Registration of a subsidiary in Montenegro
Easy access to European markets, low tax rates, an efficient legal system and business-friendly policies make Montenegro one of the most sought-after places to expand the business of foreign companies. There are three ways for foreign companies to register their business in Montenegro: representative office, branch or subsidiary.
I will explain the possibilities and procedure for establishing the most popular registration option for foreign companies – subsidiaries.
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Foreign companies that want to expand their business to Montenegro can open a branch that offers one of the best business structures. This article discusses everything about opening an affiliate and its key requirements.
What is a Subsidiary Company?
A subsidiary is a locally established limited liability company in which most shares are held by a local or foreign company. A subsidiary is a separate legal entity from the parent company and this distinguishes it from a subsidiary. If the parent owns 100% of shares in the subsidiary, it is often called „subsidiary wholly-owned“.
WHAT ARE THE KEY CHARACTERISTICS OF MONTENEGRO REGIONAL COMPANY
- A subsidiary was established as a limited liability company.
- A subsidiary company has a separate legal identity from the parent company.
- The liability of the parent company is limited to the capital it invests in the purchase of shares in the subsidiary. The liabilities company of the subsidiary do not extend to the parent.
- The business activities of the subsidiary company may be the same or different from the activities of the parent company.
- The foreign parent company can keep 100% of shares of the Montenegrin subsidiary.
As a Local Montenegrin company, the subsidiary company benefits from Montenegro’s low tax rates, tax incentives and bilateral tax agreements, among other aid schemes.
- A subsidiary has no obligation to prepare an annual audit of its accounts if it qualifies as a „small company“. The law will reduce the company’s costs and its overall burden, thus making management simple and cost-effective.
What are the main legal requirements for registering a supsidiary company in Montenegro:
- Paid-in capital: The supidiary company must have a minimum paid-in capital of at least 1 EUR.
- Registered office: A Montenegro subsidiary company must have a registered office address in Montenegro.
- Director:The supsidiary 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 are not required to perform the registration procedure through a Montenegrin company for corporate services. The following information and documents are required for the registration process:
- Certificate of incorporation of the parent company.
- Authorization of the parent company that gives the individual to sign the founding acts on behalf of the parent company
- Address of the seat of the Montenegrin subsidiary.
- Signed consent for acting director.
- Passport data and data on the residence of the branch director 6. Constitution of the Montenegrin subsidiary.
STEP 1: NAME APPROVAL
The Central Registry in Montenegro must first approve the proposed name. The parent company that decides to establish a subsidiary company that will expand to Montenegro can use another name.
The name of the company must be unique and not have to be similar to the name of the company that is already registered in Montenegro. The Registrar will reject any name that is the same or similar to another name.
. Approval of the company name takes about 10-15 minutes.
STEP 2: COMPANY REGISTRATION
After approval of the company name, the foreign company will submit the registration documents to the Central Registry. The business registration process usually takes 4 days.
The Montenegrin subsidiary company is obliged to comply with all obligations as well as the Montenegrin company. Among the key requirements are:
- Annual tax return with the Tax Administration of Montenegro
- Updating company data (shareholders, directors, registered office address, etc.) at the Central Registry.
- Taxation of goods and services (PIB).
- Compliance with applicable laws such as Yakon on Companies, Labor Law, Personal Data Protection Law, etc.
Branches are an ideal form of business structure for foreign companies that want to open a business in Montenegro. Such a business structure allows the parent company to be held accountable and for the subsidiary company to benefit from tax breaks and other assistance schemes offered by the Montenegrin government.