The new legislation aims toe fully depoliticise the five-member Conflict of Interest Commission. Its members cannot be members of political parties.
Justice Minister Drazen Bosnjakovic said that the proposed law should see to it that all office-holders prioritise the public interest.
Office-holders are obliged to forward a report with data on their and their spouses' property to the Commission within 30 days of coming into office.
Under the draft law, officials will not be allowed to hold more than 0.5 percent of shares in a company while in office. The existing legislation allows a 20 percent stake.
In addition, the company in which office-holders have an interest cannot conclude business contracts with state agencies which they head.
Members of the commission will be appointed by the parliament after being nominated by the parliamentary committee on elections, appointments and administration. A public invitation will be announced for the nominations.
The commission will be given broader powers in deciding on disciplinary measures.
The new legislation also stipulates that all office-holders appointed by the government, the parliament or the President of the Republic will be covered by this law.
It also elaborates a better mechanism for the examination of the declaration of assets.