ANALYSIS
New Policies Won’t Fix Liquidity
Problems
Author: AmCham Macedonia
Around the world, the personal liability of people
serving in managerial functions or as board members has been on the rise for over a decade. And it
is difficult to argue against the idea that individuals
be held accountable for the damage they cause in a
company role. However, a recent amendment to the
Law on Tobacco in Macedonia, takes this idea to a
new level. The amendment stipulates that the directors of tobacco purchasing companies must sign a
statement accepting personal criminal and financial liability in the event that any of the company’s
tobacco purchasing conА policy that
tracts is breached. While
might sound like it
other laws in force correctly
provide consequences for
offers additional
directors that are proven to
assurances to
have acted negligently or
farmers, deprives
with criminal intent, the afficompany directors
davit requirement attempts
of their right to the
to circumvent such “messy”
details. Instead, a policy that
due process of law.
might sound like it offers
additional assurances to farmers, deprives company
directors of their right to the due process of law.
Lawmakers seem to be hoping that personal threats
to key decision makers will improve payment practices in the country. These measures are based on the
assumption that companies possess the means to
pay, but simply choose not to. While this may be true
in some cases, it is a mistake to address the problem by creating new ways to circumvent the established legal institutions in the country. There are no
shortcuts to strengthening contract enforcement in
the country. Contract breaches must be swiftly, consistently and fairly enforced by the court system or
alternative dispute mechanisms. When courts fail to
enforce contracts in an appropriate and timely manner, injured companies delay payments to their suppliers and the cycle continues.
Lawmakers seem
to be hoping that
personal threats
to key decision
makers will improve
payment practices
in the country.
problems. The Financial
Discipline Law, passed in
December 2013, set arbitrary payment deadlines
for everyone and gave
authorities the right to
collect hefty fines to discourage late payment. Unfortunately, it has so far failed to improve liquidity in the
country while reducing economic freedom. In fact,
private companies who sell products and services
to State institutions are now potentially in a worse
liquidity situation than before the Law, since penalties for paying their suppliers late have been dramatically raised while their State clients are exempted
from such provisions until 2016.
While the Tobacco Law appears to be the first of its
kind in the country, a host of laws have been amended
in the last 2 years to criminalize new offenses and
include the threat of personal fines and prison sentences for company managers for a wide variety of
things. One illustrative example is a recent change to
the Law on Telecommunications stipulating that for
failing to post a company’s annual report on its web
site, the responsible manager can be banned from
working in his/her profession for 3 months-1 year in
addition to paying a personal fine.
This is not the first time lawmakers have tried to legislate against the country’s longstanding cash flow
Emerging Macedonia Winter 2015 Issue 44
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