Federation of Bosnia and Herzegovina Seeks to Enact New…

The Parliament of the Federation of Bosnia and Herzegovina is considering a Liquidation Bill, with the new rules motivated by inconsistent court practice, an outdated and limited existing law first enacted in 2003, and the need to eliminate a large number of companies that exist only nominally, as well to promote investment.

The proposed new legislation regulates in-court liquidation of businesses and its provisions include:

• Classification of liquidation procedures;
• Restrictions on the application of Bankruptcy Law in liquidation cases;
• Introduction of voluntary and compulsory liquidation as the two procedural options available;
• Detailed regulation of liquidators’ duties;
• One-year statute of limitations applicable to liquidators’ liability for damage;
• Rights and duties of the liquidation judge in the procedure;
• Entitlement of liquidators to remuneration;
• Regulation of options for realisation of movable and immovable assets;
• Expedited voluntary liquidation available as a simplified procedure;
• Requirement to retain books of account and documents after a business has been wound up.

If the Bill becomes law, it will replace the current Liquidation Law (Official Gazette of the Federation of Bosnia and Herzegovina, No. 29/03), but any liquidations in progress would continue under the existing rules.

Within three months of the entry into effect of the new law, the Federal Minister of Justice would be required to enact byelaws regulating:

• Liquidators’ remuneration; and
• Format and content of the liquidation petition and format and content of the petition to open expedited voluntary liquidation and format of company member declaration.

The proposed rules will significantly promote investment, foster financial discipline, reduce the number of inactive businesses, and help address the informal economy.