On 17 November 2021, the National Assembly of the Republic of Serbia adopted the amendments to the Companies Act (“Official Gazette of the RS”, No. 109/2021) (the „Act“) which entered into force on 27 November 2021.
The amendments aim:
- to promote the protection of minority shareholders,
- to implement acquis communautaire into the Serbian corporate law, as well as,
- to eliminate shortcomings that have arisen during the application of the Act (status of entrepreneurs, registered seat, electronic administration services, compulsory liquidation, etc.).
Additional Protection of Minority Shareholders
The amendments specify legal provisions referring to the conclusion of legal transactions and undertaking of legal actions which imply personal interest when it comes to:
- content of the notice on existence of personal interest;
- data that a company is obliged to publish (including the intention for the conclusion of legal transactions and undertaking of legal actions which imply personal interest when for limited liability companies as well as joint-stock companies);
- reporting on such legal transactions, and/or undertakings in the annual financial statements; and
- right to a lawsuit if the transaction was not concluded, i.e. the action was not undertaken at fair value.
Additionally, a limited liability company and a non-public joint-stock company must provide information on the amount and structure of total compensation for each director (or executive director and supervisory board member, in case of two-tier corporate governance system) no later than 3 days upon receipt of the request, if such request is filed by a shareholder of a limited liability company or a non-public joint-stock company holding at least 5% of shares.
The assessment of the items or rights that are the subject of the legal transaction or undertaking if the value of transaction or undertaking which imply personal interest amounts to or exceeds 10% of the value of the total assets of the company, is now to be performed at the fair value (instead of the market value), under the IFRS 13 — Fair Value Measurement.
Remuneration in Public Joint-Stock Companies
Public joint-stock companies are obliged to adopt a compensation policy for directors (and supervisory board members, in case of two-tier corporate governance), within one year as of the day the amendments have entered into force (27 November 2022). The amendments to the Act provide mandatory elements of compensation policy, the manner of voting on the policy, and a report of compensations.
Preventing Registration of a Fictitious Seat of a Company
The address of the company’s seat includes the city, municipality, street or square, house number, floor, and apartment number, in accordance with the regulations governing the territorial organization. Companies, including entrepreneurs, must register missing data before the Serbian Business Registers Agency (“SBRA”) within one year as of the day the amendments have entered into force (27 November 2022).
Any interested party (creditor, state authority, owner of the premises where the company has its registered seat) is entitled to file a lawsuit if the owner of the premises where the company is registered has not allowed the use of such premises for performing the company’s business activities. The company needs to change the registered seat within 30 days as of the day the judgment becomes final and binding. Otherwise, the SBRA will initiate compulsory liquidation against the company.
Share Capital of a Company Purchased from Insolvency
The share capital of a company purchased from insolvency amounts to the purchase price from the sale and purchase agreement and it represents a non-monetary stake of the buyer. If such share capital is less than the value of the minimum share capital provided by the law (e.g. RSD 3,000,000.00 for joint-stock companies), the buyer is obliged to register the missing amount within six months from the date of termination of the insolvency proceedings.
Other relevant amendments
Companies are obliged to register as users of e-governance, under the E-Government Act, to enable communication between government authorities and companies.
When the law requests registration of the decisions of the shareholders’ assembly (increase or decrease of the share capital, initiation of a liquidation proceeding, etc.), a lawsuit for annulment of such decision may be filed within 30 days as of registration of such decision (the amendments to the Act excluded the deadline of 3 months as of the enacting of such decision).
Companies are obliged to register data on the gender of natural persons who have to be registered under the Act (shareholders, representatives, members of boards depending on the legal form of a company, etc.).
An Agreement on the Accession of a New Shareholder into the Company has to be signed in a written form with certified signatures of a new shareholder and a person authorized by the decision of the company’s shareholders’ assembly on approving such accession (not shareholders themselves).
A judgment declaring the share transfer agreement is null and void affects the company and shareholders (not only parties to the proceeding). Parties to the proceeding, i.e. their legal successors, are entitled to request registration of changes of shareholders of the company who were registered based on such share transfer agreement.
Finally, the amendments to the Act include rules concerning the encouragement of long-term shareholder engagement in public joint-stock companies, regulating the identification of shareholders and their notifying, as well as role and status of mediators, which will apply upon Serbia’s accession to the EU.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
By Milan Samardzic, Partner, and Andja Nikolic, Senior Associate, Samardzic, Oreski & Grbovic