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What will the amendments to the Law which…

David Bojić • apr 20, 2023

What will the amendments to the Law which will establish business entities exclusively electronically bring us?

By the Law on Amendments to the Law on the Registration Procedure at the Agency for Business Registers (“Official Gazette of RS” No. 99/2011, 83/2014, 31/2019 and 105/2021) from 2021 (hereinafter: Law), among other things, it is foreseen that after the expiration of the period of 18 months from the date of entry into force of this law, the provision that foresees the electronic form of establishment as the only possible way of establishment of companies in the Serbian Business Registers Agency (hereinafter: SBRA) will begin to be applied. As the end of this period is approaching, in the following text you will be able to familiarize yourself with the basic things regarding the electronic establishment of companies.

Namely, starting from May 17, 2023, SBRA will accept applications for the establishment of a business company exclusively in electronic form. In the following text you can find answers to the following questions:

  • What is electronic incorporation of the company and how it works;
  • Differences and advantages compared to the old way of establishing companies;
  • The role of lawyers in the procedure of electronic establishment;
  • Procedure of electronic establishment in relation to foreigners.

What is electronic incorporation of the company and how does it work?

Electronic incorporation is a way of establishing business companies that is carried out on the SBRA website through a user application. As we mentioned, from May 17, 2023, the only way in which it will be possible to establish business companies is precisely this, by submitting an e-application with the necessary documents that must be digitized (in electronic form signed with an electronic signature).

There are four important prerequisites for submitting an e-application. The applicant must have:

  • qualified electronic certificate (electronic signature) issued by a certification body in the Republic of Serbia;
  • installed electronic card reader and installed NEXU application for electronic signature;
  • the possibility of electronic payment using a Visa, Dina or MasterCard payment card;
  • opened an account on the system of the Serbian Business Registers Agency, in order to access the application.

Differences and advantages compared to the old way of establishing companies

Submitting the establishment registration application in paper form, directly at the SBRA headquarters or by postal courier, was the usual practice of submitting applications. However, with the entry into force of the amendments to the Law, registration applications for the establishment of business companies (Limited Liability company, Joint-stock company, Partnership company, Limited Liability Partnership company) will no longer be able to be submitted in this way, i.e. it will not be allowed to submit a paper application for the establishment of a business company, but the application can be submitted exclusively in electronic form through a special user application.

Other legal forms that are registered in the Register of Business Entities (cooperatives and cooperative associations, public companies, branches and representative offices of foreign companies) will still be able to be established in the current way (on paper), with the fact that it will also be possible to submit electronic applications for those who want it. Additionally, we draw attention to the fact that Article 9, paragraph 2 of the Law stipulates that the electronic method of submitting an application is the only permitted and possible method of submitting an application, but only when it concerns the establishment of companies, and in this respect all other registration applications that are submitted to the SBRA, for example, registration applications for change of headquarter, e-mail address or director of the company are still submitted in paper form directly at the SBRA headquarters or by postal courier. However, as the SBRA announces, it will soon be possible to submit these registration applications for data changes electronically, but in such a way that they represent only a possibility and not the only possible way of submitting these applications.

One of the differences between the electronic registration of the establishment compared to the paper ones is that the Act of Incorporation no longer has to be certified by a notary because it is not in paper format, but rather an electronic act that the founders now sign with their electronic signatures and thus confirm their identity (which the notary used to do by putting his clause on the paper document).

The basic advantages of electronic incorporation are reflected in the fact that in this way conditions are created for reducing costs and time for establishing a company, the level of services for citizens is improved and expanded, and the processing time of requests by the Agency is reduced, which contributes to greater efficiency.

This practice is in accordance with the concept of e-Government and digitization of the entire economy in order to speed up legal transactions and contribute to the preservation of the environment. Also, it should be noted that with these changes, the Republic of Serbia is harmonizing company law with the law of the European Union, which in the last decade has a pronounced trend of digitalization, thus achieving the goal it strives to achieve, which is greater efficiency.

The role of the lawyer in the procedure of electronic establishment of the company

At this point, the question arises as to what the consequences of the amendment of the Law will be in a situation where a foreign natural person or legal entity wants to establish a business company in Serbia through its legal representative.

First of all, it should be emphasized that the SBRA accepts all electronic certificates issued by the certification bodies of the Republic of Serbia, while on the other hand it recognizes those certificates issued in a foreign country only if they are on documents signed with the electronic signature of the state with which the Republic of Serbia has a ratified mutual agreement recognition of trusted electronic services. However, as these agreements are not applied in relation to the largest number of countries due to the lack of reciprocity conditions, electronic documents signed with an electronic signature issued by the certification body of a foreign country will not be accepted.

As the electronic signature possessed by foreigners was most likely issued by the certification body of the country where that person comes from, it will not be important for the procedure of electronic establishment in the Republic of Serbia, since SBRA does not accept foreign certificates for the aforementioned reason. It follows from this that it is necessary for a foreign citizen to first of all obtain an electronic signature issued by a certification body in the Republic of Serbia, and only then can he establish a company in Serbia. However, difficulties may arise at this point because the Law on Electronic Document, Electronic Identification and Trust Services in Electronic Business (“Official Gazette of Republic Serbia” No. 94/2017 and 52/2021) stipulates that the issued certificate can only be received in person by the person to whom the certificate refers. Although justified and introduced for a reason, this provision creates numerous difficulties in practice, and it will also be a problem for electronic establishment of the company in situations where a foreign citizen is not physically present in Serbia and therefore is not able to collect the certificate in person.

Based on all of the above, the process of establishing a business company whose founder is a foreigner must be carried out through a lawyer in the following manner. First of all, it is necessary for the lawyer to have a signed power of attorney on paper, which he will then digitize and sign with his electronic signature. Then it is necessary to provide the lawyer with documentation, also on paper, which meets all the requirements for registration (that it is in the original, with a translation by an authorized interpreter, where it is necessary to be supplied with a stamp or an apostille), the lawyer digitizes such original documentation (scans, translates in pdf format and signs with a qualified electronic signature) and finally submits it electronically to the SBRA.

If in the country of issuance of the document (e.g. an extract from the foreign register) it is issued exclusively in electronic form, the procedure is as follows:

  • a foreign electronic document that is not recognized in Serbia must be converted into a paper form, but by having a foreign notary public or other authority responsible for notarizing copies abroad confirm with their clause that it is a copy faithful to the electronic original,
  • then such a document is translated into Serbian,
  • the lawyer digitizes it all together (certified copy and translation).

Apart from the requirement that the lawyer, who digitized the document, is also the applicant of the registration application, it is also necessary that he is registered in the directory of the Bar Association of Serbia, which the registrar checks by inspecting the “BAS” directory.