Starting a Business

Foreign investors may establish a company or enterprise in the form of:

JOINT STOCK COMPANY (a.d.);

LIMITED LIABILITY COMPANY (d.o.o.);

LIMITED PARTNERSHIP (k.d.);

GENERAL PARTNERSHIP (o.d.).

In practice, foreign investors usually choose to incorporate a LIMITED LIABILITY COMPANY (d.o.o.), considering the fact that the minimal obligatory pecuniary part of the initial capital of a L.L.C shall not be less than the dinar equivalent of US $ 5,000 that the limited liability company may have not more than 30 members, and the bearing risk for the transactions of the company to the extent of their investments.

General partnership (o.d.)	Members: 2 or more Investment: No requirements for minimum/maximum contribution; Contribution can be in money, property, rights, labor or services. Characteristics: All partners bear unlimited liability for the obligations of the partnership.
Limited partnership (k.d)	Members: 2 or more Investment: No requirements for minimum/maximum contribution. Contribution of the limited partner may be in money, property and rights but not in labor or services. Characteristics: At least one member (the general partner) has an unlimited liability for the obligations of the partnership and the liability of at least one member (the limited partner) must be restricted to the value of the agreed equity. Only an individual may be a general partner while the limited partner may be a natural person or a legal entity.
Limited Liability Company (d.o.o)	Members: 1 to 30 (natural person or legal entity). Investment: Minimum dinar equivalent of USD 5.000 for the pecuniary part of the initial capital; Minimum dinar equivalent of USD 500 for the pecuniary contribution of each partner. This amount may be smaller if shares are privileged. Minimum 50% of the founding capital and minimum 50% of the equity of each founder must be paid before the incorporation. If the pecuniary capital exceeds USD 15.000 at least 20 % of this sum must be paid before the incorporation. Equity may not be expressed in shares. Characteristics: Members are liable for the business of the company up to the value of their investment. The bodies of the LLC are: managing director, board of directors, supervisory board and in some cases Assembly of shareholders. No requirements for citizenship for the member of the bodies.
Joint Stock Company	Members: 1 or more for companies formed simultaneously (buying all the shares through the incorporation), 2 or more for companies formed successively (issue of the prospectus intended for third parties). Investment: Initial capital is divided into shares of specific value. Minimum dinar equivalent of USD 10.000 for the pecuniary part of the initial capital for companies formed simultaneously and USD 20.000 for the companies formed successively. Minimum dinar equivalent of USD 500 for the pecuniary contribution of each shareholder. The minimum par value of shares is the dinar equivalent of USD 5. This amount may be smaller if shares are privileged. A minimum 50% of the founding capital and minimum 50% of the equity of each shareholder must be paid before the incorporation If the pecuniary part of the initial capital exceeds USD 25.000 (simultaneous founding) and USD 50.000 (successive founding), it is necessary to pay at least 20% before the incorporation. Contribution of the limited partner may be in money, property and rights but not in labor or services. Characteristics: The bodies of the JSC are: managing director, board of directors, supervisory board (obligatory if more than 100 employees) and in some cases Assembly of shareholders.  No requirements for citizenship for the member of the bodies.

Incorporation procedure:

A company or an enterprise is incorporated according to a Memorandum of Associates (two or more founders) or a Decision on incorporation (one founder). These documents are to be in written form, signed and notarized. The incorporated procedure is the same for all forms of companies or enterprises.

The Memorandum of Association or decision on incorporation has to include the following:

1. Name and address of the company;
2. Founder's name and address. When the founder is a physical entity- the name, address, and the personal ID number of that person;
3. Business activities of the company. It is mandatory to list all services the enterprise will conduct
4. Invested/founding capital
5. Mutual rights, obligations and responsibilities between the founder and the company or the enterprise;
6. Conditions and manner of distribution of profit as well as risk covering;
7. Representation of a company or an enterprise;
8. Environmental protection, and
9. Other provisions stipulated by the Company Law

Depending on the intended business activities of the company or an enterprise, and before it starts operations, some of the following inspection approvals should be obtained:

The Market Inspection

The Sanitary Inspection

The Labor Inspection, and

The Environmental Inspection

The inspections are supposed to verify whether the stipulated conditions for the intended activities of a company or an enterprise have been met. If all the conditions for the intended activities have been met, the appropriate permits are issued.

The following documents have to be submitted to the Commercial Court Registry Dept:

1. Incorporation application form with all the required enclosures;
2. Memorandum of Association or a Decision on incorporation (courts application)
3. Proof of payment of initial capital or founder's share;
4. Verified signatures, deposited as registered entry, of authorized representatives for the enterprise/company to be registered;
5. Articles of Association of the enterprise or company
6. As soon as the court verifies that all the legal conditions have been met, it issues the Decree of Incorporation of the enterprise. This Decree is then deposited with the appropriate Registration Department.
7. Finally, a company or an enterprise has to open an account with the Public Accounting Service (NBY-ZOP), as well as an account with a commercial bank of its choice.

 

Foreign company's representative offices

A representative office in FR Yugoslavia may be opened by:

one or more foreign persons engaging in an economic or banking/financial activity and/or insurance;

any national or international organization whose members are foreign persons engaging in business operations;

any national or international organization working towards the advancement of trade with Yugoslavia.

The representative office does not have the status of a legal entity; it may have one or more branches in Yugoslavia. The representative office cannot be opened in the field of armaments and military equipment.

The representative office may start working after being entered in the Register of Representative Offices of Foreign Persons in Yugoslavia, kept at the Federal Ministry of Foreign Economic Relations and may perform only the operations that have been entered n the Register.

The application to be entered in the Register shall contain the following:

Title of the founder's firm

Title of firm and address of the representative office

Business activity of the representative office

Number of employees of the representative office

The following shall also be attached to the application:

Foreign person's certificate of registration issued by the authorities of its domicile country

The original or its photocopy authenticated by the registering authority or by a notary public and its translation by court translator,

Representative office's program of activity

Foreign person's statement assuming liability for any commitment arising in Serbia in connection with the representative office's operations

Permanent or temporary Serbian residence permits for foreign nationals to be employed in the representative office

Precision appointing the manager of the representative office

Bank guarantee that it shall meet all commitments, if the founder is a foreign legal entity whose paid- up initial capital share is less than US $ 5,000.00

Contract on the founding of the joint representative office if two or more foreign persons are opening the representative office. The foreign representative office may also employee Yugoslav citizens, upon which local labor regulations are applied to.