Major change in relation to incorporation of business in the Republic of Serbia occurred in 2005 when new administrative procedure was introduced aiming to speed up the incorporation process and improve efficiency. It was done by introducing a new unique and electronic registration system that replaced the registration with the courts and by establishing the specialized administrative body – the Serbian Business Registers Agency (“SBRA”). This was followed with amendments to the existing regulations and enactment of the new Company Law in 2011, which is still effective and was amended on several occasions to this date, in order to further adapt procedure with prevailing standards of the EU legislation.
The business in Serbia may be conducted either by incorporation of the branch office (in Serbian: ogranak) or representative office (in Serbian: predstavništvo) of the foreign company. Branch or representative office are not considered as separate legal entities and therefore the foreign company remains liable for all obligations assumed by branch office or representative office.
Alternatively, the business may be conducted by incorporation of the company in one of the following legal forms:
General and limited partnerships are not that common in Serbia due to the unlimited liability of partners (general partnership) and general partners (limited partnership) for the debts of the company, whereas the incorporation procedure for joint stock company is rather complex and time-consuming and requires minimum share capital in the amount of approx. EUR 25,000, which makes this legal form not so often used in Serbia as well.
The limited liability company is by far the most common used legal form in practice. This is due to the rather straightforward incorporation procedure, minimum requirements in relation to the share capital of the company (approximately EUR 1), and the fact that the shareholders are not liable for the debts of the company (except in specific circumstances, e.g., if there are grounds for the piercing of the corporate veil). For this reason, below are outlined incorporation requirements and permitted activities related to the limited liability companies.
Incorporation requirements (registration, capital and management requirements)
A limited liability company is deemed incorporated upon registration with the SBRA. The required time for incorporation in most cases is up to five days from the date of submitting the appropriate documents (i.e., proof of identity on shareholders, the Memorandum of Association and evidence of payment of administrative fees). In order to become operational, there are few other registrations and formalities that have to be made following the registration – including general tax registration, VAT registration (if applicable and if not done as part of the registration procedure), registration with the public revenue authorities, customs registration, opening of a bank account and ultimate beneficial owner registration. Required time for post-registration procedures is approximately two weeks (provided all the documents are collected in a timely manner).
Corporate governance of the limited liability company can be organized as one-tier (the shareholders’ meeting and one or more directors) or two-tier system (with additional supervisory board).
The limited liability company can engage in all legally permitted activities, but its predominant business activity must be contained in the Memorandum of Association and registered with the SBRA. There are certain activities (e.g. financial services and insurance services), that may only be performed by an entity incorporated in a certain legal form (e.g. joint stock company), and certain activities (e.g. trade in poisonous goods, medicines or weapons) that may be subject to licensing requirements.