Transfer of ownership of share in a limited liability company is regulated by the provisions of the Law on Companies (“Official Gazette of RS”, No. 36/2011, 99/2011, 83/2014- other law and 5/2015) (hereinafter referred to as the “Law”).
In general, transfer of share is free, except in cases where the transfer is restricted by the Law or if otherwise determined by the Memorandum of Association.
In the event of the sale of share, company members have the pre-emption right with regard to the share which is the subject matter of transfer to a third party, unless such right has been excluded by the Memorandum of Association or by the Law. Prior to transfer to a third party, the transferor shall be obliged to offer the relevant share to all other company members. The offer shall be given in writing and shall contain all the essential elements of the share transfer agreement. A company member exercising the right of pre-emption shall be obliged to notify the transferor of share, in writing, of the acceptance of offer in its entirety, within the period of 30 days from the date of receipt of the offer, unless the Memorandum of Association provides for a different deadline, but such deadline must not be shorter than eight days or longer than 180 days. If two or more company members have accepted the offer and if no agreement has been reached between the transferor and those members on the manner of distribution of share subject to transfer, distribution shall be made in a manner that each member accepting the offer shall purchase the part of the share which is proportionate to its share in the sum of shares of all other members of the company who accepted the offer. The Memorandum of Association may regulate the procedure related to the right of pre-emption in any other way.
A company member who has the right of pre-emption but to whom the transferor of share has not submitted the offer in accordance with the Law, or in a manner determined by the Memorandum of Association, may file a lawsuit to the competent court and request: (i) the annulment of the agreement or any other act on the transfer of share and (ii) obligation of the sued member of the company to transfer the share to the plaintiff, or that the court ruling should replace the share transfer agreement between the plaintiff and sued member of the company.
In the event the right of pre-emption has not been exercised by any member of the company in accordance with the provisions of the Law and the Memorandum of Association, the transferor of share may, within 90 days from expiration of the deadline for the acceptance of offer, conclude a share transfer agreement with a third party, subject to the terms and conditions which may not be more favourable than the terms and conditions referred to in the offer submitted to other company members, unless otherwise provided by the Memorandum of Association.
If the share is sold through public auction, bidding or a similar procedure (public sale), a member of the company wishing to exercise the right of pre-emption may only exercise such right in that procedure, unless otherwise provided by the Memorandum of Association.
The Memorandum of Association may provide that a share in the company may be transferred to a person who is not a member of the company only subject to the prior consent of the company. The company shall be authorized, instead of giving the consent under this Law, to appoint a third party to whom the transferor may transfer the share subject to the same terms and conditions, in which case the transferor may transfer its share only to that third party and subject to the relevant conditions. Should the company inform the transferor that the requested consent has been denied, but provided no third party has been appointed, the transferor may file a lawsuit against the company to the competent court seeking the adoption of the judgment which shall replace the company’s consent.
The share shall be transferred based on a written agreement, with certified signatures of the transferor and the acquirer. The transferor of share shall be jointly and severally liable with the acquirer of share for the liabilities towards the company arising from the unpaid i.e. outstanding subscribed share in equity of the company, and for the obligation to make additional payments in terms of such share, according to the balance on the share transfer date. Legal actions undertaken towards or by the share transferor prior to the registration of the transfer of share in accordance with the law on registration regarding such share or relationships in the company shall be deemed actions undertaken towards or by the share acquirer, unless incompatible with the nature of the undertaken legal action.
In the event of a sale of share in an enforcement procedure or in a procedure or judicial or extra-judicial settlement in accordance with the law governing pledge on movable property entered in the register: (i) company members having the right of pre-emption with regard to that share shall reserve that right or (ii) if the Memorandum of Association stipulates the company’s right to give prior consent to the transfer of share such company’s consent to the sale of share shall not be required but the company shall be entitled to determine the buyer of share.
In the event of death of a company member, the heirs of that member shall acquire his/her share in accordance with the law governing inheritance. The Memorandum of Association may stipulate the right of the company or of one or several company members to adopt a decision on enforced purchase of share from the heirs within six months from the date of death of a company member, but no later than within three months from the date of registration of heirs of the deceased company member as the members of the company, in accordance with the law governing registration.
The share in company may be divided: (i) on the basis of the agreement on transfer of part of share; (ii) on the basis of legal succession; (iii) on the basis of the share distribution agreement between joint owners; (iv) in other cases, in accordance with the law.
A company member may also pledge its share or part of share, unless otherwise stipulated by the Memorandum of Association.
Attorney at law Damir Petrović
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 Petrović Mojsić & 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.