Opening a company in Serbia – what legal form of a company to choose?

Otvaranje firme u Srbiji

As a stimulating and economically stable environment, Serbia is attracting more and more businesses. There are numerous international companies in Serbia, and some of the largest foreign investors in Serbia, by the value of projects, are from Germany, Italy, the USA, Russia, China, France, and Austria. Bearing in mind that Serbia ranked No. 1 on the FDI 2019 Europe list, based on the criteria of Greenfield investments relative to the size of the economy, various international companies in Serbia are motivated to join and expand their business. There is an extensive increase in the number of Chinese companies in Serbia, such as Serbia Zijin Mining, HBIS GROUP Serbia Iron & Steel, SERBIA ZIJIN COPPER, and many others. Great support for Chinese companies in Serbia is certainly given by the Chamber of Chinese Companies in Serbia, as well as the Bank of China, which is present in Serbia since 2016. One of the great benefits of company registration in Serbia is the possibility to get a residence permit by company formation in Serbia. For further information about this immigration question, please visit the link.

When thinking about company formation in Serbia, one of the decisions to make is what legal form of a company to choose. Company law in Serbia prescribes the following legal forms:

1) General Partnership - a company of two or more partners who have unlimited joint and several liability with all their assets for the company's liabilities. Unless the partnership agreement provides otherwise, the company's profit is distributed in equal shares among partners, and partners enter into the company contributions of equal value. When it comes to the company's ordinary activities (management), each partner has the authorization to conduct actions. A partner is entitled to reimbursement of all expenses he had concerning the operation of the general partnership, which was necessary under the circumstances. It is also possible for a new partner to join the company after incorporation. In that case, the new partner would be liable for the obligations of the company as the existing partner, including obligations undertaken before he joined the company.

2) Limited Partnership - A limited partnership is a company of at least two members, at least one member who has unlimited joint and several liability for the liabilities of the company (general partner), and another member who has limited liability up to the amount of his contribution (limited partner). General partners have the status of partners in a general partnership previously mentioned. General partners and limited partners usually participate in the division of profit and in covering the company's losses proportionately to their shares in the company. General partners manage the company's operations and represent it, but a limited partner may object only to taking actions or entering into transactions by a general partner that is outside the company's ordinary activities, in which case the general partner may not take that action or enter into that transaction. A limited partner may be granted a procuration - a business power of attorney whereby a company authorizes one or more natural persons (the procurator) to conclude legal transactions and take other legal actions in its name and on its behalf.

3) Joint Stock Company - A joint stock company is a company whose share capital is divided in stocks held by one or more stockholders who are not liable for the company's obligations (except in a few cases provided by company law in Serbia). The company is held liable for its obligations with all of its assets. A joint stock company usually has a minimum share capital amounting to RSD 3.000.000,00. When it comes to the management of the company, it has a General Meeting, and one or several directors, i.e. a board of directors. The board of directors defines the business strategy, conducts the company's operations, performs internal supervision over the company's operations, etc. There is also another option, and in that case, the company bodies are the General Meeting, Supervisory board, and one or several executive directors, i.e. the executive board. In both options, the General Meeting is composed of all company's stockholders, and it decides on changes in the rights or privileges pertaining to any class of stocks, acquisition, and disposal of high-value assets, distribution of profit, etc. Executive directors conduct the operations of the company and are legal representatives of the company, while the Supervisory board needs to give consent for the acquisition, disposal, and encumbrance of shares and stocks that the company holds in other legal persons; acquisition, disposal, and encumbrance of immovable property; getting a credit facility, i.e. getting and granting loans, etc.

4) Limited Liability Company (LLC) - a company in which one or more company members own shares in the company's share capital, and company members are not liable for the company's obligations (except in a few cases provided by company law in Serbia). Having in mind that company members are not liable for the company's obligations, and that company's initial capital amounts to at least RSD 100 (less than EUR 1), this legal form is chosen very often. Shares in a limited liability company can be transferred. For example, you open a company with one more member, and after a while, a third member joins the company. Regarding management of the company, usually it has General Meeting and one or more Directors. It is possible to have a Supervisory board as well. A general meeting is composed of all company members, and normally every member of the company has a voting right in the general meeting in proportion to his share. For instance, General Meeting approves financial statements, supervises the work of a director, decides on profit distribution, etc. Concerning Director, it is a legal representative of the company and manages the company's operations. A Director needs to be registered at the moment of registering the company at the Business Registers office. It is not very common, but it is also possible to opt for a two-tier management system, that includes a Supervisory board as well. In that case, it supervises the work of the Director. The supervisory board can also set the company's business strategy, establish accounting policies of the company and risk management policies, propose to the general meeting the choice of auditor, etc.

How much does it cost to open a company in Serbia?

Business registers office fee for company registration in Serbia amounts to RSD 6.500,00.

Sole proprietorship in Serbia

Also, it is possible to register a sole proprietorship, which is a legally capable natural person who conducts an activity to gain profit. It is liable for all its obligations arising from performing its activity with all of its personal assets, including the assets acquired with regard to the performance of the activity. A sole proprietor may entrust management to a legally capable natural person - the manager. This is also chosen very often, considering that for registering a sole proprietorship, only a personal ID is required. Business registers office fee for registering a sole proprietorship in Serbia amounts to RSD 1.600,00.

Bearing in mind opening a Limited Liability Company (LLC) and registering a Sole Proprietor are the most often chosen options, let's compare them briefly:

Opening an IT company in Serbia

Many IT companies in Serbia choose to open a company in Serbia in the form of LLC. VEGA IT, QUANTOX TECHNOLOGY, DEVTECH, NORDEUS – are all Limited Liability Companies. Probably the fact that company members are not liable for the company's obligations, makes this legal form so popular. Opening an IT company in Serbia takes no longer than 5 working days, and it can also be done remotely. For further information on how to open a company in Serbia and what documentation is required, without coming to Serbia, please visit the link. This is especially useful for company registration in Serbia for foreigners.

Opening an IT company in Serbia

Company formation in Serbia remotely – do you need an Apostille?

If opening a company in Serbia remotely is the most suitable option for you, you will need to authorize someone in Serbia, usually a lawyer, to establish a company on your behalf. That is, you will need a Special Power of Attorney. Whether that Special Power of Attorney needs to be fully legalized, whether the requirement of legalization is abolished and only Apostille is needed, or not even an Apostille, depends on the country where the Document is coming from. For example, Apostille is required for foreign public documents coming from Hong Kong, Germany, India, Singapore, the UK, the US, etc. On the other hand, for documents coming from Austria, France, Greece, Hungary, Russian Federation, etc. – not even an Apostille is required. In that case, you will only need to certify your signature at the Special Power of Attorney, at the Notary Public office in your country. After that, you will send that Special Power of Attorney to the authorized person in Serbia, usually a lawyer for company formation in Serbia, and that person will do everything needed on your behalf.

Lawyer for a company formation in Serbia

Company registration in Serbia is an important business decision for each individual, and if you are not familiar with the procedure for company formation in Serbia, it is advisable to hire a Lawyer for opening a company in Serbia. If you have any questions such as how to register a company in Serbia, or how much does it cost to open a company in Serbia, you can contact Law office Pekić via the e-mail address [email protected], or by sending a message on Facebook messenger or Linkedin.

Sonja Pekic Advokat Novi Sad

Autor

Advokat Sonja Pekić