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

The Company Law (Official Gazette of the Republic of Serbia Nos. 36/2011, 99/2011, 83/2014, 5/2015, 44/2018, 95/2018, 91/2019 and 109/21).

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

The JSC has separate legal personality.

(Maximum) period of existence

There is no maximum period of existence; the JSC can be incorporated either for an indefinite or definite period of time.

Governing document(s)

Governing documents include: (i) the Articles of Association; and (ii) the Memorandum of Association.

Liability of incorporators / shareholders

As a general rule, the liability of the JSC cannot pass to the incorporators/shareholders except in specific circumstances: (1) if there are grounds for the piercing of the corporate veil; (2) if an "in-kind" (non-monetary) share capital contribution was valued by way of an agreement between the shareholders (instead of an evaluation made by a third party – such as a certified evaluator) in which case the creditors can challenge the shareholders’ evaluation and shareholders may be liable to pay up in cash the difference between the initially agreed value and the market value subsequently determined by the court. But this applies solely for the non-public JSC, as in case of the public JSC "in-kind" (non-monetary) share capital contribution is always valued by a certified evaluator. Also, in case of compulsory liquidation (which is a consequence of certain irregularities such as failure to file financial statements for two consequential years, or operates without a director for more than three months, or similar), controlling shareholder remains liable for the obligations of the liquidated company for three years.

(Governing) bodies

Corporate governance in the JSC can be organised as a –

• one-tier system, in which case the corporate bodies are:
• Shareholders’ Assembly; or
• One (1) or more directors; if three (3) or more directors they form the Board of Directors. Note that public JSC must appoint a Board of Directors, constituted of at least three (3) directors;
• two-tier system, in which case the corporate bodies are:
• Shareholders’ Assembly;
• One (1) or more executive directors; if three (3) or more directors they form the Executive Board. Note that public JSC must appoint Executive Board, constituted of at least three (3) directors; and/or
• Supervisory Board.

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.)?

Starting from 1 January 2025, provisions on cross-border mergers and acquisition for JSCs will formally be applicable under the Company Law. Such cross-border mergers and acquisitions will be possible if they occur between: (i) a Serbian JSC, and (ii) an LTD/JSC registered on the territory of a European Union member state, or a state which is a party to the Agreement on European Economic Area.

Serbian JSCs can acquire assets abroad including shares in foreign companies.

Can this type of entity be publicly listed or held?

Yes. JSC can be organised as a (i) non-public JSC; and (ii) public JSC. In the latter case, the shares of the public JSC can be publicly held and listed on the stock exchange.

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

No, JSC is organised for the purpose of earning profits.

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

Main documents required

The main documents required for the incorporation are:

• Memorandum of Association – notarised and legalised. However, if the prospective shareholder(s) has an electronic certificate issued in Serbia or is a legal entity incorporated under Serbian laws with a legal representative holding an electronic certificate in Serbia, the Memorandum of Association does not require notarization. Instead, it can be digitalized and signed using a certified electronic certificate issued in Serbia;
• Articles of Association (signed only by the shareholder(s));
• Corporate resolutions respecting the appointment of governing bodies;
• Proof of the contributed share capital (from the bank in case of monetary contribution or in case of non-monetary contribution the agreement of the shareholders or evaluation from the certified evaluator);
• Resolutions from competent authorities for specific entities (such as resolution from National Bank of Serbia for incorporation of the bank or insurance company or resolution from the Securities and Exchange Commission for incorporation of investment fund management company etc.);
• Proof of payment of the registration fee; and
• Completed registration form.

Involvement of notary, company register, governmental authorities

Involvement of notary: Certain foreign documents (documents obtained from non-Serbian registries, corporate decisions of foreign entities or documents generally signed in a foreign country) to be provided to the Serbian authorities in the registration process are generally subject to certification requirements – notarisation and/or legalisation of the document. Depending on the country of origin of a document, legalisation means either (a) additional certification of a document by competent government bodies in the country of origin of the document; or (b) certification of a document with an apostille, if the country in question is a party to the Hague Convention on use of Apostilles dated 5 October 1961. As an exception, legalisation is not required if there is a bilateral agreement between Serbia and such country. Therefore, certification requirements for each non-Serbian document must be determined in each specific case depending on the type of document and country of origin of the document in question. Due to a recent development, it is now mandatory to incorporate JSC’s electronically. Consequently, all documents must be submitted to the SBRA in electronic format. This implies that all documents need to be authenticated using an electronic certificate by a notary public or an attorney registered in the directory of lawyers of the Bar Association of Serbia. Foreign documents originally issued electronically must be converted into hard copies and notarized by a foreign notary public. These certified hard copies of foreign documents then need to be digitalized in Serbia and finally authenticated using an electronic certificate provided by a notary public or attorney at law.

Company register: A company is deemed incorporated and legally permitted to commence its business upon registration in the Serbian Business Registers Agency (SBRA) while shareholders of the JSC must be registered with the Central securities depository and clearing house (Securities Registry) in which case the exact list of documents is to be checked with the broker who will perform the registration process before the Securities Registry.

Governmental authority: Depending on the type of business to be performed by the JSC, pre-approval of the governmental authority may be required.

Timing (estimate)

Timing: The SBRA will register incorporation of the JSC within five (5) business days from the date of submitting the required documents. Timing necessary for preparation, notarisation, legalisation, and collection of required documents depends on different circumstances but it usually takes two (2) to three (3) weeks.

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

Main costs: Notary/legalisation fee (depending on the country in which documents are notarised/legalised), translation fee (depending on the volume of documents to be translated to Serbian language), notary certification fee (depending on the volume of documents to be certified using an electronic signature in Serbia), and registration fee (approx. EUR 50).

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

Business – JSC can engage in all legally permitted activities, but its predominant business activity (taken from an exhaustive list of business activities provided by Serbian laws) must be defined in the Memorandum of Association and the Articles of Association and registered with the SBRA. There are certain activities (e.g. financial services and insurance services), that may only be performed by an entity incorporated in a form of JSC, and certain activities (e.g. trade in poisonous goods, medicines, or weapons) that may be subject to licensing requirements.

All documents prepared in a foreign language must be translated by a certified translator in Serbia before being submitted to the SBRA and the Securities Registry (in original or certified copy).

Minimum number of incorporators / shareholders and residency requirements

There must be at least one (1) incorporator/shareholder in the JSC. There are no residency requirements for incorporators/shareholders.

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

The must be at least one director for a JSC. There are no residency requirements for directors.

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

There is a mandatory minimum share capital requirement of RSD 3,000,000 (approximately EUR 25,500).

The capital contributions by shareholders may be in money – Serbian dinars or a foreign convertible currency – or "in-kind" such as equipment, goods, know-how, etc. In any case, the capital is expressed in Serbian dinars.

Share capital must be contributed within two (2) years in case of public JSCs, and within five (5) years for non-public JSCs after registration of the Memorandum of Association.

In case of monetary share capital, in order for the shareholders to make such contribution, an account needs to be opened with a bank operating in Serbia.

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

Shareholders may authorise a Serbian lawyer or other individual to execute the Memorandum of Association and other required documentation on behalf of shareholders, and to conduct the registration procedure in general – so for that purpose, the physical presence of shareholders or representatives of shareholders in Serbia is not required.

However, the director’s presence may be required for certain post-incorporation activities (e.g. bank account opening, collecting the issued electronic certificate and registration of the ultimate beneficial owner of the JSC before the SBRA etc.).

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

Tax identification number is required but it is obtained at the moment of the registration of the JSC before the SBRA together with the registration number of the JSC.

What is the title of the applicable company registry?

There are two public registers relevant for the JSC:

• Serbian Business Registers Agency; and
• Central securities depository and clearing house.

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)

Following information of the JSC is publicly available on the registries maintained by the SBRA:

• Memorandum of Association;
• Articles of Association;
• Name and address of the JSC;
• Legal form of the JSC;
• Legal status of the JSC (active, deleted, in liquidation, in bankruptcy);
• Contact phone and webpage (optional);
• Address for receipt of emails;
• Registration number;
• Tax identification number (TIN);
• Incorporation date;
• Prevailing business activity;
• Bank accounts;
• Period of existence;
• Name, gender, and personal number (if Serbian citizen) or name and passport number (if foreign citizen) of directors, Executive Board members (if any), members of the Board of Directors (if any), other officers (if any), proxies (if any) and Supervisory Board members (if any);
• Share capital value;
• Various annotations such as decision of increase of the share capital, decision on status change);
• Published documents on any bankruptcy;
• Financial Statements;
• Liens and encumbrances on assets of the entity;
• All decisions issued by the SBRA;
• Various corporate resolutions (e.g. resignation letter, decision on increase/decrease of share capital, merger documents etc.);
• Branches;
• Information regarding the financial leasing agreements entered by the JSC;
• Information on injunctions;
• Information on temporary restrictions of rights of entities;
• Information on companies which are registered as bidders; and
• Ultimate beneficial owner.

Limited information on shareholders and liens and encumbrances on shares is publicly available on the website of the Securities Registry. SBRA maintains inter alia: company registry, pledge registry, financial leasing agreements registry, financial statement registries etc. Publicly available information on the JSC, in addition to the SBRA, may be also obtained from the Securities Registry, the intellectual property registry, central bank registries, the land and buildings registry, rating data base (for subscribed users) etc. JSCs have an obligation to disclose the details of their ultimate beneficial owner(s) to the registry maintained with the SBRA. Also, JSCs in certain cases are obliged to disclose the details of their ultimate beneficial owners to other entities (e.g. to Serbian banks due to KYC process).

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

Directors (who may form the Board of Directors, or the Executive Board as explained above) represent the JSC, carry out management duties in the interest of the JSC, observe any limitation in their authorisation as provided in the Memorandum of the Association and the Articles of Association, shareholders’ agreements, company’s by-laws, and corporate resolutions adopted/issued by corporate bodies.

Executive directors are deemed as the statutory representatives of the JSC. One (1) of the executive directors may be appointed to the position of the general director (in one-tier system by other directors; in two-tier system by the Supervisory Board if there is the Executive Board formed). Non-executive directors supervise work of the executive directors, suggest business strategy of the company, and supervise its implementation. Non-executive directors cannot be employed by the JSC. A public JSC must have non-executive directors, whose number must exceed the number of executive directors.

For the JSC, it is mandatory to have an independent director. The independent director is appointed from among the non-executive directors, with additional criteria to be fulfilled.

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

By the decision of the Shareholders’ Assembly, or the Supervisory Board (if the JSC is organised in a two-tier corporate governance system). Any change needs to be registered with the SBRA. There is a possibility of co-optation of directors under the conditions and procedures from the law and the Articles of Association.

At the moment of incorporation the directors are appointed in the Articles of Association (or in a separate resolution) by the incorporators/shareholders (to be submitted to the SBRA at the moment of incorporation).

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

Under Serbian Company Law, the only prescribed form for the statutory representative of the JSC is “director” (one (1) or more). In addition to directors, the JSC may appoint corporate officers (who may be registered with the SBRA as other representatives).

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?

In case of one-tier corporate governance system: (1) a non-public JSC may have both executive and non-executive directors, but in case that there are less than three (3) directors they are all executive directors; (2) a public JSC must have non-executive directors which number is higher than number of executive directors while one (1) of non-executives is deemed as “the independent director”.

Appointment and dismissal are explained above, as well as a requirement for forming the Board of Directors (consisting of both executive and non-executive directors if three (3) or more directors are appointed).

In case of two-tier corporate governance system, all directors are deemed to be executive directors and appointed by the Supervisory Body.

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

The Shareholders of the JSC constitute the Shareholders’ Assembly the main tasks of which are –

• appointment and dismissal of director(s) (in one-tier system);
• appointment and dismissal of the members of the Supervisory Board (in two-tier system);
• increase and decrease of share capital, as well as on each issuance of securities;
• changes in the rights or privileges pertaining to any class of the shares;
• status changes and changes in legal form;
• approval of the financial statements;
• acquisition and disposal of high-value assets;
• distribution of profit and coverage of losses;
• amendments to the Articles of Association; and
• opening of liquidation and bankruptcy proceeding.

Tasks and responsibilities of the Shareholders’ Assembly are provided in the law, the Memorandum of Association, the Articles of Association, the shareholders’ agreement, and company’s by-laws.

In case of the single shareholder JSC, the only shareholder of the JSC (who owns 100% share in the JSC) performs the functions of the Shareholders’ Assembly and thus there is no need for convening and holding sessions of the Shareholders’ Assembly (as the powers and duties of such body are in hand of the single shareholder).

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

For the ordinary session of the Shareholders’ Assembly, the quorum is the ordinary majority of the total number of the shareholders with the right to vote. Decisions require approval by vote by a majority of the shareholders present. These requirements are different for a reconvened session: The quorum is then one-third of the shareholders with the right to vote.

In general decisions are taken by the shareholders in accordance with the ordinary majority of vote (“50% plus 1”-rule) but this general rule can be varied by a specified majority required by the law for specific circumstances or by the Articles of Association.

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

There is a special governance regime for the public JSC (as explained above).

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

The JSC has to submit its annual financial statements twice per year before the SBRA. JSCs must submit (i) statements for statistical purposes (which are not publicly available) by 28 February of the current year for the previous year and (ii) regular financial statements (publicly available) by 30 June of the current year for the previous year. Starting from 1 January 2022, both the statistical and regular financial statements must be jointly submitted by 31 March of the current year for the previous year to the SBRA. This must be done electronically by director of the JSC who must establish a qualified electronic signature before the Serbian certification body.

Is the entity permitted to determine its own financial year?

Yes, upon approval obtained from the competent authority but only if its parent company, which is a foreign entity, has a financial year determined differently than the calendar year. In such case, the subsidiary (Serbian JSC) is obliged to apply the different financial year for at least five (5) years starting from the moment of its application.

As a general rule, a financial year lasts from 1 January until 31 December.

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

A public JSC is always subject to an audit obligation (to be performed by the external auditor).

As a general rule, an audit is mandatory for regular annual financial statements of large and medium-sized non-public JSC classified in accordance with the law regulating accounting, as well as for those whose business income earned in the preceding business year exceeds EUR 4.4 million in RSD equivalent (statutory audit).

Audit of the consolidated financial statements is mandatory for parent companies that prepare consolidated financial statements in accordance with the law regulating accounting (statutory audit).

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

A public JSC has to employ at least one (1) person in charge for compliance matters (and such person needs to fulfil the conditions for an internal auditor) including: (1) control of compliance of operations with relevant laws, other regulations and company bylaws; (2) supervision of implementation of accounting policies and financial reporting; (3) review of implementation of risk management policies; (4) monitoring of compliance of a JSC’s organisation and operations with a corporate governance code; (5) evaluation of corporate policies and processes, and providing proposals for their improvement. There are no residency requirements for such person.

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

Ownership interests in the JSC are called shares.

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

Yes, there are two (2) different types of the shares: (1) the ordinary shares; and (2) the preferential shares, which grant special rights to the shareholders such as a priority right to a dividend. Among preferential shares, there may be different classes of such shares, in accordance with the different right granted to the shareholders.

What documentation is required for the transfer of ownership interests?

As a general rule, the transfer of the shares of the non-public JSC is effected pursuant to a share transfer agreement entered into between the transferor and the transferee. The share transfer agreement must be notarised and legalised.

As a general rule, the transfer of the shares of a public JSC is effected by the transfer of the shares to the account of the acquirer of the shares which is opened, kept, and maintained with the Central Securities Registry, simultaneously with payment of purchase price for such shares (delivery-versus-payment).

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

Yes, the following formalities needs to be undertaken:

• In case of a non-public JSC – the agreement on transfer of share needs to be notarised with a notary public in Serbia or abroad. In case of notarisation abroad, further legalisation is required and a proof on identity of the new shareholder needs to be obtained (as explained under Section II.);
• The above documents need to be provided to the Securities Registry for purpose of registration of the transfer of the shares together with the registration form and proof on registration fee payment (the exact list of documents and steps should be checked with the broker who is intermediary and performs the registration process);
• Approvals of government authorities may be required (i.e. merger clearance by Ministry of Finance/National Bank for certain JSCs involved in banking and finance activities etc.);
• Data on name, residence, and address for the receipt of mail of the new shareholder is maintained with the company’s records; and
• In case of the public JSC, additional activities need to be undertaken before the Securities Registry, the Belgrade Stock Exchange, and the Securities Commission (the exact list of documents and steps should be checked with the broker who is intermediary and performs the registration process).

The transfer of shares is deemed finalised upon registration with the Securities Registry when new shareholder is deemed as shareholder of the JSC.

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

There are no stamp duties, aside from the notary fees payable at signing of share transfer agreement.

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

Shares of the JSC can be issued:

• Publicly by a public offering, in which case the approved listing particulars have to be published and the payment obligation must be satisfied within the period for subscription of the shares; and
• By a non-public offering, in which case the payment obligation has to be satisfied in the period of five (5) years following the date of subscription.

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 contribution can be valued by way of an agreement between all the shareholders or an evaluation made by a third party – a certified evaluator. Creditors can challenge the shareholders’ evaluation and shareholders may be liable to pay the difference between the initially agreed value and the market value subsequently determined by the court in cash. Therefore, it is recommended that in-kind contributions always be valued by an outside certified evaluator.

This applies solely for the non-public JSC as in case of a public JSC an "in-kind" (non-monetary) share capital contribution is always valued by a certified evaluator.

Serbian law does not recognise share premium contributions without issuing shares.

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

The JSC may acquire its own shares (treasury share) in cases determined in the Company Law. Such shares may be cancelled in which case the share capital decrease procedure must be performed.

The share capital reduction procedure is subject to the requirements related to the protection of creditors (as determined in the Company Law) with exemption to certain share capital reductions which may be performed without observing such rule (e.g. reductions in case of loss coverage).

The shares of minority shareholders can be repurchased upon the request of a shareholder who has at least 90% shares in the share capital of the JSC.

Any requirements with respect to distributions to shareholders?

The Shareholders’ Assembly must adopt a resolution on profit distribution in order to make distribution of profit (dividends) to shareholders. Such profit distribution may be made only with loss coverage (if any).

In any case, limitations of payments to shareholders must be observed. The Company Law provides that a company may not carry out any payments to the shareholder if, based on the last annual financial statements of the company, the net assets of the company are lower, or would become lower by such payments, than paid-in share capital of the company increased for the mandatory reserves (if any). In addition, the total amount of payments to shareholder in business year may not exceed the profits at the end of that year, increased by undistributed profit from previous years and by the amount of distributable reserves (if any), and decreased by uncovered losses from previous years and the amount of mandatory reserves (if any). In case of unpermitted payments, shareholders receiving the payments would have to return the payment, if they knew or should have known that such payments were not permitted.

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

Yes

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

The JSC should consider maintenance costs related to accounting services provided by external accountant (in case of JSC), registration fees regarding registration of corporate changes within the JSC and annual financial statements, taxes, brokerage fees (as the JSC needs to engage the broker), administrative fees before the Securities Registry, the Belgrade Stock Exchange and the Securities Commission, costs of publication of various corporate documents.

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

Corporate income tax rate for local company is 15%. Corporate income tax is payable on taxable profits determined in accordance with accounting rules, adjusted in line with tax rules.

Dividend paid to non-resident shareholder from LTD registered in the territory of Serbia is subject to a withholding tax at the statutory rate of 20%, unless an applicable bilateral double taxation treaty provides otherwise.

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

Recently, JSCs can only be incorporated electronically, by using an electronic certificate obtained from one (1) of the certification bodies in Serbia (this inter alia implies creating an account on the eID.gov.rs web portal, which was introduced as mandatory);

Generally, the JSC is a less common entity than the LTD because of the –

• significantly higher minimum share capital;
• more difficult incorporation procedure; and
• more complicated management structure.