Well, how does it work in Serbia?
The Company Law came into force on June 4, 2011, and is effective as of February 1, 2012.
All existing companies were obliged to adjust their operations and corporate documents to the provisions of the Law until February 1, 2012.
The Law refers to business enterprises and entrepreneurs.
Main types of business enterprises (companies) are:
- General Partnership
- Limited Partnership
- Limited Liability Company by portions
- Joint Stock Company (Limited Liability Company by shares)
The Law no longer refers to socially-owned enterprises, but it is provided that certain provisions of the former Enterprise Law remain in force until the conclusion of the privatization process in Serbia.
General Partnership is to be founded by two or more individuals as partners who perform various business activities under the joined business name. Partners are jointly responsible toward third persons for all debts of the company, with no limitation.
Formation documents are Foundation Act and optionally Partners’ Agreement.
Investment in the company may be in cash contribution, assets, rights, work or services performed or to be performed to the company. There is no minimum share capital determined, and all of the Partners have shares in the company proportional to their corresponding investment in the company.
Limited Partnership is to be founded by two or more individuals as partners who perform various business activities under the joined business name, where at least one partner is responsible for the company’s obligations with no limitation and at least one partner has limited responsibility for the company.
Formation documents are Foundation Act and optionally Partner’s Agreement.
Limited Liability Company
Limited Liability Company is to be founded by one or more founders/members. Founders of Limited Liability Company can be either individuals or legal entities (domestic or foreign), who are Members of the company.
Members have limited responsibility for the Company’s obligations, up to the amount of ones portion in the basic capital of the company.
Foundation Act is the only necessary formation document. Members may conclude Members’ Agreement in purpose to regulate their mutual relationship, but that is optional. The content of the Foundation Act is prescribed by the Law.
The Law reduces minimum of the initial contribution to 100RSD (less then 1EUR). This amount must be paid in accordance with the term defined in the Foundation Act, but no later then five years after the founding of the company. The Law allows that initial contribution may be made in cash, assets, rights and even services. Official evaluation of non-pecuniary investments is no longer required.
The supreme body of the company is Members’ Assembly. Apart from the Assembly, limited liability company may have either one or more Directors (‘unicameral’ form of management) or the Supervisory Board and one or more Directors (‘bicameral’ form of management). Director acts as an authorized representative of the company.
Joint Stock Company
Joint Stock Company is founded by one or more shareholders, individuals or legal entities (domestic or foreign).
Shareholders have limited responsibility for the company’s obligations, up to the amount of ones portion in the initial capital of the company.
New Company Law does not distinguish types of joint stock companies. However, Law on the Capital Market does: joint stock company that is public and joint stock company that is not (no special name has been assigned). Joint stock company is condidered public if at least one of the conditions are fullfilled: 1. that the company has succesfully completed public offering of securities, and 2. that the secuties of the company are admitted to trading on a regulated market, and/or MTF (multilateral trading facility). Shares are considired as securities.
The minimal value of the initial contribution is set at 3.000.000RSD (around 25.500EUR). This amout must be paid by the time of registration of the company at Serbian Business Registers Agency. If the initial contribution is higher then prescribed minimum the rest of if has to be paid in the period of two years in case of public joint stock company, or in the period of five years in case of joint stock company that is not public.
The Foundation Act and By-Laws are obligatory documents. The content of both documents is prescribed by Law.
The supreme body of the company is Members’ Assembly. Apart from the Assembly, joint stock company may have either one Director/ Board of Directors or the Supervisory Board and one Director/Board of Directors. Director acts as an authorized representative of the company.
The Law provides large number of new provisions on shareholder’s protection including minority shareholder’s rights, large transactions, mergers, spin-offs and partial transfers, compulsory sale and buy out provisions, etc.