Bosnia: Republic of Srpska introduces new law on the deadlines for settlement of financial obligations in commercial transactions

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Bosnia: Republic of Srpska introduces new law on the deadlines for settlement of financial obligations in commercial transactions

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The National Assembly of the Republic of Srpska has adopted a law (New Law) that regulates the deadlines for the settlement of financial obligations and penalties applicable in cases of failure to comply.

The New Law – published in Official Gazette number 31/18 – became effective as of April 24 2018.

The New Law applies to legal entities in the territory of Bosnia and Herzegovina, with the exception of financial institutions, economic entities in the process of insolvency proceedings, or economic entities subject to garnishment or foreclosure arrangements.

The main novelties introduced by the New Law concerning commercial transactions are as follows:

  • The payment period must not be longer than 60 days (unless the debtor provides adequate means of security – a bank guarantee containing the terms 'irrevocable', 'unconditional', or 'debit-free at first call without objection', as well as bills of exchange issued by the bank); and

  • In cases where a contract does not specify a payment period, a default payment period of 30 days will apply.

The deadline for fulfillment of a financial obligation commences from:

  • The date the debtor received the relevant invoice or other official document;

  • The date the creditor fulfilled his/her obligation – in cases where it is not possible to determine the date of receipt of an invoice; or

  • The expiry date for the inspection of the subject of the purchase – if such a deadline is prescribed in a contract or under law.

It is important to note that the creditor is entitled to default interest in cases of delays in settling the obligation.

A fine ranging between KM5,000 ($3140) and KM15,000 will be imposed on a business entity debtor that fails to meet its financial obligations to suppliers within the stated deadlines.

A fine of between KM1,000 and KM3,000 will be imposed on the responsible physical person in the debtor entity.

The provisions of the New Law do not apply to agreements concluded before the New Law came into force.

Eurofast advises clients active in the market in Bosnia to carefully review their existing settlement and collection practices as well as future business transaction plans. Our team is ready to assist with any advice required to ensure compliance with the New Law.

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