Chapter 6 – Company law

What is being negotiated?

Company law refers to the establishment and functioning of companies in the EU Member States. It is composed of two parts: company law in a narrow sense and accounting and auditing.
Company law acquis includes in a narrow sense refers to regulations on establishment, registration, domestic and cross-border mergers and division of joint stock companies. When it comes to accounting and auditing, the acquis includes the establishment of the system for quality control of the auditing profession and an effective system of public supervision of its work in general, as well as the system for publishing annual financial reports.
By harmonising the national legislation with the EU acquis in the area of company law, business conditions for enabling national business entities to become competitive will be ensured along with the equal treatment at the EU market. Furthermore, the candidate state is required to ensure electronic registration of business entities with simplified procedures of registration and lower founding capital, which will boost development of small and medium-sized enterprises which represent 99% of all businesses in the EU, generating a total 70% of turnover and accounting for 60% in the GDP of the EU. At the same time, within the harmonisation of the national legislation with the EU acquis the state will avoid legal uncertainty which can be a burden to business and investments.

In the area of financial reporting, the EU acquis prescribes the rules for presenting annual and consolidated financial reports, including simplified rules for small and medium-sized enterprises. Furthermore, specific accounting rules are being implemented in the area of banking and insurance.

Sub-areas?

Company law is divided into following subchapters: capital market, company law and accounting and auditing.

When was the chapter opened?

Montenegro opened Chapter 6 – Company law on 18 December 2013 at the Intergovernmental Conference which took place in Brussels.

Closing benchmarks?

Montenegro has achieved high level of harmonisation with the EU acquis and it actively works on meeting the closing benchmarks. There are four closing benchmarks identified in this chapter, namely:

1. Montenegro adopts the Law on Capital Markets and relevant implementing legislation, aligning in particular with the Transparency Directive.

2. Montenegro adopts the new Law on Business Organisations and relevant implementing legislation, aligning it with Company Law acquis, in particular by introducing provisions on cross-border mergers.

3. Montenegro completes alignment with the Directive on Takeover Bids.

4.Montenegro fully aligns its accounting and statutory audit legislation, including implementing legislation, with the acquis. Montenegro establishes an independent and adequately funded public oversight body and a quality assurance system so as to comply with the rules on statutory audit.

o Currently, Montenegro considers that the greatest part of the first closing benchmark is completed, particularly when it comes to the legislative framework. In addition, the rest of the by-laws (planned to be adopted within three years from the day of entering into force of the Capital Market Law) do not affect the fulfilment of this benchmark.

o When it comes to the second closing benchmark, all activities were aimed at preparing and adopting the Company Law, which is adopted by the Government on 24 October 2019. This is the key Law in this area, and Montenegro is willing to continue harmonising the national legislation with the EU acquis when it comes to this important part of the chapter.

o Montenegro considers the third closing benchmark fulfilled.

o When it comes to the fourth closing benchmark, which deals with accounting and auditing, high level of alignment with the EU directives is achieved. Several by-laws remain to be adopted and Montenegro should also work on strengthening administrative capacities in this area.

What are the activities in the coming period?

The key obligation in pursuing the temporary closure of the chapter 6 is the adoption of the Company Law, which is currently in the Parliamentary procedure. IN addition, in the area of accounting and auditing Montenegro should adopt remaining by-laws and strengthen administrative capacities.

Institutions/organizations participating in the negotiation group?

Negotiator for Chapter 6 and Chief of the Working group come from the Ministry of Economy, as a key institution in charged for this chapter. Contact person from the Office for European Integration, as coordinating body in the negotiation process.

Members of the Working group are representatives of the following institutions/organisations: Ministry of Economy, Ministry of Finance, Commercial Court of Montenegro, Capital Market Authority, Faculty of Economics (University of Montenegro), Department for Public Revenues, Montenegrin Employers Federation, Chamber of Economy of Montenegro, NGO Movement for supporting Montenegro’s accession to the EU, Insurance Supervision Agency of Montenegro, Faculty of Law (University of Montenegro) and Institute of Accountants and Auditors of Montenegro.

Chapter 6 - Working Group

Goran Nikolić

Negotiatior

Renata Milutinović

Head of the WG

Andrijana Čanović

Secretary of the WG

The working group was established in August/September 2012. The negotiator for this Chapter is Goran Nikolić, Director General for Industry and Entrepreneurship in the Ministry of Economy, and the head of the working group is Renata Milutinović, from Directorate for Industry and Entrepreneurship, Ministry of Economy. The contact person of the Working group is Andrijana Čanović from the European Integration Office.

The working group consists of 19 members (11 from state institutions and eight representatives of the civil sector).