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

Companies Act (Zakon o gospodarskih družbah (Official Gazette of the Republic of Slovenia, no. 65/09 as amended))

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

The d.d. has separate legal personality.

(Maximum) period of existence

There is no maximum period of existence.

Governing document(s)

The d.d. is governed by Articles of association (Statutes).

Liability of incorporators / shareholders

Shareholders are not personally liable for the debts of the company.

Limited liability is subject to limited instances of piercing the corporate veil.

(Governing) bodies

A company’s corporate governance may be organised as a one-tier or two-tier system.

Governing bodies are Management Board (“uprava” ), Board of Directors ( “upravni odbor” ) and Supervisory Board ( “nadzorni svet” ). The company may have a two-tier system with Management Board ( “uprava” ) and Supervisory Board ( “nadzorni svet” ) or one-tier system with Board of Directors ( “upravni odbor” ).

Other particularities

N/A

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

Under Slovenian law it is possible for d.d. to enter into mergers (whereby the company ceases to exist by operation of law), demergers/divisions of all or a portion of its assets and liabilities (with universal succession of the relevant assets), and conversions (changing into another form of legal entity without ceasing to exist). International restructurings like the above are possible with respect also to the EU legislation or pursuant to the relevant European Court of Justice rulings.

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?

Generally, no, given its nature as a commercial entity, with the ability to make profit distributions, and being subject to corporate income tax.

A non-profit or charitable organization should be organized as an association (“društvo”) or institution (“ustanove”).

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

Main documents required

 

Involvement of notary, company register, governmental authorities

Statutes in the form of a notarial deed.

Documents for the appointment of members of Board of Directors, Management Board and Supervisory Board (if applicable).

Other documents; statement of the incorporators, confirmation from the bank of the payment of the monetary contributions, calculation of the establishment costs borne by the company, incorporation report, report of the auditors for incorporation (if applicable), etc.

If an incorporator is a foreign natural person or legal entity, he/she/it will have to acquire a Slovenian tax number, which can be obtained from the local tax office (FURS). The same applies for foreign members of corporate bodies

If an incorporator is a foreign natural person or legal entity, he/she/it has to submit to the court register relevant certificates, extracts or similar documents issued by a competent authority which prove that the circumstances preventing a person from becoming an incorporator (e.g., outstanding tax liabilities, misuse of VAT identification, etc.) do not exist, if the Slovenian authority does not have access to the relevant foreign records or registers.

Notary files request for the entry into the business register and the registry court decides on the request with a resolution. Successful entry in the register, which is confirmed with a court decision, finalizes the incorporation procedure.

There are two methods of incorporation of a d.d.: simultaneous establishment or gradual (successive) establishment.

The simultaneous establishment means that all incorporators adopt and sign the Statutes and take over the shares themselves.

The gradual or successive establishment is carried out by public subscription of the shares (prospectus) on the basis of the advertisement.

Timing (estimate)

The timing varies, however it usually takes up to two weeks for the court to issue the decision from the date when the notary files the request to the competent court.

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

The main costs are the lawyers/notary/translation fees (if required). Also, the minimum share capital of EUR 25,000.00 is required for the incorporation of d.d. under Slovenian law.

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

The anticipated business activities must be stated in the Statutes.

Minimum number of incorporators / shareholders and residency requirements

There must be at least one incorporator upon incorporation, there is no residency requirement for incorporators.

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

Two-tier system: Management Board may consist of one or more members.

One-tier system: Board of Directors must have at least three members.

There are no residency requirements for directors. A director does not need to be a Slovenian tax resident, but a director may be considered a Slovenian tax resident if certain conditions are met.

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

EUR 25,000.00 is the minimum share capital and it can be provided in cash or as an in-kind contribution. One-third of the share capital must comprise of shares that are paid in cash. If the contributions are paid in cash at least 25 % of the minimum issuance amount of each share should be paid prior to submitting the application for incorporation. If the shares are 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.

Monetary contributions are paid to the bank account of the d.d. and the bank issues a confirmation on the paid amount. Procedures for opening a bank account differ, depending on the chosen bank.

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

The process may be carried out by virtue of a power of attorney.

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

The company when registered receives the identification number ( “matična številka”) and tax number. If necessary, the company must acquire an identification number for VAT by registering for VAT purposes with the Slovenian tax authority.

What is the title of the applicable company registry?

Agency of the Republic of Slovenia for Public Legal Records and Related Services ( “Agencija Republike Slovenije za javnopravne evidence in storitve - AJPES”) – company registry

Central register of dematerialized securities ( “Centralni register nematerializiranih vrednostnih papirjev”)

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 listed below must be filed at the AJPES and is publicly available:

• Statutes;
• Name, seat and business address;
• Date of incorporation;
• Identification and address information of the members of the Management Board (“uprava”), Supervisory Board or Board of Directors (“upravni odbor”);
• The time period for which it is established;
• Business activities of the company;
• Share capital and the number of the shares;
• Information regarding insolvency and liquidation;
• The annual accounts;
• Merger and demerger documents.

The shareholders are not evident from the business register, however a list of shareholders may be obtained from Central Securities Clearing Corporation (“KDD” ).

In Slovenia there is the register of 'beneficial ownership' (UBO Register) and d.d. must enter the ultimate beneficial owner in the UBO Register.

In Slovenia there is a register of non-possessory liens and pledged movable property which is a database on liens, prohibitions of transfer and burdens on movable property.

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

In two-tier system Management Board ( “uprava”) in one-tier system Board of Directors (“upravni odbor”).

Main tasks are to conduct the operations and represent the company.

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

Members of the Board of Directors in the two-tier system are appointed by the Supervisory Board, and members of the Management Board are appointed by the Shareholders’ Meeting.

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

Management Board (“uprava” ) may consist of one or more members whereas Board of Directors ( “upravni odbor” ) must have at least three members and the duties may be divided between non-executive and executive directors. Only natural persons can be appointed as members of the Management Board and Board of Directors.

Internally, managerial persons (e.g. sales director, marketing director etc.) who will run the daily management in accordance with the decisions, directions, and orders of the executive members may be appointed.

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?

Generally: no.

However, the Board of Directors in a one-tier system may appoint one or more executive directors. The chairman must be a non-executive director. Non-executive directors do not form a separate body.

Alternatively, a two-tier structure can be opted for where there is a separate Supervisory Board which is appointed by the Shareholders’ Meeting.

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

Shareholders’ Meeting (“skupščina”) where Shareholders exercise their rights and decide on the adoption of the annual report, the use of distributable profit, the appointment or recall of the members of the Supervisory Board or Board of Directors, changes in the Statutes, the appointment of the auditor, increase or decrease of the share capital, changes of the legal form, etc.

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

For the adoption of the resolutions of the Shareholders, the majority of votes cast is necessary unless otherwise determined in the law or by the Statutes.

Quorum is not determined under Companies Act but may be determined in the Statutes.

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

Under Slovenian law there is a special regime for small, medium and large companies. If a company meets the threshold requirements then it must comply with the provisions as set out for that regime. The difference pertains especially to business books and annual reports as well as the difference in various penalties.

There are also certain special provisions for public d.d.

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

Companies have to manage books of accounts and prepare year end accounts once a year in accordance with Companies Act and the Slovenian Accounting Standards or International Financial Reporting Standards. Based on year end accounts, companies must prepare the annual report within three months from the end of financial year. The three months deadline applies to all annual reports except for consolidated annual reports where the deadline is four months from the end of financial year.

The companies must submit annual reports for publication within 3 months after the end of the financial year and the audited and consolidated annual reports within 8 months after the end of the financial year.

Is the entity permitted to determine its own financial year?

Yes.

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

Medium, large and companies whose securities are traded on a regulated market are obliged to have their accounts externally audited each financial year.

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

No.

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

Shares ( “delnice” )

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

Shares can be regular/ordinary (“navadne (redne)” ) or priority shares ( “prednostne” ).

Priority shares are shares that give their holders a number of priority rights (besides “regular” rights), for example, priority in the payment of pre-determined amounts or percentages of the nominal value of shares or profits, priority in the payment upon liquidation of the company and other rights determined by the Statutes.

Shares with the same rights from a class of shares. Priority shares may be non-voting shares. Priority stocks are furthermore divided in classes which may be Cumulative or Participative shares.

What documentation is required for the transfer of ownership interests?

For the transfer of shares, the agreement (for the sale of shares) is required (if applicable) and a transfer order submitted to Central Securities Clearing Corporation. Transfer orders may be submitted only through the members of the Central Securities Clearing Corporation (i.e., Slovenian brokers), the acquirer therefore requires a brokerage account opened in Slovenia.

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

Submission to Central Securities Clearing Corporation and brokerage account as mentioned above.

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

No.

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

In order for the d.d. to fulfil its obligation towards shareholders, namely to issue shares as dematerialised securities the company must provide a request for the issuance to KDD. Shares are issued not only upon establishment but also (e.g.) when the share capital is increased. KDD may determine other conditions that must be fulfilled in order to issue the shares.

As per establishment of a European single securities settlement platform, called Target2-Securities (T2S), the KDD was included into the T2S as the Slovenian Central Securities Clearing Corporation. Due to the concept of T2S as a single pan-European platform, KDD must operate according to the same rules for all central depository companies involved.

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?

Shares may be paid in cash or with in-kind contributions. One-third of the share capital must consist of shares that are paid in cash. If the contributions are paid in cash at least 25 % of the minimum issuance amount of each share should be paid prior to submitting the application for incorporation. If the shares are 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.

If shareholders give contributions in-kind, the Statutes must specify: the subject of the contribution, the person from whom the company acquires the object and the number of shares, for the shares with a nominal amount, also their nominal amount.

Contributions without issuing shares are possible in certain circumstances.

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

Share cancellations are possible in certain circumstances subject to the rules regarding minimum share capital.

Share repurchase is possible only in exceptional circumstances whereas the prohibition of an original acquisition of its own shares is absolute (acquisition on the primary market, either when a company is established, upon an increase in the share capital or upon a transformation of legal form).

Capital reduction is possible. The Companies Act regulates three forms of reduction of share capital: 1. regular reduction of share capital, 2. simplified reduction of share capital, 3. reduction of share capital by withdrawal of shares.

Any requirements with respect to distributions to shareholders?

The Shareholders’ Meeting decides on the use of distributable profit. The distribution of profits to the shareholders is determined in proportion to their respective share in the share capital. Different shareholders' participation in the distributable profit is allowed only if it is provided in the law or in the Statutes. If the Shareholders’ Meeting has decided not to distribute dividends in the amount of at least 4 % of the share capital, the shareholders may challenge the resolution if, in the opinion of a good manager, this was not necessary given the circumstances in which the company operates.

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

Yes. The provisions in such agreement should not contradict the Statutes or mandatory provisions, but additional and/or more detailed provisions are allowed.

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

There are certain costs connected with maintaining the entry of shares in the Central Securities Clearing Corporation. The company should also consider maintenance costs related to its office address (e.g. rent payment, utility costs, etc.), payment of directors remunerations (if any), accounting services provided by external accountant (if not employed in the company), employees` salaries, registration fees regarding registration of corporate changes and annual financial statements, taxes, etc.

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

The corporate tax rate in Slovenia is 19%.

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

No imminent major legal developments are expected in 2021.

Generally, d.d. is less common legal entity than d.o.o. in Slovenia.