Limited Liability Company (hereinafter: “LLC”) is established by legal or natural persons. Establishing is made by investing monetary and non-monetary assets in order to perform joint activities and to make profit. As any other legal form, LLC too has its advantages and disadvantages, as well as its own process of establishment.
Advantages and Disadvantages of LLC.
Some of the benefits of forming a limited liability company are:
- Limited liability for all members. Members of LLC are liable for the obligations of the Society only up to the amount of their contribution.
- Management flexibility. Because the owners themselves form the management structure of the Company. In this form of organization the members of the Society participate in the management. Management could be entrusted to an individual, a board, or a majority of owners.
- A small founding stake is required (RSD 100,00)
- Larger business ventures are possible.
- Carrying out economic activities for which there are restrictions on the legal form (banks, insurance companies…).
Some of the disadvantages of this legal form are:
- The establishment of the Company, the registration process and the data changes of the Company require greater financial expenses.
- The transfer of ownership shares is limited by the right to take over the company and its members.
- Taxes are higher.
- There are restrictions on the disposal of money.
Establishment of a limited liability company and registration with the Agency for Business Registers
The registration procedure begins with the submission of a registration application. Along with it, the required documentation and proof of payment of the prescribed fees are submitted directly at the Agency for Business Registers headquarters in Belgrade, to one of the organizational units or post office. The establishment fee to be paid to the account of the Business Registers Agency is in the amount of RSD 4.900,00, as well as the registration and publication fee of the founding act, which stands at RSD 1.000,00.
The founder submits the registration application for establishment. The submission can also be done by a person authorized by the founder, in which case it is necessary to enclose a power of attorney.
Necessary documents for the establishment
For the establishment of LLC in the Republic of Serbia, it is necessary to enclose the following documentation (in the original, certified transcript or certified photocopy):
- single registration application for the establishment of legal entities and other entities and entry in the single register of taxpayers – limited liability company, which can be downloaded from the official website of APR HERE.
- founding act of the company (decision for a single-member company or a contract for a multi-member company) with certified signatures of the company’s members,
- proof of identity of company members (for a domestic natural person – photocopy of ID card, and for a foreigner – photocopy of their passport, i.e. photocopy of ID card if issued to a foreigner, if the founder is a legal entity not registered in the Register kept by the Business Registers Agency – extract from the registry),
- decision on the appointment of a representative, if not determined by the founding act,
- bank confirmation of payment of the cash deposit if the deposit is paid to the company before the establishment, or agreement of members on the assessment of the value of the non-monetary contribution, or assessment of the value of the non-monetary contribution if the investment is introduced into the company before the establishment,
- proof of payment of the fee for registration of establishment and proof of payment of the fee for registration and publication of the founding act.
If the law stipulates that certified documents must be submitted with the application for registration, it implies the verification of the authority responsible for verifying signatures is needed (as of 1st of March 2017, only notaries are competent for certification of documents, exceptions are local self-government units where there are no notaries – the verification there may still be carried out in a court or municipality).
Documentation in a foreign language
Documentation which is certified by the competent authority for certification of signatures abroad, becomes a foreign public document. It must contain the Apostille* (seal) – in so far as s country is a party to the Hague Convention on the Elimination of the Need to Legalize Foreign Public Documents.
*What is Apostille? It is a Certificate form especially prescribed by the Hague Convention and made as a stamp in which certain data is entered. This is called the Apostille stamp.
This is not necessary if a bilateral agreement on mutual recognition of public documents without legalization has been concluded between a specific foreign country and the Republic of Serbia. In the case when a particular foreign country is not a signatory to the Hague Convention and does not have a bilateral agreement with the Republic of Serbia on the mutual recognition of public documents without legalization, the so-called “Full” legalization is required.
Note: You can find which countries are parties to the Convention on the Elimination of the Need for Legalization of Foreign Public Documents on the Hague Convention website HERE.
When a document is submitted to the register that represents the basis for transferring the property ownership of real estate (the founding act, status change agreement / division plan, the member’s membership and capital increase contract, the decision to increase the non-monetary capital) it must be in the form of notarized (solemnized) document.
Note: In addition to documentation prepared in a foreign language, a translation into Serbian must be provided, certified by a permanent court interpreter.
Legal and other representatives
The Law on Companies stipulates that companies have legal (statutory) representatives and other representatives. When it comes to legal representatives, the law prescribes which persons or functions are there in each of legal forms. Therefore, you must take into account that only those functions that are provided by law can be entered as legal representatives in each individual form. With other representatives, functions are not registered. However, this does not prevent the company from appointing a certain person to a certain function within the company in the company’s internal acts.
Permitted functions of legal (statutory) representatives in LLC in accordance with the applicable legislation are the following:
- Executive Director (CEO)
- Deputy Director
- Chairman of the Executive Board (leasing companies only)
- Deputy Chairman of the Executive Board (only with leasing companies)
Administrative authorities in the limited liability company
When founding a LLC, the founder/s, depending on their needs, decide whether the management of the company will be unicameral or bicameral. Unicameral management means that a company has one or more directors. Bicameral management means that the company has one or more directors and a supervisory board. If the founder/s decide for a bicameral management system, the application must be accompanied by decisions on the appointment of the chairman and members of the supervisory board, if not appointed in the founding act.
In a LLC, all directors are also legal representatives. They are stated in the Single Registration Application for the Establishment of a LLC. If the company has other representatives in addition to the directors (deputy directors and others), they should be stated in the Single Registration Application for the Establishment of the LLC as Other Representatives.
Special rules apply to limited liability companies that perform the activity of financial leasing. The Law on Financial Leasing applies to these companies. In accordance with its provisions, the bodies of the lessor are the board of directors and the executive board.
Basic (registered) capital of a LLC
The stakes can be:
- cash and
The stakes are denominated in dinars. If the payment of a cash deposit is made in a foreign currency, the dinar equivalent of the deposit is calculated at the middle exchange rate of the National Bank of Serbia on the day of deposit payment. You can check this HERE.
The minimum subscribed share capital (cash or non-cash) is at least RSD 100,00 (unless a special law states a higher amount).
When founding a limited liability company, the contribution does not have to be paid or entered, but must be registered, and the founding act must specify the deadline within which the member of the company pays or enters the contribution. The deadline for payment may not exceed five years five years and is calculated from the day of the adoption of the founding act. The members of the company acquire a share in the company by taking over the obligation to pay or submit deposits.
Note: If the cash contributions are not paid at the time of establishment and this obligation is postponed, no proof of payment of the initial share is submitted to the Registry, nor a business account is opened with the bank – this conformation is to be delivered later when the deposit exists and share is paid.
Non-monetary stakes can only be in goods and rights. The value of the non-cash stake is determined by the agreement of all members of society. It can also be done through the assessment of an expert, which is authorized by the competent state body to assess certain goods and rights (court expert, auditor or other expert). If, in accordance with Art. 56 and 57 of the Law on Companies, the value of the non-monetary contribution has not been assessed, a certificate on its value is made, in accordance with Article 58 of the Law on Companies, which is submitted for registration and publication.
When the non-monetary contribution of the founder consists of a certain real estate, the founding act is the basis for the transfer of ownership of real estate. This document must be in the form of a notarized (solemnized) document.
We sincerely hope that this article shed some light on opening an LLC. We wish you all the best with your future ventures.