New Amendments to the Companies Act

Upon conducting the legal procedure, the Law on Amendments to the Companies Act (hereinafter: the Law) entered into force on November 27, 2021., introducing certain novelties and clarifications to the basic state act which regulates the forms and manner of performing an economic activity in the Republic of Serbia.

In the previous period, great attention was paid to the institute of compulsory liquidation of companies, which implementation has finally begun and through which a large number of companies were deleted from the competent register. The implementation of compulsory liquidation opened a number of legal issues, especially in the situations where the reason for compulsory liquidation was the failure to submit annual financial reports. The practice has shown that this reason cannot be eliminated despite the will of some companies to fulfill their legal obligation and in that way save themselves from deletion from the register and cessation of existence.

The Law specifies and amends the provisions on compulsory liquidation and now separates the reversible and irreversible reasons for compulsory liquidation and accordingly predicts different deadlines and processes for compulsory liquidation. Also, the Law gives the priority to the bankruptcy proceedings ie it stipulates that in case the previous bankruptcy proceedings are opened during the compulsory liquidation proceedings, the compulsory liquidation proceedings shall be interrupted and the same shall be suspended in case the bankruptcy proceedings are opened.

The responsibility of the members of the company in case of deletion of the company in the procedure of compulsory liquidation is now provided in the basic provisions of the Companies Act, besides the responsibility that exists in the case of piercing the corporate veil institute.

The Law also regulates the issue of the company’s registered office in more detail and explicitly prescribes the possibility for an interested person to file a lawsuit to the competent court, thus requesting deletion of the registered address of the company’s registered office, if the person who has the ownership on the space, has not allowed the use of that space for management. The procedure for such a lawsuit is urgent and it will enable the owners of space (business premises, apartments, houses) to be protected from inconveniences they may have due to the fact that the company’s headquarters is registered at their address against their will.

The Law also introduces various obligations for companies, therefore, all companies will have to register as users of e-government services, in addition to the already existing obligation to have a registered address for receiving e-mails. The implementation of this Companies Act provision begins 18 months after the Law is entered into force.

For public joint-stock companies, a number of obligations regarding the remuneration of directors and members of the supervisory board if the management of the company is two-tier has been introduced. The obligation to have a remuneration policy for these persons, annual reporting on remuneration, procedures for discussing and voting on them at the shareholders’ assembly, and the manner of availability of acts related to remuneration to the management bodies of public joint-stock companies are prescribed.

The Law also specifies the provisions related to special duties towards the company, namely the provisions on the duty to report jobs and activities in which there is a personal interest. In accordance with that, the Law changes the legal description of criminal offenses prescribed in the Companies Act, and in accordance with the amendments, new economic offenses are prescribed for companies and responsible persons.

The implementation of the Law started on November 27, 2021., except for certain provisions for which, the implementation is postponed until June 1, 2022. The public stock companies are obliged to harmonize with Law provisions within a year from the date when the Law is entered into force.