Subsidiary Company Registration in Montenegro
Easy access to european markets, low tax rates, an efficient legal system and business-friendly policies make Montengro one of the most sought after places for foreign companies to expand their business. Foreign companies have three options to register their business in Montenegro: a representative office, a branch office or a subsidiary company.
This article will discuss the key requirements, and the incorporation procedure of the most popular incorporation option for foreign companies— a subsidiary company.
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For foreign companies that want to expand to the Montenegro or establish a base of operation in Europe, a subsidiary company provides one of the best business structures to thrive. This article discusses the concept of a subsidiary company, its key requirements, and the incorporation procedure.
What is a Subsidiary Company?
A Montenegro subsidiary company is a locally incorporated limited liability company where the majority of the shares are held either by a local or a foreign company.
Unlike a Montenegro branch office, a subsidiary company is a separate legal entity from its parent company. If the parent company owns 100% of the shareholding of the subsidiary company, it is often called a “wholly-owned subsidiary company”.
KEY CHARACTERISTICS OF MONTENEGRO SUBSIDIARY COMPANY
- A subsidiary company in Montenegro is incorporated as a limited liability company.
- The subsidiary company has a separate legal identity from its parent company.
- The parent company’s liability is limited to the capital it invests in purchasing shares in the subsidiary company. The liabilities of the subsidiary company do not extend to the parent company.
- The business activities of the subsidiary can be the same or different from those of the parent company.
- A foreign parent company can hold 100% of the Montenegro subsidiary company’s shares.
- Being a local Montenegro company, the subsidiary benefits from Montenegro’s low tax rates, tax incentives, and bilateral tax treaties, among other assistance schemes.
- A Montenegro subsidiary company is exempt from the annual audit of its accounts if it qualifies as a “small company”. This exemption reduces the company’s compliance costs and its overall regulatory burden thus making it simple and cost-effective to operate it.
The key statutory requirements for registering a Singapore subsidiary are as follows:
- Paid-up capital: A subsidiary company must have a minimum paid-up capital of at least EUR 1.
- Registered office: A Montenegro subsidiary company must have a registered office address in Montenegro.
- Director: The company must have at least one director.The director can be a native person or a foreigner.
- Company Secretary: The company does not have to appoint a secretary
Foreign companies must go through a Montenegro-based corporate services firm to register. The following information and documents are required during the registration process:
- A certificate of incorporation from the parent company.
- An approval from the parent company giving authority to an individual to sign incorporation documents on behalf of the parent company
- The registered office address for Montenegro subsidiary company.
- The signed consent to act as a director.
- The passport details and residential information of the subsidiary company’s directors
- The Constitution of the Montenegro subsidiary company.
STEP 1: NAME APPROVAL
The Montenegro Company Registrar must first approve of the proposed name. A parent company that chooses to establish a subsidiary to expand into Montenegro can use a different name.
However, the company name must be unique and not similar to a company name already registered in Montenegro . Keep in mind, the Registrar will reject any name that does not follow the naming rules and procedures.
If the proposed company name does not conflict with any of the existing company names, the approval of the name takes around 10-15 minutes.
STEP 2: COMPANY REGISTRATION
After the company name is approved, the foreign company must complete an application form and submit it to the Registrar. The entire registration process is computerized and usually takes 4 days.
A Montenegro subsidiary company is required to comply with annual filing requirements that are applicable to Montenegro companies. Among the key requirements are:
- Annual Tax filing with Montenegro Revenue Authorities.
- Keeping company information (shareholders, directors, registered office address, etc.) up to date with the Company Registrar.
- Registration for Goods & Services Tax (GST), if applicable.
- Compliance with applicable laws such as Employment Law, Personal Data Protection Law, etc.
Subsidiary companies are the preferred form of business structures for foreign companies who wish to set up their business presence in Montenegro. Such a business structure not only offers liability protection to the parent company, it also enables the entity to benefit from tax breaks and other assistance schemes offered by the Montenegro government.