The New Company Law Has Entered Into Force and Will be Applicable as of January 1, 2026.

The reasons for adopting the New Law include the need for full harmonization of national company law with European Union law, numerous conceptual issues with the current law, insufficient regulation, leaving courts to fill legal gaps, as well as terminological and conceptual inconsistencies.

It has been stated that the draft Company Law harmonizes with a set of relevant EU directives, Council regulations, and that the recommendations of the European Commission have also been taken into account.

The current Company Law was adopted in 2020 and has been applied with amendments introduced in 2021 and 2024 (“Current Law”).

The adoption of the New Law represents a significant change for companies in Montenegro, since it introduces numerous and substantial new rules.

The New Law brings changes to all forms of conducting business. This article focuses on specific changes relating to the limited liability company (LLC), bearing in mind that this form of company is the predominant business form in Montenegro, making up over 80% of all business entities according to certain statistics.

• Electronic Incorporation

A novelty is the possibility of incorporating a company electronically, without the physical presence of founders or applicants at any stage of incorporation. Founding documents may be signed and submitted electronically in accordance with laws governing electronic signatures and electronic documents, without the obligation to prepare or submit any paper documents. This option also exists in the Current Law, but the New Law regulates the matter in more detail, introducing elements such as the possibility for the competent authority to require the physical presence of the founder or applicant in specific cases for additional identity verification or to confirm legal capacity or authorization for representation.

We consider this provision very significant, as an accelerated incorporation process may contribute to faster economic growth. Challenges, however, may arise in terms of technical solutions and the transitional phase toward full implementation, considering that Montenegro has not yet reached a satisfactory level of digitalization.

• Definition of Company Name

The New Law distinguishes between a “business name” and a “designation,” whereas the Current Law only recognizes the term “name.” Under the New Law, the business name of a company must include the designation, legal form, and registered seat, while the designation is the distinctive part of the business name by which the company is differentiated from others. A company may also have an abbreviated business name. Companies are required to use their registered business name or abbreviation in legal transactions and display it visibly on every business premises. The business name must be in Montenegrin or another official language in Montenegro, using Latin or Cyrillic script, while the designation may be in a foreign language.

These changes are primarily terminological, but they will result in clearer distinctions and recognition of company names in legal transactions, thereby ensuring greater legal certainty and clarity in disputes concerning name protection, which until now lacked consistent criteria.

• Valuation of Non-Monetary Contributions

The New Law introduces changes regarding the valuation of non-monetary contributions. If circumstances arise between the time of valuation and the contribution being made that reduce its value, the company must carry out a new valuation before entry.

Additional protection is provided to minority shareholders: members holding at least 5% of the share capital may request a revaluation if the company fails to do so. If the company does not comply, the competent court will decide on the value in non-contentious proceedings.

The New Law also prescribes exceptions to mandatory valuations, when approved by the competent authority, but even then, minority members may request a valuation in case of disagreement. Furthermore, creditors of the company may also petition the court to determine the value of a non-monetary contribution if it was previously agreed upon among members.

These provisions undoubtedly strengthen minority shareholder protection, aligning with EU regulatory standards. On the other hand, they may complicate capital increase procedures, as the law does not fully regulate certain situations—for instance, the status of proceedings and capital if majority shareholders have already registered contributions, or the relationship between valuations requested by minority shareholders and creditors.

• Articles of Association (Statute) of an LLC

Article 363 of the New Law prescribes mandatory content of an LLC’s articles of association, including: business name, registered seat, and principal activity,  share capital amount, share of each member expressed as a percentage, procedure for convening and decision-making of the general meeting, competencies of management bodies, their composition, appointment and dismissal procedures, and decision-making, procedure for amending the articles of association, other elements as provided by law.

Amendments to the statute require a two-thirds majority of voting members, unless a different threshold is provided, which cannot be lower than a simple majority.

By setting mandatory elements similar to those required for joint-stock companies, the New Law elevates LLCs to almost the same level, which may burden small companies. Standardized model statutes will be necessary to enable micro and small companies to comply without incurring unnecessary costs.

• Acquisition and Transfer of Shares

The New Law clarifies rules regarding a company’s acquisition of its own shares. For instance, when a company acquires its own shares, it may: transfer them to members for compensation, giving existing members a pre-emptive right to purchase proportionate to their shareholding, transfer them to third parties for compensation, or cancel them and reduce capital accordingly.

Article 375 stipulates that if a member intends to transfer shares to a third party, other members have a pre-emptive right, unless otherwise provided in the statute. Unlike the Current Law, which also granted this right to the company itself (rarely effective in practice), the New Law simplifies the framework.

The New Law also allows transfer of shares by court decision, an important protection for withdrawing members. Moreover, dissatisfied members may challenge the compensation determined by the general meeting and request the court to award the full market value. Shares of members who withdraw or are excluded automatically become the company’s own shares without a resolution.

In the part concerning the exclusion of a member, the New Law also grants the company itself the right to file a lawsuit for the exclusion of a member. In such a case, the share of the excluded member automatically becomes the company’s own share, without the need for a resolution on the acquisition of its own share.

• Management Bodies of an LLC

Article 405 provides that the bodies of an LLC are the general meeting and the director, but companies may opt for a board of directors instead. In single-member LLCs, the sole member exercises the powers of the general meeting.

The law defines exclusive powers of the general meeting but allows other powers to be delegated to the director by statute. The general meeting may also decide on director matters upon the director’s request.

The director is entitled to remuneration and allowances, as defined in the statute or by general meeting decision.

The New Law introduces numerous other changes relating to joint-stock companies, corporate restructuring, changes of legal form, the concept of corporate groups and subsidiaries, the European Company (SE), and the European Economic Interest Grouping (EEIG).

We consider the New Law a significant reform of Montenegro’s company law system, requiring continuous monitoring of its effects and alignment of existing frameworks.

The New Law will apply from January 1, 2026.

According to Article 630 (1), companies and entrepreneurs will have three months from that date to harmonize their organization and operations with the New Law and register changes with the Central Registry of Business Entities (CRPS).

This article serves as an introduction to the changes brought by the New Law, with further commentaries on Montenegro’s company law reforms to follow.

By Dajana Drljevic, Associate, JPM & Partners