Types of companies in Montenegro
Types of Companies in MontenegroUpdated on Wednesday 22nd April 2020
based on 4 reviews.
Montenegro is a European country, situated on the coast of the Adriatic Sea. After obtaining its independence in 2006, Montenegro has been in constant and fast economic growth thanks to its transition to market economy. The tourism in the beautiful landscapes of this country was also an important development factor. If you intend to invest in this country our attorneys in Montenegro can help you with choosing the most appropriate structure from the multitude of company forms existing in Montenegro.
We can also guide you through the entire business registration procedure in Montenegro if you are a foreign investor.
Main company business forms in Montenegro
With a friendly tax environment, what you still have to do is to choose from one of the several Montenegrin business forms. Some of the main company types in Montenegro are:
- the Montenegrin limited liability company (Drutvo s ogranienom odgovornou), which does need a minimum share capital of EUR 1, and which must have a director and shareholder, who assumes the responsibility for the eventual debts of the company;
- the Montenegrin joint stock company (Akcionarsko drutvo), for the establishment of which it is required minimum capital of EUR 25,000, which needs to be deposited to the corporate account.
- the sole proprietorship which is the simplest business form in Montenegro and is suitable for those who want to register one-man companies in this country;
- the partnership which can be general or limited and implies at least two founding members.
Our Montenegro lawyers can offer information about the characteristics of each type of company so that foreign investors can choose the appropriate business structure in accordance with their needs.
If you intend to keep more control over the newly established legal form, then you can consider the option of setting up a branch in Montenegro. A branch differs from a subsidiary (a local separated entity) by the fact that it is not independent of the parent company.
Our lawyers in Montenegro can help you form one of the above mentioned Montenegrin company types by elaborating for you the articles of association, setting the mandatory bank account, and by providing you all needed documents for eventual company incorporation.
The sole proprietorship in Montenegro
As mentioned earlier, the sole proprietorship is the simplest type of company in Montenegro and it is suitable for various activities which need to be completed a single person. The registration of a sole trader in Montenegro is quite simple, requiring an application form to be filed with the Trade Register.
There are no share capital requirements when opening a sole trader in Montenegro, and the person setting up this business form must use their own names for registration. Also, once established the sole trader must apply for a business license in accordance with the activities to be completed.
Just like any other type of company, the sole trader is required to register for taxation and obtain a VAT number. Foreign citizens seeking to set up sole traders in Montenegro must also apply for a residence permit.
You can rely on the legal services provided by our law firm in Montenegro for guidance in setting up any type of company.
The private limited liability company in Montenegro
The private limited liability company is the most common business form among local and foreign investors in Montenegro. The requirements related to the opening of this type of company are quite relaxed, starting with the share capital which is established at 1 euro and up to the shareholding structure which is just as simple: the shareholder can be a foreign citizen or company and can also hold the role of the company director.
The registration of a private limited liability company is quick and hassle-free and foreign entrepreneurs can rely on our Montenegro lawyers for assistance in preparing the documents needed to incorporate this business form.
The joint stock company in Montenegro
Compared to the private limited liability company, the joint stock company is subject to more stringent requirements given the fact that it can also be used for stock exchange trading purposes. The joint stock company can be set up as a private or public company with one shareholder and one director, however, it is also required to appoint an auditor.
Our attorneys in Montenegro can guide foreign investors interested in setting up large operations which require the registration of a joint stock company.
The partnership in Montenegro
The partnership is not often employed by foreign investors coming to Montenegro, however, it is suitable for those interested in entering the local market in cooperation with a local partner.
There are two forms of partnerships in Montenegro, the general partnership and the limited partnership. Each business form requires at least two members who will share the profits but will also participate in the obligations of the company.
In the case of a general partnership, both partners will have the same rights and obligations. In the case of a limited partnership, the business will have a general and a limited partner. The general partner will have full liability over the business’ debts, while the general partner will be liable for the business’ obligations to the extent of their contribution.
Our Montenegro lawyers can help you set up this type of company if you are interested in it.
The main types of companies in Montenegro are also presented in the scheme below:
The registration process in Montenegro
The registration of companies in Montenegro is effectuated by the Central Register of Companies which is run by the Tax Administration.
Starting in 2011, new companies in this country have been able to register their economic activities in only one place.
Having introduced the one-stop system, the Central Register of Companies enables businesses to be registered automatically in the register of the Statistical Office, the Register of taxpayers, the Register of customs payers, the Register of value added tax payers and excise taxpayers, if they wish to do so.
All companies which are registered with the Central Register of Companies become members of the Chamber of Economy in this country.
An application for the registration of a company in Montenegro can be filed through a government portal.
Documents required when opening a company in Montenegro
No matter the type of company chosen, there are various documents which need to be prepared before the registration with the Trade Registrar starts. Among these are:
- the Articles of Association are mandatory when opening a limited liability company or a joint stock company;
- in the case of sole traders, the application form released by the Trade Register is sufficient;
- in the case of a partnership, a partnership deed must be drafted and notarized by a public notary;
- no matter the chosen business form, the company will need to have a registered address which can be obtained through a lease contract;
- a business name must also be reserved, and the reservation certificate is issued by the Trade Register;
- in the case of companies, the bank receipt indicating the deposit of the share capital is also required.
Our lawyers in Montenegro can help foreign investors with the preparation of the documents which need to be prepared when setting up any type of company in this country.
How to open a company in Montenegro from abroad
Montenegro welcomes foreign investors in most of its available sectors. The local government offers the same treatment to foreign investments as it does to the domestic ones, without any discrimination or restrictions related to the currency used.
A foreign entrepreneur who intends to open a company in Montenegro can take advantage of the Montenegrin Law on Foreign Investments which guarantees that foreign entrepreneurs can set up and run a company in this country under the same regulations as local investors.
The current situation of companies in Montenegro
An overall picture of the companies’ market in Montenegro will help you in knowing your competition and elaborating the right strategy. The statistics conducted by the Montenegrin Registers Department regarding the types of companies in Montenegro states that 61% from the companies in this country are single-member private limited companies, followed by the limited liability companies - 21,5%. From the remaining, 12.2% represent the entrepreneurs, 1.2% the joint-stock companies and 1.7% co-operative societies.
The entities in Montenegro are in a proportion of 98.6% small enterprises and only 1.4% of them are medium-sized or large companies.
Please contact our law firm in Montenegro for complete legal assistance when opening a company in this country.