Yugoslavia: Combating late payments in transactions

The general rule of the newly-adopted Law on the Terms for the Settlement of Monetary Obligations in Commercial Transactions (the "Law") is that all payments between business entities have to be settled within 60 days; where the debtor is a subject from the public sector, the maximum agreed period for payments is 45 days.

The law foresees some exceptions from this general rule for business entities and for the public sector, as well as for the business entities in the restructuring proceeding. The exceptions are as follows:

Exceptions for business entities

► Instalment payments - payment period is 90 days, whereby at least 50% of the monetary obligation has to be paid within the first half of the agreed payment period.
► Bank guarantee - where the debtor provides a bank guarantee (unconditional, irrevocable and payable on first demand without the right to object), the parties are free to agree different payment periods than provided under the Law (longer than 60 days).
► Bill of exchange guaranteed by the bank - where the debtor provides a bill of exchange guaranteed by the bank, the parties are free to agree different payment periods than provided with the Law (longer than 60 days).

Exceptions for the public sector

The only exception for public sector subjects is where the debtor is the Republic Health Insurance Fund or the user of the assets of the Republic Health Insurance Fund. For these subjects the maximum payment period is 90 days. The intention of the Law is to reduce the maximum period for payments of the Republic Health Insurance Fund in a stepwise manner, until a 90 days maximum period is reached. The Law provides for the following scheme:

► from 31 March 2013 until 31 December 2013 the maximum payment period shall not exceed 150 days
► from 1st January 2014 until 31 December 2014 the maximum payment period shall not exceed 120 days
► from 1st January 2015 onwards, the maximum payment period shall not exceed 90 days.

Exceptions for entities during the restructuring procedure

Until 14 January 2014, the Law shall not apply to entities within a restructuring proceeding - i.e. to commercial transactions where the debtor is subject to a restructuring.

In all other cases, the general rule of maximum 60 days payment period for business entities and 45 days maximum payment period for public sector shall apply.

 
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