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Restrictions on Financial Assistance for Share Acquisitions

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In Croatia, there are restrictions on the ability of a company to guarantee and/or provide security to support borrowings incurred to finance or refinance the direct or indirect acquisition of shares. According to Croatian law, an agreement under which a company grants financial assistance to third parties in the form of advance payment, security, or loan for the acquisition of its own shares is invalid.

However, there are some exceptions to this rule:

  • The operation of credit and financial institutions
  • Financial assistance for the acquisition of shares by employees

Additionally, there are no restrictions on a company providing financial assistance for the acquisition of shares in another company, as long as it is done lawfully and in compliance with all applicable regulations.

Foreign Lenders

Croatia has a number of tax incentives and other benefits that apply to foreign lenders. For example:

  • Interest paid to foreign lenders (not natural persons) in Croatia is subject to withholding tax, which can be reduced or waived depending on the terms of bilateral treaties regulating the avoidance of double taxation.
  • There are no specific taxes or fees applicable to foreign lenders with respect to loans, mortgages, or other security documents for the purposes of effectiveness or registration.

Judicial Enforcement

Croatian courts recognize and enforce judgments given against companies in other jurisdictions, such as New York or English courts, without re-examination of the merits of the case. The country’s courts also recognize foreign governing laws in contracts, although there are certain exceptions to this rule due to the protection of Croatia’s public interests.

In summary, while there are some restrictions on financial assistance for share acquisitions, Croatia has a number of tax incentives and other benefits that apply to foreign lenders. Additionally, the country’s courts are generally willing to recognize and enforce judgments given against companies in other jurisdictions, and to recognize foreign governing laws in contracts.