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One Step Closer in the Ease of Doing Business in Croatia

One Step Closer in the Ease of Doing Business in Croatia

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This year, the Croatian Companies Act (Act) was amended again (amendments enter into force on 1 June 2020 and on 1 August 2023).

The reasoning behind new amendments is, among other things, implementation of digital transformation in the process of company incorporation with the aim of easier and more time and cost-efficient start of economic activity.

Let us look at the main changes to the Act.

The newly amended Act introduces changes into the remote company incorporation by allowing for the incorporation documents (Articles of Association and Statement of Incorporation) to be filed electronically.

Furthermore, a branch office can now be incorporated remotely (i.e. electronically). Additionally, notary public conduct in the event of remote company incorporation is amended in the following manner: physical presence of company founder is not necessary before the notary public, whereas communication with shareholders, their representatives and members of company bodies can be via electronic communication (e.g. video connection).

A useful change envisages availability of the forms from the Act in the English language.

Finally, the new change deletes provision based on which the court registry system can be accessed only in person. Thus, the proxies will also be permitted to access the system.

Additional important change relates to the adjustment with the provisions of the Bankruptcy Act: the new amendments envisage that, after bankruptcy proceedings are opened, only the bankruptcy trustee may initiate proceedings to determine the liability of a shareholder who is not personally liable for the company's obligations.

Furthermore, the consequence of the companies’ merger is now also regulated by the Act, in the situations where a proposal for opening the bankruptcy procedure was submitted against the merged company. Namely, if the proposal for opening the bankruptcy procedure is submitted for the merged company, and the merger is still not registered in the court registry of the acquiring company, the decision on the proposal to open bankruptcy proceedings will be made in relation to the acquiring company. If the pre-bankruptcy proceeding is initiated on the merged company before the merger is registered in the court registry, then this proceeding is continued over the acquiring company.

Finally, one of the most significant changes is certainly the one related to the process of division of the company capital. According to the current Act, all companies that participate in the division are liable as joint and several debtors for the liabilities of the company being divided that arose before the registration of the division in the court registry (limited to the value of the assets transferred to each of the company in accordance with the division plan and reduced by the liabilities assigned to each company). Pursuant to the new Act, the liability of these companies is no longer limited.

The new, yet to be introduced, Companies Act should definitely take Croatia a bit away from bureaucratization and a bit closer to modernization.

By Marijana Soldo Kubat, Senior Associate, Ostermann & Partners

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