In line with European efforts to create a competitive, innovative, and efficient business environment, electronic company registration has become a significant part of reforms in the field of company law. The branch of law related to business stands out as one of the most prominent examples of the impact of digitization on the law and its continuous evolution.
Electronic registration of the establishment of companies has numerous advantages, but it also brings certain challenges and dilemmas. However, due to the wide range of benefits it offers, the view that this institute represents an indispensable tool in a modern legal system stands out. It is considered a logical product of the development and digitization of company law, as well as the overall contemporary environment in which we live.
Legal framework in Serbia:
The Law on Companies, as the overarching law in the field of company law, provides legal support for the establishment of business companies, defining the basic institutes related to establishment. In addition to this, the Law on the Procedure of Registration with the Business Registers Agency is of exceptional importance for this topic, regulating the process of registration, recording, and publication of data and documents subject to the registration of the establishment of business companies.
Electronic company registration was first introduced into Serbian law in 2017, initially limited to the establishment of entrepreneurs. Shortly thereafter, the option was extended to single-member limited liability companies. In May 2023, a provision came into effect requiring the registration application for the establishment of business companies to be submitted exclusively in electronic form, according to Article 9. paragraph 2. of the Law on the Procedure of Registration with the Business Registers Agency (more about this update can be found at the following link: https://vp.rs/en/2023/04/20/what-will-the-amendments-to-the-law-which/)
It is commendable to note that the Serbian legislator in the field of company law follows European trends. Serbian law in this regard is largely harmonized with the directives and regulations of the European Union. This undoubtedly has a significant impact on the development of business in Serbia and the attraction of foreign investments to our territory.
How electronic company registration works in Serbia:
The registration of the establishment of business companies in Serbia is done by submitting an electronic registration application on the website of the Serbian Business Registers Agency through a user application. Along with the completed registration application, certain documents in electronic form must be attached, signed with an electronic signature (depending on the form of the business company being established, the required documentation may vary). The registration application fee is paid electronically with a credit card, and the procedure is completed by submitting the registration application for establishment, signed with the electronic signature of the applicant. The Serbian Business Registers Agency, within the legally prescribed period of 5 business days, makes a decision to adopt or reject the registration application for establishment.
When submitting an electronic registration application, two situations should be distinguished. The first is when the applicant is the founder of the business company, and the second is when the applicant is the authorized representative of the founder (usually an attorney at law). The table below outlines the basic characteristics and differences depending on who is designated as the applicant:
|
Submitter of electronic company registration: |
|
|
1. Founder of the business company |
2. Authorized representive of the founder (attorney at law) |
|
It is necessary to possess a valid electronic certificate issued in their name by a certification body in Serbia |
If the client does not have an electronic certificate or if it is not issued in Serbia, the law grants special powers to attorneys at law |
|
The founder(s) signs the Articles of Association of the business company with their electronic signature |
1) The lawyer, as the authorized representative of the founder, signs the founding act with their electronic signature on behalf of the founder, based on a notarized power of attorney or 2) In the case of digitizing the founding act, where the act is composed on paper, manually signed by the founder of the business company, and notarized by a public notary, the lawyer scans and signs it with their electronic signature |
|
The founder signs the registration application with their electronic signature |
The registration application is signed by the attorney at law with their electronic signature based on the attached power of attorney in electronic form. |
Advantages of electronic company registration:
Electronic registration of business establishments offers a wide range of advantages, among which the following stand out:
- Speed and Efficiency: Reducing the time required for registration accelerates the overall process of establishing a company. This primarily refers to the time needed for preparing paper documentation and its immediate submission after long waiting queues.
- Reduced Administrative Costs: Electronic registration eliminates the need for physical copies of documents, thereby reducing costs associated with printing, sending, or directly submitting documentation.
- Greater Transparency: The digitization of the process makes registration information easily accessible and transparent.
- Simplified Filling of Registration Applications: The electronic application system is designed to guide users through data entry, ensuring that the registration application is correctly filled out in accordance with relevant regulations.
Efficiency as a new primary goal of Corporate and Commercial Law – Challenges it brings:
With the introduction of innovations influenced by modern technologies, legislative systems unmistakably prioritize efficiency as the main and fundamental goal for further development of commercial law. Electronic registration of business establishments serves par excellence example of favoring efficiency over protection as the guiding principle for the further development of commercial law.
Comparing the old method of registering business establishments (submitting paper documentation directly to the Serbian Business Registers Agency) and the current method (submitting documentation in electronic form), we can conclude that, from the perspective of legal security, the old method was far more secure. Although electronic registration brings numerous benefits, it also carries a certain risk of misuse, leading to various challenges. Therefore, addressing issues related to data security, identity verification during online registration, and user education on the proper use of electronic systems is crucial.
Balancing efficiency and user protection:
Despite the emphasis on efficiency, laws also incorporate strict legal mechanisms to protect user interests. Rules regarding transparency, clarity of information, and access to relevant documents set standards that shield users from unethical or unfair business practices. These rules are crucial to protect users and maintain trust in the business environment.
Future development of electronic company registration:
Globally, numerous proposals highlight the future development of electronic systems for registering business establishments. Integrating new technologies, such as blockchain or artificial intelligence, can further enhance the security and reliability of the system, anticipating future challenges.
The implementation of blockchain technology in electronic registration of business establishments has the potential to significantly improve transparency, reliability, and data integrity. As a decentralized distributed ledger, blockchain allows all participants in the process to track every change and transaction in real-time, ensuring data immutability and preventing information manipulation.
The application of artificial intelligence in electronic registration opens new horizons for process optimization. Machine learning algorithms can analyze large amounts of data to identify patterns and provide predictions regarding the registration process. Automating routine tasks, such as data validation or document verification, can significantly reduce the time required to complete registration.
Electronic registration of changes in registered data – Completing the E-Registry:
In addition to registering the establishment of business companies, the Serbian Business Registers Agency registers certain data and documents, as prescribed by law. For example, if a business decides to change its registered address, legal representative, business name, shareholder, increase in share capital, etc., it is necessary to submit a registration application for the change of that data along with the corresponding set of documentation to the Serbian Business Registers Agency.
In Serbia, for now, electronic submission of registration applications for changes in data is not yet possible. Instead, they are currently submitted exclusively by direct submission or by post. However, in the coming months, it is expected that this option will be introduced, allowing for the electronic submission of registration applications for changes in data. This would result in the completeness of the electronic registry of business companies, completing the story about electronic registration applications.
It is noteworthy that with the introduction of this option, the advantages of electronic registration applications will reach their full potential, considering their much greater frequency and quantity compared to registration applications for establishment.
Conclusion:
Electronic company registration in Serbia represents a significant step toward creating a modern, efficient, and transparent business environment. This innovation, in line with European trends, brings numerous advantages, with particular emphasis on speed, efficiency, reduced administrative costs, and greater transparency in the process of establishing business companies.
Despite the fact that it carries certain risks, primarily regarding data security and identity confirmation, electronic registration remains an indispensable tool in the modern legal order. The future development of the electronic registration system may include the implementation of technologies such as blockchain and artificial intelligence. These innovations promise to enhance security, transparency, and efficiency, anticipating challenges of the future. Electronic registration remains a key component of the contemporary legal and business environment, ready to adapt and support the accelerated pace of digital transformation.
By David Bojic, Trainee Lawyer, Vukovic & Partners
