The new Montenegrin Companies Act (“Official Gazette of Montenegro”, no. 90/2025), which entered into force on August 13, 2025, will be applied from January 1, 2026. The law was adopted under an urgent procedure, although a public debate on the draft law was held in April 2024. The new law aims to improve and fully harmonize the existing rules of company law with European Union law, as well as to more comprehensively regulate certain areas compared to the previous period. The Law regulates the establishment, management, restructuring, termination and other matters of importance for the work of companies, entrepreneurs and parts of foreign companies.

• Companies and entrepreneurs who were registered in the Central Register of Business and Other Entities („CRBE“) before the start of the application of this law are required to harmonize their organization and operations with this law and register the changes within three months from the date of application of this law.
• Joint-stock companies in which ordinary shares of different nominal values existed on the date of application of this law are required to homogenize the shares to equalize the nominal value, within one year from the date of application of this law, in such a way as to maintain proportional participation in the total number of shares.
• Public joint-stock companies are obliged to ensure gender representation in management bodies in accordance with the provisions of this law by June 30, 2026, and upon the expiration of this term, CRBE will refuse to register members of management bodies if this representation is not ensured.

Main aspects of the changes

Harmonization with the law of the European Union

The new law fully harmonizes the national company law with the so-called company directives, as well as corresponding regulations and recommendations of EU company law,  and thus creates conditions for the development of the internal market, as the basis of European economic integration.

• In addition to harmonizing with EU law the provisions governing different forms of business companies, the Law foresees the possibility of establishing a European joint-stock company (Art. 548-576) and a European Economic Interest Association (Art. 577-602). A European joint-stock company can be established by mergers and acquisitions of joint-stock companies, as a holding company, as a subsidiary company or by changing the legal form, provided that the companies participating in this establishment are registered or have a registered part in Montenegro and another EU member state. However, the application of these provisions has been postponed until the day of Montenegro accession to the European Union.
• The Law regulates status changes and different types of status changes in more detail (Art. 435-505). In addition, a special procedure has been regulated for each of these status changes with a cross-border element, i.e. if two or more capital companies participate, at least one of which was established according to the regulations of Montenegro, and at least one according to the regulations of another Member state: cross-border mergers and acquisitions (Articles 460-478), cross-border divisions (Articles 486-505). Also, in addition to the detailed regulation of the change in the legal form of a company (Art. 506-512), the Law also regulates the procedure for cross-border conversion (Art. 513-529). This issue of cross-border restructuring also falls under the provisions whose implementation is postponed.
• Pursuant to Directive (EU) 2022/2381 on the improvement of gender equality, Article 309 of the Law prescribes the obligation for public joint-stock companies, which are considered large legal entities in accordance with the regulations governing accounting, to ensure certain participation of members of the less represented gender in management bodies: at least 40% of the total number of non-executive directors in the board of directors, i.e. 40% of members of the supervisory board; or 2) one third of the total number of all director positions, including executive and non-executive directors.

Elimination of conceptual problems in the implementation of the Law

The second group of reasons for the adoption of the new law consists of perceived conceptual problems in the implementation of the law from 2020.

• The provisions on the liquidation of a company were changed, considering that the earlier foreseen corresponding application of the rules of bankruptcy proceedings to judicial liquidation is not possible, because these are fundamentally different procedures. Within the provisions of Part 11 (Art. 603 to 626), the term is defined and the types of liquidation are regulated, as a way of terminating a company that can be carried out only if the company is liquid, that is, when the value of its assets exceeds the value of its liabilities (Article 603). The relationship between the liquidation procedure and the bankruptcy procedure is also regulated. Article 621 still provides that the provisions of the law governing bankruptcy shall be applied accordingly to the judicial liquidation procedure, but the provisions relating to reorganization, the board of creditors, separate creditors and the rebuttal of legal actions of the bankrupt debtor are expressly exempted from this application.
• The 2020 Law provided for the corresponding application of the rules of a joint-stock company („JSC“) to a limited liability company („LLC“). In this way, the key differences between these two types of capital companies were erased, the flexibility of the LLC was reduced and the number of binding rules applied to it was unnecessarily increased. A special problem is the application of the rules on shares, which are securities, to shares in LLCs, which are not. The new law contains detailed provisions on limited liability companies (art. 358-433) for the purpose of harmonization with EU law in this matter, but also for the purpose of greater legal certainty. Corresponding application of the rules of JSC to LLCs is significantly limited by the new solutions.
• Although according to the previous law there was a right to choose between unicameral and bicameral management systems in JSC, the legislative solution was such that both systems functioned almost identically, and that there was no essential difference between them. In Chapter V, Section C (Art. 292-334) of the new Law, the two management systems of the JSC, unicameral and bicameral, are regulated more closely, so that the norms specific to one and the other management system are first prescribed, while the norms contained in the third section are common to both systems. Among other provisions that regulate unicameral management, articles 293-296 regulate the types and legal status of different types of directors, with the fact that only executive directors perform company management activities (article 293). The supervisory function in the unicameral management system is exercised by non-executive directors (Article 295), who cannot be employed in a JSC. Article 296, in accordance with the highest standards of corporate governance and the recommendations of the European Commission in this area, defines the concept of an independent director, as a non-executive director who has no business, personal or other relations with the JSC, executive directors and controlling shareholder, as well as with affiliated companies, members of the management bodies of affiliated companies and controlling shareholders of affiliated companies, which could bring him into a conflict of interest. Given its role and importance, it is imperative that public JSC must have at least one independent director.

Overcoming the marked insufficient regulation of certain areas by the Law

The third reason for the adoption of the new Companies Act is the insufficient regulation of certain areas by the previous law. In contrast to Anglo-American legal systems, where courts fill legal gaps by creating law through practice, in Montenegro, judicial practice is not a source of law in the full sense and courts do not have the authority to create new rules. In addition, Montenegrin courts, like most European ones, are reluctant to apply creative interpretation to replace missing norms. Frequent amendments to the law in question would further undermine its systematicity, which makes clear interpretation and practical application of this important systemic regulation difficult.

• For example, the Companies Act from 2020 does not regulate certain essential institutes of company law, such as the association of companies and business associations, while many existing institutes are regulated with a minimal number of provisions. The new Companies Act regulates groups of companies, which include the parent company and its subsidiaries, the key concept of control, which can be legal – when one company in a subsidiary owns, directly or indirectly, more than 50% of the voting rights, and factual which will exist when one company owns 50% or less of the voting rights in another company, with the fulfillment of the prescribed conditions, and it is also assumed when one company has appointed the majority of the members of the board of directors, i.e. the supervisory board, as a matter of group management (art. 530-541).
• A special problem was insufficient regulation in the area of registration. The provisions of the new Law unify and regulate all registration issues – from the establishment, through changes, to the termination of the legal entity. A very important issue from the aspect of legal security is regulated by Article 5, which defines the issues of legal effects that data registration produces towards third parties.

Elimination of terminological and conceptual inconsistencies

An additional reason for the adoption of the new Law is to eliminate the terminological and conceptual inconsistency of the Law from 2020.

• For example, the previous Law introduced the term “public interest company”, which is inadequate and can be misleading, because it implies that the company performs activities of general interest, which is traditionally related to public companies or other companies to which the state entrusts these tasks. According to the provisions of the new Law, these companies are called “public companies”, and in Article 2, paragraph 5 they are defined as companies that have successfully made a public offer of securities in accordance with the prospectus whose publication was approved by the Capital Market Commission or whose securities are included in trading on the regulated market in Montenegro.