One of the benefits, which is often mentioned in short and concise sentences on numerous websites when researching company formation in Montenegro, is that companies only require one shareholder and one director to be established in Montenegro. The shareholder and the director can also be the same person. But what does that mean to the foreign investor?
Let’s take a closer look at what it means to be a director and a shareholder before we tackle the reasons the one shareholder and one director requirement for company formation in Montenegro deserves its spot at the top of the list of advantages.
A director is an individual, or group of individuals, who is appointed to take care of a company’s business and affairs. The director is responsible for signing and managing contracts with other companies, such as suppliers and lenders, keeping the records of the company up to date, scheduling meetings, including the AGMs of shareholders, filing the legally required documents with the Companies Office, policymaking and decision making.
From the above to-do list of a company director, it is evident that a company would fall apart without the appointment of at least one director. All companies have this requirement and Limited Liability Companies in Montenegro are no exception. Directors of companies formed in Montenegro do not need to be citizens of Montenegro nor are they required to have a residence permit for Montenegro. In short, the director of a Limited Liability Company in Montenegro can be a foreigner.
The director is either appointed or elected into the position by the owners of the company, also known as the shareholders. The shareholders are the people who own parts of the company through the purchasing of shares. An individual can become a shareholder of a company in Montenegro by contributing to the capital of the company in the beginning phases of company formation or through the purchase of shares once the company is established.
It can be a challenge to find the right people to join you on a business venture because you need to be able to trust them with your company. Directors and shareholders need to be people who you, as the foreign investor looking to form a company in Montenegro, can rely on. The directors of a company need to have the company’s best interests at heart in order for the business to flourish.
In addition to this, the higher the number of shareholders of a company, the wider the spread of company ownership which means that you may not have as much of a say in the company as you may desire. Therefore, a requirement for multiple shareholders is not ideal when starting a business.
These risks reinforce the fact that forming an LLC in Montenegro is the best option for you. Not only does an LLC in Montenegro require only one director and one shareholder to be formed, but the director and the shareholder can be the same person. The individual can be a foreigner and there is no legal requirement for any local person to be involved in the company formation process.
This translates to you, the foreign investor, being able to choose the best route for your company from the beginning with the option to grow the directors and shareholders in the future. There is no external pressure applied by the government of Montenegro to dictate how your business is structured.
The low business member requirement also means that less time will be dedicated to finding directors and shareholders for your company which, in turn, results in a faster company formation speed.