Securities' trading or offering in Kosovo is not specifically regulated or practically applied. In November 2003 the USAID/Kosovo released a report, saying that Kosovo did not have the appropriate environment to establish a securities market. It considered the introduction of laws governing securities in Kosovo premature in 2003, and in the medium term.
In 2007, the situation has not changed. No securities laws are in place and a licensed market where the securities can be publicly traded does not exist. Regulations have not been enacted on the public offer, notification and prospectus requirements related to securities issuance or their offering/trading. Although Kosovo is aligning its legal framework to the laws of the EU, EU law does not directly apply in Kosovo and cannot be used as a respective legal source.
The United Nations Interim Administration Mission in Kosovo (UNMIK) is responsible for an interim civilian administration in Kosovo. The UNMIK regulations and the law in force in Kosovo on March 22 1989 are the applicable laws in Kosovo. Laws introduced in Kosovo after March 22 1989 can be applied, provided that the subject matter is not covered by UNMIK regulations and older laws in force in Kosovo, it is not discriminatory, and it complies with internationally recognized human rights standards.
Because no specific UNMIK regulations in the field of securities are in place, an old Yugoslavian Law on Securities, enacted on July 22 1978, at least formally still applies in Kosovo. However, this law was based on an eastern socialist/communist economy and respective legal surroundings, so it simply does not fit into Kosovo's current system. In former Yugoslavia this law was changed and replaced with new laws adapted to the changed political climate, but these changes and replacements date later than March 22 1989, which renders their applicability in Kosovo disputable.
Given the lack of an adequate legal framework in Kosovo, it is questionable whether a domestic securities market will develop in this jurisdiction. In light of the undeveloped domestic market, it is more likely that foreign securities will be offered on the Kosovo market from outside its borders. But at this stage one should not expect a surge in foreign securities offerings in Kosovo, due to political, legal and financial instability. Lack of knowledge on securities investment is another serious factor that could undermine transactions directed to an unqualified public. The most likely outcome, as experienced in other jurisdictions, is that foreign securities will enter the Kosovo market, gradually and sporadically, as part of the non-core activities of banks, insurance companies, pension funds and other non-bank financial institutions already established in Kosovo. Kosovo established players are active in this field, but branches of foreign banks also conduct business in Kosovo and hold a considerable share in its banking and financial market. These foreign market participants would be eager to boost offerings of foreign securities in Kosovo. Domestic and foreign intermediaries for securities transactions will be more active in the future. (The conduct of any intermediary financial activity in Kosovo requires a respective licence issued by the competent supervision authority, the Central Banking Authority of Kosovo.)
Our discussion is mainly theoretical and based on the applicable law in Kosovo. In practice the situation could vary, dependent on the legal interpretation by the relevant authorities in Kosovo and the competent courts. The legal framework in Kosovo consists of various sources of legislation, including UNMIK regulations and old Yugoslavian laws, so the legal basis for intended activities in Kosovo should be checked carefully. It is advisable to conduct proper due diligence before market entry. In any case, Kosovo is, and will become even more so, an interesting market in the field of banking and finance including securities.
Rezarte Vukatana and Nikolaus Paul