Company formation in Montenegro Types of business entities
AMR Global Advisors
December 3, 2020
About Montenegro – attractive investment destination
Montenegro is increasingly attractive for foreign investors offering many investment opportunities and impressive natural potential. The country has a constant growth of net foreign investments, in amount of 241 million € by the end of July 2019, which is 23% more than in 2018, according to data from the Central Bank of Montenegro (CBM). According to CBM estimates, about 10 billion € have flowed into Montenegro since 2006.
The country is in the process of negotiations to become a member of the European Union (EU) and therefore constantly improving regulations, reducing costs of taxes and social contributions thus contributing investment friendly environment. The euro is used as Montenegrin legal currency which is another favorable advantage for foreign investors.
The country has the lowest corporate tax rate in Europe and is therefore a major attraction for international investors. The Montenegrin tax system applies incentives for the development of the companies. Corporate and income tax rate are quite low compared to other countries. Montenegro provides fast residence and work permits for the partners and family members of the foreign investors.
The structure of investments is changing. From the former huge interest in real estate, foreign investments are now directed to tourism and banking. Tourism, banking sector, infrastructure, energy, agriculture and real estate are sectors where foreign investors invest the most, and the value of net foreign investments by the end of July 2019 is 23% higher compared to the same period in 2018.
Montenegro applies equal treatment principle to all companies, local and foreign. Registering companies in Montenegro is a simple process. Before starting, an entrepreneur has to be familiarized with types of companies that can be registered in Montenegro.
Types of business entities
– According to Montenegrin law there are 6 types of companies that can be established:
– Entrepreneur – minimum capital required – 0 €
– Limited Liability Company (LLC) – minimum capital required – 1€
The most common forms for business entities are LLC and JSC.
Limited Liability Company (LLC) in Montenegro can be established by at least one shareholder but the total number cannot exceed 30. The liability of the members is limited by the capital contribution. This form of entity does not require share capital. Opening a bank account used for transactions must be opened. Shareholders general meeting is the highest authority in the company. They appoint directors making decisions and being responsible for every day work.
Joint Stock Company (JSC) is intended for large businesses where a capital of 25 000 € is required. Its shares can be transferable to the public. The major decisions are made by shareholders general meeting. They appoint Board of Directors responsible for daily decisions.
General Partnership (GP) is also available for foreign entrepreneurs in Montenegro. This form of business entity requires at least two members known as partners. Partners can be other companies or individuals. All partners are obliged to enter partnership agreement and are equally responsible for business financials. Profit generated by partnership is equally shared to all partners.
Limited Partnership (LP) has actually the same requirements as GP with the main difference between members. This type of partnership must have a general partner who will also manage the business and a limited partner who will act as a silent partner. The general partner is responsible with their personal assets for the business` obligations and limited partner is accountable only in the limit of their contribution.
Part of foreign company or branch can be also established in Montenegro. A foreign investor who has a company in another country, can open a branch providing minimum share capital and taking over the whole responsibility for business operations.
Detailed comparison overview on company structure in Montenegro can be found here.
AMR Global Advisors can help you set up any of the above mentioned business forms in Montenegro. Our team of professionals will lead you through the process of company formation in an easy and efficient way, saving your time and money.