What new obligations do the amendments to the Companies Act bring?

Amendments of companies act

On November 17, 2021, the National Assembly of the Republic of Serbia finally, after several years of delay, adopted amendments to the Law on Companies (hereinafter: the “Law”), which entered into force on November 27, 2021.

We hereby point out some of the most important changes to the Law.

The definition of the company’s headquarters has been changed

Amendments to the Law changed the definition of the company’s headquarters, in such a way that an “address” was added as its important element, so that now the company’s headquarters represent the place and address in the territory of the Republic of Serbia from which the company’s business is managed and which is as such determined by the statute or by the decision of the assembly, or by the decision of the partner or general partner. The address means the following: city, municipality, settlement, street or square, house number, floor and apartment number, in accordance with the regulations governing the territorial organization.

Since the seat of the company is obligatory information in the founding act, it is necessary that all these data are entered in the founding act. It should be borne in mind that the new amendments to the Law stipulate that it is now possible to determine another body of the company (e.g. the director) by the founding act, which will decide on changing the seat of the company instead of the assembly.

We especially note that companies, entrepreneurs, branches and representative offices of foreign companies that do not have a registered office address in accordance with the provisions of this Law, are obliged to harmonize the headquarters address with the provisions of this law and to register the harmonized headquarters address within one year from entering into force of this Law, i.e. until November 27, 2022.

Claim for unauthorized seat registration

Amendments to the Law also resolve the situation that has often occurred in practice, that a certain person registers a seat at an address without the knowledge of the person to whom the real estate belongs at the specified address. The court shall deliver the judgment by which the seat of the company is deleted from the Business Registers Agency (hereinafter: “SBRA”) ex officio to the SBRA, and if the company does not register a new address within 30 days, the procedure of forced liquidation is started.

Additional information to be registered on foreign members

Pursuant to the amendments of the Law, the data on registered members have been changed, so that now it is necessary to register gender of the members for a member who is a foreign natural person, while instead of a personal number, the registration number is now determined. The stated data is registered only for foreign citizens, but not for members who are domestic natural persons.

Therefore, we draw your attention to the fact that in all changes to the founding act or in case of a change of the member, the gender of the foreign natural person must be stated as information.

Obligation to use e-mail address and e-government

In the spirit of increasing digitalization of the state administration as well as business, the obligation of companies to use registered email addresses is envisaged, as well as the obligation to register as a user of electronic administration.

This novelty should speed up the process of submitting decisions and other decisions of the competent state bodies, through a single electronic mailbox.

Change of share capital in case of sale of the bankruptcy debtor as a legal entity

In the case of the sale of the debtor as a legal entity, the company is in a position similar to the company in the process of establishment, which starts business with new capital, given that the previously registered share capital no longer exists. Thus, the question arose how to determine the share capital of the company.

The new amendments to the Law envisage changing the share capital of the company, so that the purchase price from the bankruptcy procedure is registered as the new share (non-monetary) capital. If the purchase price is lower than the minimum share capital of the company, the buyer from the bankruptcy as the new owner has the obligation to enter the difference in the company within six months from the date of termination of the bankruptcy proceedings. In the event that the buyer does not pay the missing part within the specified period, it is envisaged that a compulsory liquidation procedure may be initiated against the company.

Additional rules for business where there is a personal interest

When approving a business in which there is a personal interest of a person who has special duties, it is regulated in detail what the notification about that business should contain, such as: type, i.e. legal nature of the legal transaction or action, detailed description of the subject of the legal transaction or action, value, i.e. price of the subject of the legal transaction or action, deadline for execution, payment, etc., as well as all relevant facts about the nature and scope of personal interest.

Another exception to the existing rule has also been added, as it is stipulated that approval does not have to be sought in the case of approval of a legal transaction on the employment of a director.

Obligation to publish a legal transaction

Also, the amendments stipulate that a limited liability company and a joint stock company are obliged to publicly announce on their website or on the website of the SBRA the intention to conclude a legal transaction that requires approval.

The notice that is published on the company’s website or on the SBRA website is also published in the case of concluding a legal transaction, i.e. taking legal action between a person related to the company and a controlled company. Data on transactions (or actions) with personal interest that have been concluded with approval must be presented separately in the financial statements.

Company owned share cannot be pledged

The legal problem that existed in practice has been resolved by new amendments, and that is whether company owned shares as part of the company’s property can be the subject of a pledge. In this regard, the amendments to the Law explicitly regulate that company owned shares, due to their legal nature, cannot be the subject of a pledge.

Accession of a new member requires a special written form

It is envisaged that in case a new member joins the company by the method of recapitalization, it will do so with a written contract with a certified signature of the person joining the company and the person authorized by the decision of the general meeting approving the new member joining the company.

However, this provision is not precisely regulated, so it could be interpreted as applying in all situations when a new member joins the company and that it is always necessary for the assembly to make a decision on approving the member’s accession and appointing a person to conclude a new accession contract with member.

Nullity of the share transfer agreement

The new amendments to the Law also resolved the legal gap that existed in connection with the legal consequences of the judgment which determined the nullity of the contract on the transfer of shares. In that regard, it is envisaged that the judgment determining the nullity of the share transfer agreement has effect on the company and the members of the company and has the effect that a “return” of the share can be made even if the share transfer agreement has been executed.

Forced liquidation of entrepreneurs

One of the novelties envisaged by the amendments to the Law is the introduction of the institute of forced liquidation among entrepreneurs as well.

Namely, in such situations, the register of business entities on its website publishes a notice about the entrepreneur when the reasons for deletion from the register were met, with an invitation to remove the reasons for deletion within 90 days from the date of publication. If the entrepreneur does not eliminate the reason for deletion within the set deadline, the register will, within a further period of 30 days, ex officio, make a decision on deleting the entrepreneur from the register.

Therefore, the procedure of forced liquidation of entrepreneurs is in fact the same as in the case of forced liquidation of companies, except that the reasons for initiating forced liquidation of entrepreneurs are different in relation to companies, given the different legal nature of entrepreneurs.

This article is for informational purposes only and does not constitute legal advice. If you need additional information related to the subject or help with harmonization of your business with amendments of subject Law, feel free to contact us by email office@ncrlawyers.com or by phone +381677049551.

Nemanja is attorney at law and founder of the law firm NCR Lawyers. Additionally, Nemanja is on the permanent list of arbitrators for the Commodity Exchange in Novi Sad and is also a member of the Belgrade Arbitration Center.

In his career, Nemanja has been involved in numerous complex legal transactions and has collaborated with clients from various industries. Dynamic and innovative in finding the best solutions for clients, Nemanja primarily focuses on corporate law, dispute resolution, and arbitration. Additionally, Nemanja’s legal expertise includes the protection of intellectual property for both domestic and international clients.

He completed his undergraduate and master’s studies at the Faculty of Law, University of Belgrade. Part of his master’s studies was completed at the Europa Institute in Saarbrücken as part of the Erasmus+ program.

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