Withdrawal of an LLC Member in Serbia: Procedure and Compensation

Legal content reviewed: 4 November 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.

These circumstances may prompt an exit request, but personal dissatisfaction, loss of trust or being outvoted does not automatically establish a justified reason for compensation. The relevant conduct and its effect on the member must be proved.

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 with no outstanding obligation to pay or contribute their subscribed capital contribution 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:

• withdrawal does not extinguish the member’s existing obligations to the company, or automatically release any personal guarantee or separate contractual undertaking;
• 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 (APR).

Under APR’s instructions, the declaration must expressly state that no compensation is sought, with evidence of receipt or the prescribed dispatch to the company. The application is submitted by the company or its representative, rather than the departing member acting solely in that capacity. Keep delivery evidence and arrange the filing before assuming the register will be updated.

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 company or other members cause damage through acts or omissions, or such damage will evidently arise in the ordinary course;
• the member is substantially prevented from exercising 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, unless already fixed by the memorandum.

The company’s General Meeting must decide on the request and notify the member within 60 days of receipt. 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. Article 189 prescribes an ordinary majority of all members’ votes unless the memorandum requires more, subject to Article 214: the withdrawing member cannot vote on their own withdrawal, and their votes are excluded from the relevant quorum. Check the meeting notice, agenda and calculation of the majority.

If the request is approved, the paid-in portion becomes a treasury interest. Outstanding subscribed capital requires the corresponding capital reduction and creditor-protection procedure; APR describes a two-step registration process, including publication of the capital-reduction decision for three months. Unpaid capital must therefore be addressed when planning this route.

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.

Article 192 sets two limits for bringing the claim: six months from knowledge of the reason for withdrawal and, at the latest, three years from when that reason arose. Do not assume that the internal request or negotiations restart these periods. Plan the assembly stage and the lawsuit together.

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.

In Prev 1266/2023, the Supreme Court upheld rejection of a withdrawal claim where the alleged impairment of membership rights was not proved. The member’s actual participation and consent to corporate decisions mattered. Read alongside Prev 486/2018, this shows why a claim must connect specific conduct, evidence and statutory grounds, rather than rely on a general breakdown in relations.

For an internal withdrawal request, Article 190 permits the member to request a pledge over the treasury interest and requires a draft pledge agreement to accompany that request. In court proceedings, a pledge must be requested and justified; it is not granted automatically.

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.

For court-ordered withdrawal under Article 192, the default is market value at the date the lawsuit is filed, with a floor equal to the proportionate net asset value at that same date, unless the memorandum provides another valuation method. This differs from compensation following exclusion under Article 197. Review the memorandum before commissioning a 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.

The court sets the payment period with regard to the company’s finances and expected ordinary revenues: generally no more than two years from the final judgment, or up to five years if the memorandum provides a longer period. This is a maximum framework, not an automatic entitlement to defer payment for two years.

If court-awarded compensation is not paid, Article 193 limits enforcement against the company to sale of the acquired treasury interest and additionally provides liability of the remaining members with their own assets, proportionate to their holdings. The statute expresses that liability as joint and several subject to that proportion. Its scope and procedural enforcement require individual assessment. Do not import the rule extinguishing a shortfall after exclusion into a withdrawal case. A separate damages claim may also be available under Article 193.

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.

Practical Checklist and Related Guidance

Review the memorandum, subscribed and paid-in capital, grounds and dates, meeting notices, minutes, information requests, financial statements and proof of service. Assess valuation, payment security and the assets available for recovery before choosing between statutory withdrawal and a negotiated share transfer.

For assistance, see our corporate and commercial law services and Litigation Desk, together with our guide to disputes among LLC members. Following registration, separately check whether beneficial ownership records and supporting documents require updating.

Primary guidance: Companies Act, Articles 187–193 and 214, and APR instructions on changes of members. Apply the provisions in force for the relevant events.

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.

Author: Damir Petrović, Attorney-at-Law