The principal forms of business organisation available in Montenegro are the general partnership, limited partnership, joint-stock company and limited liability company. Entrepreneurs may also conduct business as registered natural persons, while branches of foreign companies may be registered in Montenegro but do not constitute separate legal entities.

The choice of legal structure in Montenegro is influenced by several factors, including the extent of liability, regulatory and corporate requirements, capital requirements and tax considerations. In a general partnership, partners have unlimited liability for the obligations of the partnership, while in a limited partnership, general partners have unlimited liability, and limited partners are generally liable only up to the amount of their agreed contribution. Members of a limited liability company and shareholders of a joint-stock company generally have limited liability and are not personally liable for the obligations of the company.

The choice may also be affected by regulatory and corporate requirements, including registration with the Central Register of Business Entities (known by its Montenegrin acronym, CRPS), sector-specific licences or approvals, and structure-specific capital requirements, such as EUR1 for a limited liability company and EUR25,000 for a joint-stock company.

Taxation is also relevant because corporate entities are generally subject to corporate income tax at rates prescribed by the Corporate Income Tax Act, while distributions to shareholders may also be subject to withholding tax, subject to applicable exemptions and treaty relief.

The following summary describes the incorporation procedure for a limited liability company, the corporate form most commonly used in Montenegro.

The incorporation documents typically include:

• a founding act, namely, a resolution for a single founder or an agreement for two or more founders;
• the Articles of Association;
• if the founder is a legal entity, an excerpt from the relevant register in the founder’s country of origin;
• if the founder is a natural person, a passport (if the founder is a foreign national) or a Montenegrin identity document (if the founder is a Montenegrin citizen);
• a completed registration application form with all required information; and
• any other necessary approvals/licences/certificates in accordance with planned activities, company size or other relevant parameters.

The CRPS issues a decision on the registration application within ten days.

Companies are generally required to maintain prescribed corporate records and keep their registered details with the CRPS up to date, and comply with annual financial and other reporting obligations under the applicable tax and sector-specific legislation.

The Companies Act regulates the creation, maintenance, and alteration of share capital of a joint-stock company and permits authorised increases of share capital subject to statutory requirements.

A resolution of the Shareholders’ Meeting may authorise the board to increase the share capital by issuing new shares, subject to the statutory amount and time limitations. Shares may be issued either with or without par value, provided that all shares in the company follow the same approach. No-par-value shares have an accounting value determined by dividing the company’s share capital by the total number of shares. Increases and reductions of share capital are subject to the applicable corporate approval and registration requirements. The Companies Act does not use a separate “stated capital account” concept; it regulates registered share capital and, separately, share premium.

A joint-stock company may issue ordinary and preference shares. Ordinary shares constitute a single class, while several classes of preference shares may be issued. The rights attached to preference shares may include preferential dividend and liquidation rights, conversion rights and redemption rights. When structuring different classes, particular attention should therefore be paid to the economic and voting rights, transfer restrictions, pre-emption rights and statutory class consent requirements attached to each class. The aggregate nominal value of issued and authorised preference shares may not exceed 50% of the company’s share capital.

In a limited liability company, share capital is divided into ownership interests rather than shares, and members hold participation interests expressed as a percentage of the company’s share capital. The share capital is increased through additional contributions of the members, rather than by issuing shares, as ownership interests in a limited liability company are not securities.

Distributions, including dividends, are subject to statutory restrictions. A company may not distribute profits to shareholders if, following the distribution, its net assets would fall below the amount of its share capital together with reserves that may not be distributed under the law or the company’s Articles of Association. The amount available for distribution may not exceed the profit for the relevant financial year, increased by retained profits from previous years and available reserves, and reduced by losses carried forward and amounts required to be allocated to reserves under applicable law and the company’s Articles of Association.

If it is established that shareholders knew or could have known that a distribution was not made in accordance with these requirements, the shareholders may be required to return the amounts received.

A joint-stock company may acquire its own shares (treasury shares) subject to statutory requirements, including shareholder approval, a net asset test, a 10% limit on the company’s own shares and the requirement that the shares be fully paid. The acquisition resolution must specify the maximum number of shares, the minimum and maximum purchase price and the acquisition period, which may not exceed two years. Certain statutory exceptions apply.

The treasury shares generally must be disposed of within the statutory deadlines; otherwise, they must be cancelled in accordance with the applicable statutory requirements. While held by the company, treasury shares do not carry voting or dividend rights and are not counted for quorum purposes. The acquisition and disposal of treasury shares must also be reported in the company’s financial statements and registered with the CRPS.

The company may pay for its shares only from available reserves or proceeds from the sale of its own shares. The company may not distribute profits or acquire additional treasury shares until the withdrawing member has been paid in full.

A limited liability company may acquire an ownership interest from one or more of its members with the approval of members holding at least two-thirds of the share capital. The proposed acquisition agreement must be provided to all members at least 21 days before the decision.

Financial assistance is generally prohibited: a company may not directly or indirectly provide loans, guarantees or other financial support to a person intending to acquire shares in the company. Exceptions apply to financial institutions and acquisitions of shares for the purpose of allocating them to employees.

Control person reporting obligations for private companies primarily concern the disclosure of beneficial ownership information. Companies are generally required to identify and register their beneficial owners, and update information regarding them, in accordance with the rules governing the Register of Beneficial Owners.

The principal laws and regulations governing corporate governance in Montenegro are:

• the Companies Act;
• the Act on Registration of Business and Other Entities;
• the Capital Markets Act;
• the Audit Act;
• the Bankruptcy Act;
• tax legislation relevant to corporate governance and reporting obligations;
• the Accounting Act;
• the Corporate Governance Code; and
• the Rules on Corporate Governance Reporting by Issuers whose Securities are Admitted to Trading on a Regulated Market.

In the case of regulated business activities, such as banking, the relevant special legal framework also applies.

The principal fiduciary duties of directors include the duty to act with due care and in the best interests of the company, the duty to disclose personal interests and avoid conflicts of interest, the duty of confidentiality and the duty to comply with non-compete restrictions. Although published case law is relatively limited, breaches of duty-of-care, loyalty and conflict-management obligations may give rise to liability.

Directors are required to act with the care of a prudent businessperson and in the reasonable belief that they are acting in the company’s best interests. A breach of their fiduciary duties may give rise to personal liability for any resulting damage suffered by the company.

Limited liability companies are generally managed by a Shareholders’ Meeting and a director, although their Articles of Association may provide for a board of directors instead.

In case of joint-stock companies, in addition to the Shareholders’ Meeting, the management system can be either one-tier or two-tier. Under a one-tier management system, the joint-stock company has a director or a board of directors, while under a two-tier management system, it has a director or management board and a supervisory board.

For joint-stock companies, where a board of directors is established, it must have at least three members and an odd number of directors.

Public joint-stock companies are subject to stricter composition and independence requirements than other joint-stock companies, including a majority of non-executive directors, at least one independent director and, for large public joint-stock companies, gender representation requirements.

As regards the independence requirements, at least one-third of the members of the board of directors must be independent directors. In the case of a public joint-stock company, at least two-fifths of the members of the board of directors must be independent directors.

Only a natural person with full legal capacity may be appointed as a member of the board of directors. A person may not serve as a member of the board of directors if such person has been convicted of certain criminal offences against employment rights, intellectual property, payment transactions and commercial operations, property or official duty, for a period of three years from the date on which the judgment became final. Any period spent serving a prison sentence is not included in this three-year period.

In addition, a member of the board of directors may not be the company’s auditor or a person who has audited the company’s financial statements. A person subject to a prohibition on carrying out an activity constituting the company’s principal business activity may not serve as a member of the board for the duration of such prohibition. An executive director of the company may not serve as a member of the board of directors, except in the case of a single-member company.

The company’s Articles of Association may prescribe additional eligibility requirements for the appointment of members of the board of directors.

Montenegrin legislation does not provide for a standalone ESG regulatory framework. ESG and sustainability-related requirements are addressed through various laws and regulations, primarily the Accounting Act, the Companies Act and the Environmental Protection Act. The applicable legal framework covers, among other matters, non-financial reporting, corporate governance, environmental protection and sustainable development.

Under the Accounting Act, certain large legal entities and parent companies of large groups are required to include in their management report, or in a separate non-financial report, information concerning their business model, relevant policies relating to environmental, social and employee matters, human rights and anti-corruption, the results of such policies, principal risks and relevant non-financial key performance indicators.

Under the Companies Act, executive directors and members of the relevant management and supervisory bodies are required to act conscientiously, with the care of a prudent businessperson and in the interests of the company as a whole. This general duty is not expressly formulated as a standalone ESG obligation, although ESG considerations may be relevant when assessing the long-term interests of the company.

As a matter of best practice, boards should integrate material ESG considerations into risk management and long-term business planning, monitor compliance with applicable ESG-related requirements and oversee relevant ESG policies, risks and non-financial performance indicators. This approach is consistent with the non-financial reporting requirements under the Accounting Act.

A personal interest in a transaction must be disclosed to the company in advance, and the transaction must be approved by persons who have no personal interest in the transaction.

The relevant person must notify the company of the existence of such personal interest before the transaction is entered into or the relevant action is taken. The notification must include, among other things, the nature and extent of the personal interest, a description and value of the transaction, the proposed date of the transaction, and other information necessary to assess whether the transaction is fair and reasonable from the perspective of the company and the shareholders or members who have no personal interest.

For joint-stock companies, transactions representing at least 10% of the company’s total assets are subject to an additional fairness assessment, while a notice of approved transactions involving a personal interest must be published and made available to interested persons.

Shareholders are entitled to certain proprietary and non-proprietary rights, including the right to:

• participate in the distribution of profits through dividends;
• receive a share of the company’s remaining assets following liquidation;
• receive shares free of charge in the case of a share capital increase from the company’s own funds;
• exercise pre-emption rights in connection with new issues of shares and convertible bonds;
• dispose of their shares;
• attend and vote at the Shareholders’ Meeting;
• access certain corporate and financial information and documents;
• appoint an expert to examine the company’s business operations or accounts, subject to the applicable statutory requirements;
• ask questions in connection with matters considered at the Shareholders’ Meeting; and
• request the repurchase of their shares in certain circumstances where they dissent from a resolution of the Shareholders’ Meeting.

Statutory remedies available to shareholders include:

• claims for damages suffered personally by the shareholder due to the breach duty;
• derivative actions brought in the shareholder’s own name but on behalf of the company;
• challenges to Shareholders’ Meeting resolutions that are contrary to the Companies Act or the company’s Articles of Association or were adopted at an improperly convened or held meeting;
• buyout rights of dissenting shareholders in connection with certain fundamental corporate decisions; and
• court protection of information rights where a shareholder has been unjustifiably denied an answer to a question raised at a Shareholders’ Meeting in connection with transactions involving assets of significant value, as provided under the Companies Act.

Shareholder agreements are frequently used to regulate voting arrangements, board representation, exit mechanisms and restrictions on share transfers, including pre-emption, tag-along and drag-along rights. They serve as a contractual framework governing the relationship between shareholders alongside the statutory framework under company law. Their enforceability may be affected where contractual arrangements conflict with mandatory company law provisions or the company’s constitutive acts.

Shareholder disputes are commonly addressed through court proceedings challenging corporate decisions or seeking protection of shareholder rights. Depending on the circumstances, parties may pursue claims for damages, contest the validity of shareholders’ resolutions or request judicial intervention in relation to the management and operation of the company. Where conflicts significantly impair the company’s functioning, the courts may also order the company’s dissolution in accordance with the requirements of company law.

The principal laws and regulations governing mergers and acquisitions in Montenegro are:

• the Companies Act, which regulates mergers, demergers, acquisitions, corporate reorganisations, and other changes in ownership and corporate structure;
• the Law on Takeovers of Joint-stock Companies, which governs mandatory and voluntary takeover bids, as well as the acquisition of control over joint-stock companies;
• the Capital Markets Act, which regulates securities transactions, disclosure obligations, and other capital markets aspects relevant to M&A transactions; and
• the Law on Protection of Competition, which provides the merger control framework and requires notification and clearance of concentrations meeting the prescribed thresholds.

The choice of M&A structure depends on whether the transaction involves an acquisition of shares, a transfer of assets or a statutory merger. Statutory mergers require a merger agreement, corporate approvals and registration, with safeguards for shareholders and creditors and judicial involvement in specified matters rather than general court approval. Public takeovers involve additional considerations, particularly mandatory offer requirements, shareholder protection and regulatory approval.

The principal M&A structures are share acquisitions, asset acquisitions and statutory mergers. Share acquisitions involve purchasing existing ownership interests, while asset acquisitions allow buyers to acquire selected business assets and assume agreed liabilities. Statutory mergers provide an alternative where the intention is to combine businesses through the transfer of assets and liabilities by operation of law.

The new Companies Act, applicable since January 2026, has updated the framework for corporate governance and restructuring, including procedures and safeguards relevant to mergers. The new Law on Protection of Competition, adopted in 2026, is also relevant to transactions requiring merger-control assessment. Certain cross-border restructuring provisions under the Companies Act will apply only upon Montenegro’s accession to the EU.

While Montenegrin courts continue to play an important role in resolving shareholder, corporate governance and transactional disputes, recent developments in the M&A framework have been driven primarily by legislative and regulatory reforms rather than landmark judicial decisions. Court practice in this area remains relatively limited and has not yet resulted in the development of distinct judicial doctrines or principles specific to M&A transactions. Instead, the role of the courts has largely been to ensure compliance with the applicable corporate and regulatory framework and to safeguard shareholder rights.

The primary regulatory bodies overseeing capital markets in Montenegro are:

• the Capital Market Authority of Montenegro, which is the principal regulatory body responsible for supervising the capital market, market operators, investment firms and other authorised participants; and
• the Central Bank of Montenegro, which is also relevant where credit institutions provide investment services.

Initial and follow-on public offerings are primarily governed by the Capital Markets Act and generally require an approved prospectus, subject to statutory exemptions and ongoing disclosure requirements for listed issuers. The prospectus approval period is generally ten working days from the filing of a complete application. However, the review period is extended to 20 working days where the issuer is making its first public offer of securities or is seeking admission of its securities to trading on a regulated market for the first time.

Stock exchange requirements apply in addition to statutory securities regulation, so admission to trading on the Montenegro Stock Exchange requires compliance with both the Capital Markets Act and the applicable market-segment admission rules.

Prospectus exemptions include offers exclusively to professional investors, offers to no more than 150 non-professional investors, offers of securities with a denomination of at least EUR100,000 and offers requiring an investment of at least EUR100,000 per investor, as well as certain takeover, merger, division and other corporate restructuring transactions, share dividends, replacement shares not involving an increase of share capital, and employee share schemes. In certain cases, an information document must be made available instead of a prospectus. Exempt offers remain subject to any applicable notification, filing and other regulatory requirements imposed by the Capital Market Authority.

Securities offered under an exemption may be resold, but each subsequent offer is assessed separately and may require a prospectus unless another exemption applies. There is no general statutory holding period, while a non-exempt public offer made without a prospectus is void and may also be suspended or prohibited by the Capital Market Authority.

Listed entities are subject to ongoing reporting and disclosure obligations under the Capital Markets Act, including periodic financial reporting and disclosure requirements concerning information relevant to investors and the market. Such information is subject to the applicable publication and reporting requirements and must be made available to the public and reported to the Capital Market Authority in accordance with the applicable rules.

Material events are generally disclosed through the prompt publication of inside information relating to the issuer. Such information must be disclosed in a manner that enables prompt access and a complete, correct and timely assessment by investors, and must also be published on the issuer’s website. Disclosure may be delayed only in limited circumstances, provided that the delay is not likely to mislead the public, that the confidentiality of the information can be maintained and that the applicable statutory conditions are met.

The principal rules governing market abuse and insider trading are contained in:

• the Capital Markets Act, which prohibits insider dealing, unlawful disclosure of inside information and market manipulation and regulates the disclosure of inside information by issuers; and
• secondary legislation issued by the Capital Market Authority, which further develops the applicable compliance and reporting requirements.

Specific rules on the prevention and sanctioning of market abuse have also been adopted and are expected to come into force upon Montenegro’s accession to the EU.

As regards the enforcement powers of the relevant regulatory bodies, the Capital Market Authority has broad supervisory and enforcement powers, including the power to request information and documents, conduct on-site inspections, access trading and communication records, order corrective measures, suspend or prohibit trading, and initiate proceedings before the competent court.

The disclosure of substantial shareholdings is primarily governed by the Capital Markets Act. The framework requires shareholders and other persons entitled to exercise or control voting rights in listed companies to notify the issuer of relevant changes in their interests, while the issuer is responsible for making the notified information publicly available.

The disclosure obligation is triggered when voting rights reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75%. It applies to shareholders and other persons who are entitled to exercise or control voting rights in issuers whose shares are admitted to trading on a regulated market.

Non-compliance with these rules may result in fines ranging from EUR5,000 to EUR40,000 for legal entities and from EUR500 to EUR4,000 for responsible persons, with additional percentage-based fines possible for more serious infringements. The Capital Market Authority may also impose supervisory measures and require compliance with the applicable disclosure obligations.

The key legal requirements for corporate compliance programmes and internal control systems include internal controls, clear allocation of responsibilities, effective risk-management procedures and ongoing compliance monitoring, with additional obligations applying in regulated sectors.

Mandatory whistle-blowing mechanisms require regulated capital market entities to provide internal channels for employees to report suspected breaches, supported by secure reporting to the Capital Market Authority, protection of the reporter’s identity, and safeguards against retaliation or discriminatory treatment.

Effective compliance risk management requires companies to implement an independent and effective compliance function, risk-management policies, internal controls, staff training, reporting procedures and, where appropriate, internal audit arrangements, supported by regular oversight from senior management and the governing body.

The principal legislation governing secured transactions includes:

• the Law on Secured Transactions, which governs pledges over movable property and receivables;
• the Law on Property Relations, which governs mortgages over real estate and other property-law security rights; and
• the Law on Obligations, which recognises assignment of receivables by way of security.

The principal forms of security include mortgages over real estate, possessory and registered pledges over movable assets and rights, assignments of receivables by way of security, fiduciary transfers of ownership and, in the financial sector, financial collateral arrangements.

Perfection requirements depend on the type of security. Mortgages must be registered in the Real Estate Cadastre, while registered pledges must be entered in the Pledge Register. Priority is determined by the order of registration or perfection, and enforcement is carried out through realisation of the secured asset in accordance with the applicable statutory procedure.

In acquisition financings, security may be taken over shares or interests, real estate, movable assets, bank accounts and receivables, while relationships between multiple secured creditors are typically addressed through subordination or intercreditor arrangements, subject to applicable registration, priority and financial-assistance rules.

The key principles of contract formation include freedom of contract, equality of the parties, good faith and the binding force of contractual obligations, with contracts formed by an agreement on essential terms, interpreted by reference to their wording and the parties’ common intention, and enforced through claims for performance, damages or, where applicable, termination.

A commercial contract is validly formed where the parties have capacity and authority to contract, the parties have agreed on its essential terms, the subject matter and legal basis are permitted, and any mandatory form requirements are satisfied; consideration is not a separate requirement.

The principal grounds of invalidity include illegality of the subject matter or legal basis, lack of required capacity, failure to comply with mandatory form requirements and defects in consent, such as mistake, fraud or duress.

The laws and rules affecting the interpretation and enforcement of commercial contracts are primarily set out in the Contracts and Torts Act, including the principles of freedom of contract and good faith and the rules governing interpretation of contracts, performance and non-performance, damages, contractual penalties, termination and contractual limitations of liability.

The key legal remedies for breach of contract include performance, damages, termination of the contract and, where agreed, contractual penalties.

A party may terminate a contract in the event of non-performance or another material breach, subject to any applicable notice or cure requirements, while wrongful termination may give rise to liability for damages suffered by the other party.

The Contracts and Torts Act provides the principal framework for impossibility of performance and hardship, including rules on exemption from liability and the amendment or termination of contracts due to changed circumstances. For international sales of goods, the UN Convention on Contracts for the International Sale of Goods may also apply, which provides exemption from liability where non-performance results from an impediment beyond a party’s control.

Key considerations regarding intellectual property (IP) in commercial transactions include confirming ownership of patents, trade marks and copyright, properly documenting their assignment or licensing, completing any applicable registration formalities, and protecting trade secrets through appropriate confidentiality arrangements.

Ownership of IP created in a commercial relationship is primarily determined by statutory rules and the parties’ contractual arrangements, with specific rules applying to employee-created works and inventions, commissioned works and jointly created IP. Published case law is limited, although the Supreme Court has distinguished ownership of a physical asset from the underlying author’s rights, while no specific rules or established case law currently address ownership of AI-generated content.

Remedies available for infringement of IP rights include injunctions, damages, removal or destruction of infringing goods, and provisional measures.

The principal consumer protection laws and regulations in Montenegro are:

• the Consumer Protection Act, which regulates consumer rights, unfair commercial practices, disclosure requirements and consumer remedies;
• the Consumer Protection in Financial Services Act, which regulates the provision of financial services to consumers and related consumer rights;
• the Contracts and Torts Act, which governs general contractual relationships and remedies for breach; and
• the Electronic Commerce Act, which regulates certain aspects of online transactions and electronic contracting.

Consumer protection rules may affect commercial agreements by imposing mandatory disclosure requirements, restricting unfair contractual terms and granting consumers certain statutory rights, including cooling-off rights in specific circumstances.

Key enforcement mechanisms available to regulators include inspections, information-gathering powers, administrative measures and the imposition of sanctions, while consumers may seek redress through complaints procedures, alternative dispute resolution mechanisms and court proceedings.

Courts and regulators address unfair business practices, misleading advertising and e-commerce consumer protection issues through inspections, corrective measures and enforcement proceedings. Regulators may investigate misleading, aggressive and other unfair commercial practices, and require traders to remedy identified infringements, while courts may provide remedies to affected consumers and impose monetary penalties. Depending on the nature of the breach, legal entities may be subject to fines ranging from EUR3,000 to EUR20,000 for unfair commercial practices, while certain e-commerce infringements may attract fines of up to EUR10,000.

Merger control in Montenegro is governed by the Law on Protection of Competition, supplemented by the Merger Notification Guidelines, the Relevant Market Rulebook and the Regulation on the List of Competition Rules. A merger filing with the Montenegrin Agency for Protection of Competition (“Agency”) is required if either of the following thresholds is met in the preceding financial year:

• combined Montenegrin turnover of at least two parties exceeds EUR5 million; or
• combined worldwide turnover exceeds EUR20 million and at least one party generates at least EUR1 million in Montenegro.

Turnover is assessed at group level, excluding intra-group sales.

There is no statutory filing deadline, but closing must await clearance. The Agency has 30 days from receipt of a complete filing to clear the transaction or open an in-depth investigation. If opened, the investigation must be completed within four months from the submission of the filing.

The Agency assesses whether the transaction would significantly restrict effective competition, particularly through the creation or strengthening of a dominant position.

Implementing a notifiable concentration without prior clearance (gun jumping) may result in a fine of up to 1% of the undertaking’s worldwide annual turnover. Implementation of a prohibited concentration may result in a fine of up to 10% of worldwide annual turnover.

The Agency may also order divestment, unwinding of the transaction or other measures to restore effective competition.

Failure to comply with certain Agency orders may trigger periodic penalties of up to 5% of average daily turnover for each day of non-compliance.

Prohibited restrictive agreements and abuse of dominance may result in fines of up to 10% of the undertaking’s worldwide annual turnover and behavioural or structural remedies. Prohibited agreements are null and void, and injured parties may seek damages. Responsible individuals may also face imprisonment of three months to five years for abuse of a monopolistic or dominant position or conclusion of monopolistic agreements, where the statutory conditions for criminal liability are met.

Foreign Investment Regulations in Montenegro

Montenegro has no general FDI screening regime. Foreign investments are governed by the Law on Foreign Investments, which grants foreign investors national treatment and imposes no general notification or approval requirements.

Under the currently applicable framework, foreign investments in companies engaged in the production and trade of arms and military equipment require prior approval from the relevant ministry. No minimum investment value or shareholding threshold applies. The Law does not prescribe a specific approval fee or review deadline.

Investments in regulated sectors, including banking, insurance and other financial services, may require separate sector-specific approvals, generally irrespective of the investor’s nationality.

Foreign Ownership

Foreign ownership is generally permitted in Montenegro, but restrictions apply in certain sectors and asset classes.

In the defence industry, foreign investments require prior approval, although no general foreign ownership cap applies.

Foreign persons are generally prohibited from acquiring agricultural land, forests, natural resources, islands, property within one kilometre of the state border and certain protected or strategically important properties, subject to limited statutory exceptions.

Air carriers holding a Montenegrin operating licence must be majority-owned and effectively controlled by Montenegro or Montenegrin nationals, unless an international treaty provides otherwise.

Acquisitions of qualifying shareholdings in banks and insurance companies, generally starting at 10%, require prior regulatory approval.

Telecommunications and broadcasting are primarily subject to licensing and regulatory requirements rather than general foreign ownership caps.

These restrictions are enforced through sector-specific regulatory approvals, licensing requirements and property registration rules, as applicable.

National Security Review Process With Respect to Foreign Investment

Montenegro has no standalone, economy-wide national security screening regime for foreign investments. National security considerations are addressed through sector-specific approval procedures, particularly in the defence industry.

Under the Law on Foreign Investments, investments in companies engaged in the production and trade of arms and military equipment require prior approval from the relevant ministry, following consultation with the authorities responsible for defence and internal affairs.

In July 2026, the government initiated the establishment of a comprehensive FDI screening mechanism. A dedicated law is currently under preparation and has not yet been adopted.

Incentives

Foreign investors are generally eligible for the same incentives as domestic investors, subject to applicable eligibility criteria.

Newly established companies operating in economically underdeveloped municipalities may benefit from a 100% corporate income tax exemption for up to eight years, capped at EUR200,000, and subject to certain sector-specific exclusions.

Additional incentives include grants and subsidies for eligible investment, innovation and agricultural projects, as well as local tax and administrative benefits in designated business zones.

Montenegro also offers customs and VAT relief for qualifying activities in free zones, subject to applicable conditions.

Recent Developments and Policy Changes

Montenegro has undertaken several legislative reforms to align its investment framework with EU standards.

In March 2025, amendments to property ownership legislation provided for equal treatment of EU nationals in acquiring real estate, with application deferred until Montenegro’s accession to the EU.

In February 2026, Montenegro adopted a new Law on Free Zones, updating the regulatory framework for their establishment and operation.

In July 2026, the government adopted a proposal to establish a general FDI screening mechanism. Public consultations on drafting the relevant legislation commenced in September 2026, but no screening law has yet been adopted.

A new Law on the Production of Arms and Military Equipment was also adopted in July 2026, introducing additional national security requirements for foreign investments in the defence sector. Its application is deferred until 11 August 2027.

Data Protection Framework

Montenegro’s data protection framework is currently governed by the Law on Personal Data Protection (Official Gazette of Montenegro Nos. 79/08, 70/09, 44/12, 22/17 and 77/24). A new Law on Personal Data Protection, aligned more closely with the GDPR, was adopted in September 2026 and is scheduled to apply from 20 March 2027. Until then, the existing law remains the principal framework for personal data processing, subject to the new law’s transitional provisions. The Agency for Personal Data Protection and Free Access to Information is the principal supervisory authority.

Additional requirements apply in specific sectors: the Law on Electronic Communications regulates the confidentiality of communications and related data, healthcare legislation governs the processing and management of health data, and the Law on Labour Records regulates employee-related records. Video surveillance is also subject to specific rules under the personal data protection framework.

Key Obligations for Organisations Under Montenegro’s Privacy Law

Under the existing Law on Personal Data Protection, organisations must:

• process personal data lawfully and fairly;
• process personal information for specified purposes and only to the extent necessary;
• ensure that data collection is proportionate;
• ensure data accuracy;
• protect confidentiality; and
• implement appropriate security measures.

Consent is one legal basis for processing, while disclosure to third parties and processing of sensitive data are subject to specific statutory requirements.

The existing law does not establish a general data breach notification regime equivalent to the GDPR. From 20 March 2027, the new law will introduce a GDPR-aligned framework, including notification of qualifying breaches to the supervisory authority within 72 hours and notification of affected individuals where a breach is likely to result in a high risk to their rights and freedoms.

Cross-Border Data Transfer Requirements and Data Localisation Considerations

Under the currently applicable Law on Personal Data Protection, transfers of personal data outside Montenegro generally require prior approval from the Agency for Personal Data Protection and Free Access to Information, unless a statutory exception applies. Exceptions include transfers to EU/EEA countries and other countries recognised as providing an adequate level of protection, as well as certain transfers necessary for contractual performance or the protection of legal interests. This is particularly relevant for businesses using foreign cloud providers, sharing employee or customer data with overseas group companies, or outsourcing data processing.

The new Law on Personal Data Protection, applicable from 20 March 2027, will regulate international transfers as follows:

• Adequacy decisions: Transfers will be permitted to countries, territories, sectors or international organisations recognised as providing an adequate level of data protection.
• Appropriate safeguards: Where no adequacy decision applies, transfers may rely on safeguards such as standard contractual clauses, binding corporate rules for transfers within corporate groups, or approved codes of conduct and certification mechanisms, subject to the statutory conditions.
• Specific derogations: In limited circumstances, transfers may be permitted based on explicit consent, contractual necessity or the establishment, exercise or defence of legal claims.
• Data localisation: The law does not impose a general requirement to store all personal data in Montenegro, although specific sectoral requirements may apply.
• EU/EEA transfers: Transfers from the EU/EEA to Montenegro remain subject to the GDPR’s separate international transfer requirements, where applicable.

Principal AML/CFT obligations include:

• conducting customer due diligence, including the identification of customers and beneficial owners;
• monitoring business relationships and transactions on an ongoing basis;
• reporting suspicious transactions and activities to competent authorities;
• maintaining records relating to customers, transactions and AML/CFT measures; and
• implementing risk-based AML/CFT policies, procedures and internal controls, including employee training and compliance measures.

Entities subject to these requirements are:

• financial institutions, including banks, payment institutions and certain insurance undertakings;
• virtual asset service providers;
• professional service providers, including auditors, accountants, tax advisers, lawyers and notaries in prescribed circumstances;
• real estate professionals; and
• gambling operators and certain dealers in high-value goods.

In relation to sanctions, trade restrictions and export controls, Montenegro implements UN sanctions and restrictive measures aligned with the EU sanctions framework. Businesses are required to comply with applicable financial and trade restrictions, while breaches may give rise to administrative, misdemeanour or criminal liability.

In relation to anti-corruption and anti-bribery compliance, businesses are prohibited from engaging in bribery and other forms of corrupt conduct and may be exposed to both individual and corporate liability. Risk mitigation is typically achieved through compliance programmes, including anti-corruption policies, employee training, third-party due diligence, conflict-of-interest controls, and whistle-blowing or other internal reporting procedures.

To ensure compliance with these requirements, the competent authorities have broad supervisory, investigative and enforcement powers, including the power to request information and documentation, conduct inspections and impose administrative, misdemeanour or criminal sanctions for non-compliance.

Environmental Regulation

The key environmental regulatory requirements in Montenegro arise primarily from the Environmental Protection Act, the Environmental Impact Assessment Act, the Environmental Liability Act and the Climate Change Act.

Projects that may have significant environmental effects, including certain industrial, energy, infrastructure and tourism projects, are subject to environmental impact assessment requirements and must obtain the relevant approvals before implementation.

Environmental liability is based on the “polluter pays” principle, under which operators are responsible for preventing and remedying environmental damage. In corporate transactions, particular attention is typically paid to potentially contaminated sites, remediation obligations, environmental assessments and potential environmental claims.

Montenegro’s climate change framework regulates greenhouse gas emissions, monitoring and reporting obligations, and permitting requirements for certain emitters. The framework is being further aligned with EU climate legislation and is intended to support future integration with the EU emissions trading framework (EU ETS).

Climate-Related Litigation and Environmental Liability

Climate-related litigation in Montenegro remains relatively undeveloped. However, companies may face civil, administrative and, where applicable, criminal liability for environmental damage or non-compliance with environmental regulations.

Operators may be required to implement preventive measures, remedy environmental damage, and undertake remediation activities in accordance with applicable legislation. For companies operating in sectors such as energy, industry and infrastructure, potential risks include remediation costs, regulatory enforcement measures, fines and environmental damage claims.

As Montenegro continues to align its legislation with EU environmental and climate standards, climate-related obligations and environmental liability issues are expected to become increasingly significant from both a regulatory and transactional perspective.

Health and Safety

Occupational health and safety obligations in Montenegro are primarily governed by the Occupational Health and Safety Act and the Labour Act.

Employers are required to provide safe and healthy working conditions, carry out risk assessments, implement preventive measures, provide employee training and personal protective equipment, and organise mandatory medical examinations where required.

Montenegro does not have separate federal or provincial occupational health and safety regimes. A single national legal framework applies throughout the country.

Licensing and Permitting

Licensing and permitting requirements depend on the nature of the business activities carried out by the relevant company. Industry-specific regulatory regimes apply in sectors such as energy, banking and financial services, telecommunications, pharmaceuticals and environmental protection.

Certain activities, particularly in regulated sectors, may only be carried out on the basis of the relevant licences, permits or regulatory approvals issued by the competent authorities.

In addition, certain facilities may require environmental permits, environmental impact assessment approvals or integrated permits. Accordingly, legal due diligence in corporate transactions should include verification of the validity of all relevant licences and permits, compliance with the conditions under which they were issued and any regulatory approvals required following a change of ownership or control.

Montenegro does not yet have a comprehensive AI regulatory framework. AI use is currently governed through existing data-protection, anti-discrimination and sector-specific rules. Organisations must ensure lawful and transparent processing of personal data, observe restrictions and safeguards relating to solely automated decision-making, prevent discriminatory outcomes, and comply with any applicable sector-specific requirements concerning the safety and reliability of AI systems.

Other relevant compliance regimes include tax, accounting and financial reporting requirements and, for business falling within their scope, cybersecurity and information-security rules. Additional requirements may apply to businesses participating in public procurement or otherwise subject to specific regulatory regimes.

The principal employment and labour laws applicable to employers include:

• the Labour Act, which sets out the general framework for employment relationships;
• the Occupational Health and Safety Act, which governs workplace health and safety;
• the Prohibition of Harassment at Work Act, which regulates protection against workplace harassment;
• the Peaceful Resolution of Labour Disputes Act, which governs alternative resolution of labour disputes; and
• the General Collective Agreement, which supplements statutory employment rules with generally applicable employment terms.

Termination of employment is primarily governed by the Labour Act and must be based on a legally permitted ground and carried out in accordance with the applicable procedural and notice requirements. Depending on the grounds for termination, specific requirements may apply in relation to notice, severance, and the procedure preceding dismissal. Employees may challenge an unlawful dismissal and seek the remedies available under the Labour Act.

Executive compensation arrangements are primarily governed by the Companies Act, the Labour Act and applicable tax legislation. For public joint-stock companies, the remuneration policy may cover management personnel and must address fixed and variable remuneration, including share-based remuneration and the financial consequences of termination.

Non-compete covenants are expressly regulated by the Labour Act and are enforceable subject to statutory requirements. Post-termination non-compete restrictions may be agreed for up to two years, provided that the employer undertakes to pay the employee agreed monetary compensation. Confidentiality obligations may be contractually agreed, while trade secrets also benefit from statutory protection.

Under Montenegrin law, land can be owned by private individuals and legal entities, the State of Montenegro, municipalities and other public entities. Ownership rights may be held as sole ownership or co-ownership of multiple persons. In addition to ownership rights, land may be subject to other rights, including easements, mortgages and rights of use, in accordance with the Law on Ownership Rights. Property rights over real estate, including land, are acquired, transferred and recorded through registration in the Real Estate Cadastre.

As a general rule, foreign natural persons and foreign legal entities may acquire, hold and dispose of real estate in Montenegro, subject to the restrictions prescribed by the Law on Ownership Rights.

Pursuant to Article 415 of the Law on Ownership Rights, foreign persons may not acquire ownership rights over:

• natural resources;
• assets in general use;
• agricultural land;
• forests and forest land;
• cultural monuments of exceptional or special significance;
• real estate located within the land border zone extending one kilometre from the state border and on islands; or
• real estate situated in areas designated by law, for reasons of state interest and security, as areas in which foreign ownership is prohibited.

By way of exception, a foreign natural person may acquire ownership of agricultural land, forests and forest land with a surface area of up to 5,000 sq m, provided that the subject matter of the transfer agreement (eg, sale and purchase, gift, exchange, etc) is a residential building situated thereon.

Furthermore, natural and legal persons from EU member states will be entitled to acquire ownership rights under the same conditions as domestic persons (rule applicable as of the moment of accession of Montenegro to the EU).

Additionally, foreign persons may obtain long-term lease rights, concessions, BOT arrangements and other forms of PPPs with respect to the categories of real estate listed above, under the same conditions as domestic persons.

Key Legal Framework Governing Commercial Real Estate Transactions

Commercial real estate transactions in Montenegro are primarily governed by the Law on Ownership Rights, the Law on State Survey and Real Estate Cadastre, the Law on Obligations, the Law on Spatial Planning and Law on Construction of Facilities and other sector-specific regulations, depending on the nature of the asset.

Depending on the nature of the property and transaction, additional regulations may apply, including those concerning planning and construction, agricultural land, status of maritime property, environmental protection, energy production and supply, cultural heritage and archaeological findings. Planning and construction legislation is particularly relevant when assessing permitted use, development potential and the permitting of existing buildings.

Land Registration System

The Real Estate Cadastre is the principal public register of real estate in Montenegro and contains spatial and descriptive data on real properties, registered proprietary rights, encumbrances and other rights and legally relevant facts subject to registration. Basic cadastral information is publicly available through the eKatastar platform, including information on registered properties and their registered right-holders. Cadastral procedures have become increasingly digitalised, with electronic communication and submission mechanisms available to notaries and other authorised professional users.

As a general principle, ownership and other proprietary rights over real estate acquired on the basis of a legal transaction are acquired upon registration in the Cadastre, rather than by execution of the underlying agreement alone.

The cadastral system is based, among others, on the principles of publicity, reliance and priority. In particular, under the principle of reliance, information registered in the Cadastre is deemed true and complete, and a good-faith person may rely on such information without suffering adverse consequences as a result of that reliance. The principle of priority generally determines the ranking of registered rights by reference to the time of receipt of the relevant document or application for registration.

In transactional practice, registration is of particular importance for the acquisition and effectiveness of proprietary rights, while the cadastral records also provide the principal reference point for establishing ownership, registered encumbrances and other relevant rights and restrictions affecting a property.

Structuring Commercial Real Estate Transactions

Commercial real estate acquisitions in Montenegro are commonly structured either as an asset transaction, involving direct acquisition of the property, or as a share transaction, involving acquisition of the company owning the relevant property. The appropriate structure depends principally on the circumstances of the transaction, the property portfolio and the commercial and tax considerations of the parties.

Legal due diligence is an important feature of both structures. For an asset acquisition, the review typically focuses on the seller’s title and chain of title, cadastral status and registered encumbrances, third-party rights, planning and construction matters, relevant permits, access and utilities and, where the property is income-generating, material lease arrangements. Particular attention should be given to consistency between the factual status of the property and cadastral and permitting records as discrepancies with material consequences are widespread in practice.

In a share acquisition, the review is broader because the purchaser acquires the property-owning company together with its historical liabilities. Corporate, financing, tax, contractual and regulatory matters therefore typically supplement the real estate review.

Title insurance is not a customary feature of Montenegrin real estate transactions. Transactional protection is instead principally achieved through legal due diligence, verification of the cadastral records, appropriate representations and warranties, and contractual allocation of identified risks.

Environmental considerations depend substantially on the nature, historical use and intended development of the property. As a general rule, a purchaser does not automatically assume the historical polluter’s liability merely by acquiring the property. Existing contamination may nevertheless give rise to remediation or other obligations affecting the current owner or user. Enhanced environmental review is recommended for industrial, logistics and brownfield sites. As regards pollution-intensive facilities or potentially contaminated sites, any changes in ownership over the company or any other form of property transfer must include an environmental assessment and determination of responsibility for historical environmental pollution, as well as the settlement of debts (liabilities) by the previous owner for pollution caused and/or damage inflicted on the environment.

Mortgage Financing

Real estate financing in Montenegro is typically secured by a mortgage, governed principally by the Law on Ownership Rights. In larger real estate financings, the mortgage will typically form part of a broader security package, potentially including security over shares in the property-owning company, receivables, bank accounts and other assets and rights relevant to the financed property or its income stream.

A mortgage may secure existing, future or conditional claims and may be established over various categories of real estate and certain real estate rights, including, buildings and separate parts of buildings under construction.

A mortgage is established on the basis of an appropriate mortgage agreement or unilateral mortgage statement and requires registration against the relevant property in the Real Estate Cadastre. Mortgage documentation is subject to prescribed notarial form requirements.

Priority is a critical financing consideration. A mortgage entitles the secured creditor, following default, to satisfy the secured claim from the value of the mortgaged property ahead of unsecured creditors and subsequent-ranking mortgage creditors, irrespective of a subsequent change in ownership of the property. Consequently, lenders typically carry out detailed cadastral searches before closing and co-ordinate registration mechanics carefully as part of the conditions precedent process.

Mortgage Enforcement

Montenegrin law provides mechanisms for enforcement against mortgaged real estate. Mortgage documentation satisfying the statutory requirements may constitute a directly enforceable instrument, while the mortgage regime also allows the lender, subject to additional statutory requirements, to realise the security directly through an out-of-court enforcement procedure.

Commercial Real Estate Leases

Commercial leases are primarily governed by the Law on Obligations, although certain properties, particularly publicly owned premises, may be subject to additional statutory or local rules. Montenegrin contract law generally permits parties broad freedom to regulate their contractual relationship within the boundaries of mandatory law, public policy and good customs.

As a result, commercial leases are almost entirely contract-driven. Notarisation is mandatory, and as a result, attention is ordinarily given to the duration of the lease; rent, indexation and operating costs; security deposits or bank guarantees; fit-out arrangements; maintenance and repair responsibilities; permitted use; insurance; termination rights; reinstatement obligations; the consequences of a change of control or transfer of the property; and the form of the agreement.

Renewal, Assignment and Subletting

Renewal rights are generally dealt with contractually, as commercial tenants have no statutory right to require renewal or pre-emption right to a new lease. Longer-term leases commonly contain express provisions concerning extension or renewal or pre-emption right to a new lease.

Assignment of a lease requires the consent of the other party. A change of ownership of the leased property does not terminate the lease and the new owner assumes the landlord’s position, although the tenant is entitled to terminate the lease.

Subletting is restricted unless permitted by the lease agreement.

Remedies on Default

Default provisions are an important area of negotiation. Typical triggers include non-payment of rent, material breaches of permitted-use provisions, and other material contractual breaches. Remedies may include termination, claims for unpaid rent and damages, enforcement of contractual security and recovery of possession in accordance with applicable law.

In the event of non-payment, a landlord may seek termination and recovery of unpaid rent and, where voluntary surrender is not forthcoming, seek possession through enforcement proceedings.

Recent Developments

Recent real estate regulatory developments in Montenegro have primarily been driven by legislative reforms in the areas of spatial planning, construction and legalisation of unauthorised buildings.

In 2025, Montenegro adopted the new Law on the Legalisation of Unauthorised Buildings which introduced a comprehensive framework for the registration and legalisation of unlawfully constructed buildings. The legislation imposed new registration requirements, established restrictions on transactions involving certain non-legalised buildings, and significantly increased the importance of reviewing legalisation status during real estate due diligence.

In parallel, reforms of the spatial planning framework, including the adoption of the new Law on Spatial Planning in 2025, have materially affected development projects and commercial real estate transactions by introducing a revised planning regime and new rules relating to land use and development documentation.