New Croatian Capital Markets Act

A new Croatian capital markets act looks to upgrade the Croatian capital markets regime to EU standards.

On 15 July 2008 the Croatian Parliament passed the new Croatian Capital Markets Act (Zakon o trzistu kapitala, Official Gazette No. 88/2008, 146/08 and 74/2009; the Act), which came into force on 1 January 2009. In order to upgrade the Croatian capital markets regime, the Act incorporates a line of EU guidelines and regulations. Although the impact of the Act is yet to be seen in real terms, it certainly provides a solid platform for more certainty and sophistication in the Croatian capital markets.

A new EU-style law

In order to upgrade the Croatian capital markets regime, the Act incorporates a line of EU guidelines and regulations governing credit institutions, investors' protection, securities, conflicts of interest, investment firms, and more. The Act entirely replaces the former Securities Markets Act (Zakon o trzistu vrijednosnih papira, Official Gazette No. 84/02 and 138/06; ZTVP), meaning it replaces a rather underdeveloped capital markets law with a new EU-style capital markets law. This should appeal to both foreign and local investors. The volume of the relevant EU regulations also determined the volume of the Act – while the ZTVP had only about 90 articles the new Act has about 600 articles.

Further streamlining of the local capital markets with the EU regulations and case law is to come through the legislative activity of the national regulator of the financial sector (outside banking sector), being the Croatian Financial Services Supervisory Agency (Hrvatska agencija za nadzor financijskih usluga; HANFA). Due to a dynamic development of the corresponding EU regulations, it is reasonable to expect the Act to change more frequently than if it were driven only by local developments (the first amendment to the Act already being enacted back on 29 June 2009).

Also, in addition to the Act, the Croatian Parliament on 15 December 2008 passed the Law on Criminal Offences against Capital Markets (Zakon o kaznenim djelima protiv trzistu kapitala, Official Gazette No. 152/08) which also came into force on 1 January 2009 and which for the first time sanctions offences against the local capital markets.

Upgrades

The Act upgrades all segments of the Croatian capital markets including, in particular:

conditions for establishment, operation, supervision and dissolution of investment firms, market operators and system operators in Croatia...