended during the state of emergency. Аs of 16 April 2020, the state of emergency is prolonged for additional 30 days.

Yes. The Macedonian regulator (ISA) has arranged special working conditions in order for its operations to continue without interruption. Until further notice, the ISA accepts all filings and is reachable via e-mail or telephone.

Montenegro

(Last checked/updated on 21 April 2020)
 

No. At this point no legislative measures that may result in a suspension / delay of assessment periods of ownership control proceedings (or administrative assessment periods in general) are in place or planned.

Despite no measures being adopted so far we cannot be certain that there won't be any delays regarding the ownership control assessment period. However, currently there is no legal basis for such delays.

Not applicable.

Yes. Although there is no express confirmation that the Insurance Supervision Agency and the Central Bank of Montenegro ("Regulators") accept ownership control filings and commence assessments thereof, there are no measures / announcements which would indicate otherwise, and the Regulators have arranged special working conditions in order for operations to continue without interruption. Until further notice all communication with the Regulators should be conducted via e-mail, mail or telephone.

Poland

(Last checked/updated on 21 April 2020)

Yes. On 1 April 2020, new legislation concerning the COVID-19 situation entered into force in Poland. One of the provisions sets forth that the deadlines for objections by the Polish regulator (KNF) are suspended as long as the epidemic emergency state is declared.

Yes, a separate set of provisions regulate the suspension of regulatory assessment periods by the Polish regulator KNF.

The running of the ownership control assessment period is suspended as the epidemic emergency state is declared (there is no end date yet). The law may evolve anytime, as the situation is dynamic.

Yes. The KNF operates mostly on a teleworking / home office basis, but accepts filings in its office too.

Romania

(Last checked/updated on 22 April 2020)

No. Until now, there are no such express measures.
However in Romania the status of emergency was extended  until 16 May 2020, which means that such measures might be adopted in the future. 

Despite the fact that there are no measures adopted determining the suspension or the delay of the assessment of any application with Romanian the Financial Supervisory Authority (FSA) (except for petitions and requests for information of public interest – in which case the legal deadlines for settlement were doubled), we expect the assessment process to take longer than usual. 

We cannot assess the delay, considering there are no official measures taken in this respect.
Usually the assessment period in Romania is  a maximum of 60 business days from receiving all the additional information requested by the FSA (if the case).
We expect the delay of the assessment to be a maximum of four weeks. 

Yes. The FSA accepts fillings in electronic format made by regulated entities and  is reachable via e-mail and telephone.

Serbia


(Last checked/updated on 21 April 2020)

Yes. According to Serbian COVID-19 legislation, the running of administrative assessment periods (including ownership control proceedings) is suspended for the duration of the state of emergency.

Measures have not been adopted for the specific case of ownership control assessment periods. However, the general suspension of administrative assessment periods also affects the assessment period of ownership control proceedings.

The running of the ownership control assessment period is suspended during the state of emergency. The exact duration of the state of emergency (implemented on 15 March 2020) has not yet been determined.
Legal actions (taken during the state of emergency) which trigger the running of non-extendable procedural time limits (delivery and notification) will be considered as taken on the 15th day following the last day of the state of emergency.
Any procedural time limits which may expire during the state of emergency are extended until 30 days following the last day of the state of emergency.

Yes. The Serbian regulator (NBS) has arranged special working conditions in order for its operations to continue without interruption. Until further notice, the NBS accepts all filings and is reachable via e-mail or telephone.

Slovakia

(Last checked/updated on 22 April 2020)

Yes. The specific COVID-19 law focused on the financial sector enables the regulator, the National Bank of Slovakia, to interrupt ongoing proceedings (also repeatedly) if the pandemic does not allow it to properly proceed with them or to prolong applicable deadlines for issuing a decision. No appeal will be possible against such decision(s).

Legislative measures have been specifically adopted with respect to all proceedings conducted by the National Bank of Slovakia, not only ownership control proceedings.

The interruption can only last until the end of the pandemic state (the term of the state of emergency that was declared on 12 March 2020).
The new deadline will be the 30th day after the end of the pandemic state (unless a shorter deadline is set by the regulator).

Yes, however, employees are in home office until further notice.

Slovenia

(Last checked/updated on 22 April 2020)

Yes. According to Slovenian COVID-19 legislation, the running of administrative assessment periods (including ownership control proceedings) are, as a general rule, suspended until 1 July 2020 (or earlier if so decided by a governmental decree). Exceptions apply in respect of 'urgent matters' (defined abstractly); notably, legislation refers to situations where an absence of a decision could result in significant financial/economic losses – which could potentially be relied upon in ownership control proceedings to obtain a decision during the suspension period (e.g. where this is a conditions precedent to closing of a transaction).

General suspension / delay of all administrative proceedings.

Technically, the deadlines should expire within T (= date of official termination of suspension) + (D – X) (where D = the statutory assessment deadline; and X = number of days which have passed since the deadline for assessment has commenced (if any) prior to the enactment of the COVID-19 suspension measure).

 

That said, we cannot rule out that a different interpretation (e.g. favoring a longer assessment deadline post-termination of suspension) will be adopted in practice.

 

Yes, filings are accepted, however, assesment may be suspended (see answers to the preceding questions). The relevant officials are generally available via phone and e-mail.

Turkey

(Last checked/updated on 22 April 2020)

No.

No.

Not applicable.

Yes.

Ukraine

(Last checked/updated on 22 April 2020)

Yes. According to Ukrainian COVID-19 legislation, the running of administrative assessment periods (including ownership control proceedings) is suspended until (at least) 24 April 2020.

Measures have not been adopted for the specific case of ownership control assessment periods. However, the general suspension of administrative assessment periods also affects the assessment period of ownership control proceedings.

The running of the ownership control assessment period is suspended until (at least) 24 April 2020.

Yes. The Ukrainian regulator (Financial Markets Commission), until further notice, operates in a restricted working regime (without personal contacts with the applicants/visitors, working on home office basis), accepts filings via post and is sometimes reachable over the telephone.

 

Authors:
Austria – Matthias Pressler
Bosnia – Minela Sehovic
Bulgaria – Tsvetan Krumov
Czech Republic –Matěj Šarapatka
Croatia – Ozren Kobsa
Hungary – Gergely Szaloki
Montenegro – Nikola Babic, Petar Vucinic
North Macedonia – Andrea Lazarevska
Poland – Krzysztof Pawlak, Kapica Paula Weronika
Romania –Cristina Tudoras
Serbia – Dusan Obradovic
Slovakia – Michal Lučivjanský
Slovenia – Vid Kobe
Turkey – Levent Celepci
Ukraine – Denys Sytnyk

This article is part of our coronavirus-focused legal updates – visit our coronavirus info corner to get more info!

 

Matthias Pressler

Counsel

T: +43 1 534 37 50384
m.pressler@schoenherr.eu

Minela Šehović

Attorney at Law

T: +381 11 320 26 00
m.sehovic@schoenherr.rs

Matěj Šarapatka

Attorney at Law

T: +420 225 996 534
m.sarapatka@schoenherr.eu

Linkedin

Ozren Kobsa*

Attorney at Law in cooperation with Schoenherr

T: +385 1 4579 916

Linkedin

Gergely Szalóki

Local Partner

T: +36 1 8700 690
g.szaloki@schoenherr.eu

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Krzysztof Pawlak

Counsel

T: +48 22 223 09 22
k.pawlak@schoenherr.eu

Paula Weronika Kapica

Attorney at Law

T: +48 22 223 09 20
w.kapica@schoenherr.eu

Cristina Tudoraș

Attorney at Law

T: +40 21 319 67 90
c.tudoras@schoenherr.eu

Linkedin

Vid Kobe

Local Partner in cooperation with Schoenherr

T: +386 1 200 09 34
v.kobe@schoenherr.eu

Michal Lučivjanský

Attorney at Law

T: +421 2 571 007 37
m.lucivjansky@schoenherr.eu

Levent Çelepçi

Partner

T: +90 212 230 17 00
l.celepci@schoenherr.eu