Withdrawal of an LLC Member in Serbia 2026

The withdrawal of an LLC member may be a purely personal decision, in which case the member leaves the company without receiving any compensation for their ownership interest. In other situations, however, a member’s withdrawal is the result of a serious breakdown in the relationship between the partners, with the withdrawing member seeking compensation for the value of their ownership interest upon leaving the company.

Unlike the exclusion of a member, where the company or the remaining members initiate proceedings against one member, withdrawal is initiated by the member who no longer wishes to remain part of the company. Although the Serbian Companies Act regulates this area in detail, disputes concerning a member’s withdrawal are among the most complex corporate disputes in practice.

Withdrawal of an LLC Member – How Does It Occur?

In addition to a member’s personal decision to leave a limited liability company, the most common reasons for withdrawal include:

• disagreements among the members;
• deadlock in decision-making;
• an unequal distribution of responsibilities;
• loss of trust; or
• a complete breakdown of cooperation.

Any of these circumstances may lead a member to seek withdrawal from the company.

The Serbian Companies Act regulates a member’s right to withdraw from an LLC in detail. However, the withdrawal procedure, the rights of the departing member, and the company’s obligations depend on whether the member seeks compensation for their ownership interest and whether there is a justified reason for withdrawal.

These two issues are often the source of disputes.

Many company members mistakenly believe that they can simply leave the company without any legal consequences for the company, the remaining members, or their own rights. Conversely, companies sometimes attempt to prevent a member from leaving or make it difficult for the member to exercise their right to receive compensation for their ownership interest.

For this reason, it is important to understand:

• when a member may withdraw from an LLC;
• when the member is entitled to compensation for their ownership interest;
• what constitutes a justified reason for withdrawal;
• how the internal company procedure is conducted;
• when court proceedings become necessary; and
• what financial consequences the withdrawal may have for the company itself.

Withdrawal of an LLC Member Without Compensation for the Ownership Interest

The simplest scenario arises when a member wishes to leave the company without requesting any compensation for their ownership interest.

In such a case, a member who has fully paid or contributed their subscribed capital contribution and has no outstanding obligations toward the company may submit a notice of withdrawal to the company at any time, without being required to state any reason for leaving.

Such withdrawal effectively constitutes a voluntary relinquishment of the member’s status and all rights arising from their ownership interest.

It is important to understand, however, that:

• the member remains liable for obligations that arose before the withdrawal;
• the ownership interest automatically becomes a treasury interest held by the company by operation of law; and
• the change must be registered with the Serbian Business Registers Agency (SBRA).

In practice, this type of withdrawal is relatively uncommon, particularly where the company has substantial value or operates profitably.

Withdrawal of an LLC Member for a Justified Reason

A considerably more complex situation arises where a member wishes to leave the company while seeking compensation for the value of their ownership interest.

In such cases, the law requires the existence of a justified reason for withdrawal.

The Companies Act specifically recognizes justified reasons in situations where:

• the other members or the company cause damage to the member through their actions;
• the member is prevented from exercising their membership rights; or
• the company imposes disproportionate obligations on the member.

Examples include:

• complete exclusion of the member from the decision-making process (such as being denied access to the company’s premises or omitted from notices convening members’ meetings);
• denial of access to company information and documentation;
• diversion of company assets to the detriment of a minority member;
• abuse of majority control;
• persistent outvoting aimed at marginalizing one member; or
• a serious deterioration of relations among the partners, making further cooperation practically impossible.

It is important to note that the company’s Articles of Association may provide for additional grounds for withdrawal, as well as a specific procedure and method for determining compensation for the ownership interest.

On the other hand, the Articles of Association cannot validly exclude a member’s statutory right to withdraw for a justified reason, nor may a member waive that right in advance.

Withdrawal of an LLC Member Procedure

A company member wishing to withdraw for a justified reason must submit a written request to the company.

The request must specify:

• the grounds for withdrawal;
• the amount of compensation claimed for the ownership interest; and
• the proposed deadline for payment.

The company’s General Meeting must decide on the request within 60 days. It may either approve the request in full or reject it in its entirety. The Companies Act does not provide for partial approval of a withdrawal request. The decision is adopted by a simple majority of votes, unless the Articles of Association require a higher voting threshold.

If the request is approved, the member’s ownership interest becomes a treasury interest held by the company, and the company becomes obligated to pay the agreed compensation.

When Does the Dispute End Up Before the Court?

In practice, companies often reject a withdrawal request or simply fail to decide on it within the statutory deadline. In such cases, the member may initiate court proceedings against the company.

In those proceedings, the court determines:

• whether a justified reason for withdrawal exists;
• the fair market value of the ownership interest;
• the deadline for payment by the company; and
• whether additional security should be provided to secure the member’s claim.

Serbian case law confirms that justified grounds for withdrawal may exist even beyond the situations expressly listed in the Companies Act. In its decision Prev 486/2018 of 3 October 2019, the Supreme Court of Cassation held that, when assessing the merits of a withdrawal claim, the court must examine whether the company’s actions or those of the other members have effectively prevented the member from exercising their membership rights or caused them damage, even where the circumstances do not fall within the typical cases expressly referred to in Article 188 of the Companies Act.

In that particular case, the Court attached particular importance to the fact that the member had been denied access to the company’s business premises and prevented from attending and voting at the General Meeting, concluding that these actions constituted a serious infringement of the member’s corporate rights.

It is also worth noting that the Companies Act provides additional protection for a withdrawing member by allowing the establishment of a pledge over the company’s own ownership interest as security for payment of the compensation due.

Determining the Value of the Ownership Interest

One of the most contentious issues in withdrawal proceedings is determining the value of the departing member’s ownership interest.

Under the Companies Act, compensation is calculated based on the fair market value of the ownership interest as of the date the lawsuit is filed. However, the compensation may not be lower than the proportional share of the company’s net assets corresponding to the member’s percentage ownership in the company’s share capital. In certain cases, the Articles of Association may contain specific provisions governing the method of valuation.

Determining the value of an ownership interest almost always requires the involvement of financial valuation experts, particularly in profitable companies, businesses with substantial assets, IT companies, family-owned businesses, or companies where the parties dispute the actual value of the company’s assets or operations.

Financial Consequences for the Company

A member’s withdrawal may impose a significant financial burden on the company.

For this reason, the Companies Act limits the sources from which compensation for the ownership interest may be paid. Such compensation may be funded only:

• from the company’s reserves designated for that purpose; or
• from the proceeds generated by the sale of the treasury interest acquired as a result of the member’s withdrawal.

To ensure that the withdrawing member’s claim is satisfied, the company is prohibited from distributing profits to its remaining members until the compensation has been paid in full. Any profits generated during this period must instead be used to satisfy the company’s obligation to the withdrawing member.

These rules are intended to protect the company’s creditors while preserving its financial stability.

Why the Articles of Association Matter

Many entrepreneurs regard the Articles of Association as a document that is signed when the company is incorporated and never consulted again. In reality, it is precisely during corporate disputes that the importance of a carefully drafted constitutional document becomes evident.

Well-prepared Articles of Association may regulate in advance:

• additional grounds for withdrawal;
• the method for valuing an ownership interest;
• payment deadlines;
• dispute resolution mechanisms; and
• the procedure for a member’s withdrawal from the company.

Clear contractual arrangements can often prevent years of litigation and help avoid serious disruption to the company’s business operations.

Conclusion

The withdrawal of a company member is far more than a formal exit from a business. It almost always raises fundamental issues concerning the true value of the business, corporate control, the company’s financial stability, and the protection of the rights of all members.

For this reason, such situations require careful legal and commercial assessment, particularly where conflicts among the members have already arisen.

Properly drafted Articles of Association, timely legal advice, and a strategic approach to negotiations are often the best way to facilitate a member’s withdrawal while minimizing the risk of lengthy corporate litigation and its potentially significant consequences for the business.

Law Firm Petrović Mojsić & Partners