Changes of Serbian Companies Law-improving the text
On 06. March, the National Assembly, through an urgent procedure, has addopted changes of Serbian companies law. In line with its harmonisation commitments, the 2018. amendments to the Companies Law introduced significant legal reforms. These changes established the legal framework for European Companies (SE) and European Economic Interest Grouping (EEIG) within Serbia’s legal system and regulated cross-border mergers and acquisitions between Serbian capital companies and entities from EU member states. By implementing these provisions, Serbia has taken a significant step toward aligning its corporate law with European standards, facilitating cross-border business operations…but with signifficant errors in translation.
Puting it in simple the words, harmonization with these legal regulations- Council Regulation (EC) No. 2157/2001 on the Statute for a European Company (Societas Europaea – SE), Council Regulation (EEC) No. 2137/85 on the European Economic Interest Grouping (EEIG), and Directive (EU) 2017/1132), all incorporated in the 2018. Changes of Companies law, included poor translation effort.
EXPLANATION OF BASIC LEGAL INSTITUTIONS
Article 1 introduces changes to Part Seven and Articles 514a to 514m, which regulate the procedure for implementing cross-border corporate transformations, with the aim of improving the text and further clarifying the provisions.These provisions define a cross-border merger as a merger involving at least two companies, one of which is a company referred to in Articles 245 or 139 of this Law registered in the territory of the Republic of Serbia, and at least one of which is a capital company established in the territory of another Member State of the European Union or a state signatory to the Agreement on the European Economic Area. One or more of these defined companies merge into another company by transferring to that company all their assets and liabilities, whereby the merging company ceases to exist without undergoing a liquidation procedure. Additionally, the newly introduced provisions define a cross-border consolidation as a consolidation involving at least two companies, one of which is a company referred to in Articles 245 or 139 of this Law registered in the territory of the Republic of Serbia, and at least one of which is a capital company established in the territory of another Member State. Two or more companies consolidate by establishing a new company to which all assets and liabilities are transferred, whereby the consolidating companies cease to exist without undergoing a liquidation procedure. The provisions regulate key issues related to cross-border mergers and consolidations, including the drafting of a Joint Draft Merger Agreement, its publication, the report of the competent company body, and the auditor’s report on the merger, as well as their adoption by the general assembly. These provisions also regulate the notarial deed preceding the registration of the merger, the registration process, the legal consequences of the merger, the simplified merger procedure, employee participation in decision-making, the nullity of merger registration, and other relevant matters. Furthermore, it is prescribed that the provisions of this part of the law on cross-border mergers shall apply mutatis mutandis to cross-border consolidations.
Article 2 of the Law introduces changes to Part Eleven-a and Articles 577a to 577š, which regulate the procedure for establishing a European Company (Societas Europaea) in the Republic of Serbia in accordance with Council Regulation (EC) No 2157/2001 of October 8, 2001, with the aim of improving the text and further clarifying the provisions.
These provisions regulate that a European Company (hereinafter: European Company) is established in the legal form of a joint-stock company, whose share capital is divided into shares held by one or more shareholders who do not bear liability for the company’s obligations, except in cases specified in Article 18 of this Law. A European Company established in the territory of the Republic of Serbia acquires legal personality upon registration in the register in accordance with the law on registration. These provisions also prescribe the methods of establishing a European Company, its share capital, founding act, and statute. Special regulations are provided regarding the establishment of a European Company through merger and consolidation, including all matters related to the Joint Draft Merger Agreement, its publication, the report of the competent company body, the auditor’s report on the merger, and their adoption by the general assembly. Furthermore, these provisions regulate the notarial deed preceding the registration, the registration process, the legal consequences of establishing a European Company through merger, employee participation in decision-making, and the mutatis mutandis application of provisions concerning the establishment of a European Company through consolidation. This part of the law also governs matters concerning the establishment of a European Company as a holding, the conversion of a joint-stock company into a European Company, the transfer of the registered office of a European Company established in the Republic of Serbia to another Member State, and, in connection therewith, the transfer plan and notarial certification. Special provisions regulate the management of a European Company registered in the Republic of Serbia, as well as its dissolution, stipulating that the provisions of this Law on liquidation shall apply mutatis mutandis to the liquidation of a European Company, while the provisions of the law governing bankruptcy shall apply mutatis mutandis to the bankruptcy of a European Company. The newly introduced provisions also prescribe that the Business Entities Register shall, within one month from the date of registration of the establishment of a European Company, its deletion from the register, and the transfer of its registered office, submit a notification of the registered data to the Office for Official Publications of the European Communities for publication in the “Official Journal of the European Union.”
Article 3 of the Law introduces amendments to Part Twelve-a and Articles 580a to 580č, which regulate the establishment and legal status of the European Economic Interest Grouping, with the aim of improving the text and further clarifying the provisions. These provisions prescribe that a European Economic Interest Grouping may be established in the Republic of Serbia in accordance with Council Regulation (EEC) No 2137/85 of July 25, 1985. The Grouping is a legal entity established by at least two business entities, entrepreneurs, or other legal or natural persons engaged in agricultural or other activities in accordance with the law, at least one of which is registered in the territory of the Republic of Serbia and the other in the territory of another Member State of the European Union or a state signatory to the Agreement on the European Economic Area. These provisions regulate the purpose and activities of the Grouping, its establishment and registration, its acquisition of legal personality, financing, liability for obligations, changes and transfers of its registered office, governing bodies, dissolution, and other relevant matters.
This Law shall enter into force on the eighth day following its publication in the “Official Gazette of the Republic of Serbia” and shall apply from January 1, 2027.