The new Company Law which was enacted in May 2011 shall take effect on 1 February 2012. By that date, all existing companies should have adjusted their corporate bodies, share capital and corporate acts in order for them to be in line with the provisions of the new law. In practice, this means that before 1st February 2012, the shareholders i.e. shareholders’ meetings of all existing companies should enact new corporate documents (Memorandum of Association i.e. Articles of Association) that are fully in line with the new law. The registration of these changes with the companies’ registry should be completed by 1 May 2012.
The new law introduces several changes to the existing corporate regime, the most striking of which relates to the corporate governance system, a company’s share capital and forced liquidation:
(iv) Companies, both limited liability companies and joint stock companies, are now free to choose the corporate governance system that best suits their internal needs. Namely, companies can choose between (a) a one tier system, which is characterized by the existence of only one corporate body aside from the shareholders’ meeting – the director(s); or (b) a two tier system, which is characterized by the existence of both a supervisory board and director(s).
(v) As opposed to the regime which was applicable in Serbia for many years (whereby the share capital of Serbian companies was expressed in foreign currencies such as the EUR or the USD), companies in Serbia are now obliged to express their share capital in Serbian dinars.
(vi) A forced liquidation is now a well-developed concept, which makes it a realistic sanction for companies in breach of certain regulations – such as, for example, companies whose net asset value is lower than the share capital; and those who fail to file financial statements with the requisite registration body by the correct deadline etc.
There are several other important changes being made to the existing company law regime, the real implications of which should be carefully considered and analyzed by each company and its shareholders prior to the law taking effect.
For any further information please contact:
Jelena Vučković, Partner
jelena.vuckovic@karanovic-nikolic.com