Kategoria: Corona

Corona pandemic can be classified as force majeure

Posted on by Jessica Zenz-Spitzweg

In a decree issued by the Federal Ministry of Construction on 23.03.2020, the federal government announced that the corona pandemic can be classified as force majeure in individual cases for public buildings. At the same time, however, it intends to continue with its construction projects and only interrupt them when official measures come into force, if these measures make further construction activities impossible, such as the construction of a new building, for example:

– quarantine of most construction workers or

– decree of prohibition to enter.

This is stated in a decree of the Federal Ministry of Building and Construction from Monday. The addressee is the Federal Office for Building and Regional Planning.

Force majeure possible in individual cases

In the letter, which was addressed to the Federal Office for Building and Regional Planning, the ministry gives advice on how to deal with process disturbances in construction. According to this, the Corona pandemic is in principle suitable to trigger the facts of force majeure according to § 6 Para. 2 No. 1 VOB/B (German Construction Contract Procedures). 'Force majeure usually means an unforeseen event which cannot be averted economically even by exercising the utmost care.’

The ministry does not see these strict requirements as generally given. The Ministry recommends that the subordinate authorities check in each individual case why a company is not efficient. Exemplary reasons are:

– that the authorities have quarantined a large number of employees,

– no replacement can be found,

– Building material is missing or

– that workers can no longer come to the construction site due to travel restrictions.

The Ministry of Construction is thus responding to the demands of the building associations, whose interest is to protect defaulting companies from recourse claims by clients.

In case of doubt for the construction company

Doubts may remain during the examination. The authorities are required to 'handle the statements required by the contractor in individual cases with a sense of proportion, pragmatism and with a view to the overall situation’. With the letter, the Ministry of Construction also took into account the demand of the construction industry for fee payments and thus for securing liquidity. Invoices are to be checked and paid immediately, the decree warns.

Measures adopted regarding the functioning of the governing bodies of companies

Posted on by Jessica Zenz-Spitzweg

Some measures adopted by Royal Decree-Law 8/2020, of 17 March, on extraordinary urgent measures to face the economic and social impact of COVID-19 (“RDL 8/2020″), articles 40 to 42, regarding the functioning of the governing bodies of companies during 2020 are detailed below.

On the convening and holding of General Meetings and the decision-making process

  • In the event General Meetings were convened before the state of alarm was declared but they were supposed to be held after such notice, the company’s governing body may modify the time and place of such meeting (or suspend its celebration) by publishing a note on the company’s website at least 48 hours in advance, or publishing said note in the Spanish Official State Gazette (in the event the company has no website). If the General Meeting is suspended altogether, a new one must be convened within a month after the state of alarm ends.
  • Sessions can be held telematically, in real time. Under these circumstances, sessions will be deemed to have taken place in the company’s registered address.
  • Agreements can be adopted by written votes without a meeting, if the chairperson so decides and at least two members of the governing body request it.

On the submittal of financial statements and other compulsory documents

  • Generally speaking, the deadlines currently in force for the drafting of financial statements and the submittal of reports and other compulsory documents are suspended. Once the state of alarm ends, these deadlines shall be reinstated, and companies will have three months for the drafting and submittal.
  • The period to approve the financial statements, once drafted, shall be three months from the moment the drafting period ends.
  • In the event of a mandatory audit, the period to verify the financial statements that were formulated before the state of alarm was declared will be of two months after it ends.

Other corporate provisions applicable during the state of alarm

  • Partners may not exercise their right of withdrawal until the state of alarm ends.
  • The reimbursement of contributions made by cooperative partners is suspended until six months after the state of alarm ends.
  • If the term for which the company was constituted ends, or the latter is the subject of a dissolution of some kind, the automatic dissolution shall remain on hold until (i) two months after the state of alarm ends (preferred option) or (ii) the deadline to adopt a dissolution agreement expires, from the date the state of alarm ends.
  • Administrators will not be liable for the corporate debts contracted while the state of alarm was in force, provided the cause for dissolution also falls within this period.
  • The expiration of registry entries is cancelled and will be reinstated the day after the state of alarm ends.

Provisions related to listed companies

  • The publication and submittal of their annual financial report to the Spanish National Stock Market Commission (CNMV), together with that of the audit report, may be done up to six months after the financial year ends.
  • The General Shareholders’ Meeting can be held within the first ten months of the business year.
  • When convening the Meeting, the Board of Directors can call for its online celebration and the remote casting of votes. The Board can also pick any place within the Spanish territory for its celebration, even if these options are not included in the company bylaws.
  • If, however, the measures imposed by the authorities prevented the General Shareholders’ Meeting from being held at the place specified in the call but the Meeting was validly constituted, another place in the same province could be chosen instead (provided the Meeting was held that same day and attendees were given reasonable time to reach the new destination).
  • In the event the Meeting had not yet been validly constituted, a call for another Meeting that has the same agenda and notice requirements as the one not held may be given (i.e., at least five days in advance).
  • Furthermore, the agreements telematically adopted by the Board of Directors shall be considered valid, even if this option is not part of the company bylaws.

Implications of COVID-19 on M&A Transactions

Posted on by Lisa Fortmüller

We face an unprecedented business environment, given the scale and speed with which the coronavirus situation is developing.

Our clients face various challenges – from protecting and supporting employees and customers, facing material supply chain challenges, to preserving liquidity and adapting to new and to a large extent unknown operating conditions. Also, pending transactions that were signed pre-crisis and that now may or may not be closed, need to be efficiently handled. And despite the background of these current market conditions, we expect that both strategic investors and financial sponsors will, for various reasons, consider and pursue new transactions in the coming months.

To assist clients in navigating the M&A process in this unprecedented environment, here are the key points for the near future from our perspective:

MAC Clauses

Material adverse effect or material adverse change (MAE or MAC) clauses have only been seen very rarely prior to the hit of the Corona crisis in Germany. And even if a purchase agreement contains such an MAE/MAC clause, it might not cover a pandemic such as COVID-19. Therefore, most buyers may not be able to invoke the termination of a transaction based on a MAE/MAC clause at the moment.

As a consequence going forward, the parties of an M&A transaction need to negotiate explicit language to address COVID-19 risk-allocation in the context of an MAE/MAC provision. We have seen this practice followed in response to past crises.

Termination rights

Parties should pay extra attention to the seemingly routine “outside date” termination provisions since government approvals, particularly mandatory merger clearances, and further closing conditions might get delayed under the current conditions. The risks of delay need to balanced between the parties, and so do potential changes in the target’s financial results if the period prior to closing is particularly long. 

In addition, it is now even more important to synchronize termination rights under the financing commitments on the one hand and the purchase agreement on the other hand.

Due diligence and reps & warranties

Extensive due diligence investigations to determine legal and financial risks and vulnerabilities become even more important – from reviewing supply chains to understand dependencies and potential shortfalls, analyzing key contracts to assess, inter alia, termination rights and force majeure provisions, to reviewing liquidity shortages and potential insolvency risks.

Moreover, specific representations (for example as to contingency planning, protocols, etc.) regarding the crisis may become more common in M&A deals in the coming months.

W&I insurance

As COVID-19 is a known risk, insurers will most likely specifically exclude coronavirus-related losses from their policy coverage. In addition, an insured’s “knowledge” of a situation typically excludes that situation from policy coverage. For that reason, the scope of specific diligence regarding COVID-19, which would also apply to post-signing “updates” from a seller, and their effect on the insured party’s knowledge should be carefully addressed with legal counsel in the context of W&I insurances.

Interim operating covenants

In the interim period until closing, sellers normally operate the target’s business in the “ordinary course” to protect its value. However, given the current economic situation, ordinary course might very likely be counterproductive and might actually be the last thing a buyer wants a seller to do – the parties will therefore need to discuss and tailor “emergency” measures to put the seller, without obtaining prior consent of the buyer, in a position to preserve the target’s business in this time of crisis. This applies particularly to liquidity maintenance, debt refinancing and working capital management, but also to exceptions for changes required by law or regulation.

Insolvency protection

Now even more than before, transactions need to be structured insolvency proof, avoiding unpleasant surprises and later disputes with an insolvency administrator or the authorities in the interests of all parties. This relates to analyzing and mitigating the risks for (a) the seller in case of an insolvency of the target and/or the buyer and (b) the buyer in case of an insolvency of the seller.

Employment reorganisation

Potential employment reorganisation features following closing should be addressed in the course of the transaction already – from adhering to essential employment-law procedures to negotiating the effects of potential post-closing reorganization issues on the purchase price.

Purchase price adjustments

Regarding the current uncertainties, we expect locked box mechanics will be rarely seen in the near future – in particular as the net debt and working capital of a target might significantly change in the interim period until closing. A balanced purchase price adjustment mechanism can therefore play an important role to provide for deal certainty.

Periods of administrative suspension and their extent

Posted on by Jessica Zenz-Spitzweg

Since the publication of Royal Decree 463/2020, of 14 March, declaring the state of alarm to manage the health crisis caused by COVID-19 (“RD 463/2020″), these past few days have been marked by a debate regarding the interpretation of its third additional provision, by which “the terms and deadlines to process procedures by public sector entities are suspended or interrupted”.

The debate focused on the scope of this suspension (i.e., if its effects were applicable to deadlines linked to fiscal obligations, such as the filing of tax returns or the payment of debts settled by the Tax Authorities).

The matter has already been resolved by Royal Decree 465/2020, of 17 March, modifying Royal Decree 463/2020, of 14 March, declaring the state of alarm to manage the health crisis caused by COVID-19 (“RD 465/2020″), which adds the following new content to the aforementioned third additional provision:

“6. The suspension of the terms and the interruption of the administrative deadlines mentioned in paragraph 1 will not be applicable to tax periods, which are subject to special regulations, and shall not alter the deadlines set for the submittal of tax returns and self-assessments.”

As a result, it is obvious that the suspension or cancellation of deadlines brought by the state of alarm (RD 463/2020) is not applicable to the periods established for the submittal of tax returns and self-assessments (despite parties having the right to request their postponement, as detailed further on).

Notwithstanding the Royal Decree-Law 8/2020, of 17 March, on extraordinary urgent measures to face the economic and social impact of COVID-19 (“ RDL 8/2020″) does include a whole section on the suspension and/or extension of tax-related deadlines, which we shall analyze below.

Suspension and extension of fiscal-related deadlines

First of all, it is worth noting that RDL 8/2020 entered into force on 18 March 2020 for a period of one month.

Article 33 RDL 8/2020 regulates some events links to the suspension or extension of tax-related deadlines and renders them more flexible, as summarized below:

A. The following terms are extended until 30 April 2020, provided they had launched before RDL 8/2020 entered into force (18 March 2020) and had not expired by then:

  • The terms for tax collection related to liquidations (ii) during the voluntary period, and (ii) during the enforcement period, once orders for recovery were sent.
  • The expiry of full and partial terms on deferment and fractioning agreements already concluded.
  • Terms related to auctions and foreclosure of assets.
  • The periods to comply with court orders, enforcement proceedings or requests for information with tax significance, to lodge pledgings in any actions or proceedings for the enforcement of tax-related matters, sanctions, nullity statements, the return of sums unduly paid, and to correct revocation and material errors.
  • When it comes to orders for recovery, between 18 March and 30 April 2020 no collateral enforcements involving property will be carried out.

B. The following terms are extended until 20 May 2020, provided they are notified at a later date than that in which RDL 8/2020 entered into force (and unless the deadlines that appear in the regulations are broader, in which case the latter shall apply):

  • The terms for tax collection related to liquidations (ii) during the voluntary period, and (ii) during the enforcement period, once orders for recovery were sent.
  • The expiry of full and partial terms on deferment and fractioning agreements already concluded.
  • Terms related to auctions and foreclosure of assets.
  • The periods to comply with court orders, enforcement proceedings, information requests or opening acts involving allegations or hearing procedures.

C. In addition, article 33 also contains the following provisions that are worth mentioning:

  • The taxpayer can meet the abovementioned obligations (i.e. court orders, requests for information with tax significance, allegations) within the initial deadline set, in which case these formalities will be deemed performed.
  • The special terms and deadlines under custom regulations to lodge pleadings and comply with court orders remain untouched.
  • The period ranging between 18 March 2020 and 30 April 2020 will not be taken into account:

    When calculating the maximum duration of tax application procedures, sanctions or reviews launched by the Spanish Tax Agency. However, the latter may order, prescribe, and carry out any essential formalities during the aforementioned period.

    When it comes to the prescription periods for Administration and taxpayer rights, including limitation periods.
  • With the sole intent of calculating the prescription periods in appeals for reversal and economic-administrative proceedings, final resolutions will be deemed notified when an attempt to deliver them between 18 March and 30 April is duly accredited.

    The period to lodge appeals or claims of an economic-administrative nature involving taxes, as well as to appeal (through administrative channels) the decisions adopted in economic-administrative proceedings, will not start until the abovementioned term is over (or until the relevant notification is sent, provided this is of a later date).
  • In accordance with the criteria followed by the Spanish Tax Agency, if the act or resolution was notified before RD 463/2020 entered into force (14 March 2020), and the deadline to lodge an appeal or claim was not over on that date, the period to lodge an economic-administrative claim or appeal will be one month from 1 May 2020 (or from the day following the end of the state of alarm, whichever is later).

Measures to mitigate the negative economic impact in the tourist sector

Posted on by Jessica Zenz-Spitzweg

Advancement and extension (February to June 2020) of the rebates available for the tourist sector. Royal Decree-Law 7/2020, of 12 March, adopting urgent measures to mitigate the economic impact of COVID-19 (RDL 7/2020)

Beneficiaries: companies whose corporate activities fall within the framework of the tourist sector, as well as the retail and catering industry (provided they are linked to tourism and excluding those belonging to the public sector): as long as they generate productive activity during February, March, April, May and June, and that they keep workers with permanent seasonal contracts employed throughout these months.

Benefit: a rebate, during those months, amounting to 50 % of the company’s contributions for common contingencies, as well as for the joint collection of these workers.

Period: from 1-1-2020 to 31-12-2020.

Scope of application: across Spain, except for the Balearic and Canary Islands, during February and March 2020. In the aforementioned months, the rebate that appears under art. 2 of Royal Decree-Law 12/2019 (urgent measures to mitigate the effects of Thomas Cook’s insolvency) shall be applicable.

Act to mitigate the consequences of the COVID-19 pandemic

Posted on by Lisa Fortmüller

The German Bundestag today unanimously adopted the act to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings in expedited legislative action. With this, the extensive protective measures for companies and private individuals, which the Federal Government already recommended on Monday, will enter into force soon. The law now only has to be approved by the Bundesrat and executed by the Federal President, which is generally regarded as a formality.

If you want to know more about the detailed contents of the passed legislation make sure to check out our detailed reports.

Insolvency: https://blog.actlegal.com/the-planned-changes-by-the-act-to-mitigate-the-consequences-of-the-covid-19-pandemic-in-insolvency-law/

Corporate: https://blog.actlegal.com/the-planned-innovations-in-company-law-resulting-from-the-act-to-mitigate-the-consequences-of-the-covid-19-pandemic/

Commercial/Supply Chain: http://blog.actlegal.com/rights-to-refuse-performance-for-debtors-in-the-corona-crisis-planned-creditors-can-take-countermeasures/

Banking/Finance: http://blog.actlegal.com/corona-crisis-special-features-of-lending-law-from-the-banks-perspective/

COVID-19: Temporary closing measures under the state of emergency

Posted on by Ana Pandelea

Under the Covid-19 state of emergency, temporary closing measures of restaurants, hotels, coffee shops, clubs, casinos, associations’ headquarters or other public places may be ordered by the authorities. The measures currently in force include the following:

  • temporary closing of shopping centers, except for:
    • sale of food, pharmaceutical or veterinary products;
    • cleaning services;
    • sale of electronic / electric household products by the economic operators which also ensure home delivery / delivery at the headquarters of purchaser;
    • sale of medical optics products and services;
  • temporary suspension of activities such as food or beverage serving and consumption within restaurants, hotels, cafes or other public places within the interior or exterior spaces designated for this purpose, except for the options which allow clients not to remain in the respective spaces, such as:
    • drive-in;
    • room service;
    • home delivery;
  • temporary suspension ofall cultural, scientific, artistic, religious, sports, entertainment, gambling, SPA and personal care activities which are performed in closed spaces;
  • temporary suspension of dental medicine offices, except for urgent interventions;
  • events of more than 100 persons in open spaces are also prohibited, while events with a lower number of participants may be organised provided that a distance of minimum 1 meter is ensured between participants.

At the same time, additional measures must be applied by public institutions and economic operators, which are required to mark the areas designated for the public / clients’ access within their respective spaces, as well as the customer-care and the sales’ area with visible indicators to guide the people to observe the minimal safety distance of 1.5 meters.

Stricter safety measures have also been adopted for the agri-food market administrators, which must organise the sale activity so that social distancing is maintained between agricultural producers, merchants and purchasers. Agricultural producers and merchants are also obliged to wear safety masks and gloves.

COVID-19: The new False Statements offence and how not to become a nation of criminals

Posted on by Ana Pandelea

Starting 23 March 2020, became applicable the measure imposed through the Military Ordinance no. 2/2020 on measures for preventing the spread of COVID – 19 according to which, between the hours 22:00 – 06:00, Romanian citizens may leave their houses only for:

  • travel for professional interest, including from the domicile to the place(s) of professional activity and back;
  • travel for the acquisition of goods that cover the basic needs of individuals and pets, as well as goods necessary for performing the professional activity;
  • travel for medical care that cannot be delayed or provided remotely;
  • travel for justified reasons, such as caring / accompanying the child, assisting elderly, sick or people with disabilities, or death of a family member;
  • short trips, near the house / household, related to individual physical activity and pets needs.

Although initially the measure was just a recommendation as regards travels between 06:00 – 22:00 for the above reasons, the Military Ordinance no. 3/2020 (effective since 25 March 202), the restriction was extended for the entire day and a few new reasons were added:

  • travel for blood donation to the blood transfusion centres;
  • travel for humanitarian or voluntary purposes;
  • travel for agricultural activities;
  • travel of agricultural producers for the marketing of agri-food products.

At the same time, new restrictions were added for people who have reached the age of 65 who may now leave their houses – for some of the reasons shown – only between 11:00 and 13:00.

Both in case of travelling for professional interest, and in case of travelling for personal interest, it is necessary for the persons who are outside their houses to have a own liability statement in order to prove the reason for their travel.

The purpose of the own liability statement is to alert the declarant on the importance of its content, on the reality that this statement must express, especially considering the purpose for which the obligation of its drafting was established.

One of the elements included in the statement model made publicly available is the one according to which the person who drafts and signs it knows the provisions of art. 326 Criminal code (on false statements) and of art. 352 Criminal Code (on compromising the fight against diseases).

Since the latter offence has been intensely debated lately, we now draw attention to the false statements offence that can be easily committed under the current circumstances, especially given the lately reluctance of Romanians to follow the authorities recommendations meant for stopping the spread of COVID – 19 virus.

According to the legal text, the false statements offence consists in the false statement of the truth, made to a person among those provided in art. 175 or to a unit in which that person performs his/her activity in order to produce a legal consequence, for himself/herself or for another, when, according to the law or the circumstances, the statement serves to produce that consequence and is punished with imprisonment from 6 months to 2 years or with a criminal fine.

A few days ago, through the Government Emergency Ordinance 28/2020, the minimum limit of the imprisonment penalty for the basic form of the offence (which was previously of 3 months imprisonment) was increased and a new form of incrimination was introduced, which consists in the false statement of the truth, made to a person from the ones provided in art. 175 or to a unit in which that person performs his/her activity, committed to conceal the existence of a risk regarding the infection with an infectious contagious disease which is now punished with imprisonment from 1 to 5 years or a criminal fine.

If the aggravated form of the offence has been designed to hold responsible (and to sanction more severely) the persons who enter the territory of Romania and falsely state before the authorities regarding the areas they came from or they have transited and / or the persons who do not declare or declare falsely any coronavirus symptoms they have, the offense having in such cases an express purpose – hiding the existence of a risk regarding the infection with an infectious-contagious disease – the basic form of the offence will now be relevant for absolutely all Romanian citizens that may be held criminally responsible, who travel outside their house under the mentioned conditions.

Thus, the offence can be easily committed by any person who chooses to alter the truth contained in the own liability statement and presents it to the authorities competent to request it.

For example, in case a person leaves the house for a purpose other than those explicitly listed by law, but drafts a statement in which he/she uses one of those cases and presents it to the competent authority in order to justify the travel, that person commits the false statements offense.

Or, another way of committing the offence is by including in the content of the statement only one of the reasons provided by law, with the travel actually extends to other purposes provided by law or not, in the sense of partially altering the truth.

Incorrect statement of the truth regarding any of the other elements contained in the statement – like place where the declarant lives, hours or places between which the person travels – can also trigger criminal liability for the false statements offence , therefore committing it can take various forms.

The sanctioning of such a criminal act is justified, on the other hand, by the value protected through its incrimination – public trust – which represents the nucleus of social relations and the guarantee that everything will develop under predictable conditions.

What is also interesting is the sanction applicable in case a person travels outside the house without however presenting an own liability statement. In this respect, the Military Ordinance 2/2020 provides that breach of the first emergency measures provided in art. 1 -7 triggers disciplinary, civil, contraventional or criminal liability, as per the provisions of the Government Emergency Ordinance no. 1/1999 on the regime of the state of siege and the regime of the state of emergency. We note in this respect that, by corroborating art. 27, 28 and 9 of Government Emergency Ordinance no. 1/1999, the breach of the obligation to comply with and apply all the established measures specific to the established state of emergency represents a contravention and is sanctioned with the contraventional fine from RON 100 to RON 5,000. Therefore, if the false statement remains a criminal offence and is punished by imprisonment or criminal fine, the lack of the own liability statement is only sanctioned contraventionally.

Moreover, since the statement must have a written form (completed in advance), we cannot help wonder to what extent such statement can be drafted by people who do not know or cannot write (which in Romania nowadays is unfortunately not a rare case).

To conclude, although the own liability statement is apparently a simple instrument, it will be necessary to pay greater attention to its drafting, since by corroborating the multitude of specific ways of committing the false statements offence with the very large number of people who have the obligation to draft the own liability statement, one can easily reach an „epidemic” of criminal files at national level.

And we do not think that one more is needed. Solving and coping with the Covid 19 one should take us sufficient time, at least for now.

Public support for restructuring

Posted on by Lisa Fortmüller


The legislative efforts to help business in the face of the coronavirus epidemic are gaining steam. One of the legal acts currently under consideration is the act on public support to rescue or restructure businesses, a draft of which was published on March 20, 2020. The document has gone to the Social Dialog Council (Rada Dialogu Społecznego) for assessment. Its final shape is yet unknown.

The solutions under consideration cover public support for businesses who are in need of: (a) rescue, (b) provisional restructuring support, (c) restructuring. The main form of help to be provided are loans which can be taken out in each of the above cases. In accordance with the draft bill, such a loan would be secured, with the available security types including a mortgage, a civil-law pledge or a registered pledge, claims assignment, a statement on submission to enforcement and a blank promissory note. Other support offered to businesses which have the option of restructuring is, i.a. shares or bonds subscription, payment of an administrative fine in instalments or cancellation of the fine.

The governmental aid proposed in the draft bill is worth PLN 100m a year, with up to 69% of this amount (PLN 69m) earmarked for loans, further 29% (PLN 29m) for shares or bonds subscriptions and the remaining 2% (PLN 2m) intended to cover the cost of providing the support.

CONDITIONS FOR RECEIVING FINANCIAL SUPPORT

Conditions regarding the purpose of the support

Eligible business should show that the governmental aid will be used to prevent and mitigate social difficulties or overcome market challenges (as defined in detail in the act) as well as demonstrate that in case the support is not provided, these goals will not be fulfilled or will not be fulfilled as fully. Additional conditions have been determined for businesses with assets acquired from another business which received governmental aid before the transaction, as well as for businesses belonging to capital groups. Further detailed requirements have been also defined with respect to the different purposes the aid may be used for: (a) company rescue, (b) provisional restructuring support, (c) restructuring.

Conditions regarding the business

The financial aid is addressed to a limited number of businesses. Eligible businesses must be able to show that they are insolvent, as defined in the Bankruptcy Law, or are facing insolvency, as defined in the Restructuring Law. In the latter case, businesses are also required to satisfy additional conditions related to showing the incurred losses and/or the debt-to-equity ratio.

The financial aid will not be available to businesses which, i.a.:
1) have been operating less than 3 years before applying for the government’s help,
2) operate in the steel, coal mining or finance industry,
3) operate in a market with long-term structural overcapacity or facing long-term structural overcapacity,
4) have already been provided with public support within the last 10 years, with some exceptions allowing to apply for the help sooner. The exceptions cover cases where the help is sough as part of the same procedure regarding the grant of financial aid as on the previous occasion of using governmental support. For instance, it will be possible to obtain help for company rescue, followed by provisional restructuring support and, finally, restructuring.

The abovementioned restrictions will not apply to a business providing services of general economic interest, where the help is necessary to ensure their continuity, however, only until the obligation to provide these services is transferred to another business.

HOW TO APPLY?

Generally, in accordance with the draft bill, a business should apply for the financial support to the minister competent to handle economic affairs, however, the minister may delegate its powers to the extent of this aid program to the Industrial Development Agency (Agencja Rozwoju Przemysłu).

The application should be appended with information and documents similar to the ones required in the case of filing for restructuring, with some types of information required to be provided in more detail (thus, the formal requirements regarding the application may be quite high). The application for company rescue will require the narrowest scope of information. Next in the order of complexity is the application for provisional restructuring support, with the most detailed information being required in the case of the application for restructuring support.

The applications will be processed in the course of administrative procedure. The decision issued as a result will be appealable. Once filed, the application should be examined within the deadline of 30 days, which may be extended up to 60 days if a given case is especially complex.

The proposed changes are a step in the right direction to help struggling businesses obtain the government’s support at the time of epidemic. However, there are some doubts as to the relatively long period of application processing and the lack of practical consequences in case the application is not examined on time.

Let us know if you have any questions.

NEW LABOR LAW REGULATIONS ACCORDING TO THE COVID-19

Posted on by Lisa Fortmüller

It is important to see that the Government has declared a state of emergency throughout the territory of Hungary due to the COVID-19 epidemic causing mass disease, and therefore provides for related measures in government decrees. Thus, under the special legal order, the Government may introduce new rules on the matters covered by this Article, which may even override the following.

There are several decrees concerning the immediate measures adopted to alleviate the economic impacts of the coronavirus epidemic have been published in Magyar Közlöny [Hungarian Gazette].

One, of the most significant decree is adopted new labor law regulations, decree No. 47/2020. (III. 18.) contains very important measures not only for certain sectors but for the whole economy.

Due to the economic downturn resulting from the epidemic, employers need to make quick, accurate, responsible, and last but not least, legitimate decisions for their employees.

According to the government decree, the Labor Code must be applied for the duration of the emergency period and for thirty days after its termination, that the employer may unilaterally assign the employee to work from home or telework. This means, this time there is no statutory limit to the duration of work at home. Before the decree, the total duration of such work might not exceed forty-four working days or three hundred and fifty-two hours per calendar year. Teleworking, which had to be agreed in the employment contract, was made unilaterally ordered by the employer.

A further relief is that the employer may adjust the working time schedule within ninety-six hours before the beginning of the daily work, if there are any unforeseen circumstances in the management or operation of the company.

The decree also contains a rule that the employer may take any necessary and justified measures to control the employee’s state of health.

The decree also contains regulation, that the employer has the right to decide about the ordination of home office alone, without the objection of the employee.

The decree eases the burden on companies operating in certain sectors, such as hospitality, tourism, entertainment, gambling, film, performing arts, event organizer and sports services, by not having to pay the public wage for their employees until June, 2020.

The prime minister stressed the necessity of measures to protect workplaces and warned of a serious wave of unemployment approaching. He asked employers and employees to make personal efforts to preserve jobs.

According to the decree, further regulations will be determined by further regulations.