Amendments to the Serbian Companies Act, Law of Central Register of UBO and Law on the Registration Procedure before the SBRA

In 2019 a set of amendments were passed by the National Assembly of Republic of Serbia relating to changes of corporate law in Serbia, mainly the Companies Act, Law on Central Register of Ultimate Beneficial Owners and Law on the Registration Procedure before the Serbian Business Registers Agency (SBRA).

Amendments to the Companies Act

The most significant amendments to the Serbian Companies Act pertain to introduction of a new legal institute into Serbian law – “reserved own share”, as well as a new financial instrument – “right to acquire a share”.

Reserved own share represents a share which limited liability company acquires from its shareholders without compensation in order to issue a financial instrument – the right to acquire a share based on which each recipient will be entitled to acquire a share in that company, under the terms and conditions jointly agreed upon. A limited liability company with only one shareholder may also acquire reserved own share. However, the percentage of all reserved own shares in the basic share capital of the company cannot exceed 40%.

One of the main objectives of stated amendments is primarily the possibility for limited liability companies (the most frequent company form in Serbia) to provide incentives to employees as well as other individuals connected to the business such as investors, consultants etc., by giving them the option to acquire shares in the company.

Most of the adopted amendments will take effect as of 1 April 2020, which seems like a reasonable period considering the participation of the SBRA and CSDCH in the procedure.

Amendments to the Law on Central Register of UBO

As far as the Law on Central Register of Ultimate Beneficial Owners is concerned, the changes mainly refer to a more exhaustive regulation of authorities’ and organizations’ competences with regard to control of the recording of data, the veracity and accuracy of such data. In instances where registered entities fail to register data within deadlines prescribed by the law, or fail to record the accurate data or keep the relevant data up-to-date, competent state bodies (SBRA, National Bank of Serbia, Minister responsible for business affairs, etc.) may initiate misdemeanour proceedings against those entities.

The amendments were implemented in order to fully comply with the EU Directive 2015/849, in the sense where it is necessary for competent authorities to show a more proactive approach when it comes to monitoring the application of the law or enforcement of sanctions prescribed by the law.

Amendments to the Law on the Registration Procedure before the SBRA

Amendments to the Law on the Registration Procedure before the SBRA bring novelties regarding persons authorized to initiate the registration procedure, i.e. submit an application.

Therefore, persons authorized to file an application are as follows: a person authorized to represent a legal entity; a person authorized by law for registration of data subject to statutory registration; founder in the process of incorporation of a company; natural person pending registration or registered as an entrepreneur. Furthermore, authorized person for registration of transfer of shares may also be the transferee, as well as the transferor, and also in the process of registration of the resignation of the authorized representative, the authorized person can be the person submitting the resignation. With these amendments, persons authorized to file an application are explicitly stated which removes any doubt regarding such issues in the future.

Regarding other changes it is important to note that the registrar shall make a decision on registration within five working days from the filing date, instead of five calendar days. Also, the deadline for deleting data or documents for which the registrar subsequently determined that at the time of registration did not fulfil the statutory requirements is expended from 6 months to 12 months, counting from the day following the date of publication of data or document.

An important amendment is a provision stipulating that a decision on an appeal issued by the competent minister is to be submitted to the registrar and the latter is obliged to submit such decision to the party within 8 days from the date of receipt. This prevents a negative practice whereby decisions have not been served on the parties, thereby denying them the right to bring an administrative dispute.