Serbian Law on Business companies

Everything You Should Know About the Serbian Law on Business Companies

November 14, 2017 by Nebojša Stanković

In Serbia, a business company is perceived as a legal entity. This is important for protecting the owner of the business, but also, it holds the owner reliable for the business, thus keeping the entity closely related to the owner.

Types of companies that can be established

The company can take several different forms; it can be an LLC (Limited Liability Company), a Stock company, a Holding company, a Partnership company and a regular company, led by an individual at the top. It all depends.

Also, in the whole process, the business must choose its specialty, that is, its business field. This parameter is used in the business company registration process and is obligatory. Once this process is complete, the company reaches the state of a legal entity, which is supported by the Law on Business Companies.

A business company can be started for a definite or indefinite period of time. If the definite period of time has passed, the company can easily continue working as an indefinite one. The decision is made by the internal organisation, that is, by the leading figures in the company.

Also, the Law on Business Companies defines what happens in case any type of legal action is required. The area where the company was founded also has to have a responsible court for it. Therefore, in case any lawsuit is created, the nearest court is going to be used for the trial process.

The Founding Act

The Founding Act has to be established in the company creation process. It represents everything related to who is in charge of the company, what are its goals, but primarily, it deals with all the legal obligations that the company has to fulfil.

The Founding Act is the responsibility of the person in charge. Furthermore, if the company is founded by several different personas, for example, a partnership company, then, all of the persons involved participate in the creation of the Founding Act.

When establishing a stock company, besides the Founding Act, it is necessary for the company to also have its own statute book that creates rules about how company’s assets are used, traded, and exchanged.

Both the Founding Act and the statute book are created in written form. Afterwards, they are registered in accordance with the Law of Registration on Business Subjects.

The importance of the Founding Act is rather significant. One of the examples that shows how important it is includes the regulation of refunded employee expenses. A company can provide refunds for its employees only if that is made possible in the Founding Act. If this is not stated in the Founding Act, a business will be much harder to operate. Therefore, it is extremely important that the Founding Act includes as many details about the company and its employees, as well as those who are running the company.

Legal representative regulations


According to the Law on Business Companies, a business can have two different types of legal representatives in court. The representative can either be an individual or a legal entity, that is, a company which specializes in providing law services. The only condition is that both of these entities have to count at least one person that is going to appear in the court of law.

No matter the case, the legal representative must be registered in accordance with the Law of Registration of Business Subjects. Furthermore, in case the legal representative is a legal entity, the company must provide a special written authorisation warrant that enables the entity to represent the company in the court of law.

Both of these legal representatives can be regulated in two different ways.

  • The Founding Act - A legal representative can be authorised by the Founding Act of the company.
  • Single hiring process - Not all business require legal representatives at all times. A company can provide authorisation separately to other hired legal representatives. In the whole process, a contract is created. With this contract, a person or legal entity becomes the legal representative of the business company and can even negotiate deals and appear in the court of law.

Whatever the case, the legal representative is solely responsible for any damage made to the company, especially in case the individual or legal entity exceeds the boundaries set by the Founding Act or the contract.

Changing the form of the company

The Law on Business Companies also includes details about how the company can be changed.

The change is defined in the following way. A business company can be joined with one or more other business companies, Also, it can be dissolved into two or more smaller companies. The company that is joining the other company ceases to exist, but all of its legal obligations, property, and employees are moved with it in the new company.

In case of splitting up, the law states the following:

 The business company can be split so that it simultaneously gives its property and obligations to:

  1. Two or more newly-created business companies
  2. Two or more already-existing business companies
  3. One or more newly-created or already-existing business companies.

During the process, the business company that is being split stops existing without entering bankruptcy.

However, it is also possible to go through the same process without removing it from the Business Company registry.

Business Company Branches

Business company branches are not perceived as legal entities according to the Law on Business Companies. However, the parent company is completely liable for the action it takes. In case a business company branch damages a third party in any way, or takes any form of illegal action, the parent company is held completely responsible, and it is going to be legally pursued for a settlement.

It is clear that the Law on Business companies is well regulated in Serbia, which makes it a place where long-term investments can flourish. Especially when you take into account how much changes the Serbian government is making, creating better conditions for those who decide to make an investment in this country.