Law on Gifts by Publicly Owned or Controlled Enterprises of the High Representative Decisions

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Law on Gifts by Publicly Owned or Controlled Enterprises in the Federati
on of Bosnia and HerzegovinaOffice
of the High RepresentativeHR`s Decisions
Thursday, March 06, 2003

Decisions in the Economic Field
Law on Gifts by Publicly Owned or Controlled Enterprises in the Fe
deration
of Bosnia and Herzegovina

Article 1
Objective and Scope of the Law
This Law sets out the limits and procedures for a publicly owned o
r
controlled enterprise (as is defined hereinafter) to make gifts.
Article 2
Definitions
For the purposes of this Law, a publicly owned or controlled enter
prise
shall mean an enterprise in which the Federation government, gover
nmental
bodies, cantons, cities or municipalities either (a) wholly own
the
enterprise; or (b) own more than fifty (50) percent of the sha
res or share
capital of the enterprise; or (c) have less than 50% of the shar
es or
share capital but control the management and/or supervision of the

enterprise (hereinafter referred to as “Public Enterprise”)
.
For the purposes of this Law, a transaction at an undervalue is on
e in
which the Public Enterprise, makes a disposition (including a dis
position
by the sale of goods or services) on terms (i) where the sale p
rice is
below market value and the terms of such sale are intended to favo
ur the
recipient of the disposition or other third party and cannot objec
tively
be said to be for the benefit or in the interests of the Public
Enterprise; or (ii) where a Public Enterprise makes a payment wh
ich is not
for goods or services provided to it by the recipient of the payme
nt.
Article 3
Limits for making gifts
1. A Public Enterprise may only make gifts out of profits and
such
gifts may only be made for the purposes of sports, culture, social
welfare
and humanitarian purposes.
2. A transaction at an undervalue made by a Public Enterprise
shall
be considered a gift.
3. A gift by a Public Enterprise shall only be considered val
idly
made where the provisions of this Law are fully satisfied.
Article 4
Annual Allocation for gifts
1. In each financial year, the Management Board of the Public

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Enterprise based on the profits disclosed in its audited financial

statement prepared in accordance with the applicable laws, shall d
ecide on
the amount (if any) to be allocated in its budget for gifts in t
hat
financial year. In deciding on the amount to allocate for gifts,
the
Management Board shall have due regard to the overall financial
commitments of the Public Enterprise in the financial year in whic
h the
allocation is made including (i) amounts required by the Public
Enterprise
in that financial year for fulfilling any business plan of the Pub
lic
Enterprise; and (ii) the capital and other investments required
for the
proper maintenance and/or growth of the Public Enterprise.
2. Upon the Management Board of the Public Enterprise decidin
g on the
amount to be allocated for gifts in a financial year, the Ministry
or
other government/public body under whose portfolio the Public Ente
rprise
falls, shall be required to approve the annual allocation for gift
s in the
budget of the Public Enterprise.
3. Where the Public Enterprise proposes to increase the annua
l
allocation referred to in paragraph 1 of this Article, for such in
crease
to be valid, it must have the unanimous approval of the members of
the
Management Board and based on that decision, the Ministry or other

government/public body under whose portfolio the Public Enterprise
falls
shall make a determination whether such increase in allocation is
justified (in light of the financial standing of the Public Enter
prise)
and thereafter, where it deems fit, may give its consent to the pr
oposal.
Article 5
Procedures for making gifts
1. The Statute of the Public Enterprise must expressly permit
gifts
to be made.
2. The beneficiary of such gifts must be a lawfully constitut
ed body
with legal personality recognised under the laws of BiH and such g
ifts
must not be for political party financing or political end.
3. The Public Enterprise must be solvent at the time of makin
g the
gift. This must be certified by an independent auditor or an audit
or
authorized under the Law on Auditing the Budget of the Federation
of
Bosnia and Herzegovina (Official Gazette of the FBH, 48/99). Th
e auditors
shall issue a Certificate of Solvency for these purposes and shall
make a
declaration therein as to whether or not, in the financial year co
ncerned,
the proposed gift is within the annual allocation provided for und
er
Article 4 hereof.
4. For a gift to be validly made, it must have the unanimous
approval
of the Management Board of the Public Enterprise. This approval mu
st be
evidenced by a written decision of the said Management Board and c
learly
identify the proposed beneficiary, the amount of the gift and the
justification for making the gift.
5. No member of the Management Board shall participate in a d
ecision
to make a gift where s/he has a personal interest in the matter.
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6. Where the Public Enterprise is not privatized and transfor
med into
another type of enterprise under the applicable laws, the Ministry
or
other government/public body under whose portfolio the Public Ente
rprise
falls, shall be required to approve the decision of the Management
Board
to make such a gift.
7. The Ministry or other government/public body referred to i
n the
preceding paragraph may only approve the gift where (i) it is pr
esented
with a Certificate of Solvency; and (ii) it is presented with th
e written
unanimous decision of the Management Board; and (iii) it is sati
sfied that
the gift is to a lawfully constituted body and for lawful purposes
and
based on the financial standing of the Public Enterprise, commerci
ally
justified.
8. After the Public Enterprise is privatized and transformed
pursuant
to the applicable laws, the Ministry or other government/public bo
dy
referred to in paragraph 6 of this Article, shall not be required
to
approve the gift but the Management Board shall put the decision o
n any
gifts to the General Assembly of Shareholders for approval. The De
cision
so put shall be considered adopted by the General Assembly of Shar
eholders
where seventy-five (75) percent of those present and voting appr
ove the
decision.
9. Before the transfer of any gift to the beneficiary identif
ied in
the decision on the gift, the Decision on the proposal to make a g
ift
shall be published in the Official Gazette of the Federation. A p
eriod of
one month shall have elapsed between the publication in the Offici
al
Gazette and the transfer of the gift to the beneficiary.
10. At the end of each financial year, the Enterprise shall discl
ose to
the public in at least one newspaper widely distributed in the Fed
eration
of Bosnia and Herzegovina, full details of all gifts made by the
enterprise including the total amount made in that financial year
and the
beneficiary/ beneficiaries of same with a statement of compliance
with the
annual allocation provided for in Article 4 hereof.
Article 6
Individual Responsibility for breach of the provisions of this Law
The members of the Management Board shall have joint and several
liability, for any breach of the provisions of this Law. In the e
vent
that a Public Enterprise makes a disposition by way of gift, contr
ary to
the provisions of this Law, and without prejudice to any other mea
sures
prescribed under the applicable laws, each member of the Managemen
t Board
shall be responsible for reimbursing all amounts unlawfully dispos
ed of by
the Public Enterprise by way of gift.
Article 7
Entry into force and Publication
This Law shall enter into force immediately.

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