1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 6 – Company Law Bilateral screening: Chapter 6 PRESENTATION OF MONTENEGRO Brussels, November 22 nd 2012

2. Chapter 6: Company Law CROSS-BORDER MERGERS SINGLE MEMBER PRIVATE LIMITED LIABILITY COMPANY SE & EEIG Poglavlje 25 Nauka i istraživanje Chapter 6: Company Law Chapter 6 Working Group member: Vladimir Savkovic, Ph. D. University of Montenegro Faculty of Law vsavkovic@t-com.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

3. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Relevant acquis: Directive 2005/56/EC Relevant legal instruments of Montenegrin Law: Law on Business Organizations CROSS BORDER MERGERS Chapter 6: Company Law Chapter 6: Company Law

4. CROSS BORDER MERGERS - GENERAL REMARKS - Poglavlje 25 Nauka i istraživanje There are no specific cross-border merger provisions in Montenegrin Law on Business Organizations Merger procedure stipulated by the Law on Business Organizations is generally in accordance with the EU Law, thus the implementation of cross-border merger concept envisaged by the Directive 2005/56/EC, once transposed into Montenegrin Law, in spite of few specific features, should come as logical (natural) consequence of Montenegrin membership in EU. Chapter 6: Company Law M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 6: Company Law

5. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 6: Company Law Chapter 6: Company Law CROSS BORDER MERGERS -KEY CHALLENGES (NOVELTIES) WHICH WILL BE INTRODUCED IN THE EXISTING MONTENEGRIN CORPORATE MERGER CONCEPT – Simplified formalities concerning the cross-border merger via acquisition by a company which holds all the shares and other securities conferring the right to vote (Art. 15) - Montenegrin Law on Business Organizations and Montenegrin legal system in general are recognizing only the simplified merger procedure due to take place in situations in which the acquiring company holds at least 90% of shares of the acquired company. However, there are no any provisions stipulating distinct simplified merger procedure in the case of acquiring company holding all 100% of shares and other securities conferring the right to vote.

6. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje CROSS BORDER MERGERS - KEY CHALLENGES (NOVELTIES) WHICH WILL BE INTRODUCED IN THE EXISTING MONTENEGRIN CORPORATE MERGER CONCEPT - Scrutiny of the legality of the cross-border merger (Articles 10 & 11) - Articles 10 and 11 of the Directive are stipulating specific scrutiny procedure of the merger procedure legality envisaging the issuance of the “pre-merger certificate”, as well as designating specific bearer of public authority entrusted with issuing it. There is no similar practice insofar in Montenegro and implementing provisions that will transpose the aforementioned articles of the Directive will present a serious challenge. Chapter 6: Company Law Chapter 6: Company Law

7. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje CROSS BORDER MERGERS - KEY CHALLENGES (NOVELTIES) WHICH WILL BE INTRODUCED IN THE EXISTING MONTENEGRIN CORPORATE MERGER CONCEPT - Employ participation (Article 16 of the Directive) Employ participation in merger procedures haven’t been envisaged at all by Montenegrin laws so far. Having that fact in mind, it is only normal to expect that legislator will face some difficulties in incorporating the provisions of Article 16 in Montenegrin Law on Business Organizations, as well that the legal practitioners will face even greater difficulties in implementing this new and unfamiliar concept in Montenegrin legal system. Chapter 6: Company Law Chapter 6: Company Law

8. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje SINGLE MEMBER PRIVATE LIMITED LIABILITY COMPANY Relevant acquis: Directive 2009/102/EC Relevant legal instruments of Montenegrin Law: Law on Business Organizations Chapter 6: Company Law Chapter 6: Company Law

9. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Montenegrin Law on business organizations is fully in line with the Directive 2009/102/EC, apart from one single issue explained bellow. Article 5 of the Directive stipulates the duty of recording contracts drawn up between the sole owner and his company which are not concluded under normal (usual) conditions and within the scope of current operations. In Montenegrin Law on Business Organizations this provision is transposed only when it comes to private limited liability companies (see Art. 77 of Low) and not when it comes to public limited liability companies (see Art 18a of Low), which will become an obligation under Article 6 of the Directive, since those companies are allowed by Low not only to survive in case of their member count dropping to one sole owner, but also to be incorporated as a single-member company to begin with. Chapter 6: Company Law Chapter 25: Science and Research SINGLE MEMBER PRIVATE LIMITED LIABILITY COMPANY

10. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje SOCIETAS EUROPEA & EUROPEAN ECONOMIC INTEREST GROUPING GENERAL REMARK These types of enterprises are completely new to Montenegrin legislation and haven’t been envisaged so far by it, hence, along with necessary amendments to the Law on Business Organizations a separate legal instrument is foreseen to be drawn up and enacted in Montenegrin Parliament in order to introduce this new forms of doing business in European single market to Montenegrin legal system. Chapter 6: Company Law Chapter 6: Company Law

11. Thank you for your attention! QUESTIONS?