The new Law on Business Entities of Montenegro (“New Law”) was enacted on 25 June 2020 by the Parliament of Montenegro and has entered into force on 11 July 2020.
Below are listed the novelties brought by the New Law.
I Two-tier system of corporate governance
The New Law introduces the possibility for the joint stock companies (“JSC”) to organize its system of corporate governance either as a one-tier system, which is a legal solution from the previous law or as a two-tier system, which is a novelty. Management bodies of one-tier system of corporate governance are the board of directors and the executive director, and the management bodies of two-tier system are supervisory and management board. Also, limited liability companies (“LLC”) which are considered major legal entities in accordance with the accounting laws are required to be organized either as one-tier or two-tier system. Some legal entities will not have a possibility to choose the system of corporate governance, such as banks, since lex specialis for the banks – Law on Credit Institutions, which begins to be applicable on 01 January 2021, prescribes imperatively two-tier system of corporate governance.
II Rights of the dissenting shareholders
The dissenting shareholders who voted against the decision of the shareholders’ assembly in the cases which are exhaustively enumerated in the New Law, have the right to request from the company the repurchase of the shares in the amount of the average market price of the shares in the previous six months from the day of the enactment of the decision of the assembly or in the amount of the proportionate part of the net value of the assets of the company on the day of the enactment of the decision. The New Law stipulates the definition of the net assets value of the company as a difference between the assets and the obligations of the company. The dissenting shareholder can initiate a legal proceeding in case the company does not pay the indisputable amount, or if the paid amount does not match the owed amount or if the market price cannot be determined in which case the court would determine the value of the shares.
III Nominal Value of Shares
The Company may issue shares with or without nominal value. In the event that the company issues the shares without nominal value, all other shares must be without nominal value. The Company may not issue the shares below the nominal value, and in case that the shares do not have the nominal value, the shares cannot be issued below the book value.
In the final provisions, the New Law stipulates that JSC, which on the day of entering into force of this New Law have the regular shares with different nominal value, are obliged to homogenize shares in order to equalize the nominal value, within one year from the date of entry into force of this New Law, in a way to keep the proportionate participation in total number of shares.
IV Online registration and electronic participation in the shareholders assembly
The general tendency of the New Law is to provide more digital approach to several legal institutes, including the participation in the assembly electronically as well as to prescribe the possibility of online registration within the Central Registry of Business Entities. The New Law stipulates the following ways of participation in the assembly electronically: (i) transmission of the assembly directly (ii) two-way communication which enables shareholders to address the assembly from another location (iii) by voting electronically, before or during the assembly. Power of Attorney for participating in the assembly can also be given electronically, in accordance with the law which stipulates the electronic signatures.
V Prokura/ Power of Attorney
The New Law stipulates a special kind of power of attorney (“PoA”) (Montenegrin prokura) by which the company authorizes one or more natural persons to, in the name and on behalf of the company, concludes legal transactions and undertakes other legal actions. PoA must be notarized and registered within the Central Registry of Business Entities of Montenegro. The natural person authorized by PoA can conclude agreements and undertake all legal actions on behalf of the company except to (i) conclude legal transactions and undertake legal actions in connection with the acquisition, alienation or encumbrance of real estate, i.e. shares and stocks that the company owns in other companies (ii) conclude loan and credit agreements; (iii) assume bill of exchange obligations and guarantee obligations (iv) represent the company in administrative and court proceedings, before arbitration or mediator (v) give power of attorney to other persons.
VI Piercing the Corporate Veil
Although this is not a new provision, the New Law stipulates in more detail the legal concept of piercing the corporate veil which is a step forward for its more common usage in court practice. The competent court may determine the joint and unlimited liability of the shareholders of the company (either JSC, LLC or limited partnership) in the following events of misuse of the capacity of limited liability of the company, (i) if the shareholder uses the company for achievement of the prohibited goal or (ii) uses the company or its assets to the detriment of the company’s creditors or (iii) manages or disposes of the company’s assets against the law or (iv) decreases the company’s assets to his own or benefits of third parties, even though he knew or ought to know that the company cannot fulfil its obligations.
VII Special Duties towards the Company
The New Law prescribes the following special duties towards the company (i) duty of care (ii) duty of reporting the personal interest (iii) duty of avoiding the conflict of interest (iv) duty of keeping the business secret (v) duty to respect the prohibition of competition. Further, the law defines special conditions and who within the company has the obligation to respect these duties as well as the possibilities for raising a claim against the responsible person for breach of duty.
VIII Alignment with the New Law
JSC and public LLC and LLC which are considered major legal entities in accordance with the accounting laws must align its organisation (statute, management bodies etc.) and register the changes, in accordance with the New Law, within 9 months from the day of entering into force of the New Law. Other companies must align its organisations and register the changes within 18 months and entrepreneurs which are registered within the Central Registry, must align its business and registers within six months from the day of entering into force of the New Law. In the event of non-alignment in the prescribe deadlines, the Central Registry of Business Entities will initiate the process of court liquidation and erase the non-aligned companies.Read More
Lawyers in Montenegro are talking about the Montenegro Economic Citizenship Program these days, says Vukmirovic Mišić Managing Partner Lana Vukmirović.
Vukmirovic says that the demand for economic citizenship in Montenegro is growing – “the country is becoming particularly attractive for investors from Asia and Middle East,” she says – and the program is expected to offer “respectable projects and programs to kick off with the first applicants by the end of the year.”
Vukmirovic says that Montenegro is awaiting a new Company Law and a new Labor Law – both representing significant improvements over previous regimes. Several attempts have been made to adopt similar laws in the past, but the drafting process was extended following feedback and comment from labor unions, employers’ associations, and other corporate players.
Vukmirovic explains that “our current Company law is not as detailed as it should be,” and that, under the new law, “some things will be better regulated and [it] will have some impact on the economy.” She also expects positive things from the Labor Law, reflecting “explicit discussions” about a statute of limitations for employee claims and increased protections for workers, specifically employees hired through agencies and employees on maternity leave. Ultimately, she says, the new Labor Law will bring “more detailed regulation for the employers and a greater level of certainty for the employees.”
Lana Vukmirović Mišić Interviewed by Mayya Kelova for CEE LEGAL METTERS, 14 October. Available at: https://ceelegalmatters.com/montenegro/11734-the-buzz-in-montenegro-interview-with-lana-vukmirovic-misic-of-the-vukmirovic-misic-law-firmRead More
Milica Komar, Associate at Vukmirović Mišić Law Firm and Tijana Vujošević, office manager at Vukmirović Mišić Law Firm, attended Spark.me conference, held on 25-26 May 2019 in Porto Montenegro, Tivat.
Spark.me brings stories from the front lines of disruptive technological solutions, innovative business models, engaging marketing strategies, and world-changing initiatives, presented by some of the world’s most influential thinkers and brands.
This year Spark.me conference hosted, among others, Jeremiah Owyang, founder and CEO of Catalyst Companies, Tom Goodwin, Tom Goodwin is the EVP, Head of Innovation for Zenith Media and the author of Digital Darwinism, Peter Shankman, Peter is a five-time bestselling author, customer service expert, and serial entrepreneur, Sam Conniff Allende is a multi-award winning serial social entrepreneur, and co-founder and former CEO of Livity, Don’t Panic and Live Magazine and many others.Read More
Lana Vukmirović Mišić, Managing Partner of Vukmirović Mišić Law Firm, participated in 10th Festival of Real Estate Investments – FREI 2019, held on 13-16th May 2019 in Budva.
Festival of Real Estate Investment – FREI is a themed and selective event dedicated to the topics of investing and real estate sector development. FREI represents a modern form of exchange of information and experiences, as well as acquiring new knowledge, with the aim of strengthening the bases for a more efficient operation of the entities interested in the real estate investment sector.
The programme of the 10th FREI contained diverse panels regarding inter alia reforms in tourism and sustainable development, new legal framework for spatial planning and building construction, credit support for the development in tourism, as well as other general and investment related issues. The Festival also emphasized the importance of incentive investments in the development of tourism in Montenegro.Read More
Vukmirović Mišić Law Firm Summer internship is an experience that will help you to advance professionally and personally and can be the beginning of your career. This is a unique opportunity for the best students of the final year of law studies or who have graduated. As a legal assistant intern, you will have an opportunity to work with our legal team and will gain basic experience in the following areas: Corporate law, Real Estate law, Finance law, Employment and others.
Vukmirović Mišić Law Firm Summer internship will take place from 17 June to 30 August 2019.
We invite you to apply with an intention to perform your best abilities, so that you can get noticed from amongst many interns and get considered for a job.
– Excellent written and verbal communication skills
– Strong problem-solving skills and research skills
– Very good English, written and spoken
Deadline for submitting CV’s and motivation letters is 27 of May 2019.
If you feel you are interested, please apply by submitting your CV on email@example.com.Read More
Montenegro, being a small country, is characterized by rapid modifications and changes in its business and financial environments. The new Montenegrin Law on the Capital Market (the “Law”), which came into force at the very beginning of 2018, is designed to create and develop a consolidated financial background, and represents the first attempt to introduce a systematic regulation in this domain to support investors and efficiently protect their interests.
New Law Prevailing Over Previous Difficulties!
In our practice we constantly meet various problems and obstacles – and the under-regulation of the capital market was one of the most constraining. We have witnessed many financial transactions in the last decade in which clients were forced to use different solutions. One cannot think of those conditions as anything but discouraging. We believe that the new Law on Capital Market is undeniably a step towards ensuring better provisions for the integration of the financial market and the vitality of our Capital Market.
The harmonization with European Law, primarily with Directive 2014/65/EU and Directive 2004/109/EC, among others, will provide a wider concept of financial instruments and make the regulatory authority more visible. It is worth noting that Montenegro’s Security and Exchange Commission, which now is recognized as the Capital Market Commission – with full independence and genuineness guaranteed by the incorporated IOSCO Principles – will provide a more secure way to for investors to carry out their transactions. Already visible, the consequences of the Law on Capital Market will undoubtedly go far beyond the mere harmonization requirements.
New Venues and Platforms For New Opportunities!
The Law provides full-scale regulation of financial instruments which were previously not recognized in Montenegro. Introducing new trading venues such as the Multilateral Trading Platform, and comprehending forwards, futures, options, swaps, and so on, the Law creates a desirable environment for trading and transactions, making the Montenegrin capital market more competitive and surely more attractive for foreign investors.
It is of the utmost importance that the new Law is directly aimed to protect investors by creating a fair, steady, and regulated capital market; the provisions on the mandatory requirements for the disclosure of information and financial intermediaries in the working of the capital market are intended to protect investors from various forms of fraud and to leave misleading and manipulative practices in the past of the Montenegrin capital market.
In the second half of 2017 the Montenegrin capital market witnessed the problems which the Security and Exchange Commission faced due to the lack of a mandate. These problems were finally resolved in late December 2017, however, and the Security and Exchange Commission should be able to prepare a better and more secure environment for the implementation of the new Law.It remains to be seen whether the concept of the new Law will be completely absorbed through the creation of the necessary bylaws and its implementation in order to fully address the requirements of the capital market.
The End of a Monopoly?
Transforming the Central Depository Agency to the Central Clearing and Depository Company, in accordance with Directive 97/9/EC, is not a mere statutory change; it defines in detail the formation and operation of the Investor Compensation Fund in order to protect investor claims when an investor is unable to pay or when bankruptcy proceedings have been commenced, as well as in other circumstances of investor financial instrument exposure. Nevertheless, we could also witness the end of the depository agency monopoly in Montenegro, since the new Law diffidently opens the door for the Capital Market Commission to approve other companies for clearing and depository management.
Overall, as far as we can see, since the depth and the size of a national economy vastly depends on its capital market, Montenegro will now be able to interconnect its capital market in the globalized economy.
By Lana Vukmirovic Misic, Managing Partner, and Andrej Bracanovic, Associate, Vukmirovic Misic Law Firm
This Article was originally published in Issue 5.2 of the CEE Legal Matters Magazine: http://ceelegalmatters.com/montenegro/8438-montenegrin-law-on-capital-market-new-law-to-support-investors
Support to the team representing University of Montenegro in 25th Willem C. Vis International Commercial Arbitration Moot
For the second time Vukmirović Mišić Law Firm have sponsored the participation of the team of University of Montenegro in 25th Willem C. Vis International Commercial Arbitration Moot which was held in Vienna March 23-29, 2018.
We value the participation of students because of the unique characteristics of the competition which develops student’s—future professional lawyer’s—practical skills and prepare them for their future careers.Read More
Lana Vukmirović Mišić, Managing Partner and Milica Komar, Associate at Vukmirović Mišić Law Firm, attended Spark.me conference, held on 29-30 May 2017 in Budva.
Spark.me is a conference which offers brand new views on technology, business, innovation and start-ups, all based on stories and presentations of the most influential thinkers as well as various brands from around the world.
This year Spark.me conference hosted, among others, Dr Max Mckeown, the best-selling author and behavioural psychologist, Rory Sutherland, Vice Chairman of Ogilvy & Mather UK, Heather B. Armstrong, a New York Times bestselling author and a brand consultant, Kamran Elahian, co-founder of Global Catalyst Partners and many others.Read More
Lana Vukmirović Mišić, Managing Partner of Vukmirović Mišić Law Firm, participated in 8th Festival of Real Estate Investments – FREI 2017, held on 15-18th May 2017 in Budva.
FREI is a real estate business event, organised with the support of Ministry of Sustainable Development and Tourism, that gathers state authorities and private companies and individuals including investors, commercial companies, representatives of international institutions, lawyers and other interested parties in various panels and discussions regarding real estate business.
The programme of the 8th FREI contained diverse panels regarding inter alia reforms in tourism and sustainable development, new legal framework for spatial planning and building construction, credit support for the development in tourism, as well as other general and investment related issues. The Festival also emphasized the importance of incentive investments in the development of tourism in Montenegro.Read More
Support to the team representing University of Montenegro in 24th Willem C. Vis International Commercial Arbitration Moot
Recognizing the importance of practical knowledge and supporting the efforts of the law students in obtaining that knowledge, Vukmirović Mišić Law Firm sponsored the participation of the team of University of Montenegro in 24th Willem C. Vis International Commercial Arbitration Moot, on Feb 3rd.
As the ex-participants who have experienced the benefits of participation in this competition, the team of VM Law Firm will always encourage young students to enrol in such activities in order for them to practice argumentation, both in writing and oral presentations, as well as to meet the colleagues from around the world, for mutual benefaction.Read More