Updated Serbian Companies Act: New Aspects

The National Assembly of the Republic of Serbia adopted the amendments to the Companies Act (“Act”) at the session held on 17 November 2021 which entered into force on 27 November 2021. With the recent amendments, the Act brought for innovations that juxtapose the Serbian company law with the EU acquis.

Digitalization

One of the new aspects is the introduction of the obligation for companies and entrepreneurs to register as users of e-Government services in line with the Law on Electronic Government, and all in line with the development of business digitalization. The application of this provision has been postponed for 18 months from the date of entry into force of the Act, i.e., applied from 28 May 2023. Regardless of the fact, the companies can already register on the e-Government portal.

Company’s Registered Seat Register

Per the amendments to the Act, the address of the company’s registered seat contains the following information: city, municipality, settlement, street or square, house number, floor, and apartment number, following regulations governing territorial organization.

Companies, entrepreneurs, branches, and representative offices of foreign companies that do not have a registered seat address in accordance with the above provisions, are obliged to harmonize the registered office address and to register the harmonized registered office address within one year from the entry into force of the Act.

There is no obligation to amend the company’s articles of association in order to add all the above information. Moreover, there is no obligation to comply with the Act only concerning this data, but their entry can be done simultaneously with the registration of another change entered into the registry of the Serbian Business Register Agency, until the expiration of the abovementioned legal deadline.

Protection of Minority Shareholders

The newly modified legal provisions refer to the conclusion of legal transactions and legal action whereby personal interest is implied:

  • the content of the notification that a person who has special duties towards the company submits to the competent body of the company;
  • for both limited liability companies and joint-stock companies, the intention to conclude a legal transaction must be published immediately after making a decision approving the legal transaction or legal action, and
  • when such legal transactions occur, they shall be highlighted in the annual financial statements;

With an added layer of protection for minority shareholders, a claim for annulment of a legal transaction or legal action and compensation for damages against a person who has a personal interest in that business, can be filed when approval is obtained and the legal transaction is not concluded or the legal action is not taken at fair value.

Harmonization with EU

Public joint-stock companies now have to comply with a new requirement. Namely, they need to include a remuneration policy for directors and supervisory board members in line with the EU Company Law Directive 2017/828.

It is up to the board of the company to propose the remuneration policy to the shareholders once every four years. If it is approved by the shareholders, the policy must be implemented until amended or replaced with a new policy. To increase transparency, it is stipulated in the Act that the approved policy must be published on the company’s website for as long as it remains valid.