GUIDE ON COMPANIES in the Republic of North Macedonia – Part II: The Limited Liability Company (LLC)

In the second part of our guide, we review the Macedonian approach to the most popular company form in virtually every jurisdiction – the Limited Liability Company (LLC).

As in the rest of the world, the limited liability company is the most widely used type of company in the Republic of North Macedonia. This company form is used for various types of undertakings – from small family-owned businesses to multimillion-euro projects and holding vehicles. The German influence on local company regulation is particularly visible in this company form, as the Macedonian LLC is most closely related to the German Gesellschaft mit beschränkter Haftung (GmbH).

I. Key Characteristics

The key characteristic that attracts business owners and investors to this type of company is the fact that shareholders cannot be held liable for the debts and obligations of the company. Furthermore, LLCs are relatively easy to establish and manage. The limited liability company (in Macedonian: Друштво со ограничена одговорност) in the Republic of North Macedonia is usually recognized by the DOO or DOOEL acronyms included in the company name.

An LLC is established by articles of association in the form of a written agreement between the founders. An LLC owned by a single shareholder is established by a statement of incorporation. The minimum share capital of an LLC is EUR 5,000. The share capital can be contributed to the company in the form of money, movable property, real estate, or any combination thereof. One notable characteristic of an LLC in the Republic of North Macedonia is that the share capital does not have to be paid at the time the company is established. It can be paid within one year from the date of establishment.

It is important to mention that the 2021 amendments to the Law on Companies introduced the so-called simplified limited liability company as a subtype of the standard LLC. The key characteristic of this subtype is that its minimum share capital is EUR 1. However, investors should be aware that the simplified limited liability company is subject to certain restrictions, including requirements concerning minimum reserves and similar matters.

II. Shareholders in an LLC

An LLC can be established and owned by natural persons or legal entities, such as individuals, companies, corporations, associations, etc. The number of shareholders may range from one to fifty shareholders. There are no restrictions on the ownership of shares by foreign investors. In fact, foreign investment is strongly encouraged by local regulations, and foreign shareholders in local companies may benefit from favorable treatment in relation to residence procedures in the Republic of North Macedonia.

Each shareholder holds a share in the company, the size of which is determined by agreement between the shareholders or, in the absence of such an agreement, by the size of the shareholder’s investment in the company. Shares can be of different sizes, but an individual share cannot be smaller than EUR 100, and each share must be divisible by 100. The size of a share usually determines important shareholder rights, such as voting rights, profit participation, and rights to the remaining assets of the company in the event of liquidation. However, the shareholders may establish different arrangements in the articles of association.

Shares can be freely transferred between shareholders. They may also be transferred to non-shareholders, although existing shareholders have certain priority rights in such cases. Shares may also be inherited in the Republic of North Macedonia.

The shareholders make their decisions at a Shareholders’ Meeting or by correspondence. These decisions may include, for example, the appointment of management, an increase or decrease in share capital, amendments to the articles of association, the distribution of profits, or the approval of certain transactions. The Shareholders’ Meeting generally adopts decisions by a majority of the shares represented at the meeting. However, for certain decisions, the Law on Companies prescribes a higher majority. The articles of association may also establish higher majority requirements than those prescribed by law.

III. Management & Supervision

Limited liability companies can be managed by one or more directors. Their rights and obligations are determined by law, while the articles of association may establish specific arrangements, including limitations on the directors’ authority. These limitations are registered with the Central Registry and are publicly available. They may therefore be relevant to third parties dealing with the company. When the company has three or more directors, the articles of association may provide for the establishment of a Board of Directors to manage the company’s operations.

Shareholders may also choose to supervise the company’s operations by appointing a controller or a Supervisory Board, which must consist of at least three members. If no controller or supervisory body is established by the articles of association, the shareholders may jointly or individually supervise the company by requesting information, ordering an audit, or inspecting the company’s books.

IV. Shareholder rights protection mechanisms

The law provides various mechanisms through which shareholders may protect their rights and interests vis-à-vis other shareholders or the company’s management. The key mechanisms include access to company data and documents, protection of voting rights, and the right to initiate judicial review of decisions adopted by the Shareholders’ Meeting.

Local law also provides specific mechanisms for the protection of minority shareholders’ rights in the Republic of North Macedonia. Minority shareholders are natural persons or legal entities whose participation in the company’s total share capital does not exceed 10%. One of the important rights available to minority shareholders is the right to appoint a certified auditor to conduct a special audit of the most recent annual accounts and financial statements.

This Guide continues with additional articles on other company types. Read more about the details and characteristics of each company form on our blog.

For more information check out our articles on tax, residency and other business services, write to us (contact@boshnjakovski.com) or call us (+38970257879).