Latest Amendments to the Serbian Corporate Act – New Trends in Corporate Organization and Governance

On 8 June 2018 National Assembly of Serbia has adopted amendments to the Corporate Act, with the main goal to improve the existing legal system and comply it with international standards and developments in this area.

Although some provisions have entered into force immediately, vast part of amendments will be effective from 1 October 2018.

Some of the most significant changes which already entered into force are related to the rights of minority shareholders of the company, prescribing shorter deadlines for payment of dividends, i.e. deadline for payment is now 6 months, calculated from the day when decision on payment was rendered.

One of amendments that will enter into force later this year pertains to corporate stamp, a use of which will not be mandatory anymore. Even thou the use of stamp was not mandatory, even before these latest amendments, business entities faced a lot of problems in practice, in their everyday correspondence with the competent authorities, in case they omit to provide corporate stamp on the issued documents. This possibility is now eliminated by explicit formulation in the amended Law.

Moreover, it is stipulated that the companies now have to register e-mail address, which was only an option so far. Also, as a part of alignment with technological innovations, it is now possible to sign articles of association by qualified electronic signature, but only if the foundation act is in e-form.

Businesses entities are entitled to include acronym SRB in their business name, but only if they have previously obtained consent from the competent authority.

Latest amendments include several provisions aimed to protect the rights of minority shareholders of the companies. Apart from provisions which entered into force immediately upon the adoption (elaborated above), voting threshold for convening a meeting of the shareholders assembly is decreased from 20% to 10%, and votes for propose of amendments of the assembly daily agenda is decreased from 10% to 5%.

Both domestic and foreign branch offices now have the obligation to be registered before Business Register Agency.

Liquidation procedure is also slightly modified, as the reasons for initiating compulsory liquidation procedure is now more precise, while the status of company in compulsory liquidation process is regulated. In addition to this, compulsory liquidation must be completed within the 180 days period.

Amendments introduces new legal institutes and instruments, which did not existed in Serbia legal system so far, such as cross – border mergers and acquisitions and new forms of a company organization.

Cross – border merger and acquisitions exists if at least one, out of two companies involved, is registered on the territory of the Republic of Serbia, while the other entity is registered in other country – EU Member State, or in some of contracting parties to the European Economic Area Treaty.

New forms of organization are European joint- stock company and European economic-interes group.

The European joint-stock company should be established in accordance with the Council Reguliation 2157/2001/EEC of 8 October 2011 and it can acquire the status of a legal entity by registration in offical Commercial Register.

The European Economic Interest Group can be established by at least two companies (or entrepreneurs, or other legal entities), whereas at least one is registered in Serbia and at least one of the remaining companies is registered in another EU Member State, or in state – contracting party to the European Economic Area Treaty. The purpose of the group is to attain the interests of its members.

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