Legal Framework

Legal Framework

COMPANY INCORPORATION

In BiH, you can choose between 4 types of business entities (companies).

  • D.n.o / o.d. – Društvo s neograničenom odgovornošću / a company with unlimited liability, Sole Proprietorship 
  • D.o.o – Limited Liability Company
  • D.d / a.d – Dioničarsko društvo (Joint Stock Company) in FBiH, Akcionarsko društvo (Joint Stock Company) in RS
  • K.d – Command Society

 

If you plan to set up a company, a limited liability company (LLC/d.o.o.) is our recommendation.

 

HOW TO ESTABLISH A LIMITED LIABILITY COMPANY (LLC/D.O.O.)

IN BIH

 

KEY CONSIDERATIONS ON THE LEGAL FORM:

 

Does the entity possess a separate legal personality?

The LLC/d.o.o. has a legal personality.

 

What is the maximum period of existence?

There is no maximum period of existence; d.o.o. can be incorporated for an indefinite or a definite period.

 

What are the governing document(s)?

The d.o.o. is governed by its memorandum of association, and in the FBiH by articles of association as well.

 

What is the liability of founders/shareholders?

Founders/shareholders are not personally liable for the debts of the company, save to the extent to which their shares are not fully paid-up. Limited liability is subject to limited instances of piercing the corporate veil.

 

What are the governing bodies?

  • Governing bodies are the general assembly (“skupština”) and the management (“uprava”).
  • In the FBIH, the d.o.o. can also have a supervisory board (“nadzorni odbor”).

 


What ability is there to be involved in international restructurings (cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Under the laws in BIH it is not possible for a d.o.o. to be involved in international restructurings, although it can be involved in asset or equity acquisitions.

 

Can this form of entity be listed or publicly held?

The d.o.o. can be incorporated as a publicly held company.

 

Can this form of entity by used for a non-profit or charitable organization?

No, given its nature as a commercial entity, with the ability to make profit distributions and subject to corporate income.

 

What is the minimum number of founders/shareholders and residency requirements?

There must be at least one (1) founder upon incorporation, and there are no residency requirements for founders.

 

What is the minimum number of directors (or other applicable officers) and residency requirements?

There must be at least one (1) director upon incorporation, and if this individual is a foreigner he/she must have both a work permit and temporary residence permit.

In RS, the d.o.o. can have a director or a managing board, which is determined by the memorandum of association. The number of managing board members is determined by the memorandum of association or shareholders agreement.

 

What is the minimum share capital, or equivalent, and payment requirements (including opening a bank account)?

It is BAM 1,000 (approx. EUR 500) in the FBIH, and it is BAM 1 (approx. EUR 0.50) in the RS.

Prior to the incorporation, it is necessary to obtain evidence of payment of share capital to a temporary bank account.

 

Is the physical presence of founders/directors required in the jurisdiction for incorporation?

The physical presence of founders is not required since the execution of the deed of incorporation may be carried out by virtue of a power of attorney.

 

Is a tax identification number, or equivalent, required? If so, how is it obtained?

The tax identification number is required and the entities’ tax authorities provide a tax identification number upon registration of the company, in a post-registration procedure. The Indirect Taxation Authority of BiH issues the VAT number after the tax identification number is obtained in a separate procedure.

 

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