Open Company Montenegro
Open a Company in MontenegroUpdated on Thursday 23rd April 2020
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Montenegro is a very appealing investment destination which is why many foreign investors from EU and non-EU countries come to open companies here. Starting a business in Montenegro implies several steps and respecting the local legislation, which is represented by the Company Law.
We invite you to read below about the procedure of opening a company in Montenegro. We are a law firm specialized in assistance foreign investors interested in setting up their own businesses in Montenegro.
Our Montenegro lawyers can help investor select a business form and register it with the local authorities.
Types of legal entities in Montenegro
Businessmen who would like to invest in Montenegro should know the main types of companies available in this country. The following entities can be registered in Montenegro:
- the sole proprietorship;
- the general partnership;
- the limited partnership;
- the limited liability company;
- the joint stock company.
Other types of business entities which can be set up by foreign companies this time, are the subsidiary company (which can take the form of a limited liability company), the branch office and the liaison office which are suitable for foreign companies seeking to have full control over the operations. A particularity of the representative office is that it cannot complete economic activities in Montenegro.
Our lawyers in Montenegro are able to help foreign and local investors open any of the company types available in this country.
What are the particularities of each company type in Montenegro?
The Montenegro sole proprietorship is usually formed by a single entrepreneur who has the same personality as the entity he/she is ruling. That is the reason why is risky to open this type of entity, in case of liquidation the personal assets can be used to cover the debts. As an advantage, no minimum share capital must be delivered at registration.
Quite similar are the two forms of partnership that the investors can open in Montenegro, the general partnership (Ortako drutvo) and the limited partnership(Komanditno drutvo). The founders of this type of entities are not obliged to deliver a minimum share capital but it must consider the fact that if are part of a general partnership or the general partner in a limited partnership their personal assets are not covered in case of liquidation. The limited partners from a limited partnership must deliver a contribution to the entity and are liable for the entity’s debts only in the limit of that contribution. Unlike the general partners, the limited partners don’t have any decisional powers. If a partnership remains without general partners it must be dissolved.
The investors owning a capital are advised to open one of the two forms of business available for small, medium or large businesses: the companies which may be limited or joint stock companies. Our attorneys in Montenegro can give your more details about these legal structures.
The limited liability company (Drutvo s ogranienom odgovornou) requires only 1 Euro as a minimum share capital and the company may be formed by at least one shareholder. The total number of the shareholders cannot exceed 30. The liability of these members is limited by their contribution to the capital and their personality is not the same as the one of the company. The capital is divided into non-transferable shares and the management is assured by a director appointed by the highest instance in the company, the general meeting of the shareholders.
A joint stock company (Akcionarsko drutvo) is similar to the limited liability company but it is designed for large businesses. The shareholders must contribute with at least 25.000 EUR paid in cash at registration. The major decisions are taken by the General Meeting of the shareholders which appoints a Board of Directors as managing body. Besides this, the company’s accounting books are verified by an auditor which must be appointed.
We have also created a scheme on how to open a company in Montenegro:
The Memorandum and Articles of Association of Montenegrin companies
The most important documents which need to be drafted by those who want to open a company in Montenegro are the Memorandum and Articles of Association. These are two distinct documents and represent the decision for creating the company (the Memorandum) and the statutory incorporation papers (the Articles of Association).
The content of these documents is nearly the same, which is why it possible for the Trade Register to ask for the filing of the Articles of Association which must contain the following information:
- information about the shareholders and company directors (personal or corporate details, depending on whether they are natural persons or corporate entities);
- the complete legal address of the Montenegro company (street and number);
- information about the share capital and its division among the shareholders, as well as the types of shares issued;
- information about the company’s main object of activity and about other secondary activities, if any;
- information about the general annual meeting and other agreements among the shareholders.
The Articles of Association of a Montenegro company must be drafted and notarized prior to being filed with the Companies House.
Shareholders in companies in Montenegro
The owners in company in Montenegro are called shareholders or stockholders, and the company they invest in must represent their legitimate interests. The right of becoming a shareholder in a Montenegro company can be obtained from the beginning by contributing to the capital of the business or later by buying shares in the company.
In order to open a company in Montenegro, there is need for one shareholder only. The stockholder can be a natural person or a corporate entity, a local or foreign investor. This requirement applies to both private and public companies in Montenegro, however, public companies must also appoint an auditor.
Our Montenegro lawyers can offer complete information on the shareholders’ rights and obligations when setting up a business here.
Company management when opening a company in Montenegro
Another important part to establish when opening a company in Montenegro is the appointment of the company’s director or directors. As a general rule, a company needs at least one director who does not need to be a Montenegro resident or citizen.
Company directors are appointed by the shareholders; however, one should also know that the shareholder can be the director of a Montenegro company.
If you need information on the duties and powers of company director, feel free to talk to our law firm in Montenegro.
The steps for incorporation of a company in Montenegro
There are a few steps which have to be accomplished before beginning any commercial activity of the Montenegro entity. The process begins with the certification of the company’s foundation agreements. These notarized documents must be delivered to the Register along with a standard application for obtaining the registration certificate, TIN (tax identification number), VAT tax number and customs authorization. If the company will have employees, they have to be registered for Health and Pension at Tax Administration counter. The company’s seal must be obtained in order to operate daily transactions. The last steps consist in opening a bank account and notifying the competent inspection authority and the municipal authority in charge of economic affairs. Our lawyers can give more details about all the taxes available in Montenegro and can assist you when opening a company in this country.
Opening a company bank account in Montenegro
One of the most important steps when opening a company in Montenegro is the business bank account set up. This is also one of the first steps to complete when creating a business in this country.
The following documents are required when opening a corporate bank account in Montenegro:
- the specific application form or forms issued by the Montenegro bank;
- the Articles of Association of the company or other documents attesting the opening of the company;
- the Certificate of Registration issued by the Trade Register in Montenegro;
- the personal information of the company representative who will be the contact point for the authorities;
- the contract which shows the deposit of the share capital with the respective bank;
- the specimen signature of the person in charge of the management of the account;
- the tax registration certificate issued by the tax authorities in Montenegro.
The opening of the bank account depends on the chosen bank. Also, it is possible for companies in Montenegro to open more than one bank account.
Our lawyers in Montenegro can assist with the opening of a corporate bank account for your business in this country.
What is the minimum share capital of DOO and AD in Montenegro?
A Montenegro limited liability company (DOO) needs only the symbolic amount of 1 EUR while a large business such as the joint stock company (AD) requires 25.000 EUR.
Documents required for the incorporation of a company in Montenegro
A founder must deliver the following documents in order to register a new business:
- the notarized memorandum of association and articles of association;
- a list with all the company’s members and their function;
- details regarding the executive director;
- the name of the company;
- registered address and the correspondence address (if not the same);
- the name of the company’s representative;
- written consent of the members of the board for their appointment(if available);
- a proof that the registration fee was paid.
Other documents may be requested depending on the business and our Montenegro lawyers can help you during this phase.
Hiring employees in Montenegro
One of the last parts related to opening a business in Montenegro is hiring employees. Before starting this procedure, the company must register as an employer with the authorities in Montenegro which fall under the supervision of the Ministry for Labor and Social Welfare.
The Employment Law provides for each person hired to work under an employment contract which must contain specific provisions related to the rights of employers and employees. In the case of foreign workers, labor permits are required.
Our lawyers in Montenegro can offer detailed information on the employment legislation.
Company registration fees in Montenegro
When it comes to opening a company in Montenegro, most investors will consider the business registration fees. They must consider the following fees:
- the company registration fee, which will include the Trade Register’s fee and the drafting and notarization fees for the incorporation papers;
- the tax and employment registration fees – these procedures are completed at the same time;
- the monthly and annual costs associated with the employees’ salaries;
- the registered address fees, if the business owner chooses a virtual office – these costs are lower than the costs of a traditional office.
We can provide more information on the costs related to starting a company in Montenegro.
Company registration services offered by our lawyers in Montenegro
As a first-time investor in Montenegro, it is very important for a businessman to request the services of specialists. Our law firm in Montenegro can guide foreigners who want to start any type of company in this country. We can help with the preparation of all the documents related to opening the company.
The client can also give us power of attorney to handle the company registration process partially or completely.
How quickly can I incorporate my company in Montenegro?
With the help of our specialized lawyers in Montenegro which are familiar with all the required procedures, the process of company incorporation in Montenegro doesn’t take longer than 12 working days.
According to recent statistics, Montenegro:
- had an influx of foreign direct investments (FDI) of 490 million USD in 2018;
- in the same year, Montenegro’s FDI stock represented 102.9% of its Gross Domestic Product;
- in 2018, real estate was one of the most important investment sectors, registered a 10.6% increase;
- according to the World Bank, Montenegro ranks 50th in the 2019 Doing Business Report.
All businessmen interested in starting a business in the country are invited to contact our Montenegro law firm for professional company formation services.