Montenegro offers numerous types of business entities for foreign investors to establish under the laws and regulations of Montenegro. The list of business entities which can be formed in Montenegro are as follows:
- Limited Liability Companies (LLC);
- Joint-Stock Companies;
- Limited Partnerships;
- General Partnerships;
- Entrepreneurial Companies;
- Part of a foreign company;
In total, there are six types of companies that can be established in Montenegro.
Out of the six types of business entities, two business entities stand out as the most popular businesses to establish in Montenegro. Limited Liability Companies and Joint-Stock Companies are the most common business entities that are formed in Montenegro by foreign investors and local entrepreneurs.
Limited Liability Companies and Joint-Stock Companies are similar because both business structures allow for limited liability which protects the personal assets of the business members, however, there is one key difference between these two types of business entities which results in Limited Liability Companies holding the top place for the most popular business entity to form in Montenegro.
Limited Liability Companies in Montenegro do not put a price on the minimum share capital required to establish a business. The minimum share capital is €1. The minimum share capital is set at this low rate in order to make company formation in Montenegro attractive to everyone.
Entrepreneurs who establish an LLC in Montenegro are usually not enthusiastic about taking a big risk when first starting out. The cheaper and less risky the process, the better. Fortunately, the low share capital requirement means that the overall cost of company formation is lower with fewer steps to complete. Limited Liability Companies are also faster to establish and can be set up and ready for business within two weeks.
Share capital is the capital of the company which comes from issuing shares. Share capital can be very beneficial for a business. Share capital allows for a company to have an initial investment without having to take out a loan or bond at a bank which is considered to be a debt to a company. Debt translates to a company being obliged to pay back the debt at regular intervals while fighting the interest rates attached to loans and bonds.
Money that is raised through the sale of shares can be used however the business chooses to spend it. The funds come in with no-strings-attached. Shares in a company can also be raised whenever the business owners elect to do so, which means that a company can start off with low share capital and increase this as the company grows.
Unfortunately, higher share capital does have its downfalls. Higher share capital means that the business itself loses control and ownership of the company. Shares refer to ownership of the company and the more people who hold shares in your company, the higher the risk to the business.
This makes an LLC the perfect solution because it puts the power into the hands of the business owner. The foreign investor is not forced to hand out ownership of the company and they are not prevented from doing so either. You can decide on the shares that you are comfortable with as the business grows while benefiting from low-cost company formation when your business is starting out.
Limited Liability Companies hold numerous benefits and €1 share capital is one that must not be overlooked by foreign investors.