Slovak Government approves Amendment to Trademark Act

The Government of the Slovak Republic has approved an amendment to the Trademark Act, which, if approved by the National Council of the Slovak Republic, will introduce several significant changes. The amendment needs to be seen in the global context of the EU trademark system.

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The amendment to Act No. 506/2009 Coll. on Trademarks as amended, approved on May 9, 2018 by the Government of the Slovak Republic, is about to be sent to the National Council of the Slovak Republic for approval. The Amendment aims to transpose into Slovak law Directive (EU) 2015/2436 of the European Parliament and of the Council of December 16, 2015 to approximate the laws of the Member States relating to trademarks.

One of the fundamental changes introduced by the Amendment concerns the definition of a sign capable of forming a trademark. Currently, a sign must be distinguishable; however, in the event of the approval of the amendment, a sign will also have to be capable of being represented on a register in a clear and precise manner. The introduction of such condition relates to the proposal to abandon the requirement to represent a trademark graphically and to accept a sound trademark.

The Amendment also introduces the requirement of the genuine use of a trademark, which is based on one of the fundamental principles of the Directive, namely the application of protection only to trademarks that are genuinely used. If, within a period of five years following the date of registration of a trademark, the proprietor has not put the trademark into genuine use in connection with the goods or services for which it is registered, or if such use is interrupted during a continuous period of five years, the trademark will be subject to possible revocation.

Last but not least, the amendment introduces the right of the proprietor of a registered trademark to prevent all third parties from bringing goods, in the course of trade, into the Slovak Republic (without being released for free circulation in the Slovak Republic), if such goods, including the packaging from a third country, bear an unauthorized trademark which is identical to the trademark registered in respect of such goods, or which cannot be distinguished in its essential aspects from that trademark.

The proposed date of effectiveness of the amendment is January 14, 2019.

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General Data Protection Regulation (GDPR)

Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the General Data Protection Regulation) which aims to set a unified and directly applicable system of rules for personal data protection within the European Union, will enter into force on May 25, 2018.

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Under the new harmonized European legislation, the obligation requiring the preparation of a security project is eliminated, however controllers will be obliged to implement appropriate technical and organisational measures to ensure and to be able to demonstrate that processing is performed in accordance with the Regulation.

The Regulation also introduces the obligation to carry out an assessment of the impact of the envisaged processing operations if the type of personal data processing is likely to result in a high risk to the rights and freedoms of natural persons, as well as the obligation to contact the supervisory authority with a request for a consultation if such data protection impact assessment indicates that the personal data processing would result in a high risk.

One of the essential changes concerns the request for valid consent to the processing of personal data, which according to the Regulation, must be presented in a manner which is clearly distinguishable from other matters, in an intelligible and easily accessible form. As a result, the consent to the processing of personal data may not be incorporated into another, un-related declaration.

Moreover, the Regulation introduces a new obligation to report any security incidents related to any event of personal data breach, including but not limited to any loss, theft or abuse of personal data.

Last but not least, the right of the data subject to be forgotten is to be strengthened in cases where the processed personal data are no longer necessary in relation to the purpose for which they were collected and the data subject requests their permanent deletion. Unless there are statutory reasons for the further processing of such data, the controller will be obligated to permanently erase such personal data without undue delay.

 Once the Regulation comes into force, the system of fines for infringement of personal data protection rules will also change. Under the Regulation, a fine of up to € 20 million or 4% of a company’s worldwide turnover (whichever is higher), may be imposed.

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Hamala Kluch Víglaský is the best Slovak law firm in the field of M&A

The weekly magazine TREND in cooperation with the publishing house EPRAVO Group s.r.o. announced the 2018 winners of the 6th year of the Law Firm of the Year competition from among law firms active on the Slovak market. The current year was attended by 57 law firms competing in two major categories and 13 categories divided by sectors.

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The law firm Hamala Kluch Viglasky s.r.o., operating on the market since 2006, was once again among the top ranked law firms, this time in six categories, while in the category Mergers & Acquisitions the law firm became the absolute winner. In the categories Corporate Law, Real Estate, and Banking and Finance, the law firm was ranked among the highly recommended law firms, and in the categories Competition and Restructuring & Insolvency, the law firm has been recognised as recommended.

loga PFR2018

“Successfully completed transactions and our customers’ satisfaction is the greatest reward for our team. We also highly appreciate the recognition by peers and professionals, that motivate us and we genuinely enjoy such recognition for our work. In the legal services sector, knowledge of the law should be given; however, what is not obvious and what we strive to continuously improve, is to apply the law so that our clients can successfully develop their business and consequently achieve excellent results, thanks to our legal advice and innovative solutions offered by our law firm,” said Roman Hamala, Partner of the law firm Hamala Kluch Viglasky s.r.o.

The objective of the competition “Law Firm of the Year” was, as in the previous years, ranking experts providing legal services in various areas of law in Slovakia, and thus contributing to increasing awareness and legal certainty. The law firms registered for the competition are evaluated by people acting outside the legal industry, and in particular the representatives of large clients, investment banks, audit firm and etc., who assessed the declared transactions from various points of view, such as legal complexity, the overall difficulty, the presence of an international element or societal impact.

 Law Firm Hamala Kluch Víglaský s.r.o.

Hamala Kluch Víglaský s.r.o. (HKV) is an independent Slovak law firm providing, already for 12 years, comprehensive legal and consultancy services to both domestic and foreign clients in all important areas of modern business law, both in the Slovak Republic and abroad.

The lawyers of the law firm have experience at both local and international levels, allowing thus the law firm to offer its clients comprehensive and coordinated advice taking into account their needs It focuses its commercial business approach on the successful and effective management and makes every effort to provide services of matching quality.

The law firm Hamala Kluch Víglaský is regularly ranked by both international and local rating organizations (Chambers Global, Chambers Europe, Legal 500, IFLR1000) among the TOP Slovak law firms in all major areas of law, including corporate law, M&A, banking and finance, construction and real estate law.



Preliminary Possession in the Case of Environmental Burden Remediation

The National Council of the Slovak Republic has approved a law introducing the possibility of expropriation and preliminary possession in cases of environmental burden remediation in the public interest.

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The governmental proposal amending Act No. 409/2011 Coll. on Certain Measures in the Field of Environmental Burden and on the Amendment and Supplementation of Certain Acts and amending certain other acts was adopted by the National Council of the Slovak Republic in an accelerated legislative procedure.

In addition to changes of a legislative and technical nature, the approved material also introduces new provisions of the Geological Act. The new rules on expropriation and preliminary possession in connection with environmental burden remediation in the public interest are effective as of February 28, 2018.

Preliminary possession is aimed at ensuring that a constructor may perform certain work on land in connection with environmental burden remediation despite the fact that such land is still subject to expropriation proceedings. Thus, preliminary possession may only be applied in cases where there is an ongoing expropriation process with respect to environmental burden remediation; it is especially likely to be applied when there is a need to protect the life and health of the population and/or the environment.

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Anti-Bureaucracy Law Proposal

There is an initiative to adopt the Act on Certain Arrangements for Reducing Administrative Burdens by Using Public Information Systems and on the Amendment and Supplement of Certain Acts. The intent of the proposed Act is to exempt natural persons and legal entities from the obligation to submit public register excerpts to public authorities.

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The draft law was adopted by the Government and was submitted for discussion to the Parliament on February 23, 2018. If approved, it will be effective as of July 1, 2018.

The main goal of the proposal is to reduce bureaucracy.  It is the first of a series of acts being prepared that aim to gradually establish a “one time, last time” system, i.e., the system according to which the state will not require the submission and demonstration of data from natural persons and legal entities in cases where it already has such data at its disposal.

The proposed law exempts a wide range of subjects from the obligation to demonstrate facts by submitting excerpts from registers such as, the Commercial Register, the Cadastral Register and Criminal Records Register if public authorities are able to verify such data by themselves through established public information systems.

The proposed Act would affect approximately 160 other acts that cover various petitions (such as, petitions concerning the change of land type, agricultural land exemptions, petitions for various authorizations, etc.) that require the submission of excerpts from registers.

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Amendment to Income Tax Act

In December 2017, an amendment to Act No. 595/2003 Coll. on Income Tax, as amended and on Act No. 563/2009 Coll. on Tax Administration (the Tax Code) and on the Amendment and Supplement of Certain Acts, as amended was introduced. The Amendment strengthens the level of protection against aggressive tax planning and the rules against the disruption of the tax base resulting from the transfer of profits outside the Slovak Republic.

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With effectiveness as of January 1, 2018 (or, with respect to some of the changes, as of January 1, 2019), through the amendment, the Anti-Tax Avoidance Council Directive (EU) 2016/1164 of July 12, 2016 is transposed into the law of the Slovak Republic and introduces many changes that intend to reduce tax avoidance.

The introduction of “Exit Taxation” is one of the most relevant changes. The aim is to tax the economic value of profits created in the Slovak Republic in cases where a taxpayer transfers its assets, business activities or tax residence abroad. As a result, beginning in January 1, 2018, a tax rate of 21% will be applied. If certain statutory conditions are met, the tax may be paid in instalments.

After the amendment, in the case of non-monetary contributions, mergers or divisions of companies or cooperatives, the “fair value method” will be predominantly applied, while the book value method may only be used in specific cases.

The amendment also affects the taxation of income of legal entities from the sale of shares and ownership interests in companies. As of January 1, 2018, such income is not subject to taxation. The change is applicable to legal entities fulfilling the following statutory conditions: interest in the registered capital in the company of at least 10%, a holding period of the ownership interests or shares of at least 24 consecutive calendar months, the seller carries out essential functions in the Slovak Republic and manages and bears risks related to the ownership of the ownership interests or shares, and has available the personnel and material equipment necessary for performance of such functions.

Last but not least, with effectiveness as of January 1, 2019, new rules for a taxation concerning controlled companies (CFS Rules) will be introduced that should prevent the outflow of profits of Slovak companies to “Controlled Foreign Companies”. A Controlled Foreign Company will be considered a foreign entity which is directly or indirectly controlled by a Slovak company (through more than 50% interest in the voting rights, registered capital or profits) and the amount of a tax paid by such Controlled Foreign Company abroad will be lower than the difference between the tax that would be paid by it in the Slovak Republic and the tax that would be paid by it abroad.

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Changes to the Anti-money Laundering Legislation

There is an initiative to introduce several changes to the anti-money laundering legislation (with proposed effectiveness as of March 1, 2018), by virtue of which customer due diligence requirements are to be modified.

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The Parliament has been debating the Government proposal seeking to transpose the fourth AML Directive (EU) 2015/849 of the European Parliament and of the Council of May 20, 2015. The vast majority of amendments that are proposed to be effective as of March 1, 2018 concern Act No. 297/2008 Coll. on Protection against Laundering the Proceeds of Criminal Activities and on Protection against Terrorist Financing and on the Amendment and Supplement of Certain Acts, as amended. The amendments of other affected acts are proposed to become effective as of July 1, 2018.

The proposal calls for minimum actions that “obliged persons” (such as banks, financial institutions, auditors, accountants and a number of other persons) should take within simplified customer due diligence. Under general customer due diligence, obliged persons would be required to examine the beneficial owners of the client and whether or not the client or beneficial owner is an internationally sanctioned person or politically exposed person. In business relationships with a politically exposed person, the obliged person would be required to conduct enhanced customer due diligence. The proposal also includes the recommendation that the definition of politically exposed person be significantly extended.

Due to the risks associated with cash payments, it is proposed that the limit required for a legal entity or a natural person – entrepreneur trading in cash to be classified as an obliged person be reduced from the current EUR 15,000 to EUR 10,000.

It is also proposed that the concerned persons be required to identify their beneficial owners, maintain (updated) their identification data (if they are not recorded in the Register of Public Sector Partners) and store them for a certain period of time.

Last but not least, with proposed effectiveness as of July 1, 2018, certain legal entities registered in the Commercial Register would also be required to register identification data about their beneficial owners. If the law is adopted, the legal entities concerned and registered in the Commercial Register before June 30, 2018 will be obliged to register data concerning their beneficial owners by December 31, 2019.

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Amendment to Agricultural Land Lease Act

The Slovak Parliament approved an amendment to Act No. 504/2003 Coll., on Agricultural Land Lease, Agricultural Holdings and Forest Land, as amended. The amendment introduces a relatively large number of changes in provisions concerning the lease of agricultural land for business purposes.
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The amendment is currently awaiting the President´s signature and the vast majority of changes should come into force on May 1, 2018. The amendment removes the automatic renewal of lease agreements (currently in force in cases where one year before the expiry of a lease agreement neither the lessee nor lessor invites the other party in writing to  return/take over the leased land after expiry).  There will also be changes in provisions concerning the right to a pre-emptive lease. This right will only be preserved for lessees who use the land and will not apply to cases in which the ownership of leased land has been transferred to another person. In the event of a breach of the pre-emptive right, the lease agreement entered into by the lessor and a third person will be invalid.  The Act will also apply to the type of land registered in the cadastral register as “Built-up Areas and Courtyards”, but only if it serves for agricultural purposes. The amendment also sets forth a minimum rent for such type of land. The maximum lease period is to be shortened from 25 years to 15 years.  Last but not least, for the purposes of arranging lease relations between co-owners and the user of land, only the approval of the majority of co-owners will be required.

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General Data Protection Regulation, approaching effectiveness and its practical impact

New Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (hereinafter the Regulation) shall come into force on May 25th 2018.
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The current legislation in the form of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data has been implemented inconsistently by individual Member States. As a result, there is an unclear fragmentation of personal data protection rules consisting in total of 28 different data protection laws, each of which has its own specificities, and some even contradict each other. Fragile legislation in the area of personal data protection has thus created an obstacle for entrepreneurs to use actively all available technological means and expand to the markets of other Member States and, last but not least, has seriously undermined the confidence of the citizens of the European Union in strict protection of their personal data.

The long-awaited reform of the Personal Data Protection system in the form of the adopted Regulation has a clearly defined objective – to set up a uniform and directly applicable system of rules on the protection of personal data across the whole European Union, thus to accompany Europe on the road to the digital age that it has already embarked upon.

Harmonized legislation introduces, in addition to a number of positive changes in the form of easier access to foreign markets, also several new, obligations for entrepreneurs that are not known yet. An unusually strict system of high sanctions, mandatory reporting of security incidents, the right to be forgotten and the right to data portability are just some of the news that will undoubtedly transform the European business environment.

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New Law on Register of Public Sector Partners

On February 1st, 2017, new Act No. 315/2016 Coll., on Register of Public Sector Partners came into force. By adopting this new law, the legislator seeks to uncover the ownership and management structures of the entities that are interested in trading with the public sector as well as to bring more transparency to the public procurement sector.
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The Register of Public Sector Partners is a substitute for the already existing register of ultimate beneficiaries introduced by Act No. 343/2015 Coll., on public procurement. In contrast to its predecessor, the Register of Public Sector Partners clearly goes beyond public procurement and covers a much wider range of transactions between entrepreneurs and the public sector. The Ministry of Justice of the Slovak Republic will be the administrator of the Register and the District Court of Žilina will be the registration authority.

In general, any legal or natural person that is not itself part of the public sector and

  • receives payments from any public budget; or

  • accepts a fulfilment in the form of property or property rights of the state or other public institutions; or

  • concludes an agreement pursuant to Act No. 343/2015 Coll., on public procurement; or

  • is a healthcare provider that concluded an agreement on the provision of healthcare services with a health insurance company; or

  • is obligatorily registered in accordance with Act No. 581/2004 Coll., on health insurance companies

is considered a public-sector partner.

A public-sector partner must strictly fulfil a wide range of duties. One of the most important obligations of the public-sector partners is the obligation to be registered in the Register of Public Sector Partners, as such registration is a necessary precondition for conducting business with the public sector.

Public sector partners are not authorized to register themselves with the Register of Public Sector Partners without the involvement of an independent subject. Such registration requires the co-operation of the so-called authorized person with whom the public-sector partner concerned has to conclude a special agreement. The law strictly stipulates that the authorized person may only be a lawyer, a notary, a bank, a branch of a foreign bank, an auditor or a tax advisor whose place of business or registered office is in the territory of the Slovak Republic. The authorized person acts on behalf of such public-sector partner towards the registration authority, arranges for the identification and verification of the ultimate beneficiary and, at the same time, fulfils a wide range of other statutory obligations.

A business entity interested in trading with the public sector may choose an authorized person at its own discretion. However, due to the fact that such authorized person will represent the public-sector partner before public authorities, the public-sector partner should assess the professional and material potentials of the authorized person.

Any breach of newly established obligations (including the breach of obligation to register with the Register of Public Sector Partners) may result in serious sanctions that may be imposed on the public-sector partner concerned, members of its statutory body, the authorized person or the ultimate beneficiary. In addition to the imposition of a fine, one of the most serious sanctions is the possibility for the public-sector entity to withdraw from the agreement with the public-sector partner concerned with an immediate effect or a restriction on trading with the public sector.

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