The main reasons for the adoption of amendments to the Company Law (Official Gazette of Republic of Serbia nos. 36/11, 99/11, 83/14 – other law, 5/15 and 44/18) (the “Law”), which started to apply from 9 June 2018 (except amendments relating to the harmonisation with legislation of the European Union, which shall apply from 1 January 2022 and certain provisions which shall apply from 1 October 2018) are the improvement of the existing system and harmonization with the international standards in this area. The text below provides an overview of the most important changes.
Registration of e-mail address and electronic registration
The Law introduces the obligation to register the e-mail address, as well a legal ground for replacing the public notary signature certification of the company’s members in the incorporation act with the qualified electronic signature. It is expected that the electronic application for registration will be 20-30% cheaper than the so far used “paper-based” form.
Corporate seal to be abolished
One of the greatest novelties is the abolishment of the corporate seal. So far, even though the corporate seal has previously been declared non-mandatory, companies faced many difficulties due to the fact that the use of a corporate seal was obligatory under various other laws and acts of secondary legislation.
Companies may now use in their business names the acronym SRB, but only with the previous consent of the relevant authority (in this case with the consent of Ministry of the Economy).
Protection of minority shareholders
The shareholding interest threshold which authorises a shareholder to request a convening of the general assembly has been decreased from 20% to 10%. In addition, the shareholding interest threshold which authorises a shareholder to put an item on the agenda of the general assembly has been decreased from 10% to 5%.
Transactions involving personal interest
If the value of the transaction is less than 10% of the company’s book asset value, no approval by the shareholders with no personal interest or directors is needed.
If the value of the transaction involving personal interest is greater than 10% of the company’s book assets value, the approval procedure is made more stringent:
1. the company must obtain an assessment by an authorised court expert, auditor etc. of the market value of the assets subject to the transaction; and,
2. once the approval has been obtained, the company must publish on its website, or on the website of the Business Registers Agency, detailed information on the transaction and the personal interest involved.
Acquisition and disposal of assets of significant value
The amendments introduce in more precise manner the notion of related acquisitions i.e. what shall be deemed as such. Further, it is now clearly prescribed that the value of the obligation under loan agreement or other legal transaction and the value of the collateral given for such obligation shall not be aggregately taken into account in order to determine whether or not the disposal of assets of significant value took place. In that regard, the highest value of respective single transaction/action shall be relevant.
Registration of the branch of domestic company
With this change, the Law intends to harmonize the treatment of the domestic and foreign branches, introducing the obligation to register a domestic branch before the Business Registers Agency.
The most significant change in relation to liquidation refers to the shortening of the deadline for the finalization of compulsory liquidation to 180 days. The provisions on reasons, initiation, course, and finalization of compulsory liquidation are tailored in a more detailed manner.
The procura will be issued by the director, board of directors or executive board instead of the general assembly.
The Law prescribes a shorter deadline for the payment of dividend – within six months from the day of enacting of the decision on dividend payment, which should significantly reduce the risk of non-payment of dividend.
Cross border mergers
The Law for the first time regulates cross border mergers. In cross-border merger at least two companies are involved of which at least one company must be registered in the territory of the Republic of Serbia and at least one company must be registered in the territory of European Union member state or in a state party to the Treaty on the European Economic Area.
Harmonization with EU legislation
In order to harmonize with the EU legislation, the Law introduces a new type of company – European company (in the obligatory form of joint stock company with the minimum initial capital of EUR 120,000.00, with abbreviation SE). The Law also introduces the European Economic Interest Group (with abbreviation EEIG), which is defined as an interest group with the characteristics of business association.