Things You Need to Know before Investing

Law on Companies in Serbia: Things You Need to Know before Investing

June 15, 2018 by Nebojša Stanković

Every company in Serbia is a legal entity. Therefore, if you are looking to make investments in some business in Serbia, you need to be well acquainted with the Company Law in Serbia. This article will help you learn about some of the most important details you need to know before investing.

The importance of The Founding Act

The Founding Act - Businessmen talking

When talking about Law on Companies in Serbia, the first and the most crucial thing you need to focus on is The Founding Act which refers to numerous different details about your company, such as your company’s overall objectives, the person or several persons who are in charge of the company, as well as each and every legal requirement your newly founded business needs to meet.

All of these details are especially important when it comes to refunded expenses for your employees. If not previously stated in your company’s Founding Act, you are not legally permitted to provide any refunds for your employees according to Company Law in Serbia, which would make your business a lot more difficult to operate in a proper way. 

Such acts are the essential part of the whole company establishment process. If the company has only one owner, then they are responsible for its Founding Act. If, on the other hand, the company has more than one founder, then all of these people need to be involved in the creation process.

In cases where a stock company is being established, it needs to possess a Statute Book along with The Founding Act. A Statute Book of your company should include different rules about your company’s assets – in short, how they are traded, exchanged, and used.

After you have created the Statute Book and The Founding Act for your business in the written form, you need to register both of these documents following the rules provided in the Law of Registration of Business Subjects.

Different types of companies in Serbia

There are a few different kinds of companies that can be established in Serbia, according to the Company Law of Serbia:
Stock companies – businesses that are in the ownership of shareholders.

Partnership companies – businesses that are in the ownership of two or several people who share the company’s profits and its management. There are two types of business partnerships – general and limited.

A general partnership implies that the partners are responsible for everything that is going on in their company, including partnership debts as well as the other different obligations. In a limited partnership, there are limited and general partners.
While the general partners own the business and operate it, limited partners are simply investors, and they don’t have any control when it comes to the company itself and its operations. 

Holding companies – Companies that own other companies’ stock, which don’t have their own products or services.
Limited liability companies – Or LLC for short, are the companies which members aren’t held liable for any company’s liabilities or debts. 

Regular companies – Companies which are in the ownership of one single individual.
Furthermore, regardless of the type of a company, business owners are obliged to define the business field it falls under which is essential for the whole process of registration. Only after this company registration process is finalized, a company is regarded as a legal entity in the Law on Companies in Serbia.

Another important thing you need to be aware of is that business company branches aren’t regarded as legal entities in Serbia and only the parent company can be held liable for any actions. For instance, if some company’s branch becomes involved in any illegal activities, only the parent company will be responsible.

Determining a legal representative of a company

You don't need to look for someone with, let's say, 10 years of experience in the business, but you need to make sure they do have experience and know how to handle all the legalities of establishing a company in Serbia. They need to be competent, credible, responsible and reliable and know everything about company registration in Serbia and the corporate law in Serbia.

The Company Law of Serbia states that every company can have either an individual legal representative or a legal entity representative in court, both of which need to be registered in the Law of Registration of Business Subjects. If a company has a legal entity as a representative, it needs to have a warrant by which this entity is authorized to represent it in court.
Regardless of the legal representative of the company, they can be regulated either by The Founding Act or by the single hiring process and will be responsible for any potential legal damage.

Even though The Law on Companies in Serbia includes many other details, the aforementioned are the most essential ones you need to be familiarized with when it comes to making investments.