HOW TO DO BUSINESS IN THE REPUBLIC OF SERBIA

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Incorporation of the Business Entities-Companies 

Business entities can do business and be organized in form of: (i) Entrepreneur, (ii) General Partnership, (iii) Limited Partnership, (iv) Limited Liability Company, (v) Joint Stock Company, (vi) Representative Office of a foreign company, (vii) Branch Office of a company or Branch office of a foreign company, (viii) Cooperative and Cooperative Federation.

Entrepreneur (Sole Proprietor) is a natural person who performs business activities with the aim of generating income. Entrepreneurs are responsible with all of their assets for liabilities arising from their business activities, including the assets resulting from their business activities. An entrepreneur operates under a business name. The business name of an Entrepreneur contains owner’s personal name, description of the main activity, term “entrepreneur” or abbreviation “pr” and the address of the main office.

For the registration of Entrepreneur it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • photocopy of the identity card for domestic natural persons or photocopy of the passport for foreign citizens,
  • if an entrepreneur intends to register activities that require prior authorization, approval or other document issued by a competent authority, it is necessary to submit such permit, approval or other document,
  • proof of payment of the registration fee.

General Partnership is a company set up by two or more partners who are responsible for all of the company’s liabilities with all of their assets. Partners’ contributions in the partnership are of equal value, and they acquire shares equal to their contributions, unless a different arrangement was made by the Agreement on Establishment. The partners’ non-cash contributions in the general partnership may be in the form of tangible or intangible assets, and exceptionally in a form of work or services.

For the registration of founding of General Partnership it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Agreement on Establishment, with certified signatures of the members,
  • proof of each member’s identity (for nationals – photocopy of the identity card, for foreign citizens– photocopy of passport or identity card, if issued to a foreigner, or registration certificate if the founder is a legal entity that is not registered with the Business Registers Agency),
  • Decision on appointment of the representative, if not specified in the Agreement on Establishment,
  • bank statement confirming that the pecuniary share capital was paid, if the share capital is being paid prior to registration; or, agreement of the members on assessing the value of the non-cash contribution, or the assessed value of the non-cash contribution, if the contribution is provided prior to registration,
  • proof of payment of fees for registration and publication of the Articles of incorporation,
  • proof of payment of the registration fee.

Limited Partnership is a company with a minimum of two members, in which at least one member has unlimited liability for company’s performance (general partner), while at least one other member has limited liability up to the value of his/her agreed contribution (limited partner). Limited partner and general partner divide the profit and cover the debts in proportion to their shares in the partnership, if the Agreement on Establishment does not stipulates otherwise.

For the registration of founding of Limited Partnership it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Agreement on establishment, with certified signatures of the members,
  • proof of the member’s identity (for nationals – photocopy of the identity card, for foreigners – photocopy of passport or identity card, if issued to a foreigner, or registration certificate if the founder is a legal entity that is not registered with the Business Registers Agency),
  • Decision on appointment of the authorized representative, if not specified in the Agreement on Establishment,
  • bank statement confirming that the pecuniary share capital was paid, if the share capital is being paid prior to registration; or, agreement of the members on assessing the value of the non-cash contribution, or the assessed value of the non-cash contribution, if the contribution is provided prior to registration,
  • proof of payment of fees for registration and publication of the Articles of incorporation,
  • proof of payment of the registration fee.

Limited Liability Company is a company in which one or more members has/have shares in the share capital. The members of the company are not responsible for liabilities of the company with their personal assets, except in the case of abuse of limited liability. A Limited Liability Company may be established by domestic or foreign natural person or legal entity – members of the company. A company’s minimum share capital shall be 100 Dinars, unless a higher amount of share capital is regulated by a special law for companies engaging in specific activities. Member of the company acquires share in the company in proportion to the value of his contribution in the share capital, unless the Articles of incorporation of the company or the unanimous decision of the Assembly states otherwise. Member of the company can have only one share in the company. If the shareholder acquires more shares, the shares are merged and viewed as a single share.

The contributions may be in cash or in kind, and they are expressed in local currency. If the payments are made ​​in foreign currency, the equivalent in dinars is calculated at the average exchange rate of the National Bank of Serbia on the day of the payment. The share capital of a Limited Liability Company does not need to be paid in the moment of registration, but it must be subscribed and specified in the Articles of incorporation with time limit for payment, which cannot be longer than 5 years starting from the adoption of the Articles of incorporation.

The management of the company may be organised as a single-tier or a two-tier system. In case of a single-tier management system, company bodies shall include: (i) General Meeting and (ii) one or more Directors. In case of a two-tier management system, company bodies shall include: (i) General Meeting, (ii) Supervisory Board and (iii) one or more Directors.

For the registration of founding of Limited Liability Company it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Articles of incorporation (decision or agreement) with certified signatures of the members,
  • proof of the member’s identity (for nationals – photocopy of the identity card, for foreigners – photocopy of passport or identity card, if issued to a foreigner, or registration certificate if the founder is a legal person that is not registered with the Business Registers Agency),
  • Decision on appointment of the representative, if not specified in the Articles of incorporation,
  • bank statement confirming that the pecuniary share capital was paid, if the share capital is being paid prior to registration; or, agreement of the members on assessing the value of the non-cash contribution, or the assessed value of the non-cash contribution, if the contribution is provided prior to registration,
  • proof of payment of fees for registration and publication of the Articles of incorporation,
  • proof of payment of the registration fee.

Joint Stock Company is a company whose capital is divided into shares. The owners of the shares can be one or more shareholders who are not responsible for liabilities of the company except in case of abuse of limited liability. Joint Stock Company is responsible for its liabilities with all of its assets. Company’s shares are issued in dematerialized form and registered on the name of proprietor(s) with the Central Security, Depository and Clearing House.

Articles of incorporation needs to be signed by each founder and their signatures must be certified. The Articles of incorporation contains information about shareholders and their contributions, shares data (number, type, class, nominal value), company data (business name, location, principal activity) and a statement of every founder about the establishment of the company and commitment to make the contributions payment. The Statute is mandatory act of a Joint Stock Company, which regulates management and internal organization of the company, contains all the essential information about the company, and it is registered in accordance with the Law. Subscribed shares which are, in accordance with the Articles of incorporation payable in cash, shall be paid prior to registration into a temporary account with a commercial bank in the Republic of Serbia. Prior to registration of the company, the shareholders who intend to establish a company are obliged to pay or to enter contributions that represent at least 25% of the capital, where the amount of the paid capital cannot be less than the minimum of the share capital which is in amount of 3,000,000.00 dinars. The nominal value of shares cannot be less than 100,00 dinars.

The management of a company may be organised as a single-tier or a two-tier system. In case of a single-tier management system, company bodies shall include: (i) General Meeting and (ii) one or more Directors or Board of Directors. In case of a two-tier management system, company bodies shall include: (i) General Meeting, (ii) Supervisory Board and (iii) one or more Executive directors or Executive Board.

For the registration of founding of Joint Stock Company it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Articles of incorporation with certified signatures of the members
  • company Statute with certified signatures of the members,
  • statement of the crediting institution confirming the cash payment of share value, or assessment report by the certified assessor of the non-cash investment value or confirmation of the relevant authority about the value of non-cash investment, in accordance with the law,
  • Decision on appointment of Director or Chairman and members of Board of Directors, if not specified in the Statute,
  • Decision on appointment of members of Supervisory Board, in case of two-tier system, if not specified in the Statute,
  • Decision on appointment of members of Executive Board, in case of two-tier system,
  • Decision on appointment of the representative, if not specified in the Statute,
  • proof of payment of the registration fee,
  • proof of payment of fees for registration and publication of the Articles of incorporation,
  • proof of payment of fees for registration and publication of the Statute.

Representative Office of a foreign company is its organizational unit that can perform preliminary and preparatory actions with the aim to conclude legally binding agreements of that company. Representative office is not a legal entity. The representative office can conclude legally binding agreements related only to their current operations. A foreign company has responsibility towards third parties for liabilities arising from operations of its representative office. Representative office is formed by the decision of competent body of a foreign company.

For the registration of formation of Representative Office it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Decision on formation of Representative Office,
  • registration certificate issued by the register in which the foreign company is registered, translated by the sworn translator,
  • evidence of bank accounts used by the foreign company for business transactions,
  • statement of the foreign company authorized representative in which the company takes responsibility for all liabilities resulting from business activities of representative office, certified by the relevant organ and translated by the sworn translator,
  • proof of payment of the registration fee.

Company’s branch office is its separate organizational unit through which the company performs business activity in accordance with the law. Branch office is not a legal entity and it acts in the name and for the account of a company. A company shall be unlimited liable for the obligations to third parties arising from the activity of its branch office. The branch office is established in accordance with the decision of the assembly or partners, unless stated otherwise in the Articles of incorporation or the Statute.

For the registration of formation of Company’s branch office it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Decision on formation of the branch office,
  • Decision on appointment of representative of branch office, in a case if the representative is different from the representative of founder of branch office,
  • proof of payment of the registration fee.

Foreign Company’s Branch Office is its separate organizational unit through which the company performs business activity in the Republic of Serbia, in accordance with the law. Branch office is established by a decision of the competent authority of a foreign company.  Foreign company’s branch office has its principal activity, but it can perform all other activities permitted by the law, regardless of the fact whether they have been specified by the decision on establishment of the branch office. Foreign company Branch office is not a legal entity but in the sense of taxation it has resident status.

For the registration of formation of Foreign Company’s branch office it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Decision on incorporation of foreign company branch office,
  • registration certificate issued by the register in which the foreign company is registered, translated by the sworn translator,
  • evidence of bank accounts used by the foreign company for business transactions,
  • statement of the foreign company authorized representative in which the company takes responsibility for all liabilities resulting from business activities of branch office, certified by the relevant body and translated by the sworn translator,
  • proof of payment of the registration fee.

Cooperative is a form of organization of natural persons in which they operate on cooperative principles of voluntarism and solidarity, democracy, economic participation, equal management rights, independence, cooperative training and collaboration with the aim of accomplishing economic, social and cultural interests. Cooperatives may be formed as farming – general and specialized (for cereal, fruit and wine, livestock, beekeeping, homemade, etc.), housing, consumer, trade, health, youth, student, as well as other kinds of cooperatives for production, trade in goods and services, in accordance with the law.

For the registration of Cooperative it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Agreement on establishment, evidencing certified signatures of the members,
  • proof of identity of cooperative members (for Serbian nationals – photocopy of personal ID card, and for foreign nationals –photocopy of passport or of personal ID card if one has been issued to them, or excerpt from the original register if the founder is a legal entity not registered with any of the Registers kept by the Serbian Business Registers Agency),
  • minutes from the constituent meeting,
  • Cooperative rules,
  • Book of members (only for cooperatives with membership fees)
  • bank confirmation of the payment of the cash contribution if such contribution is payable and/or cooperative members’ agreement regarding the appraised value of the non-cash contribution or appraisal of the value of the non-cash contribution if applicable (only for the Cooperatives with contributions),
  • Decision on the appointment of the Chairman and members of the Board of directors (if any),
  • Decision on the appointment of Chairman and members of the Supervisory board (if any),
  • proof of payment of the registration fee, and proof of payment of the fee for the registration and publication of the Agreement on establishment, Cooperative rules and Book of members.

Cooperative federations are independent and professional business interest organizations that are established in order to promote cooperative activities and protect their common interests. Cooperative federations are established by types of cooperatives and for a specific territory.

For the registration of Cooperative federation it is necessary to submit the following documents:

  • standard application form for registration of legal and other entities and application for issue of the tax ID number,
  • Agreement on establishment of a cooperative federation,
  • Cooperative federation rules,
  • Decision on the appointment of the Chairman of federation, and/or other representative if not specified in the Agreement on establishment,
  • Decision on the appointment of Chairman and members of the Board of directors and Supervisory board,
  • proof of payment of the registration fee, and proof of payment of the fee for the registration and publication of the Agreement on establishment, Cooperative federation rules.

Attorney at law Damir Petrović

The information contained herein have been provided only for the purpose of general information and cannot be considered as a legal opinion or legal advice. Accordingly, the Law Firm Petrovic Mojsic & Partners disclaims all responsibility and accept no liability in respect to actions taken or not taken based on any or all the contents contained herein.