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Limited Liability Company - Друштво со ограничена одговорност

Joint Stock Company - Акционерско друштво


What is the main source of law authorising this entity form?

Law on Trade Companies (2004, Law).

Certain JSCs, including banks, insurance companies and other financial institutions are additionally regulated with specific laws which contain differing provisions from the presented in this questionnaire.


Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

Yes, the JSC possesses separate legal personality.

(Maximum) period of existence

There is no maximum period of existence; the JSC can be established for a definite or indefinite period of time.

Governing document(s)

The JSC is governed with its founding Statute (Statute), its amendments, the Law and other applicable laws and regulations such as the Securities Law etc.

Liability of incorporators / shareholders

Incorporators/stockholders are not liable for the JSC’s liabilities. Yet, they will be unlimitedly and jointly liable for the JSC’s obligations in limited situations of piercing the corporate veil.

(Governing) bodies

Stockholders exercise their rights in the JSC at the Assembly. The management of the JSC can be organised either as one-tier system (Board of Directors) or two-tier system (Management Board or Manager and Supervisory Board).

Other particularities

The JSC can be incorporated either (i) simultaneously without a public notice for subscription of shares (Simultaneous Incorporation); or (ii) successively with a public notice for subscription of shares (Successive Incorporation).


Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

The Law contains provisions regulating international restructurings between Macedonian JSCs and companies from the European Union, which will become applicable as of the day of accession of the Republic of North Macedonia in the European Union.


Can this type of entity be publicly listed or held?

Yes.


Can this type of entity be used for a non-profit or charitable organization?

No.





Give a brief summary of the process of incorporation, formation, or organization, including

Main documents required

The following documents are required to commence the incorporation procedure:

  • Statute of the JSC;
  • Powers of attorney given by the incorporators and legal representatives of the JSC;
  • Identification documents of the relevant entities and/or natural persons acting as incorporators/stockholders;
  • Statements given by the relevant bodies and/or natural persons;
  • Evidence for the paid amount issued by the bank in which the payment of the shares was made;
  • Prospectus on the basis of which the entire or part of the basic capital is registered (in case of Successive Incorporation);
  • Contracts for the issuance of stock for non-monetary consideration;
  • Assessment of in-kind deposit by an authorised court expert;
  • Proof of ownership obtained from public records;
  • Decisions on the election of the members of the management body and the supervisory body;
  • Calculation of the establishment costs of the JSC; and
  • Founding report and founding audit report.
Involvement of notary, company register, governmental authorities

Some documents should be notarised (e.g. power of attorney) by a competent public notary. Depending on the country of notarisation of documents, additional legalisation may be required. All documents in a foreign language have to be accompanied with a certified translation, duly notarised at a competent public notary in North Macedonia. Also, in case of Successive Incorporation, a public notary opens and keeps minutes from the Incorporation Assembly. The JSC is incorporated with the registration in the Trade Registry in the Central Registry of the Republic of North Macedonia (Central Registry). The procedure is conducted through specially appointed registration agents.

Timing (estimate)

The required time for incorporation is up to 15 business days from the date of submitting the complete documentation.

Main costs, including registration and similar fees (excluding legal fees)

Main costs are administrative fees, translation (if applicable) and notarisation costs.


Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The prevailing business activity of the JSC must be stated in the Statute and registered with the Trade Registry.


Minimum number of incorporators / shareholders and residency requirements

The JSC can be incorporated by one (1) or more natural persons or legal entities. There are no residency requirements for incorporators.


Minimum number of directors (or other applicable officers) and residency requirements

One-tier system: Board of Directors. It has between three (3) and 15 members. It consists of two (2) types of members – non-executive and executive, and the number of executive members should be smaller than the number of non-executive members.

Two-tier system: Management Board or Manager. The Management Board has between three (3) and 11 members. If the JSC has a basic capital less than EUR 150,000, a Manager can be appointed instead of a Management Board.

If a director is a foreign natural person that intends to stay and work in the country, this person would have to acquire an adequate residence and work permit in order to perform his or her duties in the Republic of North Macedonia. Residence is also relevant for tax purposes.


Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

Generally, the minimum nominal amount of the basic share capital differs depending on whether the JSC is incorporated by:

  • Simultaneous Incorporation – the minimum basic share capital is EUR 25,000 in MKD counter value; or
  • Successive Incorporation –the minimum basic share capital is EUR 50,000 in MKD counter value.

The nominal amount of one (1) share cannot be less than EUR 1.

If the contributions are paid in cash prior to submitting the application for incorporation of the JSC, at least 25% of the nominal amount of each share must be paid, and if the share is issued at an amount greater than its nominal amount, the whole amount exceeding its nominal amount must also be paid. The payment of the remaining amount can be completed in one (1) or several instalments, generally within a period not longer than three (3) years of the date of incorporation of the JSC.

Prior to submitting the application for incorporation, the total amount of all monetary payments must not be less than EUR 12,500 – i.e. EUR 25,000 in MKD counter-value. The in-kind contribution must be fully paid.

If the stock is partially paid in cash, and partially by entering an in-kind contribution, the portion paid in cash must be fully paid, prior to submitting the application for incorporation. Procedures for opening a bank account and payment of contributions differ, depending on the bank that is selected.


Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No, incorporators and directors can authorise a third person by power of attorney in a prescribed form to represent them in the incorporation procedure.


Is a tax identification number, or equivalent, required? If so, how is it obtained?

A unique tax identification number is granted when registering the taxpayer in the Register of taxpayers that is kept in the Public Revenue Office of the Republic of North Macedonia, which happens simultaneously with the registration of the JSC.





What is the title of the applicable company registry?

Trade Registry in scope the Central Registry of the Republic of North Macedonia and the Central Securities Depository.


What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles , Ownership identification (direct and/or indirect ownership, 'beneficial owners') , Group structure , Share capital , Directors , Accounts , Insolvency, good-standing, liquidation , Liens and encumbrances on the shares , Liens and encumbrances on assets of the entity , Other (e.g. litigation, tax matters)

The information that has to be filed in the Central Registry, includes:

  • Business name and the head office of the JSC;
  • Prevailing business activity of the JSC;
  • Identification and address information of the incorporator/s;
  • Identification and address information of the members of the managing body and the Supervisory Board;
  • Amount of the basic share capital and the number of the issued shares;
  • The total number of paid in shares;
  • Duration of the JSC (if applicable); and
  • Authorisation for the JSC’s representation.

Any change of the above, except the incorporator’s information, must be registered with the Trade Registry.

The above information is publicly available except the incorporators information. As an exception, information about stockholders holding over 5% of shares (direct ownership) in (i) a JSC whose shares are listed on the stock exchange and/or (ii) a JSC with special reporting obligations as defined by law, are publicly available and can be obtained from the web site of the Central Securities Depository.

The Statute is submitted together with the application.

The Central Registry issues information from its various registers, such as excerpts of registered entities, information on the JSC’s accounts, insolvency and liquidation information, information on liens and encumbrances etc. These are all publicly available documents, subject to payment of an administrative fee.





What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

One-tier system: Board of Directors. It has between three (3) and 15 members. It consists of two (2) types of members – non-executive and executive, and the number of executive members should be smaller than the number of non-executive members. The JSC is managed by this body. The executive members manage the operations of the JSC and have the broadest authorisations which include representation of the JSC in the relations with third parties.

Two-tier system: Management Board or Manager. The Management Board has between three (3) and 11 members. If the JSC has a basic capital less than EUR 150,000, a Manager can be elected instead of a Management Board. This body manages the JSC and represents it in its relations with third parties.


How are the members of the executive body appointed, dismissed and replaced?

One-tier system: Board of Directors, appointed by the Assembly. The manner of appointing executive members is determined in the Statute. The Board of Directors elects its president from its non-executive members by a majority of the votes cast by the total number of members of the Board of Directors. The president can be dismissed, and a new one can be elected at any time. The Assembly can dismiss all members of the Board of Directors before the expiration of their term of office with a majority of the votes cast by the voting shares represented at the Assembly (if a higher majority is not envisaged), and at the same time can elect their replacements. An executive member can be dismissed by the Board of Directors at any time, and his or her function as a member of the Board of Directors will be held in abeyance until the Assembly which will decide on when the dismissal shall take place.

Two-tier system: The Management Board or Manager is elected by the Supervisory Board, which also appoints its president. The president can be dismissed, and a new one can be elected at any time. The Supervisory Board can dismiss one (1) or all members of the Management Board at any time, and at the same time elect its/their replacement(s).


Is it possible to appoint corporate directors or must all directors be natural persons?

No, only natural persons can be elected as members of the Management Board.


Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

One-tier system: Non-executive members of the Board of Directors, elected by the Assembly. Independent members are elected from among the non-executive members (at least one quarter of the non-executive members must be elected as independent members). The number of non-executive members must be greater than executive members. The Board of Directors elects its president from its non-executive members by majority votes out of the total number of members of the Board of Directors. The president can be dismissed, and a new one can be elected at any time. The Assembly can dismiss all members of the Board of Directors before the expiration of their term of office with majority of the votes from the voting shares represented as the Assembly (if a higher majority is not envisaged), and at the same time elect their replacement. The non-executive members generally have supervisory authorisation.

Two-tier system: Supervisory Board. This board has at least three and no more than 11 members, elected by the Assembly which specifies which members are elected as independent members of the Supervisory Board (at least one quarter of the members must be elected as independent members). The president of this body is elected by a majority of the votes cast by the total number of its members, which president can be dismissed, and a new one can be elected at any time. The Supervisory Board supervises the management of the JSC by the Management Board. The Assembly can dismiss all members of the Supervisory Board before the expiration of their term of office with a majority of the votes from the voting shares represented as the Assembly (if a higher majority is not envisaged), and at the same time elect their replacement.


What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

Stockholders exercise their rights in the JSC at the Assembly. Each stockholder registered in the stockholders book has, from the day of the entry, the right to participate in the operations of the Assembly and the right to vote. The Assembly: (i) approves amendments of the Statute; (ii) approves the annual account, financial statements and the annual report of the JSC’s operation for the previous business year, and decides on the distribution of the profits; (iii) approves the amendment of the rights attached to particular types and classes of stocks and issuing stocks and other securities; (iv) authorises increases or decreases of the JSC’s basic capital; and (v) appoints the authorised auditor to audit the annual account and other financial statements.

The Annual Assembly: (i) examines and adopts the annual account, financial statements, and annual report on the JSC’s operation in the previous business year; (ii) decides about the use of the net profit or covering the losses; and (iii) approves the work of the members of the management body and Supervisory Board.


What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Unless the Statute or the Law specifies a larger majority, the Assembly can operate, if verified participants (holding at least majority of the total number of the voting shares) are present at the session.

The decisions of the Assembly are adopted with majority vote of the voting shares represented at the Assembly, unless the Law and the Statute determine a greater majority or prescribe other conditions.


Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

A JSC whose shares are listed on the stock exchange and a JSC with special reporting obligations as defined by law must have an Audit Committee formed by the Supervisory Board. The Audit Committee is responsible for conducting supervision over the risk management of the JSC and the internal control, financial reporting and the operation of the external auditor.


What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The JSC is obliged to (i) keep accounting records; (ii) keep trading books in a way that makes it possible to see all commercial legal matters undertaken, the balance of assets, liabilities, equity, incomes and expenditures; (iii) prepare a listing of the assets and obligations at least once in the business year and harmonise the accountancy condition of the assets and obligations with the factual condition determined with the listing; and (iv) adopt annual accounts and annual reports (the deadline for their preparation cannot be longer than two (2) months after the business year has passed, unless extended by acompetent authority). There is an automatic extension until 15 March each year, for annual accounts submitted online.

The Manager files the approved financial reports, together with the annual report on the operation of the company with the Registry of Annual Accounts administered at the Central Registry within 30-days as of the day they were approved, but not later than 30 June of the ongoing year.

The JSC is also obliged to prepare and submit to the Securities and Exchange Commission of the Republic of North Macedonia an annual report on its financial results, legal status, and operation within five (5) months after the end of each calendar year. Among other matters, this report contains the financial statements prepared in accordance with international financial reporting standards, together with the opinion of a certified auditor prepared in accordance with international auditing standards.


Is the entity permitted to determine its own financial year?

No, for the purposes of annual accounts and annual reports, the calendar year is considered as the business year.


Is the entity subject to any statutory (external) auditor obligations?

A JSC which is categorised as a large or medium sized commercial entity, as well as a JSC whose shares are listed on the stock exchange are subject to audit. The Assembly elects the authorised auditor. The JSC is obliged to obtain an audit opinion on the financial reports one (1) month before the Assembly at the latest.


Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The supervisory body of the JSC is obliged to organise an internal audit service as an independent organisational unit. JSCs must appoint an internal auditor. The internal audit service performs constant and full audits of the legality, regularity, and effectiveness of the work of the JSC.





What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?

Stock.


Are different classes of ownership interests possible? If so, what are some examples of different classes?

A JSC may issue different types of stock, including:

  • Common stock, which provides the stockholder with (i) voting rights in the JSC assembly; (ii) right to dividends; and (iii) right to receive distribution of portion of the remainder of the liquidation assets that is the bankruptcy estate of the JSC; and
  • Priority stock, which besides the rights of the common stock mentioned above, shall have various other priority rights such as right to dividend in a predetermined monetary amount or percentage of the nominal value of the stock, the priority right to payment of dividend, right to distribution of the remainder of the liquidation, that is, bankruptcy estate, and other rights determined by the Statute. Unlike common stock, priority stock may be issued without the right of vote. Priority stocks are furthermore divided in classes which may be:
    • Cumulative stocks which grant the stockholder the right to payment of accumulated unpaid dividends before the payment of any dividend to the owner of common stocks; and
    • Participative stocks which grant the stockholder, besides the fixed dividend, the right to payment of dividends which belong to the owners of common stock.

What documentation is required for the transfer of ownership interests?

Decision on alienation of stocks which is submitted to the Securities and Exchange Commission of the Republic of North Macedonia.

When trading stock, an agreement with a stockbroker will be necessary.


Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer must be recorded in the Central Securities Depository.


Are there any applicable stamp duties imposed when transferring ownership interests?

No.


How are shares issued? (including information on payment obligations, registration requirements)

Shares are issued by a two-thirds decision of the voting shares of the Assembly, unless the Statute prescribes a larger majority. The shares are registered in the book of stock which is kept at the Central Securities Depository in electronic form.


Further information on equity contributions, e.g. , Non-cash payments on shares; (Share premium) contributions without issuance of shares , Can partially paid shares/ownership interests permitted and what are the restrictions on them?

When a non-monetary deposit is made when the JSC is incorporated, it must be paid in full before the application for registration of the JSC is submitted in the Central Registry. If during the filing of the application for registration of the JSC, the contribution does not reach the value of the amount of the debt taken out, then the shareholder must pay the difference in money. Full payment of the non-monetary contribution must be made in such a way that the JSC can freely dispose of it as of the date of registration of the establishment of the JSC.

An assessment by one (1) or more certified court experts is mandatory for the estimation of the value of the non-monetary contribution that is paid to the JSC. The Statute of the JSC should include data on the natural/legal entity entering the non-monetary deposit, as well as a more detailed description of the non-monetary contribution and its estimated value expressed in monetary means.


Any requirements with respect to share cancellation, share repurchase and other capital reductions

The JSC may acquire personal shares with repurchase, by itself or through a party acting in its name and on the behalf of the JSC. The repurchase of personal stock is valid under the following conditions –

  • the Assembly adopts a decision for acquiring personal stocks with repurchase, determining the manner of repurchasing, the maximum number of shares to be acquired, the time when the repurchase should be executed, which cannot be longer than 12-months as of the day of adopting the decision on acquiring personal shares, and the minimum and maximum counter value that can be paid for the shares;
  • the nominal value of the acquired stock, along with the stock previously acquired by the JSC, that is in possession of the JSC not exceeding one-tenth of the basic capital;
  • that acquiring the personal shares does not lead to reduction of the assets of the JSC below the amount of the basic capital and the reserves, which, in accordance with the Law or the Statute the JSC is obliged to maintain, and which cannot be used for payments to the stockholders; and
  • only shares fully paid can be acquired with repurchase.

As an exception, the JSC can acquire personal shares contrary to the conditions above when the acquisition of personal shares is required in order to prevent severe and direct damage to the JSC.

Additionally, the JSC can be authorised by its statute to issue shares with the right of the JSC to repurchase those issued shares within a certain period, though the repurchase shall have legal effect only if certain conditions are met.

The reduction of the capital is carried out by a decision of the Assembly with majority votes of at least two-thirds of the voting shares represented at the Assembly, unless the Statute determines a greater majority. If there are several types of stock, the decision shall be valid if the stockholders of each type of stock provide their consent by a majority that cannot be lower than the two-thirds majority referred to above. The stockholders of each type of stock must adopt a decision for providing consent.

Simplified reductions of capital and the reduction of basic capital by withdrawing shares are also possible in circumstances stipulated within the Law.


Any requirements with respect to distributions to shareholders?

The stockholders shall be entitled to participate in the profit, except if in accordance with the decision of the assembly on utilisation of the profit, adopted on the basis of the law and the statute, the profit is excluded from distribution among the stockholders.


Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Shareholder agreements are possible between shareholders which provide minority stockholders the opportunity to create critical stockholder mass – i.e. a percentage of the shares needed to exercise certain rights and take advantage of specific legal possibilities. The Law does not regulate the explicit conclusion of such agreements, but explicitly determines which types of agreements are prohibited, such as agreements by stockholders which infringe on the rights and interests of other stockholders, or agreements by which a stockholder is obliged to use its voting rights in a way prescribed by the Board of Directors or Management Board, or agreements by which the stockholder is obliged to vote on all suggestions of the Board of Directors or Management Board.





Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The JSC will be responsible to prepare and submit the annual account and annual report of the JSC. Accounting costs may also be incurred annually, and the applicable tax filings must be made.


What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The general corporate tax rate in the Republic of North Macedonia is 10%. Various exemptions and special rules may apply.





Summary of any specific matters, e.g. recent or prospective major legal developments

In January 2021, the Registry of Ultimate Beneficial Owners (UBO Registry) under the authority of the Central Registry was established. Entities, including JSCs have an obligation to register their ultimate beneficial owners – that is a natural person who ultimately owns or controls the JSC through direct and/or indirect ownership of a sufficient percentage of the stocks or voting rights, as well as through other ownership interest in the JSC, including through bearer stocks or other form of control, or a natural person who has a high managing position within the JSC, i.e. natural person who is authorized by law and the internal acts to manage and is responsible for the work of the JSC.

The UBO must be registered within fifteen (15) days as of the day of incorporation of the JSC, or within fifteen (15) days as of the day of change of the data of the UBO, for already incorporated JSCs, free of charge. In case of failure to register the UBO in the mentioned period, the JSCs will have to pay a fee, the amount of which depends on the size of the entity and period of delay. Fines amounting up to EUR 15,000 are prescribed for not complying with the obligation for registering the UBO information in the UBO Registry.

There are no imminent major legal developments expected.




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