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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
of Bosnia and Herzegovina
Objective and Scope of the Law
This Law sets out the limits and procedures for a publicly owned o
controlled enterprise (as is defined hereinafter) to make gifts.
For the purposes of this Law, a publicly owned or controlled enter
shall mean an enterprise in which the Federation government, gover
bodies, cantons, cities or municipalities either (a) wholly own
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
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
which the Public Enterprise, makes a disposition (including a dis
by the sale of goods or services) on terms (i) where the sale p
below market value and the terms of such sale are intended to favo
recipient of the disposition or other third party and cannot objec
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
Limits for making gifts
1. A Public Enterprise may only make gifts out of profits and
gifts may only be made for the purposes of sports, culture, social
and humanitarian purposes.
2. A transaction at an undervalue made by a Public Enterprise
be considered a gift.
3. A gift by a Public Enterprise shall only be considered val
made where the provisions of this Law are fully satisfied.
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
the amount (if any) to be allocated in its budget for gifts in t
financial year. In deciding on the amount to allocate for gifts,
Management Board shall have due regard to the overall financial
commitments of the Public Enterprise in the financial year in whic
allocation is made including (i) amounts required by the Public
in that financial year for fulfilling any business plan of the Pub
Enterprise; and (ii) the capital and other investments required
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
other government/public body under whose portfolio the Public Ente
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
allocation referred to in paragraph 1 of this Article, for such in
to be valid, it must have the unanimous approval of the members of
Management Board and based on that decision, the Ministry or other
government/public body under whose portfolio the Public Enterprise
shall make a determination whether such increase in allocation is
justified (in light of the financial standing of the Public Enter
and thereafter, where it deems fit, may give its consent to the pr
Procedures for making gifts
1. The Statute of the Public Enterprise must expressly permit
to be made.
2. The beneficiary of such gifts must be a lawfully constitut
with legal personality recognised under the laws of BiH and such g
must not be for political party financing or political end.
3. The Public Enterprise must be solvent at the time of makin
gift. This must be certified by an independent auditor or an audit
authorized under the Law on Auditing the Budget of the Federation
Bosnia and Herzegovina (Official Gazette of the FBH, 48/99). Th
shall issue a Certificate of Solvency for these purposes and shall
declaration therein as to whether or not, in the financial year co
the proposed gift is within the annual allocation provided for und
Article 4 hereof.
4. For a gift to be validly made, it must have the unanimous
of the Management Board of the Public Enterprise. This approval mu
evidenced by a written decision of the said Management Board and c
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
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
another type of enterprise under the applicable laws, the Ministry
other government/public body under whose portfolio the Public Ente
falls, shall be required to approve the decision of the Management
to make such a gift.
7. The Ministry or other government/public body referred to i
preceding paragraph may only approve the gift where (i) it is pr
with a Certificate of Solvency; and (ii) it is presented with th
unanimous decision of the Management Board; and (iii) it is sati
the gift is to a lawfully constituted body and for lawful purposes
based on the financial standing of the Public Enterprise, commerci
8. After the Public Enterprise is privatized and transformed
to the applicable laws, the Ministry or other government/public bo
referred to in paragraph 6 of this Article, shall not be required
approve the gift but the Management Board shall put the decision o
gifts to the General Assembly of Shareholders for approval. The De
so put shall be considered adopted by the General Assembly of Shar
where seventy-five (75) percent of those present and voting appr
9. Before the transfer of any gift to the beneficiary identif
the decision on the gift, the Decision on the proposal to make a g
shall be published in the Official Gazette of the Federation. A p
one month shall have elapsed between the publication in the Offici
Gazette and the transfer of the gift to the beneficiary.
10. At the end of each financial year, the Enterprise shall discl
the public in at least one newspaper widely distributed in the Fed
of Bosnia and Herzegovina, full details of all gifts made by the
enterprise including the total amount made in that financial year
beneficiary/ beneficiaries of same with a statement of compliance
annual allocation provided for in Article 4 hereof.
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
that a Public Enterprise makes a disposition by way of gift, contr
the provisions of this Law, and without prejudice to any other mea
prescribed under the applicable laws, each member of the Managemen
shall be responsible for reimbursing all amounts unlawfully dispos
ed of by
the Public Enterprise by way of gift.
Entry into force and Publication
This Law shall enter into force immediately.
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Emerika Bluma 1, 71000 Sarajevo; Tel: +387 33 283 500, Fax: +387 3
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