PRIVATISATION OF SOCIAL PROPERTY

DSU took over the implementation of public authorisations on the basis of Transfer of the Powers, Rights and Liabilities of the Slovenian Development Company and on the Dissolution of Agency of the Republic of Slovenia for Restructuring and Privatisation Act. With the entry into force of this Act on 7 May 2004, DSU assumed all authorisations, rights and obligations of SDC (in liquidation) deriving from the transformation of ownership of social property, privatisation and denationalisation and the assets associated therewith. This involved a number of tasks and assets that DSU manages on its own behalf and for the account of the Republic of Slovenia. Pursuant to the relevant regulations and law DSU therefore continues the extensive and complex service of resolving issues related to ownership and the completion of procedures relating to the transformation of ownership of social property, privatisation and denationalisation, which were previously carried out by the Company's legal predecessors, i.e. the Slovenian Development Fund, SDC and the Agency of the Republic of Slovenia for Restructuring and Privatisation.
Pursuant to Article 62 of the Completion of the Ownership Transformation and Privatisation of Legal Entities Owned by the Slovenian Development Company Act (hereinafter: the ZZLPPO), DSU provides detailed quarterly reports to the National Assembly of the Republic of Slovenia on the implementation of tasks that have been assigned to the former on the basis of the aforementioned Act.

IDENTIFICATION OF SOCIAL PROPERTY THAT IS TRANSFERRED TO THE OWNERSHIP AND MANAGEMENT OF DSU ON THE BASIS OF ARTICLE 5 AND 6 OF THE ZZLPPO AND THE IMPLEMENTATION OF LEGAL TRANSACTIONS ASSOCIATED WITH THIS PROPERTY

Social capital and property that was not included in the opening balance of the Company as at 1 January 1993 and therefore not subject to privatisation shall be transferred to the ownership and management of DSU in accordance with Article 6 of the ZZLPPO. The assets of natural and legal persons at home and abroad that are derived from the operations of former socially-owned companies or from other legal persons registered in the Republic of Slovenia which have undergone transformation under the Ownership Transformation of Companies Act (hereinafter: the ZLPP) or a special act, shall be deemed to be social capital passing into the ownership and management of DSU on the day the ZZLPPO enters into force, unless these assets had been included in the opening balance sheet as at 1 January 1993 in accordance with the Decree on the Methodology for the Drawing-Up of Opening Balance Sheets (most frequently in the form of real estate). Pursuant to the third paragraph of Article 3 of the ZZLPPO, DSU and the Government of the Republic of Slovenia shall be obliged to adopt measures that help them identity, trace and seize assets that were transferred in accordance with the first paragraph of Article 6 to the ownership of DSU and prevent any kind of transactions therewith, their transfer or use.
Several court proceedings in connection with the demonstration of the assets yet to undergo ownership transformation, in which DSU acts as the plaintiff, are ongoing pursuant to Article 6 of the ZZLPPO.
Recorded assets yet to undergo ownership transformation are being sold-off in accordance with valid laws and regulations.

INSURANCE OF EQUITY INTERESTS AND ASSETS AND THE MANAGEMENT AND CONCLUSION OF LEGAL TRANSACTIONS CONNECTED WITH THE EXCLUDED ASSETS THAT ARE SUBJECT TO DENATIONALISATION CLAIMS (ARTICLE 51 OF THE ZZLPPO)

During the corporate transformation of ownership processes the shares of individual companies were transferred to the SDC for the protection of denationalisation beneficiaries.

On the basis of a final denationalisation decision DSU transfers the relevant number of shares to denationalisation beneficiaries. In cases where the handover of secured shares to beneficiaries is rejected by way of a final decision, these shares become the property of DSU which can then transfer or sell them in accordance with the law.
As with shares, this also applies to the exclusion of assets (real estate) due to denationalisation claims. If a claim for the return of assets to beneficiaries is rejected, these assets become the property of DSU. In addition to the purchase of assets by companies, the ZZLPPO also allows the possibility of a capital increase with these assets. If a company does not utilise this option, DSU sells this real estate to the public (in the form of a public invitation to tender). If a beneficiary claimed compensation in the form of Slovenska odškodninska družba (now SDH) bonds instead of restitution in kind, the latter shall enforce a recourse claim with DSU in the amount of the paid compensation.

MANAGEMENT OF OFF-BALANCE-SHEET RECORDS OF ASSETS AND CONTINGENT LIABILITIES OF COMPANIES TO DSU

In accordance with the Decree on the Methodology for the Drawing-Up of Opening Balance Sheets prior to the transformation of ownership, companies could reduce their assets up to the carrying amount or gross value of investments when drawing up opening balances for property, plant and equipment and non-current financial investments in the former Yugoslav republics. Similarly, they could reduce their assets to the amount of the gross claims in the republics of the former Yugoslavia, Iraq, Cuba and Angola.
The companies established off-balance-sheet records of assets on the basis of a signed agreement on the establishment of off-balance-sheet records of assets and contingent liabilities to DSU (previously SDC/Slovenian Development Fund), which specifies that a company, when selling the aforementioned assets, must fulfil its monetary liability to DSU in the amount of the received consideration less 20%, as costs compensation. When selling these assets, companies are therefore obliged to transfer 80% of the received amount to DSU, which is then remitted to the budget.

SETTLEMENT OF PROPERTY LAW RELATIONS BETWEEN CROATIA AND SLOVENIA

The Treaty between the Republic of Slovenia and the Republic of Croatia on the Settlement of Property Law Relations entered into force on 23 February 2000. The provisions of the treaty relate to the settlement of property law relations that originated before the countries' independence was declared and thereafter, i.e. on 25 June 1991 for the Republic of Slovenia and 8 October 1991 for the Republic of Croatia.

ENFORCEMENT OF CLAIMS BEFORE COURTS AND ADMINISTRATIVE BODIES

In connection with the settlement of the ownership issues and completion of the processes associated with the transformation of ownership of social property, privatisation and denationalisation, a number of court proceedings, in which DSU appears as the plaintiff or defendant, still remain unresolved. For the most part, the court proceedings have be resolved in favour of DSU.

ISSUANCE OF CERTIFICATES AND CLARIFICATIONS REGARDING PROPERTY SUBJECT TO TRANSFORMATION OF OWNERSHIP IN ACCORDANCE WITH THE ZLPP AND ARCHIVE MANAGEMENT

Pursuant to Articles 4 and 6 of the ZPPSRD, DSU is authorised for the safekeeping and management of the archives of the Slovenian Development Company, the Development Fund of the Republic of Slovenia and the Agency of the Republic of Slovenia for Restructuring and Privatisation.
Based on this documentation DSU issues certificates regarding property that was subject to transformation of ownership in accordance with the Ownership Transformation of Companies Act. The certificates issued by DSU mostly cover property held by companies in the territory of other republics of the former Yugoslavia during the transformation of ownership. If it is established during the examination of archive documentation that specific property was not included in the ownership transformation of companies, DSU shall call on the parties involved to settle their mutual relations or to sign an agreement in accordance with Article 6 of the ZZLPPO.
On the basis of demonstrated legal interest, DSU sends different institutions several detailed explanations with regard to the ownership transformation of assets in accordance with the ZLPP.

TRANSFER OF FUNDS ACQUIRED FROM PROCEEDS TO THE BUDGET OF THE REPUBLIC OF SLOVENIA IN ACCORDANCE WITH THE ACT REGULATING THE USE OF FUNDS ARISING FROM THE PROCEEDS BASED ON THE OWNERSHIP TRANSFORMATION OF COMPANIES ACT (ZUKLPP)

Pursuant to the relevant legal provisions, the proceeds received from the sale of assets under the ZZLPPO are subject to the transfer of funds to the budget of the Republic of Slovenia and other statutory recipients (Kapitalska družba, Slovenian Sovereign Holding, denationalisation beneficiaries).