Amendments and supplements in step with the European standards
1. INNOVATION
National Assembly of the Republic of Serbia issued a Law on amendments and supplements to the Companies Act (“Official Gazette RS”, no. 109/2021), which entered into force on 27th November 2021 (hereinafter “Law”).
The Law embodies the intent of the legislator to create a favourable business climate on a par with European standards.
Amendments to the established rules inevitably impair the usual comfort in doing business, yet those were required in light of the evident improvement in the economy in the past few years.
In the following chapters, we shall provide insight into crucial amendments and supplementary provisions.
2. KEY NOVELTIES
To welcome new shareholders in a limited liability company, one or more shareholders had to transfer their shares entirely or partially to a new shareholder, while now it is possible that a new shareholder simply joins the company while the shares of all other shareholders are proportionally reduced in the process.
For a new shareholder to join a company, the assembly issues a decision and authorizes a person to sign and notarize a contract with the new shareholder.
Treasury shares in a limited liability company cannot be pledged anymore, and such shares give the company neither voting rights nor a right to a share in profits.
Besides the obligation to register an email address, entrepreneurs and companies shall from now on also have an obligation to register as users of electronic administration, and documents shall be served in unique electronic mailboxes on the website euprava.gov.rs.
The public stock company ought to disclose to stockholders data on the compensation of directors and supervisory board members and, in that regard, compile a compensation policy and a compensation report once a year.
3. HEADQUARTERS
A quite practical novelty is the introduction of a right for any interested person to request deletion of registered company headquarters address if their address has been used for registration of company headquarters without their consent.
The new lawsuit is supposed to deter from using fictive addresses to register a company since the Business register agency does not verify ownership of the premises stated in the application and filing such a lawsuit shall undoubtedly sound the alarm in tax inspection for additional monitoring.
4. PERSONAL INTEREST
The Law specifies what data should the notice of personal interest in a company’s transaction contain and introduces fair value as international financial reporting standard no. 13.
The company has to publish on its webpage and the webpage of the Business register agency the intention to conclude a transaction where there exists a personal interest immediately upon making a decision, but at the latest on the day when the transaction is being closed.
In annual financial reports, the company should state the type, object, value, share and parties in every transaction where a personal interest was reported.
5. COMPULSORY LIQUIDATION
The Law introduces a distinction between remediable and irremediable grounds for compulsory liquidation.
If the grounds are remediable, the company has a deadline of 90 days to resolve the liquidation grounds.
The law adds three new grounds for compulsory liquidation:
1) if a company does not register a new headquarters address within 30 days from the day of the finality of a judgment imposing deletion of registered headquarters address;
2) if a company does not register a new headquarters address within 30 days from the finality of the act rejecting the application for changing headquarters address;
3) if a buyer of bankruptcy debtor as a legal entity does not pay the remaining amount up to the minimum share capital within 6 months from the termination of bankruptcy proceedings.
Miloš Marković PhD, Attorney at law
The information contained herein has 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 & 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.
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