Elektroprivreda HZHB Mostar did not adopt the new Statute on time, a fine of 140,000 KM for the Management!

The Association of Citizens, Shareholders and Participants in Companies and Investment Funds in Bosnia and Herzegovina (UGDAU DIF) sent an open letter to Branka Dadić, Executive Director for Legal Affairs of JP Elektroprivreda HZHB Mostar, reports the Patria news agency.

- We later learned about the knowledge and extent of your expertise in this law, i.e., in the application of corporate governance principles, and we learned about the influence you have on the Management when something is to be done that contradicts the provisions of the Law on Business Companies.

Therefore, we are personally addressing you with the following remarks: The 28th Assembly of JP EP HZ HB d.d. Mostar was held on June 29, 2016, and at that Assembly, a decision was adopted to adopt the Statute of JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar, which is fully aligned with the Law on Business Companies. There was discussion and questions at the Assembly: why the adoption of this decision was delayed by a full 6 months, as the Statute should have been adopted by December 22.

During your presentation at the 28th Assembly, related to the Statute, you personally stated that there was no deadline set in the Law for the adoption of the Statute that is fully aligned with the Law on Business Companies.

Regardless of the replies at the Assembly concerning this matter, in continuation of your defense that there was no deadline set in the Law for the adoption of the Statute, we have decided to explain and prove to you now that there is a deadline defined in the Law, which is December 22, 2016, and here is how we explain/prove it: All business companies, including those with state capital participation in their ownership structure, are obliged to align the form, name, share capital, and statute of the company with this law. 

This law enters into force the day after its publication in the “Official Gazette of the Federation of BiH” /22.10.2015./, and will begin to be applied after the expiry of 60 days from the date of entry into force. /22.12.2015./

Article 370 states that the director and member of the company's management who fails to comply with the provisions of Article 372 of this law within the deadline will be fined from 50 KM to 20,000 KM for the offense. This paragraph 3 of Article 370 specifically refers to the deadline for adopting the Statute by December 22, 2015, and here is why:

On the day this law begins to apply, i.e., 22.12.2015, the “old” Law on Business Companies ceases to be valid.

This is very important for you, because if you compare the Statute to a driver's license, e.g., if your driver's license expires in eight months, which you obtained under the “old” Law, and you had a deadline of two months to change/extend it because the “new” Law ordered you to do so, and you did not.

When a police officer stops you (29.6.2016) and sees that the driver's license expires in 8 months, and the Law stipulated that it must be changed by 22.12.2015, the question for you is: would the police officer issue a violation report? Of course, they would issue a violation report for 20,000 KM because the driver's license you showed them is not valid.

We believe that with this, we have managed to clarify for you that JP Elektroprivreda HZ HB Mostar had to align its Statute according to the new Law by 22.12.2015, because otherwise, why would the legislator write: The director and member of the company's management who fails to act within the deadline to align the business company JP EP HZ HB d.d. Mostar's form, name, share capital, and statute with this law, which begins to apply from 22.12.2015, will be fined from 50.00 KM to 20,000.00 KM for the offense.

This means that the legal logic here is clear because how can the Law be applied if the statute, which was drafted according to the old law that is no longer valid since 22.12.2016, is used. There is no logic because it is an invalid Statute, meaning JP Elektroprivreda HZHB used an invalid Statute for six months.

And a new question for you, Branka Dadić:

The Management of JP EP HZHB consists of seven people, which in terms of penalty amounts to: 7 x 20,000 KM = 140,000 KM. A very good figure for filling the FBiH budget.

So the question is: do you want to make an effort and advise UGDAU DIF in BiH whether or not to file a request with the inspection to visit JP Elektroprivreda HZHB and determine if the conditions for the Law on Offenses have been met, or are you leaving us the option to decide on this move ourselves – it is stated in the letter signed by the Independent Expert Team of UGDAU-DIF in BiH.