In the second part of our guide we review what is the Macedonian approach to the most popular company form in every jurisdiction – the LLC.
As in rest of the world, the limited liability company is the most utilized type of company in the Republic of North Macedonia. This type of company form is used for various types of undertaking – from small family-owned business to multimillion dollar projects or holding vehicles. The German influence over the local company regulation is very visible in this particular company form, due to the fact that the Macedonian LLC is most closely related to the German Gesellschaft mit beschränkter Haftung (GmbH).
I. Key characteristics
The key characteristic that draws businessmen and investors to this type of company is the fact that shareholders cannot be held liable for the debts and actions of the company. Furthermore, LLCs are easy to establish and govern. The limited liability company (in Macedonian: Друштво со ограничена одговорност) in the Republic of North Macedonia are usually recognized through the DOO or DOOEL acronyms included in the company name. The LLC is established by articles of association made in the form of a written agreement between the founders. LLC owned by a single shareholder are established with a statement of incorporation.
The minimal share capital of an LLC is EUR 5.000,00. The share capital can be inserted in the company in a form of either money, movable objects, real estate or any combination of these forms. One notable thing in the LLC in the Republic of North Macedonia is that the share capital does not have to be paid at the moment of establishing the company. It can be paid within one year as of the date of the establishment.
It is important to mention that in 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 the minimal share capital here is EUR 1. However, investors should be aware that this simplified limited liability company comes with some restrictions in the form of minimal reserves and similar.
II. Shareholders in a LLC
The LLC can be established and owned by natural person or legal entity, such as companies, corporations, associations etc. The number of its shareholders can vary in anything between one and fifty shareholders. There are no restrictions for any ownership of shares by foreign investors. As a matter of fact, this is strongly encouraged by the local regulation, as foreign shareholders in local companies and shareholders have beneficial treatment in terms of residence procedures in the Republic of North Macedonia.
Each shareholder gets a share in company, which is established with an agreement between the shareholders or (in the lack thereof) the size of 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 with 100. The size of the share usually determines important rights of the shareholders, such as the voting rights, profits rights and rights over the remining estate of the company in case of liquidation. However, with the article of associations shareholders can establish different arrangements. Shares can be easily bought and sold between shareholders, while they can also be sold to non-shareholders, but in such cases existing shareholders have certain priority rights. Also, shares can be freely inherited in the Republic of North Macedonia.
The shareholders make their decision on a shareholders’ meeting or by correspondence (ex. appoint management, increase/decrease share capital, amend articles of associations, decide on profits distribution, or approve certain undertaking). The shareholder’s meeting makes its decisions with the majority of stakes represented at the meeting. However, for specific decisions the Law on trade companies prescribes a higher majority. With the articles of association, the shareholders can establish higher majorities than those set with law.
III. Management & Supervision
Limited liability companies can be managed by one or more directors. Their rights and obligations are determined with the law, but with the articles of association the shareholders can establish specifics arrangements, including imposing a limitation of the director’s authorization. These limitations are registered in the Central Registry and are publicly available and therefore binding to anyone who is dealing with the company. When the company has three of more directors, then with the articles of association a board of directors can be formed to run the company operations.
Shareholders can also elect to conduct the supervision over the operation of the company by appointing a controller or a supervisory board, which must consist of at least three members. If there is no controller or supervision established with the article of association, then the shareholders can jointly or individually supervise the company by seeking information, ordering an audit or inspecting the company’s books.
IV. Shareholder rights protection mechanisms
The law includes various mechanisms through with any shareholder can protect its rights and interests visa vi other shareholders or management. The key among these mechanisms are: the access to data and documents, guarantee of the right to vote and the right to initiate judicial revision of the decisions of the shareholders assembly.
The local law also provides certain mechanisms for protection of minority shareholders rights in the Republic of North Macedonia. As minority shareholders are considered natural or legal entities whose part in the total share capital does not exceed 10%. The law provides one of the crucial rights minority shareholders have, is to appoint a certified auditor to perform a special audit of the last annual account and financial statements.
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The article was prepared by Vladimir Boshnjakovski and Bojan Spirovski in March 2022.