The Company Law in the Republic of North Macedonia has finally introduced a simplified limited liability company.
With the amendment of the Company law published in the Official Gazette no. 215, published on 16.09.2021, among other changes, a new form of Trade Company was introduced, as follows: simplified limited liability company. According to the law, the short designation of this type of Company will be PDOO.
Thus, according to the legal amendment, it is if three founders who are natural persons and have only one manager, can establish a simplified limited liability company.
Based on this, the possibility for establishing a PDOO is not given in conditions when one or more of the founders are legal entities, or there is a need for more than one manager to be appointed in the Company. In addition, this opportunity is given to no more than three founders who are natural persons.
PDOO finds its advantage in the difference of the minimum amount of share capital that has to be paid by the founders. Namely, according to the above-mentioned legal amendment, the minimum amount of the share capital of the simplified limited liability company is 1 euro. On an individual basis, the minimum nominal amount of the business share is 10 cents. The law emphasizes that the share capital and the business share in the company must be expressed in whole numbers in euros. As a measurement date, the founders can also agree on the day of signing the founding act of the company.
It should also be borne in mind that the stakes for the taken-over business shares are paid only in cash.
In addition, unlike the established form of a Limited Liability Company, which provides the opportunity for payment within one year, in PDOO the application for registration of the company in the trade register is submitted only after the deposits for the taken business shares in the company are fully paid.
However, PDOO brings with it an additional obligation related to the mandatory reserve. Namely, according to the Company Law, such a company must have a mandatory reserve, in which ¼ (one quarter) of the company's profit expressed in the annual financial statements, reduced by the amount of the loss from the previous year, must be entered. The required reserve can be used for 1) increase of the share capital by the distribution of the reserve in the share capital of the company; 2) to cover the loss stated for the year for which the annual financial statements are submitted, if it is not covered by the profit realized in the previous year and 3) to cover the loss expressed for the previous year if it is not covered by the profit expressed in the annual financial statements for the year for which they are submitted.
Regarding the shares and the right deriving from them, the Law stipulates that in this type of company every amount of 10 cents in denar counter value as a nominal amount of the business share, give the right to one vote until the share capital of the company increases.
The manager is obliged to enter in the book of business shares in the registration of each change of the size of the share, the number of votes arising from that share in the meeting of partners, for which at the request of the partner in the company, he will issue a certificate.
It should be added the option to incorporate the company in North Macedonia with EUR 5.000 basic capital, which can be paid within one year, as a standard type of Limited Liability Company remains unchanged.
By Vedran Lalicic, Partner, and Martin Boskoski, Partner, Lalicic & Boskoski Law Office