In principle, the subject intending to carry out an economic activity in Albania, is required to have a legal presence in Albania in the form of a newly established and registered Albanian legal entity or in the form of a branch of a foreign company.
The Law no. 9901 “On Entrepreneurs and Commercial Companies” (Company Law) and the Law “On the National Business Centre” provide for the rules on the registration of such legal presence at the National Business Centre (NBC).
Companies can exercise any activity that is not prohibited by law. The scope of activity does not have to be specified unless specification is required under special industry legislation such as banks, energy, telecoms, insurance, etc.
There are limitations regarding the nationality of shareholders or management of an Albanian incorporated entity.
Establishment of a commercial company
Regardless of the chosen commercial form, commercial companies must all have a determined name, object of activity, legal seat (registered address) pursuant to lease or ownership title, and management (composed by a sole or more managers). The rules on management and shareholders’ meetings rights and obligations should be set out in the Articles of Association of the company.
The business forms that are provided for under the Albanian Company Law are as follows:
General and Limited Partnerships are rarely used in practice, whereas limited liability companies (SHPK) and joint stock companies (SHA) are the most frequently used forms of businesses encountered in Albania.
Limited liability company
Limited Liability Companies (LLC) are the most commonly chosen legal form for conducting business in Albania. Its shareholders are not responsible for the company’s obligations, and they are personally liable for losses only to the extent of their unpaid capital contribution. The initial capital for incorporating this type of legal entity is 100 ALL (approximately EUR 1). The LLC may also have only one sole shareholder, in which case all the resolutions of the company must be registered in the register of resolutions of the company.
The governing bodies of a limited liability company are: (i) the Shareholders’ Assembly (or Sole Shareholder) and (ii) the Managing Directors. The latter are entrusted with the daily management of the company and are appointed by the shareholders’ meeting. There are no nationality restrictions for the managing directors, however directors of a parent company may not become the directors of its controlled subsidiary at the same time.
The appointment of an auditor is only obligatory in the case of a LLC if at the end/closing of the accounting period (financial year) the company exceeds certain turnover, employee and asset value thresholds.
Joint stock company
In a Joint Stock Company (JSC) the capital is divided into shares. The shareholders are not responsible for the company’s obligations and they are liable for losses only to the extent of their unpaid capital contribution. The required capital contribution is at least 3,500,000 ALL (approx. EUR 28,600), for companies with private offer, and 10,000,000 ALL (approx. EUR 81,800) for companies with public offer. JSC have a more complex organizational structure compared to other types of companies, and are typically a mandatory form of company for sectors such as insurance companies or banks.
The organizational structure of a JSC is as follows:
The initial capital must be fully subscribed before the registration of the company with the NBC and at least one quarter of the nominal value of the shares must be paid and the remaining unpaid capital must be paid in one or more installments according to the decision of the management organs of the JSC. As for the shares contributed in kind they must be fully subscribed and paid in before the registration with the relevant authority (NBC) is carried out. Contributions in services are not permitted.
General Partnership is a form of commercial company that is rarely used in practice. Its main distinguishing feature is the fact that the responsibility of partners for debts of the company is unlimited. The administration of a General Partnership is carried out by all partners, unless otherwise specified in the Articles of Association of the company. Each partner can also represent the company against third parties, unless otherwise decided in the Articles. The minimum capital of collective companies is not defined.
This is another company form that does not see much of practical use. The company consists is one or more unlimited partners and one or more limited partners having their liability limited up their contribution in the initial capital. The Articles of Association of the company govern the relations between limited and unlimited partners. Unlimited partners in a limited partnership have the same rights and obligations as those of a General Partnership. They conduct the day to day management of the company whilst limited partners are not entitled to participate in the management but can resist actions of the management beyond the ordinary business of the company.
Every individual conducting a business activity independently by means normally used to organize a business activity is qualified under the Company Law as a sole entrepreneur. The sole entrepreneur is obliged to register with the National Business Registration same as any other commercial company form but is subject to less documents and procedures at the time of registration or dissolution.
Establishment of a branch
Branches of foreign companies pursuant to the Company Law are considered as an extension of the commercial activity of the foreign company, in Albania. They have the same legal personality with the foreign company and carry out their activity in the name of the foreign company. For fiscal purposes, they hold their own registration number and pay their own taxes as any other company in Albania.
The branch does not have an assembly or other governing body to adopt decisions on its behalf. It is the relevant organ of the foreign company which determines the business of the branch, though the day to day management of the branch is conducted by one or more administrators appointed by the foreign company.
As opposed to a subsidiary, the liability of the branch, being with no separate legal personality, can be extended to the founding parent company.
Establishment of a representative office
Under the Company Law, Representative Offices are considered as “places of activity of a (foreign) commercial company having the same legal personality of that company”. Their purpose, according to the law is not to generate income but to promote the business of a company, in which respect they could also conclude agreement in the name and on behalf of the foreign company. The Rep Office can also employ local or foreign staff for the purpose of its activity, but it does all for and on behalf of the foreign company.
The Rep Office can have one or more legal representatives authorized to sign in the name of the Rep Office (and ultimately in the name and on behalf of the foreign company). The legal representative’s powers are usually limited to the daily management of the Representative Office’s business, hiring and firing of employees, operations with the bank accounts of the Representative Office.
A Rep Office, as opposed to other forms of business in Albania is not subject to corporate tax given that it is not allowed do generate any income; all the same they are obliged to withhold and pay the income tax on salaries of its employees, pay the social security and health contributions and, also certain annual local taxes.
A non-resident taxpayer may appoint a ‘tax representative’ in Albania without having to establish a legal entity for certain activities or projects regulated under the tax laws. The tax representative is limited to handling matters relating to tax liabilities of its principal in Albania, receive invoices from third parties and pay them accordingly. The tax procedures legislation provides that a tax representatives may be any individual, entrepreneur or legal entity as appointed by the principal. The tax representative may open a bank account in Albania, but it may not hire employees and/or conclude employment agreements for the principal.
Registration with the National Business Center
The registration of a branch, rep office or a commercial company (LLC or JSC) in Albania is made through the National Business Center (NBC) and by law, if all the documents filed will be complete, registration should take place within 24 hours as of the date of application. Registration with NBC constitutes registration with the tax authorities and equipment with the fiscal VAT certificate, i.e. the entity as of that moment can start to issue invoices.
The documents required for the registration of the branch/Rep Office or commercial company (LLC or JSC) are the following:
Notarized documents and those used from public offices must be apostilled or legalized, as applicable. Official documents must be updated and up to 90 days old and foreign language documents must be translated into Albanian (certified translation).
Different corporate structures
Incorporation of a business in Bosnia and Herzegovina is primarily governed at the entity level, more specifically Federation of Bosnia and Herzegovina (“Federation of BiH”) and the Republic of Srpska, by the entity's company laws and laws on registration of business entities. In Federation of BiH, the registration is in jurisdiction of the Registry of Business Entities kept by the municipal courts while in Republic of Srpska, as of 2013 the Intermediary Agency for IT and Financial Services serves as a one-stop-shop for registration of business entities which reduced the process of incorporation dramatically.
Business activities on the market are performed through one of the legal entities prescribed by the company laws, each having different corporate structure which can, in general, be freely chosen.
The following forms may be used for incorporation of company:
Unlimited Joint Liability Company is a company of at least two persons who bear unlimited mutual liability of the company. The company is founded by a founding contract of two or more domestic or foreign legal entities or physical persons. Every member has the right and obligation to manage the company. The company has no statute and no management bodies because members manage the company directly, including representation of the company.
Limited Partnership is a company in which at least one member has unlimited liability for the liabilities of the company including members’ private assets and at least one member bears the risk of up to the value of their share in the partnership. A Limited Partnership is founded by a contract of two or more domestic/foreign legal entities. The partner which bears unlimited liability for company's debts manages the business and represents the company.
Joint–Stock Company is a company with basic capital divided into shares founded with the establishment agreement by domestic/foreign shareholders (i.e. with decision on establishment in case of one shareholder). A Joint-Stock Company is not liable for the obligations of shareholders. The minimum share capital is BAM 50,000 (approx. EUR 25,000) if the shares are listed on the stock exchange or BAM 20,000.00 (approx. EUR 10,000) if the shares are not listed on the stock exchange.
Limited Liability Company (LLC) is a separate legal entity having at least one shareholder. The liabilities of the company cannot pass to the shareholders save in exceptional circumstances (piercing the corporate veil). A member in a limited company is liable up to the value of his investment in that company. The shares of the LLC are expressed in percentages (for example, 5%, 10%, 51%, 100% or any other). A shareholder can have only one share in the company. The share capital may consist of money or any contributions "in kind" (such as property, rights and services, under the conditions prescribed by the law). Minimum share capital in Republic of Srpska is BAM 1.00 (approx. EUR 0.50), and BAM 1.000,00 (approx. EUR 500.00) in Federation of BiH, and the value of individual share cannot be less than BAM 100 (approx. EUR 50.00).
The limited liability company is by far the most common used legal form in practice. This is due to the rather straightforward incorporation procedure and minimal requirements in relation to the share capital of the company.
On the other hand, due to the unlimited liability of shareholders for the debts of the company, general and limited partnerships are rarities in Bosnia and Herzegovina, whereas the incorporation procedure for joint stock company is rather complex and time-consuming, which also makes this legal form rarely used in practice.
The business in Bosnia and Herzegovina may also be conducted through a form which does not represent a legal entity i.e. branch office and representative office and therefore the founder remains liable for all obligations assumed by branch office or representative office. The most common presence of the foreign investors in Bosnia and Herzegovina (without establishment of a legal entity) is through the representative office. Activities of the representative office are very limited and include market research, contract or investment preparations, technical cooperation and similar business facilitation activities. The registration of the representative office, is performed before the Registry of Representative Offices, maintained by the Bosnia and Herzegovina Ministry of Foreign Trade and Economic Affairs.
Incorporation requirements (registration, capital and management requirements)
The founding document of the LLC is the Memorandum of Association, which may be in a form of a decision in case there is only one shareholder of the company or the agreement in case there are several shareholders. In Republic of Srpska, in the case of a sole founder who is registering minimal share capital, it is necessary only to notarize a signature of the founder or authorized person.
In Federation of BiH, incorporation of LLC requires the submission of the Memorandum and other documents to the Registry of Business Entities of the municipal court where the headquarters of the company are situated. In Republic of Srpska, the role of one-stop-shop is performed by the Intermediary Agency for IT and Financial Services that acts as intermediary between the court and the applicant, whereby the court is issuing the Incorporation Certificate and the agency delivers it to the applicant. Once this document is issued and delivered, the LLC is considered registered and legally permitted to commence its business activities. The procedure of incorporation is finalized with the issuance of the Incorporation Certificate. In practice, the incorporation procedure in FBIH is finalized 7-15 days upon submission of the complete application. In Republic of Srpska, the incorporation is usually finalized within 5-10 days.
In Federation of BiH, following the registration of the company, there are a few other registrations that have to be completed (the so-called post-registration procedure) - including registration with the Federal Institute for Statistics, general tax registration, customs registration and VAT registration (if applicable). Required time for post-registration procedures is approximately two weeks (provided all the documents are collected in a timely manner). On the other hand, in Republic of Srpska there are no additional obligatory registrations after the registration of the company. The company is obliged to either appoint a certified accountant or to engage an accounting agency immediately after the incorporation.
To register an LLC, the founder should submit the documentation prescribed by the Republic of Srpska/Federation of BiH Law on Registration of Business Entities. Generally, all documents must be originals and translated by a court sworn translator into local language. Depending on the country of notarization of documents additional legalization may be required.
Corporate governance of the LLC in the Federation of BiH can be organized as one-tier (shareholders' assembly and one or more directors) or two-tier system (with additional supervisory board). In the Republic of Srpska, corporate governance of the LLC is organized as one-tier system.
The Assembly operates through sessions and the Memorandum governs the scope of its powers (in the case of the sole shareholder, the functions of the shareholders' assembly are performed by the shareholder itself). Management of the company consists of one or more directors who don’t have to be the company’s shareholders and who are in charge for day to day businesses of the company. Director of the company does not have to be employed by the company, provided that he/she has concluded the management agreement with the company. If a person appointed as a director is a foreigner, it is necessary that he/she obtains a residence and work permit.
In Federation of BiH, the Supervisory Board is required if the company has more than 10 shareholders or if the company has the share capital of BAM 1 million (approximately EUR 511,300) and at least two shareholders. The Supervisory Board is appointed by the Assembly.
The LLC can be engaged in all legally permitted activities, which must be defined in the Memorandum of Association and registered with the relevant state authority. Certain activities (e.g. financial services and insurance services), may be performed only by an entity incorporated in a certain legal form (e.g. joint-stock company), and some activities require prior specific licenses, approvals or consents of Bosnia and Herzegovina regulatory bodies or authorities for transfer of LLC`s share (e.g. broadcasting, financial services, etc.). In addition to the requirement of obtaining a specific license, in the fields of the production and sale of arms, ammunition and explosives for the military use and military equipment and broadcasting, the foreign capital may not exceed 49% of the company's share capital.
According to Law no.06/L-016 on Business Organizations (“Law on Business Organizations”), the following corporate structures are described:
Capital requirements: There is no requirement for an initial capital when incorporating an LLC in Kosovo. Additionally, no proof of payment of initial founding capital needs to be provided.
Capital requirements: The Initial founding capital of Joint Stock Companies is EUR 10,000.00.
Incorporation requirements (registration, capital and management requirements)
General and limited partnerships are not that common in Kosovo due to the unlimited liability of shareholders 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 EUR 10,000, which also makes this legal form rarely used in practice.
The limited liability company is by far the most common used legal form in practice. This is due to the rather straightforward incorporation procedure, no requirements in relation to the share capital of the company, 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.
The initial registration procedure of a new business in Kosovo is comprised of submitting the necessary specific documentation for the different type of business to the relevant authority i.e. the Kosovo Business Registration Agency (“KBRA”), including submitting the specific application form by the applicant or authorized representative, and accompanying documents. For a company to become operational, there are a few other registrations and formalities that have to be made following the registration – opening of a bank account. Required time for post-registration procedures is approximately two weeks (provided all the documents are collected in a timely manner).
There are no applicable fees when registering a new business, though subsequent amendments are subject to fees in accordance with the applicable administrative instruction.
A business may be established and registered for any lawful purpose and may engage in any lawful activity provided with the relevant list of activities provided. If a business is established and registered for the conduct of an activity that is subject to a license or permit requirement established by another primary normative act, the registration of such business shall not constitute or be interpreted as constituting any kind of authorization for such a business to engage in such activity. It shall be the sole responsibility of the business, after registration, to identify, apply for and obtain any and all required permits and licenses from the responsible public authority before engaging in the concerned activity. A list of permitted activities may be found here.
A business may engage in all legally permitted activities, but its predominant business activity (taken from an exhaustive list of business activities provided by Kosovo laws) must be defined in the Memorandum of Association and registered with the Kosovo companies’ registry. 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.
Different corporate structures
A company can establish its corporate presence in North Macedonia by establishing: (i) a company (Macedonian: “трговско друштво”); (ii) a branch office (Macedonian: “подружница”); or (iii) a representative office (Macedonian: “претставништво”). Each of these establishments imply a different level of legal and organizational independence from its founder which reflects the scope of activities that the establishment is authorized to perform. Branch or representative offices are not considered as separate legal entities and therefore the foreign company remains liable for all obligations assumed by branch office or representative office.
Companies can be established by domestic and foreign, natural and legal entities. The legal entity can outlive its founders.
In order to perform business activities, the regulation of North Macedonia also provides legal grounds for individuals to register as sole proprietors, instead of registering a company.
Trade companies can be incorporated in the following forms:
Foreign companies that do not intend to establish a company but want to carry out business activities in North Macedonia have an option to open a branch office. Foreign companies that intend to carry out market research and other similar activities, which do not include commercial activities, could also establish a representative office in North Macedonia. Both branch offices and representative offices are considered as a functional unit of their founder and do not have the status of a separate legal entity.
General and limited partnerships are not that common in North Macedonia due to the unlimited liability of shareholders for the debts of the company. Establishment of a joint stock company is also rare in cases when this type of company is not a precondition for operation in a specific business (e.g. banking and finance sector) considering that the incorporation procedure for a joint stock company is rather complex and time-consuming and requires minimum share capital in the amount of approx. EUR 25,000 or EUR 50,000 (depending whether the company will be established by issuing a public notice for share subscription or not).
The most common type of companies established in North Macedonia is a limited liability company (LLC).
Incorporation requirements differ from the type of company or other corporate presence which is being registered. All documents should be provided in original and should not be older than three months at the moment of submission to the Central Registry of the Republic of North Macedonia (“Central Registry”). Founders are not required to pay any administrative fees at the Central Registry when establishing a company in North Macedonia. Establishment of branch offices and representative offices is subject to low administrative fees, which do not exceed EUR 40.
Companies are established by adoption of adequate articles of association, i.e. Memorandum of Association at LLCs, or Statute at joint stock companies. Articles of association have different compulsory elements depending from the type of entity being registered, including but not limited to determine the company’s name, registered address, prevailing business activity, management, division of loss and profit etc. Branch offices and representation offices are established by adoption of a decision by the foreign founder. Note that the registration of the companies, branch offices and representation offices at the Central Registry has a constitutive effect, and entities are considered as established only after the Central Registry issues the Certificate of Incorporation.
Registration agents – Since the beginning of 2014, the procedure for registration of a new company, branch office or representative office in North Macedonia is carried out by appointed registration agents via the electronic system administered by the Central Registry. The list of authorised registration agents is published on Central Registry’s web site. Authorized accountants and attorneys at law may qualify to act as registration agents. The latest amendments of the relevant law provide that if natural persons fulfil certain conditions, they can submit registration applications through the system for e-registration of the Central Registry, without the assistance of registration agents.
The law prescribes that the required time for incorporation in most cases is up to five business days from the date of submitting of the complete appropriate documentation.
Opening of a non-resident bank account is a pre-condition for establishment of a representative office in North Macedonia. Regarding companies and branch offices, the choice of bank should only be determined during the incorporation procedure, while the activation of the bank account is carried out only after the Central Registry completes the registration of the entity.
In addition, post-registration procedures take approximately a maximum of two weeks. These post- registration procedures include:
The share capital of an LLC may consist of monetary or contributions that are deemed as being "in kind" such as equipment, goods, know-how etc. The minimal value of the basic share capital should be at least EUR 5,000 in MKD counter value. Furthermore, the amount of the share capital has to be expressed in a round number divisible by 100. The monetary share of the share capital does not have to be paid in prior to the registration; rather, it has to be paid in within one year after the registration of the company in the Central Registry.
Minimal value of the basic share capital at a joint stock company should be in amount of EUR 25,000 in cases of establishment without public notice for subscription of shares, and EUR 50,000 in cases of establishment with public notice for subscription of shares. Nominal value of one share cannot drop beyond EUR 1. Joint stock companies which have specific authorizations or carry out particular business activities (e.g. business, insurance and finance sector) have higher thresholds for their basic share capital. Stocks are issued, transferred and kept in a form of an electronic record in the Central Securities Depositary of the Republic of North Macedonia. The stocks are unlimitedly transferable and free to be traded with at the secondary securities market. Each stock must have a nominal amount at which the stock is registered.
Contributions in capital of a general partnership may consist in different amounts in the form of cash, belongings, rights, as well as labour and services. Contribution in labour and services are not allowed in other forms of companies.
There are no capital requirements for the establishment of a branch office or a representative office. The branch office would constitute a permanent establishment for taxation matters.
General partnership - Each partner is authorized to manage the general partnership, unless the partners appoint one or several partners as manager. The same applies to the representation of the company towards third persons.
Limited partnership - The General partners participate with at least one-fifth of the total amount of the contributions and are obliged to personally participate in the operation of the limited partnership and manage it, whereas the Limited partners do not have the right of management. Also, the Limited partner cannot represent the limited partnership.
LLC - Corporate governance can be organised as either (i) one-tier or (ii) two-tier system:
Joint stock companies - The management of the company can be organized either as (i) one-tier system (board of directors) or (ii) two-tier system (management board or manager and supervisory board).
Stockholders under equal conditions, have equal status in the company. Each stockholder registered in the stockholders list has, from the day of entry, the right to participate in the operations of the assembly and the right to vote. Unless the statute determines a greater majority, the assembly can operate (operation quorum), if verified participants holding at least majority of the total number of the voting stocks are present at the session. The decisions of the assembly are adopted with majority of the voting stocks represented at the assembly, unless otherwise provided by law or the statute.
Limited partnership with stocks- The contributions of the General partners cannot be less than 10% of the basic capital. In proportion to their participation in the basic capital, the General partners have a right to vote at the assembly of the limited partnership with stocks. They also manage the company.
The assembly of the limited partnership with stocks elects members of a supervisory board, composed of at least three stockholders. A stockholder from among the General partners cannot be elected in the supervisory board. The General partners cannot participate in the election of the members of the supervisory board.
Branch office of a foreign company – A branch office could have one or several managers, with limited or unlimited authorization appointed by the decision on establishment of a branch office and registered at the Central Registry.
Representative office - A representative office could have one or several authorized representatives, with limited or unlimited authorization appointed by the decision on establishment of representative office and registered at the Central Registry.
Companies and branch offices of foreign companies have an obligation to determine and register a prevailing business activity from the National Classification of Business Activities upon their establishment. However, other than their prevailing activity, a company and a branch office are generally free to perform all other business activities which do not require a specific license. Certain activities can be performed only upon prior consent, license, approval or other act of a state body or other competent authority (e.g. construction, insurance, and health-care). The general partnership can perform a business activity related to a certain profession only if there is a person with the appropriate qualification between the partners or the employees.
Representative offices are prohibited to perform commercial activities. Their activities should be limited to market research, carrying out preliminary and preparatory activities for conclusion of contracts between the founder and its clients, promotional and information activities, as well as self-representation.
Pursuant to the Law on Companies, the business in Montenegro can be performed either through the branch (in Montenegrin: dio stranog društva) or the company.
Branch. Branch does not have the status of a legal entity and represents an integral part of its founder. Due to this fact:
The branch must have at least one authorized representative with permanent residence in Montenegro, who is authorized to represent the branch in relations with third parties, including the state authorities.
Company. The company is established in one of the 4 legal forms: general partnership (in Montenegrin: ortačko društvo), limited partnership (in Montenegrin: komanditno društvo), limited liability company (“LLC”, in Montenegrin: društvo sa ograničenom odgovornošću) and joint stock company (in Montenegrin: akcionarsko društvo). General and limited partnerships are very rare in Montenegrin practice due to the unlimited responsibility of its members for company’s duties and obligations. On the other hand, incorporation procedure for joint stock companies is rather complex and time-consuming, which makes this organisational form rarely used in practice as well. For that reason, below is an overview of LLC’s characteristics, since this is the most flexible and commonly used vehicle for conducting business in Montenegro.
Incorporation requirements (registration, capital and management requirements)
Registration. A company is deemed incorporated and legally permitted to commence its business upon registration with the Central Registry of Companies (“CRC”). Documents required in the incorporation procedure:
All documents prepared in a foreign language must be translated by a certified translator in Montenegro before being submitted to the relevant authorities.
If all the required documentation is appropriately submitted, the CRC is obliged to register LLC within 4 days from the moment of the submission of the documentation. In most cases, the CRC complies with the prescribed deadline.
Capital and management requirements. LLC has a minimum of one and a maximum of 30 shareholders, whose contributions may be in money, or "in kind" such as equipment, goods, know-how etc. There is a minimum share capital requirement of symbolic EUR 1.00 (one Euro). The only mandatory body of an LLC is the executive director. Shareholders’ meeting and BoD are not mandatory bodies, but are frequent in the Montenegrin business practice.
Permitted activities. A company may engage only in those activities for which it is registered. Relevant regulations set forth an exhaustive list of business activities and the Articles of Association should specify its predominant activity and all of the other activities that the company will perform. The type and number of activities can subsequently be extended by additional registration. 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.
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.