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

Law on Trade Companies (2004, Law).

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

Yes, the LLC possesses separate legal personality.

(Maximum) period of existence

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

Governing document(s)

The LLC is governed with the Articles of Association (AoA) and the provisions of the Law.

Liability of incorporators / shareholders

Incorporators/shareholders are not personally liable for the LLC’s liabilities. They are liable to the LLC up to the amount of the share capital interest acquired by them in the LLC until the payment of the full amount of the monetary compensation for such interest. Yet, they will be unlimitedly and jointly liable for the LLC’s obligations in limited situations of piercing the corporate veil.

(Governing) bodies

Shareholders adopt decisions at a Shareholders Meeting or by way of correspondence. The LLC can be managed by a single or multiple managers. The AoA can provide for establishment of a Supervisory Board, or an election of a Controller of the LLC. If this is not the case, the shareholders themselves perform the supervision, individually or jointly.

Other particularities

NA

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 LLCs and companies from the European Union, which shall become applicable as of the day of accession of the Republic of North Macedonia to the European Union.

Can this type of entity be publicly listed or held?

No.

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 in order to commence the incorporation procedure:

• Identification documents of the shareholder/s and manager/s of the LLC;
• The Resolution/power of attorney of the shareholders to establish a LLC in North Macedonia, appoint its manager/s and authorise the representation of the shareholder/s before the authorised registration agent during the procedure for registration of the LLC;
• AoA of the LLC;
• Proof of the payment of the share capital (if it is paid prior to the registration of the LLC);
• Statement of acceptance of the appointment as manager/s of the LLC and other statements given by the manager/s and/or shareholder/s;
• Decision on the appointment of a Supervisory Board/Controller (if one is appointed);
• Forms containing signatures of the LLC’s representatives;
• Report on the appraisal of the value of any in-kind contribution; and
• Proof of registration of the ownership right from a competent public record if any in-kind contribution is in real estate, or movable assets subject to such registration.

Involvement of notary, company register, governmental authorities

Some documents must 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. The LLC 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 registration agents.

Timing (estimate)

The required time for incorporation is four (4) hours after the submission of the complete documentation. However, the procedure could take up to five (5) business days from the date of submitting of the complete documentation.

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

Main costs are legal fees, translation (if applicable) and notarisation costs. Establishment of a company is free of charge for the procedure before the Central Registry.

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

The prevailing business activity of the LLC classified in accordance with the National Classification of Business Activities, must be stated in the AoA and registered with the Trade Registry.

Minimum number of incorporators / shareholders and residency requirements

The LLC can be incorporated by one (1) or more (maximum 50) natural persons or legal entities. There are no residency requirements for the shareholders. However, if shareholders or managers of a LLC come from a country which is determined to be as of high risk under applicable anti-money laundering regulation, it could cause difficulties or even restrictions when trying to open or operate with a bank account in North Macedonia.

When dealing with transactions and clients originating from countries which are considered as high risk under the anti-money laundering regulation of North Macedonia, local banks are required to apply special procedures and request additional information and documentation. After individual assessment, the bank may even refuse to open the bank account or reject the transaction.

The current list of high-risk countries includes Angola, Iran, Democratic People’s Republic of Korea, Ecuador, Ethiopia, Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe.

In addition to the list of countries which is provided by the law, the banks usually have additional internal lists of countries which they consider as jurisdictions with substantial money laundering and terrorist financing risks, in which case further information and documentation may also be requested from clients.

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

The LLC must have at least one (1) manager upon incorporation. If the manager is a foreign natural person that intends to stay and work in North Macedonia, 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)

The minimal value of the basic share capital must be at least EUR 5,000.00 in MKD counter value. The amount of the share capital has to be expressed in a round number divisible by 100. The monetary share of the share capital does not have to be paid in prior to the registration; but it has to be paid in within one (1) year after the registration of the LLC. Prior to filing for registration, shareholders are required to provide an appraisal report for any in-kind contributions, drafted by an authorised court expert. 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 managers can authorise a third person by power of attorney 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 LLC.

What is the title of the applicable company registry?

Trade Registry in scope of the Central Registry of the Republic of North Macedonia.

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 LLC;
• Company’s number and tax number;
• Prevailing business activity of the LLC;
• Identification and address information of the shareholder/s (only direct ownership);
• Identification and address information of the manager/s, Supervisory Board/Controller (if applicable);
• Amount of the basic share capital and details regarding whether it has been duly paid;
• Date of adoption of the AoA (the AoA is submitted together with the application);
• Duration of the LLC (if applicable);
• Authorisation for the LLC’s representation;
• E-mail address of the LLC; and
• Web page and telephone number if the LLC has them.

The Central Registry issues information from its various registers, such as excerpts of registered entities, information on the LLC’s accounts, insolvency and liquidation information, information on liens and encumbrances in the shares/assets of the LLC 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?

The LLC can be managed by a single or multiple managers. The main tasks and responsibilities are determined with the AoA. Otherwise, the manager can undertake all legal actions and activities that are connected and common to the management activities and are in the LLC’s interest. Also, the manager represents the LLC in its relations with third parties.

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

The shareholder/s decide upon the appointment of a manager. The first manager upon incorporation of the LLC can be appointed with the AoA or by a separate decision. The SPLLC is managed by the shareholder, or a person appointed by the shareholder.

The manager can be dismissed by a decision of the shareholder/s or can resign from its duties in writing.

Any changes related to the manager/s personal data or limitation of authorisations, must be registered with the Trade Registry.

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

A natural person with legal capacity can be appointed as director of an LLC. If the LLC has three or more directors, they can jointly manage the company as the management body in the manner prescribed in the AoA.

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?

No.

Note that the LLC’s corporate governance can be organised as either:

• One-tier system: Besides the Shareholder’s Meeting, the LLC has one (1) or more managers.
• Two-tier system: Besides the Shareholder’s Meeting, there is a Supervisory Board or Controller as a separate supervisory and controlling body and one (1) or more managers. The Supervisory Board consists of at least three (3) members, appointed by the Shareholder’s Meeting. The Supervisory Board appoints and controls the work of managers.

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

Shareholders adopt decisions at a Shareholder’s Meeting or by way of correspondence. In the case of a SPLLC, the functions of the Shareholder’s Meeting are performed by the shareholder itself.

The Shareholder’s Meeting (i) adopts the annual account and the annual financial reports, as well the annual report on the LLC's operations for the previous business year and decides upon the distribution of the profit and covering of losses; (ii) appoints and dismisses the manager/s and the members of the Supervisory Board/Controller; (iii) decides upon the amendment of the AoA; and (iv) approves the conclusion of agreements between the LLC and its shareholders/managers.

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

Decisions of the shareholders at the Shareholder’s Meeting are made by a majority vote. The number of votes is based on the contributions of the shareholders (each amount of the contribution equal to EUR 100 confers one vote) which are present at the Shareholder’s Meeting, unless the AoA or the Law provide for a larger majority.

At the Shareholder’s Meeting (or by way of correspondence) decisions are adopted by majority of the votes from the quorum described above, unless the Law and the AoA provide for a larger majority.

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

No, depending on size of a company (micro, small, medium, or large), it could have different obligations related to annual financial accounts and reports.

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

The LLC is obliged to (i) keep accounting records; (ii) keep trade 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 a competent 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. This way, all shareholders can have access to the approved financial and annual reports.

Is the entity permitted to determine its own financial year?

No, for the purposes of annual accounts and annual reports, one (1) calendar year is considered as one (1) business year.

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

An LLC which is categorised as a large or medium sized commercial entity is subject to audit. The Shareholder’s Meeting elects the authorised auditor. The LLC is obliged to obtain an audit opinion on the financial reports not later than one (1) month before the Shareholder’s Meeting.

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

Save for some specific business (e.g. insurance, healthcare etc.), there is no requirement to have a minimum number of employees or to have employees with specific qualifications. Also, certain documents such as the annual account and annual report must be prepared by an (authorised) accountant, either an external one or an accountant employed in the LLC.

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

Share.

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

There are no different classes of ownership interests in LLCs.

What documentation is required for the transfer of ownership interests?

The basic set of documentation required for the transfer of ownership interests consists of:

• Consolidated text of the AoA;
• Decision to amend the AoA;
• Share Purchase Agreement (SPA), concluded before a notary public;
• Offer of share transfer by the seller;
• Statement confirming acceptance of the offer by the buyer;
• Statement that the existing shareholders with pre-emptive rights refused the offer for share transfer (if applicable);
• Decision on amendment of the shareholder (withdrawal and takeover of shares);
• Statement in accordance with article 32 of the Law;
• Identification document for both sides of transaction, as follows: Passports for foreign natural persons, ID cards for local residents and excerpt from competent registries for legal entities, which may not be older than one (1) month at the moment of notarisation (if applicable, notarised and apostilled for foreign persons and entities);
• Certificates of paid taxes and customs duties for both sides of the transaction;
• Power of attorney for the registration agent carrying out the procedure; and
• Power of attorney; duly notarised in event a third party is signing on behalf of the shareholder/s or the manager/s.

All documentation in foreign languages must be translated into Macedonian by a certified court translator and notarised.

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

The SPA must be signed before a notary public. The entire documentation is filed with the Central Registry for processing and the procedure is considered complete with the issuance of a resolution by the Central Registry.

Depending on the country of notarisation or issuance, further legalisation of documents could be required.

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

The SPA must be signed before a notary public for which a notary fee is applicable. Depending on the country of notarisation of documents, additional legalisation may be required for which stamp duties may be applicable in the country of origin of the document. All documents on foreign language have to be accompanied with a certified translation, duly notarised by a competent public notary in North Macedonia for which stamp duties are applicable.

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

LLCs in the Republic of North Macedonia do not issue shares. Shares are recorded in an internal Book of Shares, administered by the manager of the LLC. The share of each shareholder and its payment obligation are regulated with the AoA.

Shareholders may decide to increase the share capital of a company, either by increasing their own contributions, hence shares, or by inviting a new shareholder into the LLC.

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?

"In-kind" (non-monetary) share capital contributions in general must be appraised by a certified court expert and the appraiser’s report must be submitted together with the other corporate documentation necessary for the registration of the company in the Central Registry. Тhe appraisal procedure takes around 10 business days on average. If the value of the in-kind contribution does not exceed half of the value of the basic share capital, the Law provides for an exception to the requirement of a certified appraisal of the assets which form the in-kind contribution. Namely, the founders can unanimously decide not to appraise the value of the in-kind contribution, if the value of one in-kind contribution is less than EUR 5,000, and if the total value of the in-kind contributions in their entirety does not exceed one half of the basic share capital. In such a case, prior to filing for registration at the Central Registry, the shareholders are required to prepare a report for the in-kind contributions, stating that the value of the in-kind contribution is not less than the value of the contribution invested.

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

The Law does not include an option for share cancellation, however, in the AoA, the shareholders could agree that a shareholder could withdraw from the company. In such case, the AoA determines the requirements, the procedure, and consequences of the shareholder’s withdrawal from the company.

In addition, shareholders may decide to decrease the share capital of the LLC. However, they cannot decrease the share capital to less than the determined minimum, which is EUR 5,000. The decision determines the scope and the purpose for the decrease of the basic capital, as well as the manner in which the decrease is conducted.

Any requirements with respect to distributions to shareholders?

The shareholders have the right to an appropriate share of the profit, unless the right to profit participation is limited or excluded with the AoA.

The AoA provides for the manner of deciding upon the distribution, the distribution time, the right, if any, of the manager to determine the distribution according to the criteria and guidelines determined at the Shareholder’s Meeting, the manner of keeping records regarding the distribution, as well as the amount which each shareholder is entitled to, any restrictions during distribution and other issues, subject to the Law and the AoA.

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

The shareholders may conclude a separate Shareholders Agreement which regulates the relationship between the shareholders in respect of certain issues related to the operation of the company and is effective among the shareholders. However, the Shareholders Agreement is not a document necessary for incorporation and is not registered at the Central Registry.

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

The company must maintain a manager, who in turn will be responsible to prepare and submit the annual account and annual report of the company. 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 LLCs/SPLLCs have an obligation to register their ultimate beneficial owners – that is the natural persons who ultimately own or control the LLC through direct or indirect ownership of the LLC, or a natural person who has a high managing position within the LLC, i.e. natural person who is authorized by law and the internal acts to manage and is responsible for the work of the LLC. The UBO must be registered within fifteen (15) days as of the day of incorporation of the LLC, or within fifteen (15) days as of the day of change of the data of the UBO, for already incorporated LLCs, free of charge. In case of failure to register the UBO in the mentioned period, the LLCs 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.