If you decide to establish a company in Serbia, you should know that Serbian residents and non-residents are eligible to establish a company in Serbia. The procedure for establishing a company is governed by the “Company Law” and the “Registration Procedure Law of the Serbian Business Registration Agency”. The following is to introduce you to the main steps of setting up a company in Serbia.
Step Number 1-Select the legal form
Before starting the company formation process, you should be introduced to the legal form of the company. Which legal form you should choose based on your business model.
General Partnership Company (GPC)
A general partnership is a company established by at least two partners who are fully responsible for all their own assets and are responsible for the company’s obligations. The owner of a general partnership enterprise shall assume full responsibility as an entrepreneur. The owner can be a natural person or a legal person. They can use a general partnership to carry out any activities, but the activities stipulated by the law can only be carried out in certain legal forms (banks, insurance companies, etc.).
Limited Partnership Company (LPC)
A limited partnership is a company composed of at least two members, one of which has unlimited liability for the company’s obligations, and the other has limited liability. The company is a hybrid of companies, because some owners have unlimited liability and are responsible for all of their assets (for example, partners in a general partnership), while some owners have limited liability (for example, members of an LLC). A limited partnership can also perform any activities, but the reserved activities can only be carried out in certain legal forms.
It should be noted that in the Republic of Serbia, partnerships are rare as long as there are some reasons to form a company in this form. For example, a company formed by foreigners in this form may bring favorable tax treatment, which may lead to savings and increase the owner’s net profit!
Limited Liability Company (LLC)
A limited liability company is established by one or more company members who own shares in the company, and the founder shall not bear any responsibility for the company’s obligations unless he is responsible for lifting the veil of the company. A limited liability company can also perform any activities, but certain activities can only be carried out in the form of JSC.
So far, the limited liability company is the most commonly used legal form for Serbian companies.
Joint Stock Company (JSC)
A joint-stock company is a company in which the share capital held by one or more shareholders is divided into shares. Shareholders have limited liability for the company’s obligations. A joint stock company can engage in any activity, and its shares can be private or publicly traded on a registered stock exchange. Joint-stock companies have obligations for all assets and are suitable for large companies.
In addition to these four legal forms, you can also conduct business as an entrepreneur (also known as a sole proprietor). Entrepreneurs are natural persons, and they shall bear full responsibility for all personal assets for the obligations arising from their business activities when operating a business. However, entrepreneurs may enjoy preferential tax treatment when performing certain activities!
Step Number 2-Company’s business name
The company’s business name consists of the name, legal form and company location. The company name must not be the same as the name of another registered company, otherwise your registration application may be rejected by the Business Registration Office. If the name is registered, a third company is allowed to sue your company and demand compensation. To avoid this situation and to ensure that your company will be registered under the chosen name, we recommend that you keep the company’s business name. The reserved business name is valid for 60 days.
The company’s business name must not violate ethics and ethical standards, and must not mislead the public with the company’s legal form or main activities, and must not mislead others about the identity of other companies.
Step Number 3-Business Activities and Address
The business activities of companies registered with the Serbian Business Registration Office are the main activities. However, a company can perform all other activities except registered activities, unless it is stipulated that the company needs to obtain a license to engage in certain activities (such as a pharmaceutical company). Your company established in Serbia allows you to acquire any real estate in Serbia, regardless of whether you are not in line with the fact that you are buying real estate as a foreign natural person.
When setting up a company, you will have to register an address. The “Company Law” stipulates three types of addresses:
The company headquarters is the place where the company conducts and manages its business in the Republic of Serbia. It must be registered.
In addition to business seats, the mailing address can also be registered and is only used for receiving mail. If the company has registered a separate mailing address, it will receive mail from that address.
The company must have a registered address to receive emails. This is the official email address of the company.
Step No. 4-Draft Association Memorandum
The memorandum of the association is the basic behavior of every limited liability company. If the company has one founder, it is called a “limited liability company establishment decision”, or when it is established by two or more founders, it is defined as a “limited liability company charter”. GPC, LPC and LLC use organizational memorandums to manage company management, company name, main business activities, capital contribution to equity, etc.
The company’s memorandum of association specifically includes the following:
1) Data about company members and data about the residences of company members;
2) The business name and location of the company;
3) The company’s main business activities;
4) The total share capital of the company;
5) The amount of monetary donation, that is, the monetary value of each company member and the description of the in-kind donation;
6) The time of capital contribution to the company’s equity;
7) Shared by all members;
8) Determine the company group and its capabilities.
The memorandum of association can be used to appoint directors or other legal representatives of the company, and they can also be non-residents of Serbia. In addition to the memorandum of association, joint-stock companies also have regulations. The entrepreneur has not formulated the memorandum of association, regulations or any other constituent acts.
Equity represents the owner’s contribution to the company. Donations can be monetary or non-monetary (tangible or intangible donations in kind). The founder does not need to pay/provide donations immediately after the establishment of the company. If the owner does not pay/provide donations to the company within the time limit specified in the “Company Law” or “Organization Memorandum”, they will be responsible for the damage caused by the company. The “Company Law” stipulates that the minimum share capital of LLC is 100,00 RSD, while the minimum share capital of JSC is 3.000.000,00 RSD, unless other regulations provide a higher threshold.
Step No. 5-Procedures at the Commercial Registry
If you have followed all the previous steps, you need to collect the documents required for registration. Registration applications can be submitted directly to the Business Registration Office by mail, and in some cases can be done online. The registration decision is made within 5 working days.
When setting up a company, you do not need to live in Serbia in person. The entire procedure can be completed according to the power of attorney and completed by the attorney.
Open a bank account and report taxes
After successfully registering the company, you must choose to open a bank account in the bank. A bank account can also be opened before the company is registered, but it is only used to invest in equity. According to the Corporate Income Tax Law, the company has a 15-day deadline to submit tax reports.
Establishing a company is the opportunity to define the company’s business operations from the very beginning, so it is effective and profitable in the long run. This is achieved through proper legal definition of the relationship between the owners, the power of directors, the purchase of an owner’s shares from another owner, the company’s business model, supervision, financing mechanisms, tax analysis and savings, etc. to avoid The follow-up work issues. In addition, technical errors in the registration process may cause additional costs and prolong the start of business activities.