Director Rights and Obligations Agreement | Zunic Law<\/title>\r\n <meta name=\"description\" content=\"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. Guide for 2026.\">\r\n <link rel=\"canonical\" href=\"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/\">\r\n <meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\">\r\n <meta name=\"author\" content=\"Sofija Udicki\">\r\n \r\n <meta property=\"og:type\" content=\"article\">\r\n <meta property=\"og:title\" content=\"Director Rights and Obligations Agreement | Zunic Law\">\r\n <meta property=\"og:description\" content=\"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. 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Guide for 2026.\">\r\n <meta name=\"twitter:image\" content=\"https:\/\/zuniclaw.com\/wp-content\/uploads\/ugovor-o-pravima-i-obavezama-direktora.jpg\">\r\n<\/head>\r\n<body>\r\n\r\n\r\n\r\n<style>\r\n.zl-wrap { font-family: 'Poppins', Arial, sans-serif; color: rgb(79,94,112); font-size: 17px; line-height: 1.7; }\r\n.zl-wrap p { margin: 0 0 14px; }\r\n.zl-wrap h2 { color: #27BA66; font-weight: 700; font-size: 24px; line-height: 1.35; margin-top: 36px; margin-bottom: 12px; }\r\n.zl-wrap h3 { color: rgb(79,94,112); font-weight: 700; font-size: 20px; margin-top: 24px; margin-bottom: 10px; }\r\n.zl-wrap h4 { color: rgb(79,94,112); font-weight: 700; font-size: 17px; margin-top: 20px; margin-bottom: 8px; }\r\n.zl-wrap a { color: #27BA66; text-decoration: underline; }\r\n.zl-wrap ul, .zl-wrap ol { margin: 10px 0 16px 0; padding-left: 22px; }\r\n.zl-wrap li { margin-bottom: 6px; }\r\n.zl-meta { font-size: 14px; color: #7a8793; margin-bottom: 24px; }\r\n.zl-stat { text-align: center; border-top: 3px solid #27BA66; border-bottom: 3px solid #27BA66; background: #f5f5f5; padding: 18px 20px; margin: 24px 0; }\r\n.zl-stat-num { display: block; font-family: 'Poppins', sans-serif; font-size: 36px; font-weight: 600; color: #27BA66; }\r\n.zl-stat-lbl { display: block; font-family: 'Poppins', sans-serif; font-size: 13px; font-weight: 400; color: #888; margin-top: 5px; }\r\n.zl-toc { background: #f6f9f7; border-left: 4px solid #27BA66; padding: 16px 18px; margin: 24px 0; }\r\n.zl-toc p { font-weight: 600; margin: 0 0 8px 0; }\r\n.zl-toc ol { margin: 6px 0 0 18px; padding: 0; }\r\n.zl-toc a { color: #27BA66; text-decoration: none; }\r\n.zl-toc a:hover { text-decoration: underline; }\r\n.zl-ukratko { background: #f0faf4; border: 1px solid #c9ebd8; border-radius: 6px; padding: 12px 14px; margin: 10px 0 20px; font-size: 15.5px; }\r\n.zl-ukratko strong { color: #27BA66; }\r\n.zl-table { width: 100%; border-collapse: collapse; margin: 18px 0; font-size: 15.5px; }\r\n.zl-table th, .zl-table td { border: 1px solid #dbe3ea; padding: 10px 12px; text-align: left; vertical-align: top; }\r\n.zl-table th { background: #27BA66; color: #fff; font-weight: 600; }\r\n.zl-table tr:nth-child(even) td { background: #f6f9f7; }\r\n.zl-author { margin-top: 40px; padding: 20px; background: #f6f9f7; border-radius: 8px; display: flex; gap: 18px; align-items: flex-start; }\r\n.zl-author h4 { margin: 0 0 4px; color: rgb(79,94,112); font-size: 18px; font-weight: 700; }\r\n.zl-author p { margin: 0; font-size: 15px; }\r\n.zl-author-label { font-size: 14px; font-weight: 700; color: #27BA66; text-transform: uppercase; letter-spacing: 0.5px; margin-bottom: 6px; }\r\n.zl-footnotes { margin-top: 32px; padding-top: 16px; border-top: 1px solid #dbe3ea; font-size: 14px; color: #7a8793; }\r\n.zl-footnotes ol { padding-left: 18px; }\r\n<\/style>\r\n\r\n<div class=\"zl-wrap\">\r\n\r\n <p class=\"zl-meta\"><strong>Updated:<\/strong> May 2026 | <strong>Next revision:<\/strong> November 2026<\/p>\r\n\r\n <p>The managing director's role in modern business structures undoubtedly goes far beyond the boundaries of formally managing a company. A director's executive role is only a fraction of this significant figure of your business: this is the person who assumes responsibility for business management, strategic decision-making, and the achievement of business goals. In other words, the company's operations depend on the activities of the director.<\/p>\r\n\r\n <p>The number of managing directors within a company depends on the structure and scope of a company's business. A company may appoint one or more directors for each part of the company's business, all with the aim of distributing responsibilities. The director represents the company towards third parties in accordance with the founding act, decisions, and instructions of the competent bodies. If a company has more than one director, all directors represent the company jointly, unless otherwise determined by the founding act or a decision of the company's general assembly. Unless the company's founding act provides that each director acts independently in managing the company's affairs, a director may not independently undertake actions if the other directors object. Thus, the Law enables a kind of mechanism for limiting the freedom to manage the company's affairs.<\/p>\r\n\r\n <p>In addition to responsibility for managing the company's affairs, the Law provides that the director is responsible for business books, financial statements, and keeping records of the general assembly's decisions, as well as for the obligation to inform all shareholders of the company about its operations and to enable them to inspect the company's documents.<\/p>\r\n\r\n <p>The director is liable to the company for damage caused by violating the provisions of the Companies Act of the Republic of Serbia, the articles of association, or a decision of the general assembly. The Law excludes the director's liability if the director acts in accordance with a decision of the general assembly.<sup><a href=\"#fn-1\">[1]<\/a><\/sup> Among other things, a <strong>Contract on the rights and obligations of the managing director<\/strong> can be viewed as a tool for clearly defining the boundaries of authority and liability to the company, as well as protecting one of the most important figures in every company's business. It should be borne in mind that all of these limitations are internal in nature, i.e. they operate only in the relationship between the director and the company, whereas from the perspective of third parties the director is authorized to conclude transactions in the name and on behalf of the company.<\/p>\r\n\r\n <div class=\"zl-stat\">\r\n <span class=\"zl-stat-num\">5<\/span>\r\n <span class=\"zl-stat-lbl\">key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/span>\r\n <\/div>\r\n\r\n <div class=\"zl-toc\">\r\n <p>Contents<\/p>\r\n <ol>\r\n <li><a href=\"#employment-agreement\">Is it mandatory for a director to conclude an Employment Agreement?<\/a><\/li>\r\n <li><a href=\"#legal-nature\">Legal nature of the Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#differences\">5 key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#purpose-content\">Purpose and content of a director's rights and obligations agreement<\/a><\/li>\r\n <li><a href=\"#taxation\">Taxation of remuneration received under a Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#advantages-risks\">Advantages and risks of a director's rights and obligations agreement<\/a><\/li>\r\n <li><a href=\"#conclusion\">Conclusion<\/a><\/li>\r\n <li><a href=\"#faq\">Frequently asked questions about the Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <\/ol>\r\n <\/div>\r\n\r\n <h2 id=\"employment-agreement\">Is it mandatory for a director to conclude an Employment Agreement?<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A managing director is not required to conclude a standard Employment Agreement. They may perform the function based on a Contract on the rights and obligations of the managing director (a management agreement), which is most often used when the director is not the founder of the company.<\/div>\r\n\r\n <p>No, a managing director is not required to conclude a standard Employment Agreement. On the contrary, a director may perform their function in other ways, without establishing a typical employment relationship with the company:<\/p>\r\n\r\n <ul>\r\n <li>A person may be appointed as director by a decision of the company and, on that basis, perform the function of director. This may be any person the company chooses, including the founder of the company, who may be appointed as director. However, it is always recommended to draw up an agreement that will regulate in detail the relationship between the director and the company, in order to avoid potential disputes.<\/li>\r\n <li>The director may perform their function based on a Contract on the rights and obligations of the managing director.<\/li>\r\n <\/ul>\r\n\r\n <p>A Contract on the rights and obligations of the managing director is most often concluded when the person appointed as director is not the founder of the company, nor a person establishing an employment relationship. In practice, a Contract on the rights and obligations of the managing director is known as a management agreement.<\/p>\r\n\r\n <p>The managing director of a company is the key figure for strategic decision-making within a company, and a Contract on the rights and obligations of the managing director is a flexible way to further regulate the scope of the director's rights and obligations.<\/p>\r\n\r\n <p>This is why understanding the legal nature of this agreement is crucial both for directors and for company owners, which we discuss further below.<\/p>\r\n\r\n <h2 id=\"legal-nature\">Legal nature of the Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A Contract on the rights and obligations of the managing director is a second basis for engaging a director, recognized by the Labour Law. A director who concludes it does not establish an employment relationship, and the remuneration received does not constitute salary, but is instead determined by the company's internal documents.<\/div>\r\n\r\n <p>Under the provisions of the Labour Law of the Republic of Serbia,<sup><a href=\"#fn-2\">[2]<\/a><\/sup> it is possible to establish an employment relationship by concluding an Employment Agreement with the director as an employee, who in that case enjoys all statutory employment rights, and the remuneration received for their work constitutes salary.<\/p>\r\n\r\n <p>On the other hand, the Labour Law recognizes a Contract on the rights and obligations of the managing director as another basis for engaging a director. The agreement regulates the mutual rights, obligations, and responsibilities of a director who has not established an employment relationship, and the company.<\/p>\r\n\r\n <p>A person who performs the duties of director based on a management agreement is entitled to remuneration for work and other rights, obligations, and responsibilities in accordance with the agreement. However, that remuneration does not constitute salary, nor does the relationship established by this agreement constitute an employment relationship.<\/p>\r\n\r\n <p>Remuneration under a management agreement is recognized in the Companies Act, which prescribes that the total compensation for a director, or the method of determining such compensation, is determined by the relevant internal documents of the company. Even the Serbian Ministry of Finance has recommended that a Contract on the rights and obligations of the managing director should provide for appropriate compensation, as a form of remuneration for the work the director invests in the company.<\/p>\r\n\r\n <p>The legislator does not prescribe, through the Labour Law, every individual element of a Contract on the rights and obligations of the managing director, as it does in the case of an Employment Agreement, where it explicitly lists the elements it must contain. However, this leaves room for the company and the director to agree on the content of the agreement in line with the needs of their own business.<\/p>\r\n\r\n <p>A management agreement may last until the expiry of the term for which the director was elected, or until their removal.<\/p>\r\n\r\n <h2 id=\"differences\">5 key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> The five key differences relate to employment status, the nature of remuneration, taxation, employment-related rights, and the conditions for engaging foreign nationals as directors. A Contract on the rights and obligations of the managing director offers greater flexibility, but also fewer rights compared to a standard Employment Agreement.<\/div>\r\n\r\n <p>To better understand the legal nature of a management agreement, it is important to consider the consequences of concluding an Employment Agreement with a director, as compared to concluding a Contract on the rights and obligations of the managing director.<\/p>\r\n\r\n <ol>\r\n <li><strong>Employment status<\/strong>: Unlike the Employment Agreement, a director engaged based on a Contract on the rights and obligations of the managing director does not establish an employment relationship and is therefore not considered an employee within the meaning of the Labour Law.<\/li>\r\n <li><strong>Nature of remuneration<\/strong>: In terms of remuneration, a director engaged under an Employment Agreement receives compensation that has the character of salary, and the rules on minimum wage must be complied with, whereas under a Contract on the rights and obligations of the managing director the director is entitled to appropriate remuneration, but it does not have the character of salary.<\/li>\r\n <li><strong>Taxation<\/strong>: Unlike the system of taxation applicable to remuneration under an Employment Agreement, remuneration under a Contract on the rights and obligations of the managing director is subject to tax on \"other income\". Since the tax-law aspect is extremely important for a company's operations, it is addressed in more detail in one of the following sections.<\/li>\r\n <li><strong>Employment-related rights<\/strong>: A director engaged based on a Contract on the rights and obligations of the managing director is entitled only to the rights provided for in the agreement itself, without establishing an employment relationship. This is in fact the key difference when we talk about this agreement. By contrast, a director engaged under an Employment Agreement enjoys all the rights guaranteed by the Labour Law.<\/li>\r\n <li><strong>Foreign nationals in the role of director<\/strong>: Given that there are currently many companies on the Serbian market whose legal representatives are foreign nationals, it is necessary to emphasize that a <a href=\"https:\/\/zuniclaw.com\/en\/management-agreement-serbia\/\">foreign director<\/a> is required to obtain a single permit for residence only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. Here we see a significant difference compared to a director engaged under an Employment Agreement, where the director would be required to obtain a <a href=\"https:\/\/zuniclaw.com\/en\/unified-permit-serbia\/\">residence permit<\/a>, regardless of the number of days spent in Serbia. Engaging a foreign national as director is therefore recommended based on a Contract on the rights and obligations of the managing director, particularly if the director plans flexible engagements and short-term stays in Serbia.<sup><a href=\"#fn-3\">[3]<\/a><\/sup><\/li>\r\n <\/ol>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Criterion<\/th>\r\n <th>Employment Agreement with the managing director<\/th>\r\n <th>Director's Rights and Obligations Agreement<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>1. Employment status<\/td>\r\n <td>The director establishes an employment relationship and is considered an employee within the meaning of the Labour Law.<\/td>\r\n <td>The director does not establish an employment relationship and is not considered an employee under the Labour Law.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>2. Nature of remuneration<\/td>\r\n <td>Remuneration has the character of salary, in accordance with labour regulations.<\/td>\r\n <td>The director receives appropriate remuneration, but it does not have the character of salary.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>3. Taxation<\/td>\r\n <td>Remuneration is subject to the system of salary taxation.<\/td>\r\n <td>Remuneration is subject to tax on \"other income\".<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>4. Employment-related rights<\/td>\r\n <td>The director enjoys all rights arising from employment (e.g. annual leave, sick leave, years of service, severance pay).<\/td>\r\n <td>The director has only those rights that are provided for in the agreement, without establishing an employment relationship, which also affects pensionable service.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>5. Foreign directors<\/td>\r\n <td>A foreign director must obtain a temporary residence permit in Serbia.<\/td>\r\n <td>A foreign director must obtain a residence permit only in the event of staying for more than 90 days within a 180-day period. This form of engagement is suitable for flexible and short-term engagements.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"purpose-content\">Purpose and content of a director's rights and obligations agreement<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> The agreement is concluded between the director, appointed by the company's general assembly (or supervisory board), and the company itself. Its basic elements include remuneration for work, reimbursement of expenses, the right to absence from work, and other agreed rights, with the possibility of precisely regulating bonuses and incentives.<\/div>\r\n\r\n <p>Let us start with a common question: with whom does the director conclude a Contract on the rights and obligations of the managing director?<\/p>\r\n\r\n <p>The director is appointed by the company's general assembly, or by the supervisory board if the company has a two-tier structure. Once the decision is passed, the director may conclude a Contract on the rights and obligations of the managing director with the company. This agreement regulates the rights and duties of the director during the term of office, as well as in the event of early removal.<\/p>\r\n\r\n <p>In practice, the content of the agreement depends on the size and organization of the company, as well as the arrangement between the founders and the director. Nevertheless, a Contract on the rights and obligations of the managing director itself contains some basic elements:<\/p>\r\n\r\n <ul>\r\n <li>precisely agreed, appropriate remuneration for the director's work;<\/li>\r\n <li>the right to reimbursement of expenses (e.g. travel expenses, business trips in Serbia and abroad);<\/li>\r\n <li>the right to absence from work due to temporary incapacity;<\/li>\r\n <li>other agreed rights and responsibilities.<\/li>\r\n <\/ul>\r\n\r\n <p>Of all the basic elements of a Contract on the rights and obligations of the managing director, one question arises: what constitutes appropriate remuneration for the director's work? In practice, this question gives rise to numerous dilemmas, particularly from the tax-law perspective. That is why, in the continuation of this text, we clarify some of the most common uncertainties.<\/p>\r\n\r\n <p>While the director's basic rights may appear similar to those under an Employment Agreement, the flexibility of a Contract on the rights and obligations of the managing director makes it possible to regulate the director's bonuses, incentives, and liabilities more precisely.<\/p>\r\n\r\n <h4>Examples of agreed duties and incentives for the director:<\/h4>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Basic duties set out in the Companies Act and the company's founding act<\/th>\r\n <th>Forms of incentives for the director<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Non-competition obligation; duty to keep confidential information; obligation to compensate any damage caused; duty of care when performing duties; duty to report transactions and actions in which there is a personal interest; duty to avoid conflicts of interest.<\/td>\r\n <td>The agreement may define business targets that serve as criteria for the payment of an annual bonus to the director. This is essentially a variable component of the director's remuneration, which depends on the achievement of the set conditions. The agreement may provide for a loyalty bonus, a one-off bonus in the event of a successful sale of equity, acquisition of a share in the company, etc. Incentives for the director do not have to be monetary only. For example, the director may be given the use of a company car, payment of a club membership fee, and similar benefits, all of which represent forms of non-cash incentives.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"taxation\">Taxation of remuneration received under a Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> Being engaged under a Contract on the rights and obligations of the managing director does not prevent a person from being insured under another basis as well. The remuneration is taxed as \"other income\" at a rate of 20%, and the tax base is reduced by standardized costs of 20%.<\/div>\r\n\r\n <p>Does engaging a director based on a Contract on the rights and obligations of the managing director prevent the director from being insured under some other basis at the same time?<\/p>\r\n\r\n <p>No. Engaging a director based on a Contract on the rights and obligations of the managing director does not prevent that person from being insured under another basis at the same time.<\/p>\r\n\r\n <h3>Simultaneous existence of two different insurance bases<\/h3>\r\n\r\n <p>For example, a person may be a director based on this agreement, while at the same time being employed by another employer.<\/p>\r\n\r\n <p>For comparison, below is an overview of the difference regarding the obligation to pay contributions for the director as a natural person:<\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Insurance basis<\/th>\r\n <th>Obligation to pay contributions<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Contract on the rights and obligations of the managing director as the only basis<\/td>\r\n <td>Obligation to pay pension and disability insurance contributions and health insurance contributions at the rates prescribed by law.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Existence of another insurance basis (the director is also employed by another employer)<\/td>\r\n <td>Obligation to pay only pension and disability insurance contributions at the rates prescribed by law.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <p>Overview of the contribution rates set out in the Law on Contributions for Mandatory Social Insurance:<sup><a href=\"#fn-4\">[4]<\/a><\/sup><\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Type of contribution<\/th>\r\n <th>Rate<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Mandatory pension and disability insurance (PIO)<\/td>\r\n <td>24%<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Mandatory health insurance<\/td>\r\n <td>10.3%<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Unemployment insurance<\/td>\r\n <td>0.75%<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <p>At this point, we would also point out a consequence of the fact that the director concludes a Contract on the rights and obligations of the managing director with the company. Accordingly, it is the payer of the agreed remuneration to the director under this agreement who is obliged to calculate, withhold, and pay the director's contributions.<\/p>\r\n\r\n <h4>Tax treatment of remuneration under a Contract on the rights and obligations of the managing director (which does not have the character of salary)<\/h4>\r\n\r\n <p>Income received by the director as a natural person under a Contract on the rights and obligations of the managing director is characterized by the Personal Income Tax Act as \"other income\".<\/p>\r\n\r\n <p>The contribution base for persons receiving agreed remuneration is the taxable income from that remuneration, in accordance with the Personal Income Tax Act.<\/p>\r\n\r\n <p><strong>Taxable income = gross income reduced by standardized costs in the amount of 20%<\/strong><\/p>\r\n\r\n <p>Personal income tax on \"other income\" is paid at a rate of 20%, in accordance with Article 86(1) of the Personal Income Tax Act.<sup><a href=\"#fn-5\">[5]<\/a><\/sup><\/p>\r\n\r\n <p>From all of the above it follows that the choice of the basis for engaging a director also has important tax-law consequences, which should be carefully analysed when deciding on the form of the agreement.<\/p>\r\n\r\n <h2 id=\"advantages-risks\">Advantages and risks of a director's rights and obligations agreement<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A management agreement offers greater flexibility in agreeing on terms, remuneration, and bonuses, with fewer formalities, but it also brings greater personal responsibility for the director in terms of tax obligations.<\/div>\r\n\r\n <p>Precisely because of the dynamics of modern business, a Contract on the rights and obligations of the managing director is an increasingly common choice in the business world. The high percentage of migration in modern times means that the number of foreign directors is increasing every day. It is this type of agreement that provides a certain degree of flexibility when it comes to the position of a foreign national.<\/p>\r\n\r\n <p>Flexibility compared to an Employment Agreement also exists with respect to the agreed remuneration received by the director under a management agreement. Namely, the remuneration that the director receives under a Contract on the rights and obligations of the managing director does not constitute salary, so the amount of that remuneration is not limited by regulations on minimum wage. Thus, flexibility arises both in terms of the director's autonomy in performing their duties and in determining the amount of remuneration for the director's work.<\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Advantages<\/th>\r\n <th>Risks<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Greater flexibility in negotiating terms and remuneration, an advantage from both the director's and the company's perspective.<\/td>\r\n <td>Greater personal responsibility of the director in terms of tax obligations, noting that the director's liability is separately regulated by the Companies Act.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>The possibility of clearly defining targets and bonuses, beneficial for both the director and the company.<\/td>\r\n <td>The taxation responsibility of the director as a natural person, which at the same time is an advantage for the company.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Fewer formalities compared to establishing an employment relationship.<\/td>\r\n <td><\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Agreeing remuneration without limitations imposed by minimum wage regulations.<\/td>\r\n <td><\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"conclusion\">Conclusion<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A Contract on the rights and obligations of the managing director is a framework of trust between the owner and the person entrusted with running the business, which, when clearly drafted, enables an optimal balance between flexibility and legal certainty.<\/div>\r\n\r\n <p>A Contract on the rights and obligations of the managing director is not just a legal formality. It is a framework of trust between the owner and the person entrusted with running the business. When clearly drafted, this agreement enables an optimal balance between flexibility and legal certainty, thereby reducing risks and increasing the efficiency of corporate governance.<\/p>\r\n\r\n <p>For this reason, it is important that a Contract on the rights and obligations of the managing director always be tailored to the specific circumstances of the business, with careful consideration of the tax-law and labour-law consequences of each solution.<\/p>\r\n\r\n <h2 id=\"faq\">Frequently asked questions about the Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <h3>Does a director engaged under a management agreement establish an employment relationship?<\/h3>\r\n\r\n <p>No. A director engaged under a Contract on the rights and obligations of the managing director does not establish an employment relationship and is not considered an employee within the meaning of the Labour Law, unlike a director who concludes a standard Employment Agreement.<\/p>\r\n\r\n <h3>Does the remuneration under a Contract on the rights and obligations of the managing director constitute salary?<\/h3>\r\n\r\n <p>No. The director receives appropriate remuneration, but it does not have the character of salary, so its amount is not limited by regulations on minimum wage. The remuneration is taxed at a rate of 20% as \"other income\".<\/p>\r\n\r\n <h3>When is a foreign director required to obtain a residence permit?<\/h3>\r\n\r\n <p>A foreign director engaged under a Contract on the rights and obligations of the managing director is required to obtain a single residence permit only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. A director engaged under an Employment Agreement must obtain a single residence and work permit regardless of the number of days spent in Serbia.<\/p>\r\n\r\n <h3>Can a director under this agreement be insured under another basis at the same time?<\/h3>\r\n\r\n <p>Yes. Engaging a director under a Contract on the rights and obligations of the managing director does not prevent that person from being insured under another basis at the same time, for example, as an employee of another employer.<\/p>\r\n\r\n <h3>How long does a Contract on the rights and obligations of the managing director last?<\/h3>\r\n\r\n <p>A management agreement may last until the expiry of the term for which the director was elected, or until their earlier removal by the company's general assembly or supervisory board.<\/p>\r\n\r\n <p style=\"font-family:'Poppins',sans-serif;font-size:14px;font-weight:600;color:rgb(79,94,112);margin:32px 0 8px 0;\">About the authors<\/p>\r\n\r\n <div class=\"zl-author\">\r\n <div>\r\n <div class=\"zl-author-label\">Author<\/div>\r\n <h4>Sofija Udicki, Senior Associate<\/h4>\r\n <p>Sofija Udicki is a Senior Associate at Zunic Law, whose day-to-day work focuses on corporate, tax, and labour law. She provides comprehensive legal support to clients from the technology sector, particularly in the field of intellectual property law. <a href=\"https:\/\/zuniclaw.com\/en\/team\/sofija-udicki\/\" target=\"_blank\" rel=\"noopener\">See biography<\/a>.<\/p>\r\n <\/div>\r\n <\/div>\r\n\r\n <div class=\"zl-author\" style=\"margin-top:12px;\">\r\n <div>\r\n <div class=\"zl-author-label\">Author<\/div>\r\n <h4>Kristina Jevti\u0107, Of Counsel<\/h4>\r\n <p>Kristina Jevti\u0107 is Of Counsel at Zunic Law, specializing in corporate law and status changes, EU company law, insolvency law, international trade law, and intellectual property law. She is a teaching associate for the Company Law course at the University of Belgrade Faculty of Law. <a href=\"https:\/\/zuniclaw.com\/en\/team\/kristina-jevtic\/\" target=\"_blank\" rel=\"noopener\">See biography<\/a>.<\/p>\r\n <\/div>\r\n <\/div>\r\n\r\n <div class=\"zl-footnotes\">\r\n <ol>\r\n <li id=\"fn-1\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/companies-act-of-serbia.html\" target=\"_blank\" rel=\"noopener\">Companies Act<\/a>.<\/li>\r\n <li id=\"fn-2\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/employment-act-republic-serbiahtml\" target=\"_blank\" rel=\"noopener\">Labour Law<\/a>.<\/li>\r\n <li id=\"fn-3\"><a href=\"http:\/\/demo.paragraf.rs\/demo\/combined\/Old\/t\/t2025_02\/EN_002_2025_001.htm\" target=\"_blank\" rel=\"noopener\">Law on Foreigners<\/a>.<\/li>\r\n <li id=\"fn-4\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/zakon-o-doprinosima-za-obavezno-socijalno-osiguranje.html\" target=\"_blank\" rel=\"noopener\">Law on Contributions for Mandatory Social Insurance<\/a>.<\/li>\r\n <li id=\"fn-5\"><a href=\"https:\/\/purs.gov.rs\/upload\/media\/2025\/11\/24\/760462\/Law_on_personal_income_tax.pdf\" target=\"_blank\" rel=\"noopener\">Personal Income Tax Act<\/a>.<\/li>\r\n <\/ol>\r\n <\/div>\r\n\r\n<\/div>\r\n\r\n<script type=\"application\/ld+json\">\r\n{\r\n \"@context\": \"https:\/\/schema.org\",\r\n \"@graph\": [\r\n {\r\n \"@type\": \"Article\",\r\n \"@id\": \"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/#article\",\r\n \"mainEntityOfPage\": { \"@type\": \"WebPage\", \"@id\": \"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/\" },\r\n \"headline\": \"Is a Contract on the Rights and Obligations of the Managing Director the Right Choice for Your Business?\",\r\n \"description\": \"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. 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The remuneration is taxed at a rate of 20% as 'other income'.\" }\r\n },\r\n {\r\n \"@type\": \"Question\",\r\n \"name\": \"When is a foreign director required to obtain a residence permit?\",\r\n \"acceptedAnswer\": { \"@type\": \"Answer\", \"text\": \"A foreign director engaged under a Contract on the rights and obligations of the managing director is required to obtain a single residence permit only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. A director engaged under an Employment Agreement must obtain a single residence and work permit regardless of the number of days spent in Serbia.\" }\r\n },\r\n {\r\n \"@type\": \"Question\",\r\n \"name\": \"Can a director under this agreement be insured under another basis at the same time?\",\r\n \"acceptedAnswer\": { \"@type\": \"Answer\", \"text\": \"Yes. 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A director’s executive role is only a fraction of this significant figure of your business: this is the person who […]<\/p>\n","protected":false},"author":28,"featured_media":73605,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ai_generated_summary":"","footnotes":""},"categories":[91,96],"class_list":["post-73623","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-korporativno-pravo","category-ugovori"],"_links":{"self":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/comments?post=73623"}],"version-history":[{"count":18,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623\/revisions"}],"predecessor-version":[{"id":76121,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623\/revisions\/76121"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media\/73605"}],"wp:attachment":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media?parent=73623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/categories?post=73623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

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\n\t\t\t\t\t\r\n\r\n\r\n \r\n \r\n Director Rights and Obligations Agreement | Zunic Law<\/title>\r\n <meta name=\"description\" content=\"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. Guide for 2026.\">\r\n <link rel=\"canonical\" href=\"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/\">\r\n <meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\">\r\n <meta name=\"author\" content=\"Sofija Udicki\">\r\n \r\n <meta property=\"og:type\" content=\"article\">\r\n <meta property=\"og:title\" content=\"Director Rights and Obligations Agreement | Zunic Law\">\r\n <meta property=\"og:description\" content=\"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. Guide for 2026.\">\r\n <meta property=\"og:url\" content=\"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/\">\r\n <meta property=\"og:image\" content=\"https:\/\/zuniclaw.com\/wp-content\/uploads\/ugovor-o-pravima-i-obavezama-direktora.jpg\">\r\n <meta property=\"og:site_name\" content=\"Zunic Law\">\r\n <meta property=\"og:locale\" content=\"en_US\">\r\n <meta property=\"article:author\" content=\"Sofija Udicki\">\r\n <meta property=\"article:published_time\" content=\"2025-12-01\">\r\n <meta property=\"article:modified_time\" content=\"2026-05-01\">\r\n <meta property=\"article:section\" content=\"Corporate Law\">\r\n \r\n <meta name=\"twitter:card\" content=\"summary_large_image\">\r\n <meta name=\"twitter:title\" content=\"Director Rights and Obligations Agreement | Zunic Law\">\r\n <meta name=\"twitter:description\" content=\"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. Guide for 2026.\">\r\n <meta name=\"twitter:image\" content=\"https:\/\/zuniclaw.com\/wp-content\/uploads\/ugovor-o-pravima-i-obavezama-direktora.jpg\">\r\n<\/head>\r\n<body>\r\n\r\n\r\n\r\n<style>\r\n.zl-wrap { font-family: 'Poppins', Arial, sans-serif; color: rgb(79,94,112); font-size: 17px; line-height: 1.7; }\r\n.zl-wrap p { margin: 0 0 14px; }\r\n.zl-wrap h2 { color: #27BA66; font-weight: 700; font-size: 24px; line-height: 1.35; margin-top: 36px; margin-bottom: 12px; }\r\n.zl-wrap h3 { color: rgb(79,94,112); font-weight: 700; font-size: 20px; margin-top: 24px; margin-bottom: 10px; }\r\n.zl-wrap h4 { color: rgb(79,94,112); font-weight: 700; font-size: 17px; margin-top: 20px; margin-bottom: 8px; }\r\n.zl-wrap a { color: #27BA66; text-decoration: underline; }\r\n.zl-wrap ul, .zl-wrap ol { margin: 10px 0 16px 0; padding-left: 22px; }\r\n.zl-wrap li { margin-bottom: 6px; }\r\n.zl-meta { font-size: 14px; color: #7a8793; margin-bottom: 24px; }\r\n.zl-stat { text-align: center; border-top: 3px solid #27BA66; border-bottom: 3px solid #27BA66; background: #f5f5f5; padding: 18px 20px; margin: 24px 0; }\r\n.zl-stat-num { display: block; font-family: 'Poppins', sans-serif; font-size: 36px; font-weight: 600; color: #27BA66; }\r\n.zl-stat-lbl { display: block; font-family: 'Poppins', sans-serif; font-size: 13px; font-weight: 400; color: #888; margin-top: 5px; }\r\n.zl-toc { background: #f6f9f7; border-left: 4px solid #27BA66; padding: 16px 18px; margin: 24px 0; }\r\n.zl-toc p { font-weight: 600; margin: 0 0 8px 0; }\r\n.zl-toc ol { margin: 6px 0 0 18px; padding: 0; }\r\n.zl-toc a { color: #27BA66; text-decoration: none; }\r\n.zl-toc a:hover { text-decoration: underline; }\r\n.zl-ukratko { background: #f0faf4; border: 1px solid #c9ebd8; border-radius: 6px; padding: 12px 14px; margin: 10px 0 20px; font-size: 15.5px; }\r\n.zl-ukratko strong { color: #27BA66; }\r\n.zl-table { width: 100%; border-collapse: collapse; margin: 18px 0; font-size: 15.5px; }\r\n.zl-table th, .zl-table td { border: 1px solid #dbe3ea; padding: 10px 12px; text-align: left; vertical-align: top; }\r\n.zl-table th { background: #27BA66; color: #fff; font-weight: 600; }\r\n.zl-table tr:nth-child(even) td { background: #f6f9f7; }\r\n.zl-author { margin-top: 40px; padding: 20px; background: #f6f9f7; border-radius: 8px; display: flex; gap: 18px; align-items: flex-start; }\r\n.zl-author h4 { margin: 0 0 4px; color: rgb(79,94,112); font-size: 18px; font-weight: 700; }\r\n.zl-author p { margin: 0; font-size: 15px; }\r\n.zl-author-label { font-size: 14px; font-weight: 700; color: #27BA66; text-transform: uppercase; letter-spacing: 0.5px; margin-bottom: 6px; }\r\n.zl-footnotes { margin-top: 32px; padding-top: 16px; border-top: 1px solid #dbe3ea; font-size: 14px; color: #7a8793; }\r\n.zl-footnotes ol { padding-left: 18px; }\r\n<\/style>\r\n\r\n<div class=\"zl-wrap\">\r\n\r\n <p class=\"zl-meta\"><strong>Updated:<\/strong> May 2026 | <strong>Next revision:<\/strong> November 2026<\/p>\r\n\r\n <p>The managing director's role in modern business structures undoubtedly goes far beyond the boundaries of formally managing a company. A director's executive role is only a fraction of this significant figure of your business: this is the person who assumes responsibility for business management, strategic decision-making, and the achievement of business goals. In other words, the company's operations depend on the activities of the director.<\/p>\r\n\r\n <p>The number of managing directors within a company depends on the structure and scope of a company's business. A company may appoint one or more directors for each part of the company's business, all with the aim of distributing responsibilities. The director represents the company towards third parties in accordance with the founding act, decisions, and instructions of the competent bodies. If a company has more than one director, all directors represent the company jointly, unless otherwise determined by the founding act or a decision of the company's general assembly. Unless the company's founding act provides that each director acts independently in managing the company's affairs, a director may not independently undertake actions if the other directors object. Thus, the Law enables a kind of mechanism for limiting the freedom to manage the company's affairs.<\/p>\r\n\r\n <p>In addition to responsibility for managing the company's affairs, the Law provides that the director is responsible for business books, financial statements, and keeping records of the general assembly's decisions, as well as for the obligation to inform all shareholders of the company about its operations and to enable them to inspect the company's documents.<\/p>\r\n\r\n <p>The director is liable to the company for damage caused by violating the provisions of the Companies Act of the Republic of Serbia, the articles of association, or a decision of the general assembly. The Law excludes the director's liability if the director acts in accordance with a decision of the general assembly.<sup><a href=\"#fn-1\">[1]<\/a><\/sup> Among other things, a <strong>Contract on the rights and obligations of the managing director<\/strong> can be viewed as a tool for clearly defining the boundaries of authority and liability to the company, as well as protecting one of the most important figures in every company's business. It should be borne in mind that all of these limitations are internal in nature, i.e. they operate only in the relationship between the director and the company, whereas from the perspective of third parties the director is authorized to conclude transactions in the name and on behalf of the company.<\/p>\r\n\r\n <div class=\"zl-stat\">\r\n <span class=\"zl-stat-num\">5<\/span>\r\n <span class=\"zl-stat-lbl\">key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/span>\r\n <\/div>\r\n\r\n <div class=\"zl-toc\">\r\n <p>Contents<\/p>\r\n <ol>\r\n <li><a href=\"#employment-agreement\">Is it mandatory for a director to conclude an Employment Agreement?<\/a><\/li>\r\n <li><a href=\"#legal-nature\">Legal nature of the Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#differences\">5 key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#purpose-content\">Purpose and content of a director's rights and obligations agreement<\/a><\/li>\r\n <li><a href=\"#taxation\">Taxation of remuneration received under a Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <li><a href=\"#advantages-risks\">Advantages and risks of a director's rights and obligations agreement<\/a><\/li>\r\n <li><a href=\"#conclusion\">Conclusion<\/a><\/li>\r\n <li><a href=\"#faq\">Frequently asked questions about the Contract on the rights and obligations of the managing director<\/a><\/li>\r\n <\/ol>\r\n <\/div>\r\n\r\n <h2 id=\"employment-agreement\">Is it mandatory for a director to conclude an Employment Agreement?<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A managing director is not required to conclude a standard Employment Agreement. They may perform the function based on a Contract on the rights and obligations of the managing director (a management agreement), which is most often used when the director is not the founder of the company.<\/div>\r\n\r\n <p>No, a managing director is not required to conclude a standard Employment Agreement. On the contrary, a director may perform their function in other ways, without establishing a typical employment relationship with the company:<\/p>\r\n\r\n <ul>\r\n <li>A person may be appointed as director by a decision of the company and, on that basis, perform the function of director. This may be any person the company chooses, including the founder of the company, who may be appointed as director. However, it is always recommended to draw up an agreement that will regulate in detail the relationship between the director and the company, in order to avoid potential disputes.<\/li>\r\n <li>The director may perform their function based on a Contract on the rights and obligations of the managing director.<\/li>\r\n <\/ul>\r\n\r\n <p>A Contract on the rights and obligations of the managing director is most often concluded when the person appointed as director is not the founder of the company, nor a person establishing an employment relationship. In practice, a Contract on the rights and obligations of the managing director is known as a management agreement.<\/p>\r\n\r\n <p>The managing director of a company is the key figure for strategic decision-making within a company, and a Contract on the rights and obligations of the managing director is a flexible way to further regulate the scope of the director's rights and obligations.<\/p>\r\n\r\n <p>This is why understanding the legal nature of this agreement is crucial both for directors and for company owners, which we discuss further below.<\/p>\r\n\r\n <h2 id=\"legal-nature\">Legal nature of the Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A Contract on the rights and obligations of the managing director is a second basis for engaging a director, recognized by the Labour Law. A director who concludes it does not establish an employment relationship, and the remuneration received does not constitute salary, but is instead determined by the company's internal documents.<\/div>\r\n\r\n <p>Under the provisions of the Labour Law of the Republic of Serbia,<sup><a href=\"#fn-2\">[2]<\/a><\/sup> it is possible to establish an employment relationship by concluding an Employment Agreement with the director as an employee, who in that case enjoys all statutory employment rights, and the remuneration received for their work constitutes salary.<\/p>\r\n\r\n <p>On the other hand, the Labour Law recognizes a Contract on the rights and obligations of the managing director as another basis for engaging a director. The agreement regulates the mutual rights, obligations, and responsibilities of a director who has not established an employment relationship, and the company.<\/p>\r\n\r\n <p>A person who performs the duties of director based on a management agreement is entitled to remuneration for work and other rights, obligations, and responsibilities in accordance with the agreement. However, that remuneration does not constitute salary, nor does the relationship established by this agreement constitute an employment relationship.<\/p>\r\n\r\n <p>Remuneration under a management agreement is recognized in the Companies Act, which prescribes that the total compensation for a director, or the method of determining such compensation, is determined by the relevant internal documents of the company. Even the Serbian Ministry of Finance has recommended that a Contract on the rights and obligations of the managing director should provide for appropriate compensation, as a form of remuneration for the work the director invests in the company.<\/p>\r\n\r\n <p>The legislator does not prescribe, through the Labour Law, every individual element of a Contract on the rights and obligations of the managing director, as it does in the case of an Employment Agreement, where it explicitly lists the elements it must contain. However, this leaves room for the company and the director to agree on the content of the agreement in line with the needs of their own business.<\/p>\r\n\r\n <p>A management agreement may last until the expiry of the term for which the director was elected, or until their removal.<\/p>\r\n\r\n <h2 id=\"differences\">5 key differences between an Employment Agreement and a Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> The five key differences relate to employment status, the nature of remuneration, taxation, employment-related rights, and the conditions for engaging foreign nationals as directors. A Contract on the rights and obligations of the managing director offers greater flexibility, but also fewer rights compared to a standard Employment Agreement.<\/div>\r\n\r\n <p>To better understand the legal nature of a management agreement, it is important to consider the consequences of concluding an Employment Agreement with a director, as compared to concluding a Contract on the rights and obligations of the managing director.<\/p>\r\n\r\n <ol>\r\n <li><strong>Employment status<\/strong>: Unlike the Employment Agreement, a director engaged based on a Contract on the rights and obligations of the managing director does not establish an employment relationship and is therefore not considered an employee within the meaning of the Labour Law.<\/li>\r\n <li><strong>Nature of remuneration<\/strong>: In terms of remuneration, a director engaged under an Employment Agreement receives compensation that has the character of salary, and the rules on minimum wage must be complied with, whereas under a Contract on the rights and obligations of the managing director the director is entitled to appropriate remuneration, but it does not have the character of salary.<\/li>\r\n <li><strong>Taxation<\/strong>: Unlike the system of taxation applicable to remuneration under an Employment Agreement, remuneration under a Contract on the rights and obligations of the managing director is subject to tax on \"other income\". Since the tax-law aspect is extremely important for a company's operations, it is addressed in more detail in one of the following sections.<\/li>\r\n <li><strong>Employment-related rights<\/strong>: A director engaged based on a Contract on the rights and obligations of the managing director is entitled only to the rights provided for in the agreement itself, without establishing an employment relationship. This is in fact the key difference when we talk about this agreement. By contrast, a director engaged under an Employment Agreement enjoys all the rights guaranteed by the Labour Law.<\/li>\r\n <li><strong>Foreign nationals in the role of director<\/strong>: Given that there are currently many companies on the Serbian market whose legal representatives are foreign nationals, it is necessary to emphasize that a <a href=\"https:\/\/zuniclaw.com\/en\/management-agreement-serbia\/\">foreign director<\/a> is required to obtain a single permit for residence only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. Here we see a significant difference compared to a director engaged under an Employment Agreement, where the director would be required to obtain a <a href=\"https:\/\/zuniclaw.com\/en\/unified-permit-serbia\/\">residence permit<\/a>, regardless of the number of days spent in Serbia. Engaging a foreign national as director is therefore recommended based on a Contract on the rights and obligations of the managing director, particularly if the director plans flexible engagements and short-term stays in Serbia.<sup><a href=\"#fn-3\">[3]<\/a><\/sup><\/li>\r\n <\/ol>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Criterion<\/th>\r\n <th>Employment Agreement with the managing director<\/th>\r\n <th>Director's Rights and Obligations Agreement<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>1. Employment status<\/td>\r\n <td>The director establishes an employment relationship and is considered an employee within the meaning of the Labour Law.<\/td>\r\n <td>The director does not establish an employment relationship and is not considered an employee under the Labour Law.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>2. Nature of remuneration<\/td>\r\n <td>Remuneration has the character of salary, in accordance with labour regulations.<\/td>\r\n <td>The director receives appropriate remuneration, but it does not have the character of salary.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>3. Taxation<\/td>\r\n <td>Remuneration is subject to the system of salary taxation.<\/td>\r\n <td>Remuneration is subject to tax on \"other income\".<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>4. Employment-related rights<\/td>\r\n <td>The director enjoys all rights arising from employment (e.g. annual leave, sick leave, years of service, severance pay).<\/td>\r\n <td>The director has only those rights that are provided for in the agreement, without establishing an employment relationship, which also affects pensionable service.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>5. Foreign directors<\/td>\r\n <td>A foreign director must obtain a temporary residence permit in Serbia.<\/td>\r\n <td>A foreign director must obtain a residence permit only in the event of staying for more than 90 days within a 180-day period. This form of engagement is suitable for flexible and short-term engagements.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"purpose-content\">Purpose and content of a director's rights and obligations agreement<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> The agreement is concluded between the director, appointed by the company's general assembly (or supervisory board), and the company itself. Its basic elements include remuneration for work, reimbursement of expenses, the right to absence from work, and other agreed rights, with the possibility of precisely regulating bonuses and incentives.<\/div>\r\n\r\n <p>Let us start with a common question: with whom does the director conclude a Contract on the rights and obligations of the managing director?<\/p>\r\n\r\n <p>The director is appointed by the company's general assembly, or by the supervisory board if the company has a two-tier structure. Once the decision is passed, the director may conclude a Contract on the rights and obligations of the managing director with the company. This agreement regulates the rights and duties of the director during the term of office, as well as in the event of early removal.<\/p>\r\n\r\n <p>In practice, the content of the agreement depends on the size and organization of the company, as well as the arrangement between the founders and the director. Nevertheless, a Contract on the rights and obligations of the managing director itself contains some basic elements:<\/p>\r\n\r\n <ul>\r\n <li>precisely agreed, appropriate remuneration for the director's work;<\/li>\r\n <li>the right to reimbursement of expenses (e.g. travel expenses, business trips in Serbia and abroad);<\/li>\r\n <li>the right to absence from work due to temporary incapacity;<\/li>\r\n <li>other agreed rights and responsibilities.<\/li>\r\n <\/ul>\r\n\r\n <p>Of all the basic elements of a Contract on the rights and obligations of the managing director, one question arises: what constitutes appropriate remuneration for the director's work? In practice, this question gives rise to numerous dilemmas, particularly from the tax-law perspective. That is why, in the continuation of this text, we clarify some of the most common uncertainties.<\/p>\r\n\r\n <p>While the director's basic rights may appear similar to those under an Employment Agreement, the flexibility of a Contract on the rights and obligations of the managing director makes it possible to regulate the director's bonuses, incentives, and liabilities more precisely.<\/p>\r\n\r\n <h4>Examples of agreed duties and incentives for the director:<\/h4>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Basic duties set out in the Companies Act and the company's founding act<\/th>\r\n <th>Forms of incentives for the director<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Non-competition obligation; duty to keep confidential information; obligation to compensate any damage caused; duty of care when performing duties; duty to report transactions and actions in which there is a personal interest; duty to avoid conflicts of interest.<\/td>\r\n <td>The agreement may define business targets that serve as criteria for the payment of an annual bonus to the director. This is essentially a variable component of the director's remuneration, which depends on the achievement of the set conditions. The agreement may provide for a loyalty bonus, a one-off bonus in the event of a successful sale of equity, acquisition of a share in the company, etc. Incentives for the director do not have to be monetary only. For example, the director may be given the use of a company car, payment of a club membership fee, and similar benefits, all of which represent forms of non-cash incentives.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"taxation\">Taxation of remuneration received under a Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> Being engaged under a Contract on the rights and obligations of the managing director does not prevent a person from being insured under another basis as well. The remuneration is taxed as \"other income\" at a rate of 20%, and the tax base is reduced by standardized costs of 20%.<\/div>\r\n\r\n <p>Does engaging a director based on a Contract on the rights and obligations of the managing director prevent the director from being insured under some other basis at the same time?<\/p>\r\n\r\n <p>No. Engaging a director based on a Contract on the rights and obligations of the managing director does not prevent that person from being insured under another basis at the same time.<\/p>\r\n\r\n <h3>Simultaneous existence of two different insurance bases<\/h3>\r\n\r\n <p>For example, a person may be a director based on this agreement, while at the same time being employed by another employer.<\/p>\r\n\r\n <p>For comparison, below is an overview of the difference regarding the obligation to pay contributions for the director as a natural person:<\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Insurance basis<\/th>\r\n <th>Obligation to pay contributions<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Contract on the rights and obligations of the managing director as the only basis<\/td>\r\n <td>Obligation to pay pension and disability insurance contributions and health insurance contributions at the rates prescribed by law.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Existence of another insurance basis (the director is also employed by another employer)<\/td>\r\n <td>Obligation to pay only pension and disability insurance contributions at the rates prescribed by law.<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <p>Overview of the contribution rates set out in the Law on Contributions for Mandatory Social Insurance:<sup><a href=\"#fn-4\">[4]<\/a><\/sup><\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Type of contribution<\/th>\r\n <th>Rate<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Mandatory pension and disability insurance (PIO)<\/td>\r\n <td>24%<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Mandatory health insurance<\/td>\r\n <td>10.3%<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Unemployment insurance<\/td>\r\n <td>0.75%<\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <p>At this point, we would also point out a consequence of the fact that the director concludes a Contract on the rights and obligations of the managing director with the company. Accordingly, it is the payer of the agreed remuneration to the director under this agreement who is obliged to calculate, withhold, and pay the director's contributions.<\/p>\r\n\r\n <h4>Tax treatment of remuneration under a Contract on the rights and obligations of the managing director (which does not have the character of salary)<\/h4>\r\n\r\n <p>Income received by the director as a natural person under a Contract on the rights and obligations of the managing director is characterized by the Personal Income Tax Act as \"other income\".<\/p>\r\n\r\n <p>The contribution base for persons receiving agreed remuneration is the taxable income from that remuneration, in accordance with the Personal Income Tax Act.<\/p>\r\n\r\n <p><strong>Taxable income = gross income reduced by standardized costs in the amount of 20%<\/strong><\/p>\r\n\r\n <p>Personal income tax on \"other income\" is paid at a rate of 20%, in accordance with Article 86(1) of the Personal Income Tax Act.<sup><a href=\"#fn-5\">[5]<\/a><\/sup><\/p>\r\n\r\n <p>From all of the above it follows that the choice of the basis for engaging a director also has important tax-law consequences, which should be carefully analysed when deciding on the form of the agreement.<\/p>\r\n\r\n <h2 id=\"advantages-risks\">Advantages and risks of a director's rights and obligations agreement<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A management agreement offers greater flexibility in agreeing on terms, remuneration, and bonuses, with fewer formalities, but it also brings greater personal responsibility for the director in terms of tax obligations.<\/div>\r\n\r\n <p>Precisely because of the dynamics of modern business, a Contract on the rights and obligations of the managing director is an increasingly common choice in the business world. The high percentage of migration in modern times means that the number of foreign directors is increasing every day. It is this type of agreement that provides a certain degree of flexibility when it comes to the position of a foreign national.<\/p>\r\n\r\n <p>Flexibility compared to an Employment Agreement also exists with respect to the agreed remuneration received by the director under a management agreement. Namely, the remuneration that the director receives under a Contract on the rights and obligations of the managing director does not constitute salary, so the amount of that remuneration is not limited by regulations on minimum wage. Thus, flexibility arises both in terms of the director's autonomy in performing their duties and in determining the amount of remuneration for the director's work.<\/p>\r\n\r\n <table class=\"zl-table\">\r\n <thead>\r\n <tr>\r\n <th>Advantages<\/th>\r\n <th>Risks<\/th>\r\n <\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr>\r\n <td>Greater flexibility in negotiating terms and remuneration, an advantage from both the director's and the company's perspective.<\/td>\r\n <td>Greater personal responsibility of the director in terms of tax obligations, noting that the director's liability is separately regulated by the Companies Act.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>The possibility of clearly defining targets and bonuses, beneficial for both the director and the company.<\/td>\r\n <td>The taxation responsibility of the director as a natural person, which at the same time is an advantage for the company.<\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Fewer formalities compared to establishing an employment relationship.<\/td>\r\n <td><\/td>\r\n <\/tr>\r\n <tr>\r\n <td>Agreeing remuneration without limitations imposed by minimum wage regulations.<\/td>\r\n <td><\/td>\r\n <\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h2 id=\"conclusion\">Conclusion<\/h2>\r\n\r\n <div class=\"zl-ukratko\"><strong>TL;DR:<\/strong> A Contract on the rights and obligations of the managing director is a framework of trust between the owner and the person entrusted with running the business, which, when clearly drafted, enables an optimal balance between flexibility and legal certainty.<\/div>\r\n\r\n <p>A Contract on the rights and obligations of the managing director is not just a legal formality. It is a framework of trust between the owner and the person entrusted with running the business. When clearly drafted, this agreement enables an optimal balance between flexibility and legal certainty, thereby reducing risks and increasing the efficiency of corporate governance.<\/p>\r\n\r\n <p>For this reason, it is important that a Contract on the rights and obligations of the managing director always be tailored to the specific circumstances of the business, with careful consideration of the tax-law and labour-law consequences of each solution.<\/p>\r\n\r\n <h2 id=\"faq\">Frequently asked questions about the Contract on the rights and obligations of the managing director<\/h2>\r\n\r\n <h3>Does a director engaged under a management agreement establish an employment relationship?<\/h3>\r\n\r\n <p>No. A director engaged under a Contract on the rights and obligations of the managing director does not establish an employment relationship and is not considered an employee within the meaning of the Labour Law, unlike a director who concludes a standard Employment Agreement.<\/p>\r\n\r\n <h3>Does the remuneration under a Contract on the rights and obligations of the managing director constitute salary?<\/h3>\r\n\r\n <p>No. The director receives appropriate remuneration, but it does not have the character of salary, so its amount is not limited by regulations on minimum wage. The remuneration is taxed at a rate of 20% as \"other income\".<\/p>\r\n\r\n <h3>When is a foreign director required to obtain a residence permit?<\/h3>\r\n\r\n <p>A foreign director engaged under a Contract on the rights and obligations of the managing director is required to obtain a single residence permit only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. A director engaged under an Employment Agreement must obtain a single residence and work permit regardless of the number of days spent in Serbia.<\/p>\r\n\r\n <h3>Can a director under this agreement be insured under another basis at the same time?<\/h3>\r\n\r\n <p>Yes. Engaging a director under a Contract on the rights and obligations of the managing director does not prevent that person from being insured under another basis at the same time, for example, as an employee of another employer.<\/p>\r\n\r\n <h3>How long does a Contract on the rights and obligations of the managing director last?<\/h3>\r\n\r\n <p>A management agreement may last until the expiry of the term for which the director was elected, or until their earlier removal by the company's general assembly or supervisory board.<\/p>\r\n\r\n <p style=\"font-family:'Poppins',sans-serif;font-size:14px;font-weight:600;color:rgb(79,94,112);margin:32px 0 8px 0;\">About the authors<\/p>\r\n\r\n <div class=\"zl-author\">\r\n <div>\r\n <div class=\"zl-author-label\">Author<\/div>\r\n <h4>Sofija Udicki, Senior Associate<\/h4>\r\n <p>Sofija Udicki is a Senior Associate at Zunic Law, whose day-to-day work focuses on corporate, tax, and labour law. She provides comprehensive legal support to clients from the technology sector, particularly in the field of intellectual property law. <a href=\"https:\/\/zuniclaw.com\/en\/team\/sofija-udicki\/\" target=\"_blank\" rel=\"noopener\">See biography<\/a>.<\/p>\r\n <\/div>\r\n <\/div>\r\n\r\n <div class=\"zl-author\" style=\"margin-top:12px;\">\r\n <div>\r\n <div class=\"zl-author-label\">Author<\/div>\r\n <h4>Kristina Jevti\u0107, Of Counsel<\/h4>\r\n <p>Kristina Jevti\u0107 is Of Counsel at Zunic Law, specializing in corporate law and status changes, EU company law, insolvency law, international trade law, and intellectual property law. She is a teaching associate for the Company Law course at the University of Belgrade Faculty of Law. <a href=\"https:\/\/zuniclaw.com\/en\/team\/kristina-jevtic\/\" target=\"_blank\" rel=\"noopener\">See biography<\/a>.<\/p>\r\n <\/div>\r\n <\/div>\r\n\r\n <div class=\"zl-footnotes\">\r\n <ol>\r\n <li id=\"fn-1\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/companies-act-of-serbia.html\" target=\"_blank\" rel=\"noopener\">Companies Act<\/a>.<\/li>\r\n <li id=\"fn-2\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/employment-act-republic-serbiahtml\" target=\"_blank\" rel=\"noopener\">Labour Law<\/a>.<\/li>\r\n <li id=\"fn-3\"><a href=\"http:\/\/demo.paragraf.rs\/demo\/combined\/Old\/t\/t2025_02\/EN_002_2025_001.htm\" target=\"_blank\" rel=\"noopener\">Law on Foreigners<\/a>.<\/li>\r\n <li id=\"fn-4\"><a href=\"https:\/\/www.paragraf.rs\/propisi\/zakon-o-doprinosima-za-obavezno-socijalno-osiguranje.html\" target=\"_blank\" rel=\"noopener\">Law on Contributions for Mandatory Social Insurance<\/a>.<\/li>\r\n <li id=\"fn-5\"><a href=\"https:\/\/purs.gov.rs\/upload\/media\/2025\/11\/24\/760462\/Law_on_personal_income_tax.pdf\" target=\"_blank\" rel=\"noopener\">Personal Income Tax Act<\/a>.<\/li>\r\n <\/ol>\r\n <\/div>\r\n\r\n<\/div>\r\n\r\n<script type=\"application\/ld+json\">\r\n{\r\n \"@context\": \"https:\/\/schema.org\",\r\n \"@graph\": [\r\n {\r\n \"@type\": \"Article\",\r\n \"@id\": \"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/#article\",\r\n \"mainEntityOfPage\": { \"@type\": \"WebPage\", \"@id\": \"https:\/\/zuniclaw.com\/en\/director-rights-obligations-agreement-serbia\/\" },\r\n \"headline\": \"Is a Contract on the Rights and Obligations of the Managing Director the Right Choice for Your Business?\",\r\n \"description\": \"Contract on the rights and obligations of the managing director: what it is, key differences from an employment agreement, tax consequences and when to use it. 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The remuneration is taxed at a rate of 20% as 'other income'.\" }\r\n },\r\n {\r\n \"@type\": \"Question\",\r\n \"name\": \"When is a foreign director required to obtain a residence permit?\",\r\n \"acceptedAnswer\": { \"@type\": \"Answer\", \"text\": \"A foreign director engaged under a Contract on the rights and obligations of the managing director is required to obtain a single residence permit only if they stay in the Republic of Serbia for more than 90 days within a 180-day period. A director engaged under an Employment Agreement must obtain a single residence and work permit regardless of the number of days spent in Serbia.\" }\r\n },\r\n {\r\n \"@type\": \"Question\",\r\n \"name\": \"Can a director under this agreement be insured under another basis at the same time?\",\r\n \"acceptedAnswer\": { \"@type\": \"Answer\", \"text\": \"Yes. Engaging a director under a Contract on the rights and obligations of the managing director does not prevent that person from being insured under another basis at the same time, for example, as an employee of another employer.\" }\r\n },\r\n {\r\n \"@type\": \"Question\",\r\n \"name\": \"How long does a Contract on the rights and obligations of the managing director last?\",\r\n \"acceptedAnswer\": { \"@type\": \"Answer\", \"text\": \"A management agreement may last until the expiry of the term for which the director was elected, or until their earlier removal by the company's general assembly or supervisory board.\" }\r\n }\r\n ]\r\n }\r\n ]\r\n}\r\n<\/script>\r\n\r\n<\/body>\r\n<\/html>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Director Rights and Obligations Agreement | Zunic Law Updated: May 2026 | Next revision: November 2026 The managing director’s role in modern business structures undoubtedly goes far beyond the boundaries of formally managing a company. A director’s executive role is only a fraction of this significant figure of your business: this is the person who […]<\/p>\n","protected":false},"author":28,"featured_media":73605,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ai_generated_summary":"","footnotes":""},"categories":[91,96],"class_list":["post-73623","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-korporativno-pravo","category-ugovori"],"_links":{"self":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/comments?post=73623"}],"version-history":[{"count":18,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623\/revisions"}],"predecessor-version":[{"id":76121,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/73623\/revisions\/76121"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media\/73605"}],"wp:attachment":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media?parent=73623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/categories?post=73623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}