COUNCIL REGULATION (EC) No 1294/1999
of 15 June 1999
concerning a freeze of funds and a ban on investment in relation to the Federal Republic of Yugoslavia (FRY) and repealing Regulations (EC) No 1295/98 and (EC) No 1607/98
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular Articles 60 and 301;
Having regard to Common Position 98/326/CFSP of 7 May 1998 defined by the Council on the basis of Article J.2 of the Treaty on European Union concerning the freezing of funds held abroad by the Governments of the Federal Republic of Yugoslavia (FRY) and the Republic of Serbia(1), Common Position 98/374/CFSP of 8 June 1998 defined by the Council on the basis of Article J.2 of the Treaty on European Union concerning the prohibition of new investment in Serbia(2), as well as to Common Position 1999/318/CFSP of 10 May 1999 adopted by the Council on the basis of Article 15 of the Treaty on European Union concerning additional restrictive measures against the Federal Republic of Yugoslavia(3),
Having regard to the proposal from the Commission;
Whereas:
(1) The continued violation by the Governments of the Federal Republic of Yugoslavia and the Republic of Serbia of the relevant United Nations Security Council resolutions and the pursuance of extreme and criminally irresponsible policies, including repression against citizens, constitute serious violations of human rights and international humanitarian law;
(2) An extension of the scope of the present legal framework concerning the freezing of funds held abroad by the Governments of the Federal Republic of Yugoslavia and the Republic of Serbia, and concerning the prohibition of new investment in the Republic of Serbia will significantly increase the pressure on those governments;
(3) Therefore, the scope of the provisions of this legal framework should be extended to cover certain assets, other than funds and financial resources, which may generate funds or other financial resources for the governments concerned, and to cover companies, undertakings, institutions and entities owned or controlled by those governments, as well as persons acting for or on behalf of those governments, as well as the acquiring or extending of a participation in, ownership of or control of real estate or companies, undertakings, institutions or entities which are owned or controlled by the Government of the Federal Republic of Yugoslavia or of the Republic of Serbia;
(4) The measures contained in this Regulation should be proportionate to the objectives pursued by the Council with regard to the Kosovo crisis and the measures should not lead to severe damage to the interests of the Community;
(5) There is a need to provide for certain specific exemptions;
(6) A procedure should be laid down for amending the Annexes to this Regulation and for granting specific authorisations to avoid serious damage to industry, companies or the interests of the Community;
(7) Circumvention of this Regulation should be countered by an adequate system of information, and where appropriate, remedial measures, including additional Community legislation;
(8) Competent authorities of the Member States should, where necessary, be empowered to ensure compliance with this Regulation;
(9) It is desirable that sanctions for violations of the provisions of this Regulation can be imposed as of the date of entry into force of this Regulation;
(10) There is a need for the Commission and Member States to inform each other of the measures taken under this Regulation and of other relevant information at their disposal in connection with this Regulation;
(11) For reasons of transparency and simplicity the main provisions of Council Regulations (EC) No 1295/98(4) and No 1607/98(5) have been incorporated into this Regulation, and, therefore those Regulations can be repealed,
HAS ADOPTED THIS REGULATION:
Article 1
For the purpose of this Regulation:
1. Government of the FRY means: the Government of the Federal Republic of Yugoslavia, at any level, its agencies, bodies or organs, and companies, undertakings, institutions and entities owned or controlled by that Government, including all financial institutions and State-owned and socially-owned entities organised in the Federal Republic of Yugoslavia as of 26 April 1999, any successors to such entities, and their respective subsidiaries and branches, wherever located, and any persons acting or purporting to act for or on behalf of any of the foregoing;
2. Government of the Republic of Serbia means: the Government of the Republic of Serbia, at any level, its agencies, bodies or organs, and companies, undertakings, institutions and entities owned or controlled by that Government, including all financial institutions and State-owned and socially-owned entities organised in the Republic of Serbia as of 26 April 1999, any successors to such entities, and their respective subsidiaries and branches, wherever located, and any persons acting or purporting to act for or on behalf of any of the foregoing;
3. Funds means: financial assets and economic benefits of any kind, including, but not necessarily limited to, cash, cheques, claims on money, drafts, money orders and other payment instruments; deposits with financial institutions or other entities, balances on accounts, debts and debt obligations; publicly and privately traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures, derivatives contracts; interest, dividends or other income on or value accruing from or generated by assets; credit, right of set-off, guarantees, performance bonds or other financial commitments; letters of credit, bills of lading, bills of sale; documents evidencing an interest in funds or financial resources, and any other instrument of export-financing;
4. Freezing of funds means: preventing any move, transfer, alteration, use of or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or other change that would enable the use of the funds, including portfolio management;
5. Owning a company, undertaking, institution or entity means: being in possession of 50 % or more of the proprietary rights of a company, undertaking, institution or entity or having a majority interest therein;
6. Controlling a company, undertaking, institution or entity means any of:
(a) having the right to appoint or remove a majority of the members of the administrative, management or supervisory body of a company, undertaking, institution or entity;
(b) having appointed solely as a result of the exercise of one's voting rights a majority of the members of the administrative, management or supervisory bodies of a company, undertaking, institution or entity who have held office during the present and previous financial year;
(c) controlling alone, pursuant to an agreement with other shareholders in or members of a company, undertaking, institution or entity, a majority of shareholders' or members' voting rights in that company, undertaking, institution or entity;
(d) having the right to exercise a dominant influence over a company, undertaking, institution or entity, pursuant to an agreement entered into with that company, undertaking, institution or entity, or to a provision in its Memorandum or Articles of Association, where the law governing that company, undertaking, institution or entity permits its being subject to such agreement or provision;
(e) having the power to exercise the right to exercise a dominant influence referred to at (d), without being the holder of that right;
(f) having the right to use all or part of the assets of a company, undertaking, institution or entity;
(g) managing a company, undertaking, institution or entity on a unified basis, while publishing consolidated accounts;
(h) sharing jointly and severally the financial liabilities of a company, undertaking, institution or entity, or guaranteeing them.
Article 2
1. Any person listed in Annex I to this Regulation shall be deemed to be a person acting or purporting to act for or on behalf of the Government of the FRY or the Government of the Republic of Serbia.
2. Companies, undertakings, institutions or entities, located, registered or incorporated outside the territory of the Federal Republic of Yugoslavia and listed in Annex II to this Regulation, shall be deemed to be owned or controlled by the Government of the FRY or the Government of the Republic of Serbia.
3. In cases where a natural or legal person holds or acquires well-founded evidence that a person, company, undertaking, institution or entity is covered by the definitions of Governments of the FRY or Government of the Republic of Serbia but does not appear on the lists of Annexes I or II, such person shall, before entering into any commercial transaction or activity covered by Articles 3, 4, 5 or 7 with that person, undertaking, institution or entity, submit the evidence to the competent authorities of the Member States listed in Annex III. The competent authorities will examine all evidence made available to them. If the competent authorities consider the evidence made available as insufficient and are not able to confirm in writing within five working days after the said submission that the intended transaction or activity is prohibited under this Regulation, the transaction or the activity will not constitute a violation of this Regulation.
Article 3
Except as permitted under the provisions of Articles 7 and 8:
1. All funds held outside the territory of the Federal Republic of Yugoslavia and belonging to the Government of the FRY and/or to the Government of the Republic of Serbia shall be frozen.
2. No funds shall be made available, directly or indirectly, to or for the benefit of, either or both, those Governments.
Article 4
1. It shall be prohibited to acquire any new or extend any existing participation in, ownership of or control of real estate, a company, undertaking, institution or entity:
- located, registered or incorporated within the Republic of Serbia, or
- wherever else located, registered or incorporated, and owned or controlled by the Government of the FRY or the Government of the Republic of Serbia,
in exchange or not, for the supply or provision of tangible or intangible goods, services or technology (including patents), capital, debt relief or other financial resources.
2. It shall also be prohibited to engage in or continue activities facilitating, promoting or otherwise enabling the acquisition or extension of a participation in, ownership of or control over such real estate, companies, undertakings, institutions or entities.
Article 5
1. The participation, knowingly and intentionally, in related activities, the object or effect of which is, directly or indirectly, to circumvent the provisions of Articles 3 and 4 shall be prohibited.
2. Any information that the provisions of this Regulation are being, or have been circumvented shall be notified to the competent authorities of the Member States as listed in Annex III and/or the Commission.
Article 6
Without prejudice to the Community rules concerning confidentiality and to the provisions of Article 284 of the Treaty, the competent authorities of the Member States shall have the power to require banks, other financial institutions, insurance companies, and other bodies and persons to provide all relevant information necessary for ensuring compliance with this Regulation.
Article 7
1. Article 3 shall not apply to funds exclusively used for the following purposes and on the following conditions:
(a) Payment of current expenses, including salaries of local staff, of embassies, consular posts or diplomatic missions of the Government of the Federal Republic of Yugoslavia or the Government of the Republic of Serbia within the Community;
(b) Transfers from the Community to natural persons resident in the Federal Republic of Yugoslavia of social security or pension payments as well as the transfer of other payments to protect entitlements in the area of social insurance where these transfers are made into separate bank accounts established exclusively for this purpose and where the private recipient has immediate access to the funds in the convertible currency thus transferred;
(c) Payments of taxes, compulsory insurance premiums and fees for public utility services such as gas, water, electricity and telecommunications to be paid in the Community by persons, companies, undertakings, institutions or entities listed in Annexes I and II and resident or located or registered or incorporated within the Community;
(d) Payments of normal salaries, including compulsory redundancy payments, except bonuses and other irregular payments by companies, undertakings, institutions or entities listed in Annex II and located or registered or incorporated within the Community to employees employed at the date of entry into force of this Regulation by these companies, undertakings, institutions or entities, on the condition:
(i) that such salaries are paid into accounts held with banks or financial institutions within the Community, and
(ii) that the salary of each employee is at the rate applicable during the six months preceding the date of entry into force of this Regulation without prejudice to salary increases obtained in collective bargaining agreements, and
(iii) in case of replacement of any employee that the new employee is paid at the same rate of salary as that of the employee being replaced;
(e) Payments related to projects in support of democratisation, humanitarian and educational activities and independent media carried out by the Community and/or the Member States.
2. Article 3(2) shall not apply to:
(a) Payments in cash in Yugoslav dinars or any of the currencies of the Member States, in denominations to the value of no more than EUR 150, within the territory of the Republic of Yugoslavia;
(b) Payments of debts due to the Government of the FRY or the Government of the Republic of Serbia incurred before the entry into force of this Regulation (with the exception of bank guarantees, performance bonds, bid bonds and similar instruments), and the execution of payment orders received from outside the Community, on the condition that these payments are made into frozen accounts held by those Governments with bank or financial institutions within the Community;
(c) Payments for essential transit services provided by the Federal Republic of Yugoslavia and Serbia on the condition that provision of these services takes place at the average rate applicable during the six months before the entry into force of this Regulation and applied on a non-discriminatory basis.
3. Notwithstanding Articles 4 and 3(2), the acquisition of new or the extension of existing participation in, or ownership of, or control of real estate located in the Community shall be allowed only if the transaction meets the following conditions:
(a) the payment for the acquisition or extension of the participation, ownership or control is made into a separate frozen account held by the former owner of the real estate with a bank or financial institution within the Community;
(b) the price at which the participation in, ownership of or control of the real estate concerned is acquired or extended is in conformity with the value as determined by an appropriately authorised independent valuer;
(c) the seller of the ownership of, control of or participation in the real estate is a legal person listed in Annex II;
(d) the said seller does not hold or has no access to other funds;
(e) the purpose of the sale is solely to acquire funds to cover expenses mentioned under paragraph (1) above.
4. For any payment made under paragraphs 1, 2 and 3, conclusive evidence of the fulfilment of the conditions and the purposes shall be kept available for one year for inspection by the competent authorities listed in Annex III.
Article 8
1. In accordance with the provisions of Article 9, the Commission shall be empowered:
(a) to amend Annexes I and II;
(b) to grant authorisations, if not granting an authorisation would cause serious damage to industry, companies or the interests of the Community:
(i) to unfreeze funds or make funds available for the benefit of the Government of the FRY or the Government of the Republic of Serbia;
(ii) to acquire or extend a participation in, ownership of or control over real estate, a company, undertaking, institution or entity referred to in Article 4.
2. Any request by a legal or natural person for an authorisation referred to in paragraph 1 (b), or for an amendment of Annexes I or II, shall be made to the Commission through the appropriate competent authorities of the Member States, listed in Annex III.
3. For the purposes of implementing this Regulation, the Commission shall be empowered, on the basis of information supplied by Member States, to amend Annex III.
Article 9
1. For the purposes of the implementation of Article 8(1) and (2), the Commission shall be assisted by the Committee composed of the representatives of the Member States and chaired by the representative of the Commission, established under Council Regulation (EC) No 2271/96(6), in accordance with the following provisions.
2. The representative of the Commission shall submit to the committee a draft of the measures to be taken. The Committee shall deliver the opinion on the draft within a time limit, which the chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 205 (2) of the Treaty in the case of decisions, which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the Committee shall be weighted in the manner set out in that Article. The chairman shall not vote.
3. (a) The Commission shall adopt measures which shall apply immediately.
(b) However, if these measures are not in accordance with the opinion of the committee, they shall be communicated by the Commission to the Council forthwith. In that event:
- the Commission shall defer application of the measures which it has decided for 10 working days from the date of such communication,
- the Council, acting by a qualified majority, may take a different decision within the time-limit referred to in the preceding indent.
Article 10
The Committee referred to in Article 9 may examine technical questions concerning the application of this Regulation, which may be raised either by the chairman or by a representative of a Member State.
Article 11
The Commission and the Member States shall inform each other of the measures taken under this Regulation and supply each other with the relevant information at their disposal in connection with this Regulation, in particular information received in accordance with Articles 2, 5, 6 and 8, and in respect of violation and enforcement problems or judgments handed down by national courts.
Article 12
Each Member State shall determine the sanctions to be imposed where the provisions of this Regulation are infringed. Such sanctions shall be effective, proportionate and dissuasive.
Pending the adoption, where necessary, of any legislation to this end, the sanctions to be imposed where the provisions of this Regulation are infringed shall be those determined by the Member States in accordance with Article 6 of Regulation (EC) No 1295/98 or Article 3 of Regulation (EC) No 1607/98.
Article 13
Regulations (EC) No 1295/98 and No 1607/98 shall be repealed.
Article 14
This Regulation shall apply:
- within the territory of the Community including its airspace,
- on board any aircraft or any vessel under the jurisdiction of a Member State,
- to any person elsewhere who is a national of a Member State,
- to any body which is incorporated or constituted under the law of a Member State.
Article 15
This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Luxembourg, 15 June 1999.