30 May 2023

Serbian Public Enterprises to Transform into Joint Stock Companies or Limited Liability Companies

The Government of Serbia has adopted the proposed Act on the Management of Enterprises Owned by the Republic of Serbia, which foresees the transformation of public enterprises into joint-stock or limited liability companies.  Twenty-three public enterprises are thus set to change their legal form.  A complete automated English translation of the Draft Act is available here.

In this transition, the equity capital of a public enterprise will be converted into shares or stakes, depending on the legal form.  The change maintains the public enterprise’s legal subjectivity and business identity without liquidation or interruption of legal continuity, retaining its identity in legal and business terms.

The proposal also obliges public enterprises to provide a list of real estate they own or use to the Ministry of Economy within three years of applying the Act.  Based on this information, the government, based on the proposal of the Ministry of Economy, will decide which real estate in use will be transferred into the capital of the company.

Within one year of applying the Act, the government will adopt the necessary bylaws to change public companies’ legal forms into joint-stock or limited liability companies.

The Draft also introduces new governance requirements.  Directors and representatives of state-controlled companies will have to take a corporate governance exam organized by the Chamber of Commerce of Serbia.  The deadline for passing the exam is one year from the enactment of the Act for existing directors and officers or one year from the appointment date if the Act has already come into effect.

This legal change aligns with the government’s action plan implemented on June 24, 2021, between 2021 and 2023.  The action plan implements the Strategy of State Ownership and Management of Business Entities from 2021 to 2027.  The Draft Act on the Management of Enterprises Owned by the Republic of Serbia was developed by the objectives, activities, and measures set out in these policy documents.