GUIDE ON COMPANIES in the Republic of North Macedonia – Part I: History of Company Law

In this guide, Boshnjakovski Law Office presents the history of company regulation and reform in the Republic of North Macedonia, as well as the main forms and characteristics of companies in the country.

Companies have been one of the key inventions of capitalism. Without them, we could hardly imagine large-scale investment endeavors or the operation of businesses that go beyond the regular mom-and-pop shop. Companies allow us to pool substantial funds from various investors. In addition, the safety net of “limited liability” gives us the confidence to undertake entrepreneurial risks because we know that, if our business fails, it will not endanger everything we own.

Last but not least, the clear delineation of rights and responsibilities makes it possible to entrust the running of a business to professional managers who are separate from the company’s shareholders. Simply put, if there were no companies, we would not enjoy the wealth, mobility, globalization, and other benefits that modern capitalism offers today.

I. History of Company Regulation and Reform in the Republic of North Macedonia

Following its transition from a centrally planned economy to a free-market economy, the Republic of North Macedonia adopted a modern regulatory framework governing company forms, incorporation, and corporate governance.

The first attempts to introduce such a framework were made in the late 1980s, when Macedonia was still part of Yugoslavia, which at the time was attempting to reform its failing socialist system.

The Law on Enterprises of 1988 was, however, short-lived and was soon replaced by the first Law on Companies of 1996, which was the first genuinely capitalist company law in our country.

Nevertheless, the need to integrate fully into an increasingly globalized world, together with the strategic decision to seek accession to the highly regulated European Union, prompted the Republic of North Macedonia to adopt an entirely new Law on Companies in 2004.

This law established in the Republic of North Macedonia a system of company regulation comparable to those found in modern continental European states, including characteristic company forms, distributions of responsibilities, management structures, and other fundamental elements of corporate organization.

Since then, the law has been amended on numerous occasions to better incorporate the experience accumulated by our relatively young state, as well as the recommendations of leading European and international institutions.

In 2010, our country also enacted the Law on European Companies, which will become applicable upon the country’s accession to the European Union.

Hand in hand with the reform of the company-law system, the Republic of North Macedonia has made significant efforts to simplify company-establishment procedures and increase the efficiency of the Central Registry, where all companies are registered.

Our country has also implemented significant reforms to its tax system, making North Macedonia a jurisdiction with some of the lowest tax rates and one of the simpler tax systems in Europe.

All in all, these developments have contributed to the Republic of North Macedonia receiving recognition for its business-friendly environment. One example was the country’s 17th-place ranking in the World Bank’s 2020 Doing Business Report.

II. Types of Companies in the Republic of North Macedonia

As noted above, the Law on Companies of 2004 established a system of company regulation in the Republic of North Macedonia comparable to those found in modern continental European states. Our regulatory model may be considered particularly close to the German legal tradition of company law.

In the following parts of this guide, we will introduce readers to the different company forms available in North Macedonia, as well as their key characteristics, such as minimum share capital, methods of governance and supervision, responsibilities, and rights.

We will also discuss related forms of doing business, such as the sole proprietorship, branch office, and representative office.

This guide continues with a separate article dedicated to each company type. Read more about the details and characteristics of each company form on our blog.

For more information, you can also consult our articles on taxation, residence permits, and other business services, write to us at contact@boshnjakovski.com, or call us at +389 70 257 879.