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2 IMPORTANT NOTICE This presentation (the "Presentation") has been prepared by Schoenherr S.R.L. ("Schoenherr") for the recipient(s) to which it was sent and/or presented, and certain of that recipient s affiliates, for information and discussion purposes only. Recipients of this Presentation should not treat the contents of this Presentation as a substitute for obtaining specific advice relating to legal, regulatory, commercial, financial, audit and tax matters, and are to make their own independent assessments concerning such matters. Neither this Presentation, nor any part of it nor anything contained in this Presentation or referred to in it nor the fact of its distribution, should form the basis of or be relied on or act as a recommendation to pursue (or not to pursue) a particular course of action. The contents of this Presentation and any views expressed herein may not, directly or indirectly, be copied, distributed, published or reproduced, in whole or in part, or disclosed to any other person. Schoenherr retains the right to request the return or destruction of this Presentation at any time Schoenherr 2

3 Practical Hints for Investors Vladimir Iurkovski (LL.M.) 3 February 2017

4 Content What will we talk about today? Golden Rules of Investing Structuring an Investment in Moldova Conclusions Q&A 2016 Schoenherr 4

5 Golden Rules of Investing Before entering 1. Make sure your intellectual property is protected in Moldova (Moldova is not an EU-member and local filings may be required). 2. Have proper advisors on board (Moldova offers many pitfalls; do not try to work cross-border with Romanian or Russian advisors). 3. Analyze the sector of interest. 4. Structure while taking into account BITs and DTTs (Moldova has entered into many BITs and DTTs including with Austria ). 5. Can your model fit local particularities? (do consider that Moldova is very advanced in some areas and very burocratic and inflexible in others) 6. Choose the best form to enter with. (in the case of greenfield investments, the SRL = LLC/GMBH appears the best and least expensive option) 2016 Schoenherr 5

6 Golden Rules of Investing After entering 1. Institute and enforce internal verification rules. (control is key; taking the role as general manager without being present in Moldova may be risky) 2. Be prepared to adjust to changes in legislation. (Moldova is a country in transition and the legislation is in flow) 3. Make sure to have proper personnel. (be aware that you will require a work permit in order to be general manager of a Moldovan SRL) 4. Be prepared to defend your position. 5. Do not be afraid of novelties. 6. Have proper advisors on board Schoenherr 6

7 Structuring an Investment in Moldova Greenfield (Individually) 1. Usual forms LLC (= GmbH) JSC (= AG; two-tier structure is possible). 2. Permanent establishments Yes, doable But cannot hold licenses. 3. One-stop shop principle vastly implemented Schoenherr 7

8 Structuring an Investment in Moldova Greenfield (Individually) 1. Regulatory Over 40 activities licensed Over 100 activities subject to authorizations 2. Banking & monetary regulations. 3. Almost perfect cadaster system. 4. Immigration rules in place. 5. Court system: 3-tier Schoenherr 8

9 Structuring an Investment in Moldova Greenfield (Jointly) To Know Foreign Investor (Be Prepared) 1. Fitting business model to local legislation. 2. Obtain regulatory approvals (if needed). 3. Limited freedom of contract with shareholders agreement & corporate decisions. 4. Not all corporate concepts in place locally (e.g. Prokurist). Local Investor (Be Prepared) i. Structuring shareholding in a foreign jurisdiction. ii. Subjecting JV to a foreign legislation. iii. Less chances for a 50%-50% JV (avoiding deadlocks). iv. Appointment several managing directors. 5. JV to be properly structured. v. Supervising bodies shall be instituted. 6. Appointing your management Schoenherr 9

10 Structuring an Investment in Moldova Greenfield (Jointly) Example Phase I 2016 Schoenherr 10

11 Structuring an Investment in Moldova Greenfield (Jointly) Example Phase II 2016 Schoenherr 11

12 Structuring an Investment in Moldova Greenfield (Jointly) Example Phase III 2016 Schoenherr 12

13 Structuring an Investment in Moldova Brownfield (Individually) Usual Phases 1. Always consider timing. 2. Asset deal vs share deal. 3. DD (crucial). 4. Mergence clearance. 5. Regulatory prior approvals / approvals / notifications. 6. Contract-related formalities (e.g. authentication). 7. Registration formalities. 8. Consider keeping former management under consultancy contract. 9. Post-closing (e.g. mandatory buyout) Schoenherr 13

14 Structuring an Investment in Moldova Brownfield (Jointly) To Know Foreign Investor (Be Prepared) 1. Less willingness from counterparties to disclose real situations. 2. Counter-proposal for simpler business model and contractual framework. 3. Counter-proposal for Moldovan substantive law to apply. 4. Counter-proposal for Moldovan / CIS court to settle all disputes. 5. Drafts come in Romanian and/or Russian language(s). Local Investor (Be Prepared) i. Go through DD. ii. Contracts to be in a foreign language. iii. Contracts to be subjected to a foreign law. iv. Arbitration clauses. v. Complex and lengthy negotiations. vi. Hire counsels (including foreign) to assist Schoenherr 14

15 Conclusions Is it worth investing? 1. Yes, it is. 2. Select the sector of interest carefully. 3. Choose your business partners wisely. 4. Adjust your business model to local particularities. 5. Be prepared to defend your position. 6. In the end it will be awesomely great for you! 2016 Schoenherr 15

16 vladimir iurkovski Attorney-at-law T E v.iurkovski@schoenherr.eu Position Attorney-at-law, Schoenherr Chisinau Practice Areas Corporate M&A, Dispute Resolution Education Stockholm University (LL.M. 2006) Memberships Publications Languages Union of Bars from Moldova, Chisinau Bar Author of articles on commercial & other legal topics English, Russian, Romanian, French 16

17 schoenherr offices 2016 Schoenherr 17

18 schoenherr facts & figures Practice Areas Banking, Finance & Capital Markets Compliance & White Collar Crime Corporate/Mergers & Acquisitions Dispute Resolution EU & Competition Insolvency & Restructuring Insurance IP, IT & Life Sciences Labour & Employment New Technologies Real Estate Regulatory Tax 2016 Schoenherr 18

19 schoenherr quotes Sources say: The [Schoenherr] lawyers bring total dedication to matters and are absolute experts in their respective fields. Chambers Europe Schoenherr s clients are in good hands when seeking advice on financial restructuring, acquisition and project finance or regulatory matters. Legal 500 Market-leading Austrian firm with superb expertise in public takeovers and corporate reorganisations, and a strong track record in the energy, banking and insurance sectors. Clients benefit from its specific industry expertise and strong capabilities throughout the CEE and SEE region. Chambers Europe 2016 Schoenherr 19

20 Thank you!

21 Schoenherr is one of the top corporate law firms in central and eastern europe. With our wide-ranging network of offices throughout CEE/SEE, we offer our clients unique coverage in the region. The firm has a long tradition of advising clients in all fields of commercial law, providing seamless service that transcends national and company borders. Our teams are tailor-made, assembled from our various practice groups and across our network of offices. Such sharing of resources, local knowledge and international expertise allows us to offer the client the best possible service.