A Step Toward a Resurgent Slovak Bond Market? (September 10, 2013)

The Ministry of Finance of the Slovak Republic recently proposed amendments to the Bond Act (530/1990 Coll.) that seem to broaden access to the Slovak bond market.

The amendments provide the following important changes:

• Slovak limited liability companies (s.r.o.) may issue convertible bonds;
• bonds may contain a subordination clause;
• information obligations and issuance procedures are relaxed.

The primary aim seems to be to help limited liability companies gain the access to alternative forms of financing. Limited liability companies currently are prohibited from issuing bonds. The amendments open access for them to the bond market. This may, in particular, help perspective start–ups, which are often limited liability companies that face difficulty in obtaining bank financing.

The amendments are planned to become effective as of January 1, 2014.

While noteworthy, the amendments still have a long way to go before they are introduced.  The amendments are only a working draft and have not been submitted to the Slovak legislative authority yet so we can expect changes. We will continue to monitor this situation for you and provide updates as soon as they are available.