A company incorporated in Serbia in 2019. Two years later, its director signs a lease agreement with his own personal firm, with no procedure followed and no minority member informed. The transaction represents 15% of total company assets. Under the old law, that was a grey zone. Under the 2018 amendments to the Companies Act, it is unlawful.
The Law on Amendments to the Companies Act entered into force in June 2018, introducing concrete, measurable changes to how business entities operate in Serbia. Part of the provisions applied immediately, a second set from 1 October 2018, and a third set introducing EU law institutes only from 1 January 2022.
This article goes through each key amendment, explains what it means for your company in practice, and flags the most common mistakes in implementation. No generalizations.
(Agency for Business Registers, Serbia, 2018)
Contents
- Mandatory e-mail address registration
- Mandatory registration of company branches
- Restrictions on the company business name
- Use of the company seal
- LLC minority shareholders' rights
- Time limit for dividend payment
- Approval of legal actions involving personal interest
- LLC share capital reduction
- Compulsory liquidation of companies
- Disposing of high-value assets
- EU law legal entities
- Frequently asked questions
Mandatory E-mail Address Registration
Companies, entrepreneurs, branches, and representative offices of foreign companies in Serbia formed on or after 1 October 2018 are required to register an e-mail address for receiving electronic correspondence with the Agency for Business Registers (APR). This is not a formality: APR uses the registered address for official notifications, and an unavailable or unmonitored address can result in missed deadlines and legal consequences.
Entities registered before the amendments entered into force that had no registered e-mail address were required to register one within one year from the law's commencement date, that is, by 1 October 2019. That deadline has long passed. Any company operating today without a registered e-mail address is in breach of the law.
Practical guidance: the registered address should be an actively monitored business inbox, not a personal or shared account. Updating the address requires a registration application with APR under the standard amendment procedure.
Mandatory Registration of Company Branches
Before the amendments, Serbian companies could freely decide whether to register a branch they had factually established. The 2018 amendments removed that discretion and made branch registration mandatory.
The transition deadline was firm: branches established by 30 September 2018 had to be registered with APR by 1 October 2019. Every branch established from 1 October 2018 onwards must be registered immediately under the Law on the Registration Procedure before APR.
Restrictions on the Company Business Name
The 2018 amendments clarified when a business name may contain the word "Serbia", the name of a territorial unit or autonomous province of Serbia, derivatives of those words, and the internationally recognised designation "SRB". The answer is always the same: only with prior approval of the competent authority.
This is not a new obligation as such, but the amendments removed ambiguities that existed in the previous wording. If a proposed name contains any of the listed elements, obtaining prior approval is a precondition for registration, not an optional step.
For guidance on choosing a company name and permitted combinations, see our blog post on choosing a business name in Serbia.
Use of the Company Seal
Before the amendments, companies were not required to use a seal unless a specific law expressly provided otherwise. The 2018 amendments went further: they prohibited special legal acts from ever imposing a sealing obligation and removed existing seal requirements from 117 laws then in force.
Practice is more nuanced. Many institutions, banks, and business partners still request a seal as a matter of commercial habit, even though the law does not require it. We recommend that entrepreneurs and companies review the specific requirements of their banks and key partners before deciding whether to obtain or retain a seal.
LLC Minority Shareholders' Rights
The amendments lowered the thresholds for exercising key membership rights in LLCs, materially strengthening the position of minority shareholders.
| Right | Before amendments | After amendments |
|---|---|---|
| Calling a shareholders' assembly session | Min. 20% of votes | Min. 10% of votes |
| Adding items to the assembly agenda | Min. 10% of shares | Min. 5% of shares |
| Voting right of any member | Could be restricted by founding act | Cannot be restricted even by founding act |
A company's founding act may provide for even lower thresholds, but not for higher ones than those now set by law. The provision on voting rights is particularly significant: regardless of a member's share size, it is no longer possible to deny any LLC member the right to vote at the assembly, even through the founding act.
Time Limit for Dividend Payment
Joint stock companies are now required to include in any profit distribution decision not only the amount of the dividend but also the deadline for its payment. The deadline cannot exceed six months from the date of the decision adopted at the regular assembly session.
This amendment protects shareholders from situations where a dividend is formally approved but never actually paid. A distribution decision that omits the payment deadline is legally defective and can be challenged.
Approval of Legal Actions Involving Personal Interest
This is one of the amendments with the most direct impact on day-to-day company management. Before any legal transaction is concluded or action taken in which a person with special duties towards the company has a personal interest, a mandatory pre-approval procedure must now be completed.
Persons with special duties include directors, liquidation managers, and any LLC member or shareholder who holds a significant or controlling interest. The procedure is triggered when the value of the transaction reaches or exceeds 10% of the total book value of the company's assets as shown in its last annual balance sheet.
Once triggered, the company body that received notification of the personal interest must appoint an expert or appraisal firm to assess the market value of the transaction subject. The assessment forms part of the approval decision. Following approval, the company must publish a notice of the concluded transaction on its own website or on the APR website within 15 days, describing the transaction and the nature of the personal interest.
LLC Share Capital Reduction
The 2018 amendments introduced for the first time a systematic framework for reducing LLC share capital, including permitted grounds, the decision-making procedure, and creditor protection rules.
Permitted grounds for capital reduction
Share capital may be reduced on five exhaustively listed grounds:
- to cover the company's losses,
- to create or increase the company's reserves for covering future losses or for increasing capital from net asset value,
- in the case of relieving a member of the obligation to pay in or contribute its stake,
- in the case of withdrawal and cancellation of company shares,
- in the case of disposing of the company's own shares.
The reduction decision and registration deadline
The decision is adopted by the shareholders' assembly with a two-thirds majority of all votes, unless the founding act provides for a higher majority. The founding act cannot reduce the required majority to a simple majority. The decision must be registered with APR within three months of its adoption; failure to register renders it null and void. The capital reduction takes legal effect on the date of registration, not on the date of the decision.
Creditor protection
The company must notify in writing, within 30 days of registering the decision, every creditor to whom it owes at least RSD 2,000,000 (or equivalent in any currency at the National Bank of Serbia's mid-rate on the registration date). The decision is also published in the Business Entities Register for a period of three months. Creditors whose claims arose before the 30-day notice period expires may request security until the end of the publication period. If the company neither provides security nor settles the debt, creditors may file a lawsuit within one further month.
Compulsory Liquidation of Companies
The 2018 amendments introduced a mandatory preliminary warning step before compulsory liquidation proceedings begin. The APR registrar must first publish on the APR website a notice identifying the company for which the conditions for compulsory liquidation have been met, inviting it to resolve the issues and register the appropriate changes within 90 days.
If the company fails to act within the prescribed period, the registrar issues a decision initiating the compulsory liquidation procedure. The company's status changes to "company in compulsory liquidation", and a compulsory liquidation notice is published on the APR website for 60 days. Within 30 days after that, APR ex officio removes the company from the register.
Disposing of High-Value Assets
The amendments introduced the concept of "connected acquisition or disposal": multiple legal transactions are treated as a single high-value acquisition or disposal if they are undertaken for the same purpose, or if their connected nature follows from the nature of the underlying transaction, provided all are undertaken within a one-year period.
This prevents a series of smaller transactions from being used to circumvent the high-value asset procedure. The law does, however, clearly exclude from this regime the establishment of a pledge, mortgage, or other security interest that the company provides to secure its own obligations under a credit agreement, loan, or similar transaction.
EU Law Legal Entities
The third package of amendments, applying from 1 January 2022, introduced into Serbian law three entities well established in EU company law. These forms are designed for businesses with an international dimension that involves at least one party from an EU member state or a signatory to the Agreement on the European Economic Area.
Cross-border mergers and acquisitions
At least two companies participate, with at least one LLC or joint stock company registered in Serbia and at least one registered in an EU member state or EEA signatory state. This institute provides a legal framework for structuring regional M&A transactions with legal certainty for all parties.
For details on structuring M&A transactions in Serbia, see our mergers and acquisitions in Serbia page.
European Company (Societas Europaea – SE)
The SE is formed as a joint stock company with share capital divided into shares owned by one or more shareholders. Shareholders are not liable for the company's obligations except in cases of piercing the corporate veil. What distinguishes the SE from a standard joint stock company is the mandatory foreign element connecting it to EU member state territories. The law provides for several complex formation routes, each of which involves that international component.
European Economic Interest Grouping (EEIG)
The EEIG is formed by at least two companies, entrepreneurs, or other legal or natural persons carrying out agricultural or other business activity, with at least one registered in Serbia and one registered in an EU member state. The EEIG is entirely new to the Serbian legal system. Its purpose is to facilitate the realisation and representation of the shared economic interests of its members, without establishing a full corporate entity.
Frequently Asked Questions – Company Law Serbia
Does an LLC in Serbia have to use a company seal?
No. Serbian company law does not require the use of a seal, and secondary legislation cannot impose one either. However, some banks and business partners still request a seal as a matter of practice. We recommend checking specific requirements with your bank and key partners before deciding whether to obtain or retain one.
What is the minimum shareholding to call an LLC assembly in Serbia?
One or more members holding at least 10% of the total number of votes may submit a written request to convene a shareholders' assembly session. Before the 2018 amendments, the threshold was 20%. The founding act may provide for a lower threshold but not a higher one. If the assembly is not convened within the prescribed period, the requesting member may seek court-ordered convening.
What happens if a director in Serbia signs a contract involving personal interest without approval?
A transaction concluded without the mandatory pre-approval procedure can be challenged as voidable by the company or by minority members. Beyond voidability, the director may face personal liability for damages suffered by the company. For risk management in these situations, we recommend consulting a corporate lawyer at Zunic Law before the transaction is signed.
When did EU law entities become available in Serbia?
The provisions on cross-border mergers, the European Company (SE), and the European Economic Interest Grouping (EEIG) have been applicable since 1 January 2022. These amendments were part of Serbia's ongoing process of harmonising its legal system with EU law under the EU accession framework.
What is the deadline for registering an LLC capital reduction decision in Serbia?
The decision must be registered with the Agency for Business Registers within three months of its adoption. If registration does not occur within this period, the decision is null and void. The capital reduction takes legal effect on the date of registration, not the date of the decision itself. Full procedural details are available on the APR website.
