It is a common occurrence that a person (a citizen of Serbia or a foreigner) or a company (a Serbian company or a foreign company) registers an LLC (in English “LLC”) and starts business, but after some time they decide to sell shares of company to another person (a citizen Serbia or a foreigner) or another company (Serbian company or foreign company).
In the Agreement on the transfer of shares in a company, there is a legal restriction the seller of the shares (if there are several members in the LLC) is obliged to offer the shares to all other members of the company before selling the share to the buyer. This obligation that the shareholder must offer his share first to the other shareholders in the LLC can be circumvented in accordance with the law of Republic of Serbia. This is prescribed by the Law on Business Companies of the Republic of Serbia (“Official Gazette of the RS”, no. 36/2011, 99/2011, 83/2014 – other laws, 5/2015, 44/2018, 95/2018, 91/2019 and 109/2021)
A person (Serbian citizen or foreigner) or company (Serbian company or foreign company) can sell shares in the company, or can buy shares of company. We emphasize that the Contract on the purchase or sale of shares in the case of a company is concluded by the legal representative/director.
A share in a company can be sold to another person or company, with or without compensation, i.e. free of charge.
The contract on the purchase and sale of shares in a company must be notarized. Generally, both parties to the contract come to a notary in Serbia for the purpose of certifying the Contract on the purchase or sale of shares. However, there is a possibility that one contracting party, on the basis of a special power of attorney for a lawyer, authorizes the lawyer to conclude a contract on the purchase or sale of shares with the other party at a notary in Serbia. There are even situations when both parties to the contract are not in Serbia, but through a special power of attorney for a lawyer that they certify in their country, they send power of attorney to lawyers in Serbia who can conclude the Contract on the purchase or sale of shares before a notary in Serbia.
Often, in our practice, it is foreign citizens or Serbs living abroad who authorize our law office to conclude the aforementioned Share Purchase Contacts through a power of attorney, in order to save travel costs to Serbia and loss of time.
After the conclusion of the Share Purchase Agreement and certification before the competent public notary, the process of registering the Share Purchase Agreement in the The Serbian Business Registers Agency follows, in order to complete the entire process. The procedure for registering the Share Purchase Agreement begins with the submission of the appropriate registration application to the Business Register Agency, which is accompanied by appropriate documentation, notarized by the Share Purchase Agreement, the identification document of the buyer of the shares, or a certificate of registration of the company if it is the buyer of the share, proof about the fee paid for such a change, as well as a power of attorney if the registration application is submitted through a lawyer. After submitting the registration application, the The Serbian Business Registers Agency issues a Decision stating the change in ownership of the share, and from that moment on, the entire process is considered complete.
Bearing in mind all of the above, if you hire a lawyer/law firm, the legal actions we provide to the Client are:
1. Composition of the Share Purchase Agreement/Contract
2. The composition of the Special Power of Attorney, which is certified by the Client in the country where he lives and by which he authorizes the lawyer to conclude the Agreement on the purchase and sale of shares in the company (either as a buyer or as a seller) on his behalf and for his accounts, and with a precisely specified person or a specific company. The special power of attorney has a strictly defined content, which states who is the buyer of the share, who is the seller of the share, for what amount the share is sold, that is, for what amount the share is bought, that is, whether the share is sold free of charge.
3. Organization of the notarization of the Share Purchase Agreement at the competent notary in the Republic of Serbia, which entails submitting the said Agreement to the notary for verification of the correctness of the document, and after that we schedule an appointment for the notarization of the Share Purchase Agreement,
4. Draw of the appropriate registration application to be submitted to the The Serbian Business Registers Agency, as well as the attachment of the appropriate documentation that is necessary for the registration of the change of share, as well as the personal payment of the fee for the change of share at the APR,
5. Taking over the Decision on the change of shares from the The Serbian Business Registers Agency
6. If necessary, sending the original Decision on the change of share to the Client’s address.
Tax and Share Transfer Agreement. As for the tax on the transfer of shares, the same is prescribed in the LAW ON CITIZEN INCOME TAX (“Official Gazette of the RS”, no. 24/2001, 80/2002, 80/2002 – other laws, 135/2004, 62/2006 , 65/2006 – corr., 31/2009, 44/2009, 18/2010, 50/2011, 91/2011 – decision of the US, 7/2012 – harmonized foreign exchange, 93/2012, 114/2012 – decision US, 8/2013 – harmonized domestic foreign law, 47/2013, 48/2013 – amended, 108/2013, 6/2014 – harmonized domestic foreign law, 57/2014, 68/2014 – other law, 5 /2015 – harmonized financial statements, 112/2015, 5/2016 – harmonized financial statements, 7/2017 – harmonized financial statements, 113/2017, 7/2018 – harmonized financial statements, 95/2018 , 4/2019 – harmonized financial statements, 86/2019, 5/2020 – harmonized financial statements, 153/2020, 156/2020 – harmonized financial statements, 6/2021 – harmonized financial statements, 44 /2021, 118/2021, 132/2021 – harmonized domestic foreign law, 10/2022 – harmonized domestic foreign law, 138/2022 and 144/2022 – harmonized domestic foreign law). Namely, income from the sale of shares is considered income according to the Law on Personal Income Tax and is subject to taxation. The share transfer tax is 15%. A natural person who has received compensation from the sale of shares must submit a tax return to the competent unit of the tax administration within 30 days.
Example: Agreement on the purchase and sale of shares in a company
Based on Article 175 of the Law of Companies in Republic of Serbia (“Official Gazette of the RS”, no. 36/2011, 99/2011, 83/2014 – other laws, 5/2015, 44/2018, 95/2018 and 91/2019) member of the limited liability company _____________, headquarters: _____________, ul. _____________, personal identification number: _____________, tax identification number: _____________,
1. _____________, citizen _______________, passport number: _____________, country of passport issuance: _____________ (hereinafter: Transferor),
and
2. __________________ from __________ (hereinafter: Acquirer),
concluded on _______.2023. year, as follows:
SHARE TRANSFER AGREEMENT
Article 1.
The contractors agree:
– that the Transferor is a member of the company ______________, registered office: ______________, ul. ______________, registered in the Register of Business Companies at the Agency for Business Registers of the Republic of Serbia with registration number: ______________;
– that the basic capital of the company ______________ on the date of conclusion of this contract amounts to: 100.00 dinars, registered cash contribution,
– that the Transferor is the owner of shares in the company ______________ in the amount of 100.00% of the Company’s basic capital,
Article 2.
On the day of the conclusion of this contract, the Transferor transfers to the Transferee, free of charge, its entire share in the total capital of the company, in the amount of 100% of the basic capital ______________, which represents RSD 100.00, the registered cash contribution.
On the day of the conclusion of this contract, the Transferor transfers to the Transferee, free of charge, its entire share in the total capital of the company, in the amount of 100% of the basic capital ______________, which represents RSD 100.00, the registered cash contribution.
