The Serbian Companies Act recognises several forms of business organisations:

• limited liability companies (LLCs);
• joint-stock companies (JSCs);
• general partnerships;
• limited partnerships; and
• entrepreneurs.

Foreign companies may also establish branches or representative offices, which are not separate legal entities. Representative offices are limited to preparatory and market research activities and cannot perform commercial activities generating revenue.

The choice of legal structure in Serbia 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, 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. Shareholders of LLCs and JSCs generally have limited liability and are not personally liable for company obligations.

The choice may also depend on regulatory and corporate requirements, including registration with the Serbian Business Registers Agency (SBRA), sector-specific licences or approvals, and structure-specific capital requirements, such as EUR1 for an LLC and EUR25,000 for a JSC.

Taxation is another consideration: 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.

The following summary describes the incorporation procedure for an LLC, the corporate form most commonly used in Serbia:

• the registration process, which is conducted through the SBRA. Registration is largely electronic and is completed within five business days from the submission of complete documentation. Typical incorporation documents include:
1. the founding act, namely, a resolution for a single founder or an agreement for two or more founders;
2. a corporate excerpt from the founder’s country of origin, a passport if the founder is a foreign national, or a Serbian identity document for a Serbian citizen;
3. appointment of the LLC’s legal representative (“director”, under Serbian law);
4. a completed registration application form with all required information; and
5. proof of payment of registration fees (RSD8,000, approx. EUR70);
• other necessary approvals/licences/certificates in accordance with planned activities, company size or other relevant parameters;
• tax filings;
• obtaining a qualified electronic signature (e-signature) for the company’s legal representative, which requires the personal presence in Belgrade of the LLC’s director (approx. EUR60 for individuals and approx. EUR100 for legal entities);
• registration of its ultimate beneficial owners (UBOs) with the SBRA; and
• opening a bank account, for which the director’s e-signature is required. The account should be opened within 30 days of registration. The LLC cannot commence business activity until its bank account is operational.

Companies are generally required to maintain prescribed corporate records, keep their registration details with the SBRA up to date, and comply with annual financial and other reporting obligations under the applicable tax and sector-specific legislation. Companies must also annually review and verify their UBO information.

Serbian law distinguishes between LLCs and JSCs when regulating capital structure. LLCs have quotas (ownership interests), while JSCs issue shares.

LLCs must have a minimum share capital of RSD100 (approx. EUR1), while JSCs must have a minimum share capital of RSD3 million (approx. EUR25,500). Serbian law generally follows a fixed-capital concept, with registered share capital recorded with the SBRA.

The share capital is increased based on a resolution of the Shareholders’ Meeting, and such resolution must be registered with the SBRA in accordance with the applicable registration laws within six months of its adoption; otherwise, it will cease to have legal effect and will be deemed null and void. The resolution becomes effective upon registration with the SBRA.

The Companies Act regulates the creation, maintenance and alteration of the share capital of JSCs and permits authorised increases of share capital subject to statutory requirements. A Shareholders’ Meeting resolution 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 of 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 where applicable.

A JSC 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 attached to each class, transfer restrictions, pre-emption rights and statutory class consent requirements. The aggregate nominal value of issued and authorised preference shares may not exceed 50% of the company’s share capital.

In an LLC, share capital is divided into ownership interests rather than shares, and shareholders hold participation interests expressed as a percentage of the company’s share capital. The share capital is increased based on resolution of the Shareholders’ Meeting, typically through additional contributions of the shareholders and not by issuing shares, as shares are not securities.

Distributions, including dividends, are subject to statutory capital maintenance rules. A company may not make a distribution if, following the distribution, its net assets would fall below the amount of its registered share capital and non-distributable reserves prescribed by law or the company’s constitutional documents. The amount available for distribution may not exceed the profit for the relevant financial year, increased by retained earnings and distributable reserves and reduced by accumulated losses and amounts required to be allocated to reserves.

Shareholders that receive unlawful distributions may be required to return the amounts received if they knew or should have known that the distribution was contrary to the Companies Act.

A JSC may acquire its own shares subject to statutory requirements, including shareholder authorisation, compliance with capital maintenance rules, and quantitative limitations prescribed by the Companies Act. As a general rule, the aggregate number of treasury shares may not exceed 10% of the share capital, subject to statutory exceptions.

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

A JSC is subject to statutory restrictions on providing financial assistance, including loans, guarantees, or security for the acquisition of its own shares. Certain exceptions apply, including transactions undertaken by financial institutions in the ordinary course of business and employee share schemes.

An LLC may acquire its own participation interests from one or more shareholder subject to the conditions and approval requirements set out in the Companies Act. Such acquisitions may generally be financed only from distributable reserves and are subject to creditor-protection and capital-maintenance rules.

Serbia maintains a central register of UBOs administered by the SBRA. Companies are required to identify and register their UBOs and keep such information up to date. The regime is broadly aligned with international anti-money laundering (AML) standards and applies to most corporate entities.

The principal laws and regulations governing corporate governance in Serbia 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; and
• the Corporate Governance Code.

In the case of regulated business activities, such as banking, insurance, energy, telecommunications, healthcare and pharmaceuticals, payment services and capital markets, private security, leasing of employees, etc, 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.

Private companies enjoy significant flexibility regarding governance. LLCs are generally managed by one or more directors, while supervisory boards are optional. There are generally no nationality or residency requirements for directors, making Serbia attractive for foreign investment structures.

Both LLCs and JSCs may adopt a one-tier or two-tier management system, in addition to having a Shareholders’ Meeting, In a one-tier structure, management is entrusted to one or more directors, whereas in a two-tier structure, management and supervision are separated between executive directors and a supervisory board.

A public JSC must have a board of directors with at least three directors. In a one-tier governance structure, the majority of board members must be non-executive directors. Public JSCs must have at least one non-executive director who is independent from the JSC. In addition, public JSCs are subject to specific requirements regarding audit committees, disclosure obligations and corporate governance reporting.

Only natural persons with full legal capacity may serve as directors. Individuals convicted of certain criminal offences, the company’s auditor, and persons subject to a statutory prohibition on performing the company’s principal business activity may not serve as directors. In the one-tier management system, executive directors may be members of the board of directors, provided that they do not constitute a majority of its members.

Serbia does not have a single comprehensive ESG law. The ESG framework is derived from various regulations, including the Environmental Protection Act, the Climate Change Act, the Companies Act, the Accounting Act, and legislation concerning greenhouse gas emissions and carbon-border measures, including obligations relating to the EU Carbon Border Adjustment Mechanism (CBAM). These rules may create financial, regulatory and transition risks that companies should consider as part of their ESG risk management.

The principal ESG disclosure requirements arise under the Accounting Act. Certain large public-interest entities with more than 500 employees must provide non-financial disclosures covering environmental, social and employee matters, human rights, anti-corruption issues and principal business risks. Medium-sized and large companies are also required to include relevant non-financial performance indicators in their annual reports, while listed companies must provide additional corporate governance disclosures, including information on diversity policies, internal controls and risk management.

Serbian law does not currently impose a general, standardised obligation on all companies to disclose climate-related financial risks. However, material climate, carbon-pricing and CBAM-related risks may need to be addressed where they constitute significant business risks or uncertainties.

The Companies Act does not impose express ESG-specific duties on directors. Nevertheless, directors must act conscientiously, with the care of a prudent businessperson and in the best interests of the company. This requires consideration of material environmental, climate, social, employee, human rights, regulatory, reputational and financial risks that may affect the company’s operations and long-term sustainability. Directors may be liable for losses resulting from breaches of these duties.

Although ESG governance requirements are not comprehensively prescribed by law, boards should integrate ESG considerations into the company’s strategy and risk management framework. In practice, this includes:

• identifying and assessing material ESG and climate-related risks;
• considering ESG-related business opportunities;
• ensuring regular ESG reporting and reliable ESG data collection;
• maintaining appropriate ESG expertise and training at board level;
• overseeing the accuracy of ESG disclosures;
• engaging with key stakeholders; and
• monitoring regulatory developments and adapting business strategy accordingly.

The Companies Act regulates transactions involving directors, controlling shareholders and other related parties. Individuals owing duties to the company must disclose in advance the existence and nature of any personal interest in a proposed transaction.

Material related-party transactions generally require approval by the competent corporate body, depending on the company’s governance structure and the nature of the transaction. 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 that have no personal interest. Failure to comply may result in annulment of the transaction and liability for damages.

The above-mentioned approval is not required in the following cases:

• where the value of the subject matter of the legal transaction or legal act is less than 10% of the book value of the company’s total assets as shown in its latest annual balance sheet;
• where the sole shareholder has a personal interest in the transaction;
• where all shareholders have a personal interest in the transaction;
• subscriptions for, or acquisitions of, interests or shares pursuant to the shareholders’ pre-emptive subscription rights or rights of first refusal;
• acquisitions by the company of its own interests, reserved treasury interests or shares, provided that such acquisition is carried out in accordance with the provisions of the Companies Act governing treasury interests or shares, or in accordance with the law governing the capital market;
• where the shareholder holding a significant participation in the company’s share capital, or the controlling shareholder within the meaning of the Companies Act, is the Republic of Serbia, an autonomous province or a local self-government unit; and
• the conclusion of an employment agreement or another appropriate engagement agreement with a director or a member of the supervisory board.

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 securities, subject to statutory exceptions;
• 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
• exercise appraisal (buyout) rights in connection with certain fundamental corporate decisions.

Statutory remedies available to shareholders include:

• a claim for damages suffered personally by the shareholder due to the breach of owed responsibility;
• a derivative claim brought in the shareholder’s own name but on behalf of the company against directors, officers or other persons who have caused damage to the company through a breach of their duties;
• a claim for protection of pre-emption rights where a share/interest transfer has been effected in breach of a shareholder’s statutory or contractual right of first refusal;
• a claim for the repayment of additional contributions where the company fails to return additional contributions to shareholders in accordance with the Companies Act;
• a claim for withdrawal from the company on justified grounds and payment of compensation for the shareholder’s interest where the Shareholders’ Meeting rejects or fails to decide on the shareholder’s withdrawal request within the statutory deadline, as well as a claim by an excluded shareholder seeking compensation for the value of its interest;

• a claim to challenge a Shareholders’ Meeting’s resolution and seek damages where the resolution was adopted in breach of applicable law, the company’s Articles of Association or meeting procedures, where the shareholder was improperly prevented from participating, or where the resolution constitutes an abuse of voting rights to the detriment of the company or other shareholders;
• a claim in connection with transactions involving assets of significant value, as provided under the Companies Act;
• a claim regarding the buyout rights of dissenting shareholders in connection with certain fundamental corporate decisions;
• court protection of information rights where a shareholder has been unjustifiably denied an answer to a question raised at a Shareholders’ Meeting; and
• a claim for additional cash compensation by a shareholder that considers the share exchange ratio in a merger or division to be unfair and prejudicial to its interests.

Shareholder agreements are commonly used to regulate matters that are not fully addressed by the statutory framework or constitutional documents, including transfer restrictions, pre-emption rights, tag-along and drag-along rights, voting arrangements, deadlock resolution mechanisms and exit rights. Such agreements operate as contractual arrangements between the parties and are generally enforceable provided that they do not conflict with mandatory corporate law provisions.

Any provisions specifically agreed in a shareholder agreement should be reflected in the company’s constitutional documents to ensure their enforceability vis-à-vis third parties, provided that they follow statutory provisions.

Shareholder and partnership disputes may be resolved through court proceedings, arbitration (where agreed) and statutory shareholder remedies. Available remedies include challenging corporate resolutions, derivative actions, appraisal rights in specified circumstances and claims for damages. Serbian law does not provide for a general statutory winding-up remedy for shareholder disputes, but shareholders may regulate deadlock resolution mechanisms and the circumstances for initiating the company’s dissolution in a shareholder agreement.

General Legal Framework

The Companies Act is the primary legislation governing M&A transactions in Serbia, including share transfers, mergers and other corporate reorganisations. Acquisition agreements are generally governed by the Law on Obligations, while share transfers are implemented through registration with the SBRA.

Public M&A transactions are additionally regulated by the Takeover Act, the Capital Markets Act, and rules issued by the Securities Commission, the Central Securities Depository and Clearing House, and the Belgrade Stock Exchange.

Other relevant regulations include merger control rules under the Competition Act, sector-specific approval requirements and applicable labour, tax, foreign exchange, AML and beneficial ownership regulations. Privatisations and distressed acquisitions are subject to the Privatisation Act and Bankruptcy Act.

Private Acquisitions

The main structuring choice is between a share deal and an asset deal. Share acquisitions preserve the target’s legal identity and business continuity but transfer historical liabilities with the company. Asset acquisitions allow the buyer to select specific assets and liabilities, although transferring contracts, licences, permits and employees may require additional steps.

Key considerations include:

• change-of-control provisions in key contracts and licences;
• ownership structure, encumbrances, pre-emption rights and corporate approvals;
• tax, financing and foreign exchange implications; and
• employee matters and ownership of key intellectual property.

For transfers of shares in Serbian LLCs, signatures on the transfer agreement must be notarised, and ownership passes only upon registration with the SBRA. Transaction documents should therefore carefully co-ordinate payment, document delivery and registration.

Serbian foreign exchange rules should be reviewed when structuring acquisition financing, security packages, guarantees and deferred consideration. In addition, the Companies Act prohibits a target company from providing financial assistance for the acquisition of its own shares.

Public Acquisitions

Under the Serbian takeover regime, the acquisition of more than 25% of voting rights generally triggers a mandatory takeover offer, subject to statutory exemptions. Holdings of persons acting in concert are aggregated for this purpose.

The offer must be approved by the Securities Commission and comply with funding, pricing and equal-treatment requirements. Buyers seeking full ownership should also consider that a squeeze-out generally requires at least 90% of both voting rights and share capital.

Mergers, Reorganisations and Regulatory Approvals

Statutory mergers and divisions involve prescribed documentation, shareholder approvals, creditor protection procedures, publication requirements and registration. Serbia does not have an equivalent of the English scheme of arrangement outside insolvency proceedings.

Merger control clearance and sector-specific approvals often drive transaction timing. Serbian merger control rules may apply even to international transactions based on turnover thresholds, making an early regulatory assessment important.

Predominance of Share Deals

Share acquisitions, and particularly acquisitions of ownership interests in LLCs, remain the most common M&A structure in Serbia. Asset deals, mergers and other reorganisations are generally used only where commercial, tax or operational considerations justify the additional complexity.

Beneficial Ownership Requirements

The Law on the Central Register of Beneficial Owners, effective from 1 October 2025, introduced enhanced documentation and annual verification obligations. Beneficial ownership changes generally must be registered within 30 days, together with supporting evidence.

Buyers should therefore collect ownership documentation early and assess the target’s compliance with the beneficial ownership regime during due diligence.

Forthcoming Developments

Amendments to the Companies Act adopted in March 2025 introduce a new framework for cross-border mergers between Serbian companies and companies established in EU and EEA jurisdictions. These provisions will apply from 1 January 2027.

In addition, a draft new Takeover Act was subject to public consultation in 2026 and remains a development worth monitoring for future public transactions.

Limited Judicial Guidance

As a civil-law jurisdiction, Serbia does not recognise court decisions as binding precedent. Publicly available case law on international M&A concepts remains limited, particularly regarding warranties, indemnities and purchase price adjustment mechanisms.

These concepts are generally governed by principles of contract law and the parties’ freedom to contract. As a result, careful drafting is particularly important, with agreements clearly defining the operation of key protections, liability triggers and available remedies rather than relying solely on international M&A terminology.

The primary regulatory bodies overseeing Serbia’s capital markets include:

• the Securities Commission, which is responsible for authorisation, supervision and enforcement across the securities market; and
• the National Bank of Serbia, which has a complementary role where banks provide investment services.

The Serbian capital markets regulatory framework is primarily governed by the Capital Markets Act and the secondary legislation adopted by the Securities Commission.

Public offerings and admissions to trading require a prospectus approved by the Securities Commission, subject to statutory exemptions and ongoing disclosure obligations. Approval of the prospectus takes ten working days from the submission of a complete application, or 20 working days in the case of an issuer whose securities neither are admitted to trading on a regulated market nor have been previously offered to the public.

Admission to the Belgrade Stock Exchange requires compliance with both the Capital Markets Act and the Exchange rules applicable to the relevant listing segment.

The main prospectus exemptions cover:

• offers addressed exclusively to qualified investors;
• offers addressed to fewer than 150 non-qualified investors in Serbia;
• securities with a denomination of at least EUR100,000;
• offers requiring an investment of at least EUR100,000 per investor for each separate offer;
• certain non-equity securities issued on a continuous or repeated basis by credit institutions, where the total consideration for such securities in Serbia is below EUR75 million (calculated over a period of 12 months per credit institution), provided that such securities are not subordinated, convertible or exchangeable, do not confer rights to subscribe for or acquire other types of securities, and are not linked to derivative instruments;
• shares issued in substitution for shares of the same class already issued, provided that the issuance of such shares does not involve an increase of the share capital;
• certain securities offered in connection with takeover bids and corporate restructurings;
• certain share dividends;
• securities offered or allotted to current or former directors or employees; and
• certain non-equity securities issued by credit institutions, subject to the applicable statutory conditions.

Securities distributed under a prospectus exemption are not subject to a general statutory holding period. However, any resale is treated as a separate offer and must itself qualify for an exemption or be made under an approved prospectus; otherwise, the offer is void and may be suspended or prohibited by the Securities Commission.

Key legal requirements for listed entities include annual and half-yearly financial reporting, quarterly reporting where applicable, and disclosure of significant changes in voting rights and rights attached to listed securities. Required information must be submitted to the Securities Commission and the relevant regulated market and made publicly available.

Material events are disclosed through the prompt publication of inside information directly concerning the issuer, including through the prescribed information system and the issuer’s website. Disclosure may be delayed only in limited circumstances where the issuer’s legitimate interests would otherwise be prejudiced, confidentiality is maintained and the delay would not mislead the public.

Market abuse is primarily regulated by the Capital Markets Act and related Securities Commission regulations, which prohibit insider dealing, unlawful disclosure of inside information and market manipulation and require suspicious transactions to be reported. Examples of market abuse include trading while in possession of inside information, disclosing inside information to unauthorised persons, disseminating false or misleading information regarding an issuer or financial instrument, and engaging in transactions or placing orders that give false or misleading signals as to the supply, demand or price of financial instruments.

Issuers whose securities are admitted to trading on a regulated market are generally required to disclose inside information that directly concerns them as soon as possible, subject to limited circumstances in which disclosure may be delayed if the statutory conditions are satisfied.

The Securities Commission may investigate suspected breaches, request records and information, conduct inspections, suspend trading, impose supervisory measures, and refer suspected offences to the competent authorities. More specifically, the Commission may request documents, records and information from regulated entities and other relevant persons, order corrective measures, issue warnings and other supervisory measures, and suspend trading in financial instruments where required to protect investors or ensure orderly markets.

In cases involving suspected market abuse, insider dealing or market manipulation, the Securities Commission may investigate the matter and may initiate misdemeanour proceedings or refer suspected criminal offences to the competent prosecutorial and law enforcement authorities.

Serbian capital market rules require significant voting interest and certain related financial instruments to be disclosed once the prescribed thresholds are reached or crossed, including in cases of indirect control over voting rights.

The reporting thresholds are 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% for issuers whose shares are traded on a regulated market or multilateral trading facility, with disclosure generally due within four trading days.

Failure to report may lead to suspension of voting rights, financial penalties, and other supervisory measures imposed by the Securities Commission. Nevertheless, non-compliance with these disclosure requirements does not result in the nullity of the transaction underlying the acquisition of the relevant shares.

It is important to note that Serbian law does not impose a uniform compliance programme on all companies, although public JSCs are subject to internal supervision, audit and risk-management requirements.        

As regards whistle-blowing, employers are required to establish an internal whistle-blowing procedure, inform employees of their rights, and designate a person authorised to receive whistle-blowing reports and conduct the relevant procedure. Employers with more than ten employees must additionally regulate the internal whistle-blowing procedure by a general act. The mandatory whistle-blower protection rules exist under the Law on the Protection of Whistle-Blowers. Employers meeting the statutory thresholds are required to adopt internal whistle-blowing procedures and designate persons responsible for receiving and handling whistle-blower reports. Reports may be submitted through internal, external and, in certain circumstances, public disclosure channels. Whistle-blowers are afforded statutory protection against retaliatory measures.

Compliance governance therefore depends on the type of company, with additional requirements applying to regulated entities such as banks and AML-obliged entities.

The security interests available in the Serbian jurisdiction are mortgages over real estate, registered pledges over movable assets and rights, pledges over financial instruments, and pledges over receivables.

The requirements for their creation, perfection and enforcement depend on the type of security. Mortgages and registered pledges are subject to registration in the relevant public registers, and the applicable priority rules generally depend on the type of security and the relevant registration or perfection requirements.

In acquisition financings, security packages typically combine pledges over shares, receivables and movable assets with mortgages, while intercreditor arrangements regulate enforcement and distribution among lenders. A key limitation is the prohibition on a target company providing financial assistance for the acquisition of its own shares or quotas.

Amendments to the Capital Markets Act in 2025 have strengthened enforcement of security over financial instruments, including by allowing a first-ranking pledgee, where agreed, to acquire ownership of the pledged instruments upon default provided that the statutory valuation and surplus distribution requirements are satisfied.

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 valid contract requires parties with legal capacity and authority, a lawful and sufficiently certain subject matter, and a valid expression of intent. Certain types of contracts must also satisfy specific statutory form requirements.

A contract may be invalid if it violates mandatory law, public policy or good customs, lacks an essential element or was concluded under defects of consent, such as mistake, fraud, duress or lack of capacity.

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.

Key legal remedies available for breach of contract include damages, specific performance, contract termination, price reduction, and the recovery of losses resulting from the breach. Parties may also agree on 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 other party. A contract may also be terminated due to changed circumstances in accordance with the applicable law governing contracts and torts.

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.

Patents, trade marks and copyrights may be assigned or licensed in accordance with the applicable intellectual property (IP) legislation, while registration of the transfer or licence may be relevant for its effectiveness against third parties in the case of registered IP rights. Trade secret protection depends on the information meeting the applicable statutory requirements and on appropriate measures being taken to preserve its confidentiality.

In terms of IP ownership, Serbian law contains specific rules governing employee-created IP, jointly created works and commissioned works, with the allocation of rights depending on the type of IP and the relevant contractual arrangements. In relation to AI-generated content, the existing copyright framework remains based on human authorship, and there are no specific statutory ownership rules for AI-generated works as such.

In the event of infringement, IP rights holders may seek civil remedies including cessation of the infringement, damages, removal or destruction of infringing goods and, where applicable, publication of the judgment and interim measures.

Consumer protection is primarily regulated by the Consumer Protection Act, together with sector-specific legislation governing advertising, e-commerce, financial services and product safety. The legal framework imposes extensive pre-contractual information obligations, withdrawal rights for distance and off-premises contracts, warranty protections, restrictions on unfair commercial practices and unfair contract terms, complaint-handling procedures and alternative consumer dispute resolution mechanisms.

Regulatory oversight is exercised primarily by market inspection authorities and other competent regulators. These authorities may conduct inspections, order corrective measures, prohibit unlawful practices and initiate misdemeanour proceedings against traders that fail to comply with consumer protection requirements.

The Consumer Protection Act provides detailed rules on what constitute unfair or unconscionable business practices, misleading advertising (all regulated as unfair business practices) and e-commerce consumer protection violations, including a prescribed list of acts and omissions that may amount to each of these infringements.

When determining whether a violation has occurred, both the courts and the competent regulatory authorities assess whether the statutory conditions and criteria established by the Consumer Protection Act have been met.

Any complaint alleging a breach of these rules may trigger a consumer protection inspection procedure. Where there are reasonable grounds to suspect that a trader is engaging in an unfair commercial practice, the competent market inspector will collect evidence and establish the relevant facts. If the infringement is confirmed, the inspector will issue a decision prohibiting the trader from continuing the unfair commercial practice.

In the case of other consumer protection infringements, including breaches of e-commerce consumer protection requirements, the inspector will order the trader to remedy the identified irregularity within a prescribed deadline. If the trader fails to comply, the inspector may issue a formal corrective measure. Should the trader fail to comply with that measure within the specified period (which may not exceed two months), the inspector may impose a temporary prohibition on the sale of goods or the provision of services.

In all cases, the inspector may also initiate misdemeanour proceedings before the competent court. If a court determines that a trader has engaged in an unfair commercial practice, the trader, if a legal entity, may be fined between approx. EUR2,550 and EUR17,000. For certain breaches of e-commerce consumer protection requirements, a legal entity may be fined approx. EUR1,700.

Merger control is governed by the Law on Protection of Competition, supplemented by secondary legislation regulating merger notification requirements and relevant market definition.

Merger control filing to the Commission for Protection of Competition (CPC) is required if either of the following thresholds is met in the preceding financial year:

• the parties’ combined worldwide turnover exceeds EUR100 million and at least one party generates more than EUR10 million in Serbia; or
• the parties’ combined Serbian turnover exceeds EUR20 million and at least two parties each generate more than EUR1 million in Serbia.

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

The filing deadline is 15 days from the relevant triggering event, which is usually the signing of a binding transaction agreement. Closing must await clearance. The CPC has one month from receipt of a complete filing to clear the transaction or open a Phase II investigation. If Phase II is opened, the statutory deadline for a decision is four months from its opening.

The CPC assesses whether the transaction would significantly restrict competition.

Late filing may result in daily penalties of between EUR500 and EUR5,000, capped at 10% of the undertaking’s total annual turnover. If the transaction is also implemented without clearance, the CPC may impose a fine of up to 10% of annual Serbian turnover and order its unwinding.

Prohibited restrictive agreements and abuse of dominance may result in fines of up to 10% of annual Serbian turnover and behavioural or structural remedies. Prohibited agreements are void, and injured parties may seek damages. Individuals who conclude prohibited agreements fixing prices, restricting production or sales, or sharing markets may also face criminal fines and imprisonment of six months to five years.

Serbia has no general FDI screening regime. However, foreign investments in the production of arms and military equipment require prior government approval. No minimum investment value or minimum shareholding threshold triggers this approval. The investor submits an application along with an investment study to the Ministry of Defence, and the government decides within 120 days of receipt. The Ministry of Defence obtains opinions from the relevant ministries and security services and assesses the investment’s impact on national defence, national and public security, public health and the environment.

Separately, investments in regulated sectors may require sector-specific approvals, which generally apply irrespective of the investor’s nationality.

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

In the defence industry, foreign investors may hold up to 49% collectively and 15% individually in companies belonging to the statutory Defence Industry of Serbia group.

Foreign persons are generally prohibited from acquiring agricultural land, subject to narrow statutory exceptions. Air carriers holding a Serbian operating licence must be majority-owned and effectively controlled by Serbia or Serbian nationals, unless an international treaty provides otherwise. Foreign legal entities carrying out business in Serbia may acquire real estate necessary for their business, while foreign individuals may acquire apartments or residential buildings, in both cases subject to reciprocity.

Banking, insurance, telecommunications and electronic media are mainly subject to licensing and regulatory approvals rather than general foreign ownership caps.

Foreign investors are generally eligible for the same incentives as domestic investors, subject to the applicable eligibility criteria and state-aid rules. The main incentives include cash grants for eligible investment projects, and certain customs and VAT exemptions in Serbia’s free zones.

In 2026, amendments to the Corporate Income Tax Law phased out the ten-year investment tax holiday and certain incentives for newly established innovative companies.

The Serbian privacy and data protection framework is primarily governed by the Personal Data Protection Act, which incorporates many of the key concepts and principles of the GDPR. In addition to the general framework established by the Act, privacy-related obligations also arise under sector-specific legislation, particularly in the areas of electronic communications, information security, healthcare, banking and financial services, insurance and employment.

Organisations must ensure that personal data is processed on one of the legal grounds prescribed by the Personal Data Protection Act, including consent, the performance of a contract or of steps taken prior to entering into a contract, compliance with a legal obligation, or legitimate interests. Personal data must be processed in accordance with the principles of lawfulness, transparency, purpose limitation and data minimisation. In the event of a personal data breach likely to result in a risk to individuals’ rights and freedoms, the controller must notify the Commissioner for Information of Public Importance and Personal Data Protection without undue delay and, where feasible, within 72 hours after becoming aware of the breach. Affected individuals must also be notified without undue delay where the breach is likely to result in a high risk.

Cross-border data transfer requirements and data localisation considerations do not impose major restrictions on the transfer of personal data outside Serbia, provided that the applicable legal requirements are satisfied. Businesses must establish a lawful basis for processing and ensure that international transfers are made either to countries providing an adequate level of protection or, where this is not the case, subject to appropriate safeguards and, where required, authorisation from the Commissioner. As a general rule, Serbia does not impose a blanket data localisation requirement for personal data, allowing businesses to use foreign-based servers, subject to compliance with the applicable data transfer requirements.

The principal AML/counter-terrorist financing (CTF) obligations in Serbia apply to banks, other financial institutions and designated non-financial business and professionals and therefore include customer due diligence, beneficial ownership checks, transaction monitoring and suspicious transaction reporting.

Laws and regulations on sanctions, trade restrictions and export controls require businesses to comply with restrictive measures and licensing rules for military and dual-use goods, with fines and business restrictions available for non-compliance.

Anti-corruption and anti-bribery obligations prohibit bribery in both the public and private sectors, while legal entities may also incur liability. Companies generally mitigate these risks through approval procedures.

Environmental Regulation

The principal environmental requirements affecting commercial and corporate transactions in Serbia arise from the Environmental Protection Act, the Environmental Impact Assessment Act, the Integrated Pollution Prevention and Control Act and the Climate Change Act.

Certain projects and facilities require environmental impact assessments and the relevant approvals before implementation. These requirements may apply to both new projects and significant modifications of existing facilities.

Environmental liability is based on the “polluter pays” principle, under which the polluter is responsible for preventing and remedying environmental damage. Certain environmental liabilities may transfer to a legal successor, making environmental compliance and due diligence important aspects of corporate transactions. Serbia has also established a framework for monitoring greenhouse gas emissions, including permitting requirements for certain emitters and a greenhouse gas emissions tax applicable to specific sectors.

Climate-Related Litigation and Environmental Liability

Climate-related litigation remains relatively limited in Serbia. However, companies may face civil, administrative and criminal liability for environmental damage resulting from pollution or non-compliance with environmental regulations.

A key challenge in climate-related claims is establishing a direct causal link between a company’s greenhouse gas emissions and specific damage allegedly caused by climate change. In addition, non-compliance with environmental requirements, including emissions and environmental permitting obligations, may lead to regulatory sanctions and increased exposure to damages claims.

Health and Safety

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

Employers must provide safe and healthy working conditions, conduct risk assessments, implement preventive measures, provide employee training and personal protective equipment, organise mandatory medical examinations where required, and appoint a qualified occupational health and safety officer or engage a licensed service provider.

Serbia does not have separate federal or provincial occupational health and safety regimes. The relevant legislation applies uniformly throughout the country and is enforced by the competent national authorities.

Licensing and Permitting

Licensing and permitting requirements depend on the sector in which a company operates. Specific regulatory regimes apply, among others, to the energy, banking, financial services, telecommunications, pharmaceutical and environmental sectors.

Corporate transactions in regulated industries frequently require prior approvals, consents, or notifications to the relevant authorities. For example, certain energy activities require a licence, while the acquisition of a qualifying holding in a bank requires the prior approval of the National Bank of Serbia.

In addition, certain industrial facilities are subject to integrated environmental permits and other environmental approvals. Accordingly, regulatory compliance and verification of the status of all relevant licences and permits are important aspects of legal due diligence and transaction planning.

Serbia does not currently have a comprehensive AI-specific law. The existing framework consists of general legislation applicable to AI, including data protection and other sector-specific laws, together with the Strategy for the Development of Artificial Intelligence in the Republic of Serbia for 2025–2030 and the non-binding Ethical Guidelines for the Development, Application and Use of Reliable and Responsible Artificial Intelligence. A dedicated AI law is currently under development, with Serbia’s regulatory approach being aligned with the EU framework.

Pending the adoption of specific AI legislation, organisations remain subject to existing applicable laws, particularly data protection requirements where AI systems process personal data. The Ethical Guidelines promote principles including transparency, accountability, non-discrimination and responsible use of AI, although they are not legally binding as such.

In addition to corporate, consumer protection, tax and sector-specific requirements, businesses operating in Serbia may be subject to a broad range of regulatory compliance obligations depending on the nature of their activities.

These may include AML/CTF requirements, personal data protection, cybersecurity and information security obligations, competition law compliance, sanctions compliance, accounting and financial reporting requirements, environmental protection obligations, occupational health and safety requirements, foreign exchange regulations, electronic commerce rules, product safety requirements, export control regulations, and industry-specific licensing and reporting obligations.

Companies operating in regulated industries, such as banking, insurance, energy, telecommunications, healthcare and pharmaceuticals, payment services and capital markets, private security, leasing of employees, etc, are subject to additional licensing, reporting and supervisory requirements imposed by sector regulators.

Employment relationships in Serbia are primarily governed by the Labour Act, which sets out the general framework for employment relationships and regulates the rights and obligations arising from employment relationships. A number of other laws regulate specific areas of employment and labour relations, including:

• the Public Servants Act;
• the Employment of Foreigners Act;
• the Professional Rehabilitation and Employment of Persons with Disabilities Act;
• the Occupational Safety and Health Act;
• the Act on Amicable Settlement of Labour Disputes;
• the Strike Act;
• the Act on Prevention of Harassment at Work;
• the Whistle-Blower Protection Act;
• the Act on Employment and Unemployment Insurance;
• the Health Insurance Act;
• the Act on Central Records of Mandatory Social Insurance;
• the Pension and Disability Insurance Act;
• the Act on Conditions for the Posting of Employees to Temporary Work Abroad and their Protection;
• the Act on Records in the Field of Labour;
• the Gender Equality Act;
• the Anti-Discrimination Act;
• the Personal Data Protection Act;
• the Companies Act; and
• special collective bargaining agreements applicable to specific industries or sectors.

In addition to statutory provisions, employment relationships are also governed by collective agreements, employer rulebooks and individual employment agreements, which must comply with the mandatory requirements of Serbian employment legislation.

Termination of employment (dismissal by the employer) in Serbia is subject to strict statutory requirements, and employers must comply with both substantive and procedural rules. The Labour Act recognises several grounds for an employee’s dismissal by their employer: (i) breach of work obligations, (ii) non-compliance with work discipline, (iii) lack of work performance, (iv) a criminal offence committed at work or in connection with work, (v) failure to return to work within 15 days following the expiry of the standstill of employment rights and obligations or a period of unpaid leave, (vi) redundancy and (vii) refusal to execute an amendment to the employment agreement in circumstances expressly provided by the Labour Act.

Employers must strictly comply with procedural requirements for termination and carefully and fully document the reasons for termination. Failure to comply with these requirements may expose the employer to labour disputes.

Notice requirements depend on the ground for termination:

• In the case of dismissal due to lack of performance, the employer must provide a notice period between eight and 30 days as prescribed by the employment rulebook, collective agreement or employment agreement. In addition, prior to terminating employment on the grounds of lack of performance, the employer is required to conduct a performance improvement procedure and provide the employee with an opportunity to improve their performance, a process which in practice typically takes approximately two months before termination may be effected.
• In other cases, such as termination due to an employee’s breach of work duties, non-compliance with work discipline, or redundancy, the employer must comply with specific statutory procedures which generally require certain procedural steps to be completed before the employment may be terminated.
• An employee who terminates the employment agreement by resignation must generally give at least 15 days’ notice. The employment rulebook, collective agreement or employment agreement may provide for a longer period, but not exceeding 30 days.

An employee who considers that their employer terminated their employment unlawfully may bring proceedings before the competent court within 60 days from the date of delivery of the decision or knowledge of the violation of the right. Where a dismissal is found to be unlawful, the available remedies may include reinstatement and compensation, depending on the circumstances of the case and the employee’s claim.

Employers should therefore ensure that the termination decision is based on a valid statutory ground, properly reasoned and supported by appropriate documentation, and that all applicable procedural requirements have been followed.

Serbian labour legislation does not expressly recognise constructive dismissal. However, certain serious breaches of the employer’s obligations, such as non-payment of salary or workplace harassment, may give the employee grounds to terminate the employment or pursue other remedies available under employment legislation, such as filing a claim with the competent court seeking a declaration of the violation of employment rights and compensation for damages or submitting a complaint to the Labour Inspectorate and requesting protection of rights arising from the employment relationship.

Executive compensation in Serbia is typically agreed in the employment or management agreement and is often confirmed by a shareholders’ resolution. It usually consists of fixed remuneration, performance-based bonuses, and executive benefits such as company cars or private health insurance.

Equity-based incentive plans are more common in multinational groups than in domestic companies. These may include stock options, share plans, or other incentives linked to group performance and value, granted by either the Serbian employer or a foreign parent company. In practice, executive compensation more commonly includes bonuses and other forms of variable remuneration. Employers must consider applicable corporate and tax rules, particularly when incentives are granted by a foreign group company.

Employee share option plans offered by foreign companies to employees resident in Serbia are primarily governed by the Capital Markets Act and the Foreign Exchange Operations Act. To minimise regulatory risks, such plans should generally be structured as employee-driven arrangements, with limited involvement of the Serbian employer and direct participation and payments by employees.

Serbian law does not specifically regulate change-of-control arrangements for executives. However, parties may contractually agree on rights triggered by mergers, acquisitions or other ownership changes, including severance payments, bonuses and other protections.

The tax treatment of executive compensation depends on the type of remuneration. Salaries, bonuses and most employment-related benefits are subject to personal income tax and mandatory social security contributions, while share-based incentives may be subject to different tax rules, particularly when granted by a foreign group company.

Employers commonly use non-compete, non-solicitation and confidentiality clauses to protect business interests, confidential information and client relationships. Non-compete clauses are specifically regulated under the Labour Act and may remain in force for up to two years after termination, provided that the employer pays compensation during the restricted period. Courts assess whether such restrictions are justified, proportionate, and necessary to protect legitimate business interests.

Non-solicitation covenants are not specifically regulated by Serbian law. Their enforceability is assessed under general contract law principles, but there is currently no published Serbian case law directly addressing the breach of non-solicitation obligations. As a result, their enforceability remains somewhat uncertain.

Confidentiality obligations are generally enforceable and are commonly included in employment and management agreements. Courts assess whether the information was genuinely confidential and whether it was disclosed or used without authorisation. Employers are therefore advised to clearly define confidential information and its permitted use. In addition to contractual protection, trade secrets are protected under the Trade Secrets Act.

Forms of Land Ownership

Forms of real estate ownership in Serbia include individual ownership, co-ownership, joint ownership (ownership with undivided shares) and ownership of separate parts of buildings (apartments, business premises, garages, parking spaces).

Serbian law also recognises a specific right of permanent use of an outdoor parking space within a residential complex, which, in substance, has the principal characteristics of ownership.

Restrictions on Ownership by Foreign Persons

Foreign persons carrying out business activities in Serbia may, subject to reciprocity and exclusions in protected or restricted zones, acquire real estate necessary for the conduct of such activities. Foreign individuals who do not carry out business activities in Serbia may, subject to reciprocity, acquire residential real estate in Serbia.

Further restrictions apply to the ownership of agricultural land. Foreign persons may not own agricultural land in Serbia.

Given that there are no restrictions on indirect ownership, the restrictions applicable to ownership by foreign persons can generally be overcome by establishing a local LLC through which the relevant assets are held.

Key Legal Framework

Commercial real estate transactions in Serbia are primarily governed by the Law on Basic Property Relations, the Law on Real Estate Transfer, the Law on Obligations, and legislation governing the Real Estate Cadastre. These regulate property rights, transfers, contractual matters and registration. Real estate transfer agreements must be executed in notarised form.

Additional regulations may apply depending on the property, particularly planning and construction, agricultural land, environmental protection and cultural heritage rules. Planning and construction legislation is especially relevant when assessing permitted use, development potential and the legal status of existing buildings.

Land Registration System

The Real Estate Cadastre is Serbia’s central public register of real estate, containing information on properties, ownership, encumbrances and other registered rights. Basic information is publicly accessible through the eKatastar platform, while registration procedures are increasingly digitalised.

As a general rule, ownership and other proprietary rights acquired by contract arise upon registration in the Cadastre rather than upon execution of the underlying agreement. The system is based on principles of publicity, reliance and priority, allowing third parties acting in good faith to rely on registered information and determining priority according to the timing of registration filings.

In practice, cadastral records are the primary source for verifying ownership, encumbrances, and restrictions affecting a property.

Structuring Commercial Real Estate Transactions

Commercial real estate acquisitions are typically structured as either:

• asset deals, involving direct acquisition of the property; or
• share deals, involving acquisition of the property-owning company.

The preferred structure depends on commercial, legal and tax considerations.

Legal due diligence is critical in both cases. Asset deal reviews typically focus on title, cadastral status, encumbrances, third-party rights, planning and construction compliance, permits, utilities and lease arrangements. Particular attention should be given to discrepancies between the property’s actual status and cadastral or permitting records, which remain common in practice.

In share deals, due diligence is broader because historical liabilities remain within the acquired company, requiring review of corporate, financing, tax, contractual and regulatory matters in addition to real estate issues.

Title insurance is uncommon in Serbia. Risk allocation is primarily achieved through due diligence, cadastral verification, and contractual representations and warranties.

Environmental issues should be carefully assessed, particularly for industrial, logistics and brownfield sites. While acquisition of a property does not automatically transfer historical polluter liability, contamination may result in remediation obligations or restrictions affecting the current owner or user. Serbian law also requires environmental assessments and allocation of responsibility for historical pollution in certain transfers involving pollution-intensive facilities or potentially contaminated sites.

Mortgage Financing

Real estate financing is typically secured by a mortgage governed by the Law on Mortgage. Larger financings often include additional security over shares, receivables, bank accounts and other assets related to the property.

Mortgages may secure existing, future or conditional claims and can be created over various categories of real estate, including buildings under construction. A mortgage becomes effective upon registration in the Real Estate Cadastre and requires compliance with prescribed notarial formalities.

Mortgage priority is determined by registration. Following default, the secured creditor is entitled to satisfy its claim from the mortgaged property ahead of unsecured creditors and lower-ranking mortgagees, regardless of any subsequent transfer of ownership.

Mortgage Enforcement

Serbian law allows both judicial and, where statutory requirements are met, out-of-court enforcement of mortgages. Properly drafted mortgage documentation may constitute a directly enforceable instrument.

A practical issue may arise where land and buildings have historically been registered separately and are subject to separate mortgages. In such cases, enforcement may be more complex and negatively affect the value and marketability of the security.

Commercial Leases

Commercial leases are primarily governed by the Law on Obligations and are largely contract-driven. Parties generally enjoy broad freedom to determine their contractual rights and obligations.

Key negotiated issues typically include:

• lease term and renewal;
• rent, indexation and operating costs;
• deposits and guarantees;
• fit-out obligations;
• maintenance and repairs;
• permitted use;
• insurance;
• termination rights; and
• change-of-control provisions.

Renewal, Assignment and Subletting

Commercial tenants do not have a statutory right to lease renewal. Renewal and extension rights are therefore typically regulated by contract.

Lease assignment requires the other party’s consent. If ownership of the property changes, the lease remains in force and the new owner assumes the landlord’s position, although the tenant may terminate the lease. The previous owner remains jointly liable for lease obligations.

Subletting is generally permitted unless restricted by the lease, and any required landlord consent should not be unreasonably withheld.

Remedies on Default

Default provisions are typically heavily negotiated. Common triggers include non-payment of rent, unauthorised use and other material breaches.

Available remedies generally include:

• termination;
• recovery of unpaid rent;
• damages claims;
• enforcement of security; and
• recovery of possession.

Where a lease is notarised and contains the necessary enforcement provisions, it may constitute a directly enforceable instrument for eviction, eliminating the need for prior court proceedings.

Recent Developments

Recent reforms have focused on digitalisation of property records, resolution of historical cadastral and permitting issues, and environmental regulation.

A significant development is the Law on Special Conditions for Recording and Registration of Rights over Real Estate, adopted in 2025 and amended in 2026. The law creates a special framework for regularising ownership and registration issues affecting certain properties, including buildings constructed without all required permits. This may be highly relevant in due diligence and financing exercises.

Environmental regulation has also evolved with the adoption of new Environmental Impact Assessment and Strategic Environmental Assessment laws in 2024. These reforms are particularly relevant for developers and investors involved in greenfield, industrial and other development-intensive projects.