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Company Formation Montenegro

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Company Register in Montenegro

Updated on Thursday 07th May 2020

The entrepreneur willing to open a company in Montenegro must be familiarized first with the types of business defined by the law. These are the limited liability companies, the public limited liability companies, the general partnerships, the limited liability partnerships. A foreign company may also open a branch in Montenegro. Our company formation experts in Montenegro can help businessmen open any of the company types available in the country.
 

The Company Law in Montenegro

 
The main law that provides for the registration of companies in Montenegro is the Company Act. According to it, any local or foreign businessperson can start a business in Montenegro, as long as all the requirements are met, and the company is registered with the Companies House.
 
Recently, Montenegro has also enabled the Foreign Investment Law under which foreign investors are defined under clearer conditions and their rights and obligations are thoroughly explained. Montenegro is one of the few Eastern European countries to provide for specific conditions for foreign entrepreneurs to start companies here.
 
If you plan to open a company in Montenegro and need assistance or information about the laws to respect, you can rely on our agents.

Types of business entities in Montenegro
 

The Limited Liability Company (Drutvo s ogranienom odgovornou) in Montenegro can be formed by at least one shareholder but the total number of them cannot exceed 30. The liability of the members of a D.O.O is limited by the contribution to the capital. Even though it doesn’t require a minimum share capital, the entity must open a bank account which will be used for various transactions. The capital of a D.O.O is divided into non-transferable shares. The general meeting of the shareholders is the highest instance in the company and the directors appointed by it are taking all the necessary decisions in order to continue the business every day.
 
A Joint Stock Company (Akcionarsko drutvo) is designed especially for large businesses due to the fact that it requires a high amount of capital (25.000 EUR) and the shares of it can transferable to the public.  The major decisions are also taken by the General Meeting of the shareholders but the daily decisions are taken by the Board of Directors appointed by it. An auditor is also appointed in order to check the company’s finances.
 
The foreign investors which own a company in another country can open a Montenegro branch by providing the minimum share capital and by taking the whole responsibility for its actions. Other forms of business opened by the foreign companies are the subsidiaries and in research purposes, the representative offices.
 
The general partnership is another business form available for foreign entrepreneurs who want to operate in Montenegro. The general partnership can be created by at least two members, known as partners. These can be natural persons or other companies, or a natural person and a company.
 
In a general partnership, all the members will be required to enter a partnership agreement and will be equally responsible for the business’ debts and obligations. They will also have the same benefits in terms of profits generated by the partnership.
Foreign enterprisers can also open limited partnerships in Montenegro. The same requirements are applicable when opening a limited partnership, with the main difference between the members of the business. In this type of partnership, there must be a general partner who will also manage the business and a limited partner who will act as a silent partner. The general partner will be responsible for their personal assets for the business’ obligations, while the limited partner will be accountable only in the limit of their contribution.
 
The simplest business form when starting a business in Montenegro is the sole proprietorship or sole trader. This type of business requires one member who must be a natural person and who will be entitled to the whole profits of the company. He or she will also be responsible for the business’ debts with their personal assets.
 
Our company registration advisors in Montenegro can help foreign investors set up any of the business forms described above. Businessmen interested to know the amount of money they will have to pay in taxes in Montenegro are invited to use our tax calculator.
 

Company formation steps in Montenegro
 

The following steps must be completed in order to open a company in Montenegro:
  1.           the documents related to the incorporation of the company must be prepared - they must be drafted and notarized;
  2.           the company name which must be unique must be chosen and reserved with the Trade Register in Montenegro;
  3.           the business owners must also find a legal address for the Montenegro company - a virtual office can be useful;
  4.           the incorporation documents must be filed with the Companies Registrar of Montenegro which will issue the Certificate of Registration;
  5.           the corporate bank account must be opened with a local bank in Montenegro, and the share capital will be deposited;
  6.           the company must register for tax, VAT and employment purposes with the tax authorities in Montenegro;
  7.           the necessary business licenses must be obtained with the appropriate authorities before starting any activity.
We remind foreign investors they can benefit from virtual offices services in Montenegro. This type of service can be used as a legal address when setting up a company in Montenegro. We can also help with the preparation of the documents need for company incorporation in this country.
 
Below, we have prepared a scheme showihg how to set up a company in Montenegro:
 
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Incorporation documents in Montenegro

 
At the beginning of the company formation procedure in Montenegro, the company's foundation documents must be certified at the basic court (due to the fact that the job as a public notary is not officially recognized in Montenegro).
 
After that, the desired name of the company established in Montenegro is checked online and then the applicant must deliver all the registration documents at the Commercial Court. The following documents must be delivered in order to open a company in Montenegro:
  • - foundation act;
  • - the articles of association;
  • - a list with all the founders of the company;
  • - managers and members of the board of directors;
  • - name of an executive director (and their details);
  • - the name of the company;
  • - the address of the headquarter and the address for correspondence;
  • - persons authorized to represent the company;
  • - written consent of the members of the board of directors;
  • - a document which confirms the payment of the registration fee.
 
The Montenegro Registry will notify the Official Gazette who will publish a notice regarding the newly formed company. 
 
If the company will have employees, it must register those for Health and Pension at Tax Administration counter. After that, the founders order a seal or stamp because it is essential for future company transactions.  A bank account is opened once the company is registered with the Company Registry and tax office and the Statistical Office. 
 
The last step of the company formation procedure in Montenegro is notifying the competent inspection authority and the municipal authority in charge of economic affairs. All the steps described above can be handled by our experts in company registration in Montenegro.
 

Shareholders in Montenegrin companies

 
According to the Company Law, any natural or legal persons, local or foreign, can act as a shareholder in a Montenegro company. The shareholding rights are obtained based on the contribution to the capital of the business. The minimum number of shareholders in a company in Montenegro is one, however, depending on the type of structure to register, a maximum number needs to be established in accordance with the number of shares issued.
 
Shareholders have various rights and obligations in a company, and they must attend the annual general meeting which must be established upon the incorporation of the company. It is good to know that during the first year of activity, the annual general meeting must be held no longer than 18 months after the registration.
 
Montenegro shareholders have the following rights in the company:
 
  • - to participate to the annual general meetings where they can appoint or dismiss company directors and vote various resolutions;
  • - they are entitled to the company’s profits under various forms, including dividends, in accordance with their contribution to the capital;
  • - to split the remains of the company if it is liquidated.
 
An important aspect to consider when opening a company in Montenegro is that the shareholders do not have decision-making powers in respect to the day-to-day activities. Also, they are not entitled to own company properties or intellectual property where the business is organized as private limited liability company or joint stock company. This occurs between a clear distinction is made between the shareholders and the legal entity.
 
When it comes to the powers of shareholders, these are:
 
  • - the power of deciding any increase or decrease in the capital of the company;
  • - the power to appoint and remove company directors and other executives, including auditors;
  • - the power to decide to end the activities of the company by voluntary liquidation.
 
When setting up a business in Montenegro, it is useful to know that there are two types of shareholders: majority and minority shareholders and their type is decided in accordance with the types of shares issued by the company.
 
Our company formation specialists in Montenegro can offer more information on the treatment of shareholders, their powers and duties, and can also help you draft shareholders’ agreements.
 

Company directors in Montenegro

 
In terms of management, a company can have at least one director if it is a private company and at least 3 if it is a public one. In the joint stock company, at least one director must be a Montenegro resident. Also, corporate directors are not allowed in local companies, however, branch offices and subsidiaries can appoint corporate executives.
 
The directors are appointed by the shareholders before the company is registered, as their name(s) must be recorded with the Trade Registrar in Montenegro. However, one or more directors can be removed during the general annual meeting.
 
Company directors also have various rights and duties towards the company and the shareholders, and our Montenegro company formation representatives can offer more information on these.
 

Costs for company formation in Montenegro

 
In order to open a company in Montenegro, the following costs must be considered:
 
  1. the business registration fee imposed by the Companies Registrar in Montenegro is one of the lowest in Europe and is established at 22 EUR;
  2. the virtual office cost: it will cost approximately 75 EUR per month to benefit from a registered address in one of the most renowned office buildings in Montenegro;
  3. the minimum share capital: there are no share capital requirements for opening a private limited liability company in Montenegro;
  4. the company formation fee is around 500 EUR for those who want to take advantage of a quick and simple registration procedure of a business;
  5. the accounting fee for one month is approximately 130 EUR if you do not want to worry about the bookkeeping of your Montenegrin company.


Tax registration for Montenegro businesses

 
The company registration procedure in Montenegro must be followed by the registration for tax purposes. This implies for a business to obtain a tax identification number, to register for social security and health insurance purposes as an employer (if the company will hire personnel) and obtain a VAT number. However, VAT registration is not mandatory for all businesses in Montenegro, but only for those which will engage in trading activities from the beginning.
 
With respect to taxation, it is good to know that Montenegro offers one of the lowest corporate tax rates in Europe of 9%. If you need advice on the taxation system in Montenegro, our company formation firm can explain the legislation in this country.
 
 

Licensing requirements for companies in Montenegro

 
One of the most important phases of opening a business in Montenegro is related to licensing. All companies established in Montenegro are required to apply for business licenses with relevant authorities, meaning with the governmental agencies or ministries governing the industries in which they will complete their operations.
 
Our company formation agents in Montenegro can ease the process of obtaining various business licenses for newly created companies.
 

Mergers under the company law of Montenegro

 
A merger is a form of corporate restructuring under the Montenegro Law on Business organizations. One form of merger is when two or more companies join together through the transfer of assets and liabilities and the issuance of share in exchange for the transfer. In a merger, one company is absorb and loses its own legal identity. Another form is when two or more companies combine to form an entirely new entity which, in turn, issues shares to those corporations that were merged. Our experts can guide you through the merger process, but can also help you open a company in Montenegro.
 
 

How easy is it to hire personnel in Montenegro?

 
The Montenegro workforce is considered to be very well trained so it’s not hard to find suitable candidates for the vacant places in the companies. Many of them are speaking English so many foreign investors can find here personnel for their companies. It is advisable to hire an employment agency in order to find suitable candidates in a short period of time.
 

Company liquidation in Montenegro

The procedure of terminating a business is also covered by the Company Law, according to which a company can be liquidated voluntarily through a resolution passed by the shareholders, or mandatory upon a request filed by creditors with a Montenegrin court of justice. There are slight differences between the two procedures in terms of liquidator appointment and documents preparation. The duration of the procedure is completed much faster when the shareholders decide to liquidate the company – 7 days compared to the nearly 2 months in case of mandatory liquidation.
 
The liquidation procedure is completed once the company is stricken off the Trade Register.
 

What are the main points of interest for foreign investors?

 
Since gaining its independence in 2006, Montenegro has been considered a safe economic place with a rising economy and a decrease in inflation. The most strongly developed area is the service sector, mostly represented by tourism.
 
Montenegro is included in the top 10 holiday destinations in the world. More than 80 tour operators from more than 15 countries are organizing 
holidays here. The government is not making a difference between the foreign investors and the local investors related to the land laws. This makes the investments in real estate very advantageous (also due to the small prices of the properties).
 
 
A Free Trade Zone for the repatriation of profits and residency rights was established by the government in Montenegro in order to attract foreign 
investments. Montenegro’s government investments policies are especially focused on the manufacturing industry, the construction sector, and the tourism industry. If you want to open a company in Montenegro in one of these sectors, our incorporation agents can assist you.
 

Economy overview in Montenegro

 
Since Montenegro has gained its independence back in 2006, the country struggles to become one of the most important destinations for investors who want to start a company in Europe. The most developed sector in Montenegro is tourism. The Government has invested sharply in infrastructure, making the country more accessible for tourists but also for investors.
 
The economic climate is stable and continuously growing. The fiscal system is very favorable; the income tax may vary from 17 % to 0%, the VAT can vary from 17% to 7% and in some cases, the capital gain tax is 0%. The used currency is Euro and this facilitates the trades.

For more details about the investment options available in this country or for complete company formation services, please contact our specialists in company registration in Montenegro.
 
Our company formation firm is part of Bridgewest, an international legal network. Clients that need company formation services in Croatia, United States of America, Indonesia or Seychelles or legal assistance in Montenegro are invited to contact our partners.
 

Meet us in Montenegro


Call us now at +382 20 620 312 to set up an appointment with our company formation agents in Podgorica, Montenegro. Alternatively you can incorporate your company without traveling to Montenegro.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Montenegro.

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