The Law provides detailed rules on instances in which the reduction of the LLC’s share capital can be performed. Moreover, it regulates the legal framework aimed at the protection of the LLC’s creditors in the case of the LLC’s share capital’s reduction.
The instances of the share capital’s reduction and the Decision on the share capital’s reduction
The share capital may be reduced due to the following:
1. To cover the losses suffered by the company
2. To create or increase the company’s reserves for the covering of future losses or for the share capital’s increase from the company’s net asset value
3. In the case of relieving a company’s member of its obligation to pay in/bring in its stake
4. In the case of withdrawal and annulment of company’s shares
5. In the case of disposing of the company’s own shares
In principle, the decision on the company’s share capital’s reduction (further: “the Decision”) is adopted by its assembly with a majority of two-thirds of the total number of the member’s votes. Despite that, the company’s founding act may provide for smaller or higher majority of the votes needed to adopt the Decision. However, it cannot prescribe that the absolute majority (the majority of the total number of the company’s members’ votes) will be sufficient to adopt the decision.
The Decision must be registered before the Agency in the period of up to three months as of the date of its adoption. If not, the Decision is null and void. The company’s share capital will be reduced from the day the Decision is registered.
The protection of the creditors
The compulsory part of the Decision on share capital’s reduction is the invitation to the company’s creditors to report the debts which the company owes to them. This is done so that they may be secured, all under the condition that the Company law’s provisions on the creditor’s protection are applicable to the share capital’s reduction in the given case. Therefore, these rules are inapplicable if there are any of the exceptions to the applicability of these rules.
If the protective norms apply, the Decision will be published in the Registry of business subjects (which is managed by the Agency) in the duration of three months from the date of the Decision’s registration.
The special form of protection is provided for the creditors to whom the company owes at least 2 million RSD (the equivalent of any currency according to the average exchange rate of the National Bank of Serbia on the date of the Decision’s registration). The Company is obliged to send a written notification concerning the Decision to these creditors in the period of 30 days as of the Decision’s registration.
As for the debts which occurred before the expiration of this 30-day period and regardless of the moment when they became/have become due, the following applies:
The creditors may submit a written request to the company in order to secure the debts which the company owes to them. This may be done until the expiration of the period until which the Decision remains published. If the company does not act in accordance with their request or pays the debts which it owes to them, the creditors may file a lawsuit against the company. The lawsuit can be filed in the further period of one month with the aim to secure the debts. The prerequisite for filing the lawsuit is that the settlement of these debts is threatened by the share capital’s reduction. The creditors are required to send a written notification to the company in relation with this.
In addition, the company may make payments to its members only after the 30-day period as of the date of the Decision’s registration has expired. This is another norm aimed at protecting the company’s creditors.