Corporate Legislation Changes Adopted

by ZS Law

The Law on Amendments to the Company Law (“ACL”) and the Law on Amendments to the Law on the Centralised Records of Beneficial Owners (“ALCRBO”) were published in the “Official Gazette of the Republic of Serbia”, No. 91/2019 on December 24, 2019 and the smaller part of the ACL’s provisions as well as the ALCRBO will come into force on January 1, 2020, while the bigger part of the ACL’s provisions will come into force on April 1, 2020.

According to the ACL, employees, investors or consultants will be able to acquire a share in a limited liability company and thus profit from the future success of that company. The right to acquire a share in a company became a new financial instrument, regulated by new legal institute – the reservation of a company’s own share. This financial instrument will allow acquiring a share in a company on a specific date and at a certain price. Such ownership inscription will not be subject to tax or brokerage charges.

The main goal of these changes is to further stimulate the IT industry and start-ups, given that such companies have limited resources at the initial stage of business, and therefore are not able to reward high-quality staff with high salaries.

The ACL will also allow employees and shareholders to participate in the distribution of profits, as well as increase the percentage of own shares that a joint stock company can distribute to employees and board members from current 3% to 5%. The percentage of the share of all reserved own shares in a company’s share capital shall not be higher than 40%, and the right to acquire the share shall not be considered as a public offering.

When it comes to the ALCRBO, the key objective to be achieved by this piece of legislation is to improve the existing system for detecting and preventing money laundering and terrorist financing. In addition, one of the goals is to harmonize domestic legislation with all international standards in this field. The proposed solutions will eliminate dilemmas and different interpretations in practice regarding exercising control over registered entities, by dividing control competencies between the National Bank of Serbia, the Ministry of Economy and the Business Registers Agency.

If you have any additional questions or need further information regarding this matter, please contact Igor Živkovski, Živković Samardžić Corporate and M&A Partner, who was a member of the Working Group that prepared the ALCRBO.

You may also like