The National Assembly of the Republic of Serbia enacted amendments to the Company law on 23 December 2019.
The amendments enable limited liability companies to use the concept which resembles stock option schemes. Limited liability companies (by far the most frequent company form in Serbia) will be able to incentivize their employees and other individuals connected with the business by giving them the option to acquire shares in the company. This concept may be of particular interest in start-ups in information technologies.
In practice, limited liability companies will be able to issue a new type of financial instrument – “right to acquire a share” – based on which each recipient will be entitled to acquire a share in that company, within the terms and under conditions agreed with the company. For the company to be able to issue these financial instruments, the existing shareholders must transfer part(s) of their respective shares in the company to the company, free of charge. Based on such shares, contributed free of charge, the company forms a “reserved own share”, to which the financial instruments relate.
The entire procedure involves the participation of both the Business Registration Agency and the Central Registry of Securities and is, on the face of it, a bit complex but should be straightforward in practice. However, this seems a promising addition to the Serbian company law framework. The final shape and form of it will be finally determined by the bylaws the aforementioned institutions need to enact before the changes take effect.
Ivan Nonković* and Jelena Vučković*, on behalf of Inicijativa Digitalna Srbija, have participated in drafting the proposals of the amendments, where Jelena was a part of the working group of the Ministry of Economy formed for the purposes of drafting the changes to these amendments.
Most of the enacted changes will take effect as of 1 April 2020, which should leave enough time for competent state bodies to make all required arrangements for the implementation of the novelties introduced by these amendments.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
*independent Attorney at Law in cooperation with Karanović & Partners
