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Preparation of Founding Act – The First Step to Form a Company in Serbia

Dec 10, 2022

HBL > News > Article > Preparation of Founding Act – The First Step to Form a Company in Serbia

A founding act is the first and the most important document you need to have if you want to open a company in Serbia as an LLC.

A bank account, registration to the Tax Administration, mandatory social insurance, and all the other steps come after. A draft of a founding act is the first step when starting a company, i.e., an LLC.


How to Start the Company Formation Process in Serbia?


There have to be certain general legal acts when starting a company. One of them is the Founding Act, which represents a contract about the starting of a company.

A limited liability company in Serbia can be a single-member or a multi-member, i.e., one or more founders could start it. When establishing a company in Serbia, the following documentation should be attached:

  • A registration form of founding a legal entity for registration in the taxpayer registry
  • A Founding Act of the company, with certified signatures of company members
  • Proof of the identity of members of the company
  • A decision on appointing a representative, unless determined by a legal act
  • A bank confirmation about the payment of a deposit, if the deposit is paid to the LLC until the establishment
  • A member’s agreement of the value estimate of the non-cash stake if the stake enters the company until the establishment
  • Proof of paying the registration fee for founding a company as well as the payment proof for registration and publishing of a Founding Act


Primary Definition of a Founding Act


A founding act is a general legal act of a business company that is made while establishing a company and is made by one or more founders of the said company. It regulates the management of a company and all other issues of importance for business.

If one person establishes an LLC, it’s called a single-member company; if two or more people founded it, it’s called a multi-member company. Therefore, the Founding Act has two forms, depending on the number of founders.


The founding act is done as follows:

  • A decision of founding a limited liability company – if a company is founded by one person (has one founder)
  • A contract on establishing a limited liability company – if a company is founded by multiple people (multiple founders).

It’s important to emphasize that the founding act could exist in a written form or as an electronic document.


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Content of the Founding Act


A founding act of a business company should contain: the following

  • Information on company members,
  • Business name and headquarters.
  • Activity,
  • The total amount of company capital,
  • The amount of monetary stake, as well as a description of non-monetary stake for each member,
  • Time of payment of monetary stake and entry of non-monetary stake,
  • Every member’s share in the total company capital,
  • Determining the company’s body and its function,
  • Representation of the company,
  • Duration and termination of LLC,
  • Other items


How to Prepare a Founding Act Needed for Establishing a Company?


We will describe the process of making a founding act in the following pages, but we recommend consulting with a bookkeeping agency for help with preparation.


1. Information about company members: Founders and company members could be individuals and legal entities. For individuals, basic data is included: full name, personal identity number, and the address of residence (for every individual). Legal entities should include a business name, company registration and tax identification numbers, and company headquarters.



2. Business name and headquarter: The company’s founding act contains the business name and the headquarters. Mandatory data include name, legal form, address, and headquarters location. Also, it must be written in Cyrillic or Latin. A company with a short business name could also be included in the founding act. A short business name only includes the legal form’s name and label.


3. Business activity: Following the classification of the company activity, the company is required to submit its desired field of activity in the founding act. It contains four digits – the code and the name of the activity.


4. The total amount of company capital: The founding act of a company must include a registered part of total capital, which is: the total registered monetary amount and total registered non-monetary amount.

A minimal basic capital for a limited liability company is 100 dinars (less than one Euro). Therefore, the size of a member’s share in a company depends on the amount of his stake in the total capital.


5. Amount of monetary shareholding capital and non-monetary stake: For each founder, the amount, type, and value of the stake are stated separately. The monetary amount is stated if the money is given as a stake. If a non-cash stake is given, a description, type of stake, and its value are stated.


6. Time of payment of monetary stake or contributing a stake to the basic capital: If a stake is not paid, it has to be paid to the company account at least until the defined date. The deadline is the same for the non-stated non-monetary stake. The legal deadline for payment or stake entry is five years.


7. The members’ share: In the founding act, the share of every member is displayed in percentages.


8. Company’s body and jurisdiction: Every LLC founding act, whether a single-member or multi-member limited liability company, needs to have management bodies stated. Also, it is advisable to state their jurisdictions.


9. Legal representative: Another piece of information that should be included in the document is the legal representative’s name. It is the entity responsible for and representing the company. It is named as a CEO in the founding act, and his name, surname, address, and personal identification number are stated.



10. Duration and termination of an LLC: The Founding Act should contain information about the period of the founding of a company, whether it’s indefinite or a defined period. Also, it must state how the company ceases to exist and deletes itself from the Business Registry.


11. Other topics: It is recommended that the founding act contains additional elements for regulating issues important for establishing a company and business, shares transfer, purchase rights, and others. Also, it can contain total expenses for setting up a company, special benefits, business conditions, signing issues, and more.


Verification of the Founding Act


The company’s founding act becomes effective only when it is signed by the founder and certified by the seal of the person authorized to verify the signatures, manuscripts, and transcripts (the notary). Therefore, all founders must sign the founding act and consent to its contents, verifying it with the notary.

In the case of an electronic document, a personal signature may replace a qualified electronic signature. The notary should also affirm the signature verification form for the legal representative (OP form), which is submitted to the bank to open a business account.


Changes to the Founding Act


The founding act of an LLC may be changed by a decision of the shareholders’ general meeting, and members must vote on the decision. In other words, the company’s founding act can be changed only by voting and if most voters agree with it.


Another important thing is that all changes to the founding act must be registered with the Business Registers Agency. After each change, the clarified text of the founding act is drawn up and then sent to the business register to record the change.


Nullity of the Founding Act


The founding act may be void in the following cases:

  • It has no form described by law,
  • The activity of LLC stated in the founding act is contrary to the compulsory regulations or public order,
  • The act does not contain obligatory elements and regulations on the company’s business name or members’ stakes. The amount of the base capital and the main activity,
  • All signatories at the time when the founding act was concluded were legally or commercially incompetent,
  • Only the appropriate court can determine the nullity of the founding act, and if it is established, then the company ceases to exist. But, if the reason for nullity is removed, the founding act will be consolidated, and the legal entity will continue to exist.