INTRODUCTION

A limited liability company (hereinafter: LLC or a company) is an organizational form of a commercial company founded by one or more persons who perform activities under a common name (company). The umbrella law that legally regulates this form of trading companies is the Trading Companies Act ("Official Gazette" no. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08., 137/09., 152/11. - official consolidated text, 111/12., 125/11., 68/13., 110/15., 40/19., 34/22., 114/22., 18/23., hereinafter: TCA).

A limited liability company is the most common form of company in the Republic of Croatia, and it can be founded by one or more natural or legal persons who contribute to the share capital, which amounts to at least EUR 2,500.00 and is usually paid in full in cash, although founders are also allowed to partially register things and rights in the share capital.

The founder can take more business shares when establishing the company. The total amount of all business shares must correspond to the amount of the company's share capital. Business shares cannot be expressed in securities. If the person who is obliged to do so does not contribute to the company, nor can the company compensate it by selling a business share, other members of the company are obliged to pay the missing amount to the company in proportion to their business shares in the company.

An exception in relation to the amount of share capital exists for citizens of third countries who are employed in their own company or are key personnel in the same (they are holders of business shares that make up 51% of the share capital). Read more about this in the article published on our website - Publications: "Work permits for citizens of third countries who are key personnel in Croatian companies".

LEGAL BASIS FOR THE LLC'S ESTABLISHMENT

The company is founded on the basis of a contract concluded by the founders (company contract). All founders must sign a company contract, which is concluded in the form of a notary deed, or a private document certified by a notary public. A notarial deed or a private document certified by a notary public can be drawn up through means of electronic communication and in electronic form.

If the company is founded by a single founder, the company contract is replaced by the founder's statement on the establishment of a limited liability company filed with a notary public. This declaration can be made in electronic form and through means of electronic communication.

The founder's proxies must have a power of attorney certified by a notary public. A power of attorney is not required if the representative of the founder is authorized by law to enter into a company contract for him and make the statement required for the establishment of the company.

Successive establishment of the company is not allowed.

The company contract or the declaration on the establishment of the company must contain: 1. name, surname, i.e. company, residence, i.e. headquarters of the founder, if the founder is a natural person and his personal identification number, and if the founder is a legal person and the registration number of the entity, i.e. corresponding data if it is a foreign person, 2. the company and the headquarters of the company, 3. the total amount of capital, and the amount of each individual fundamental stake of the founder, and whether the stake consists of things or rights, they must be described in detail and their value indicated, and the number and nominal amounts of business shares that, in addition to the obligation to pay contributions, each founder assumes, 4. provision on whether the company is established for a fixed or indefinite period, 5. rights and obligations that members have towards the company in addition to the payment of their shares, and rights and obligations which company has towards its members.

PAYMENT OF TAKEN BUSINESS SHARES

The nominal amount of the business share cannot be less than EUR 10.00, unless otherwise determined by the TCA. The nominal amount of the business share must be expressed as a whole number that is a multiple of ten. The sum of the nominal amounts of all business shares must correspond to the amount of the company's share capital.

Before registering the company in the court register, each founder must pay at least a quarter of the stake for the acquired business share that he pays in money, with the fact that the total amount of all payments in money cannot be less than one quarter of the share capital, unless otherwise prescribed by law.

A contribution to a company’s share capital can be made by investing in things and rights. The contribution by entering the things and rights into the company must be entered before the registration of the company in the court register. If the value of the stake in things and rights at the time of submitting the application for registration of the company in the court register is less than the value of the stake invested thereby, the difference up to the amount of the stake thus expressed must be paid in money. Contributions must be paid so that the company can dispose of them freely. Monetary contributions are paid using a means of payment specified by law in the Republic of Croatia to the company's account at a credit institution in the Republic of Croatia or as a deposit to a special notary public account opened at a credit institution in the Republic of Croatia. When making payments to the company's account, the credit institution issues a certificate stating that the company will be able to freely dispose of the amount paid after it is entered in the court register, and if the payment was made as a deposit to the notary public's account, the notary public will issue a certificate stating that the company will be able freely dispose of the paid amount after it is entered in the court register.

BOOK OF BUSINESS SHARES

The management is obliged to keep a book of business shares of the company in which the company, i.e. name and surname, seat and address, i.e. residence of each member of the company, if the member of the company is a legal person, information on its entry in the appropriate register, its personal identification number, nominal amounts are entered business shares he has taken over and what he has paid based on that, and any additional actions he is obliged to fulfill towards the company and which he has fulfilled, all obligations imposed by the business share and the number of votes he has when making decisions of company members. Encumbrances and divisions of business shares and all other changes are entered in the book. Any person who can prove that he has a legal interest in it has the right to inspect the book of business shares of the company during working hours.

In relation to the company, a member of the company is (only) the one who is entered in the book of business shares and whose membership in the company has been notified to the registry court. The list of company members that the management submits to the registration court is changed by submitting to that court a new list with appropriate evidence of the changes. In the event of a discrepancy between the state of entries in the book of business shares and the list of company members submitted to the registry court by the company's management, it is considered that the members of the company are the founders listed in the partnership agreement, that is, the persons listed in the mentioned list, and if the company has only one member, that person is the registered person in the court register. In favor of the person who acquires a business share or the right to that share through a legal transaction, the content of the list submitted to the registry court is valid as correct, except for the acquirer of a business share who knows or due to gross negligence does not know that the information is incorrect. The acquirer cannot validly acquire a business share with confidence in the content of the list, if the information regarding the business share to be acquired is incorrect, and three years have not passed since the submission to the registry court of the list in which this information is incorrectly stated, unless the inaccuracy of the list can be attributed to the authorized person on the share.

ADDITIONAL ACTIVITIES AND SPECIAL BENEFITS

With the company contract, the members of the company can commit themselves, in addition to the payment of contributions, to additional payments of money or the fulfillment of other actions that have property value. This does not increase the share capital of the company.

In the company contract, it can also be stipulated that the members of the company decide to make additional payments to the company. If the company contract does not expressly stipulate that the decision is made by a majority of at least three quarters of the votes cast, the members of the company can only decide unanimously.

If a member, when asked to do so, does not fulfill his obligation to make subsequent payments to the company, which is limited by a certain amount, and when it is not so limited if it does not exceed the amount determined by the company contract, the provisions of this Act on late payment of contributions shall apply, if the company contract nothing else is foreseen. The ancestor of the member of the company is responsible for payment to the company only up to the amount of the obligation at the time of submitting the application for entry of his exit from the company in the book of business shares.

If the obligation of additional payment is not limited by a certain amount, a member of the company who has paid the deposit in full can be released from the obligation to pay for his business share by making his business share available to the company within one month after he is required to pay. If he does not pay what is required of him or use the right within that period, the company can inform him by registered letter that he is considered to have made his business share available to the company. The company must, within one month from the receipt of the statement from the member of the company, or from the notification to the member, put his business share up for sale by public bidding, and sell it in another way only if the member of the company whose business share is in question agrees to it. The company is obliged to pay the amount achieved by the sale, which remains after covering the costs of the sale and settling the obligation of additional payment to the member of the company. If the company's claim cannot be settled with the proceeds from the sale of the business share, it belongs to the company, which can dispose of it for its own account. By means of a company contract, the method of settling the obligation of a member of the company determined by this paragraph can be limited to the case when the required additional payment to the company exceeds a certain amount.

What has been paid can be returned to the members of the company if it is not necessary to cover the loss of the company. The refund of the amount paid is allowed only to all members in proportion to their contributions and not before the expiration of three months from when the company announces the refund decision. If the company contract stipulates that additional payments are possible even before the contributions are fully paid, the refund of such payments is not allowed before the contributions are not fully paid. If the aforementioned payments are returned in violation of this prohibition, the recipients of the returned amount, the members of the board and the remaining members of the company are liable to the company according to the provisions of Articles 407 and 430 of this Act.

If, in addition to the payment of contributions, one or more members commit themselves to the company for actions that do not consist in the payment of money but have a property value, the company contract must determine the scope and assumptions for the fulfillment of these actions, the criteria for determining the compensation that the company needs for that pay a contractual penalty in case of non-fulfilment or irregular fulfillment of the assumed obligation. Company payments cannot be greater than the value of the actions to be fulfilled.

If a member of the company is given compensation for things or rights that he transfers to the company and his role is attributed to him, or if a member of the company is given special benefits in the company, the company contract must accurately and completely state the member of the company that transfers the thing or right, a description of what thus conveys to the company the value expressed in money and the special benefits acquired by the member of the company.

REGISTRATION OF THE COMPANY IN THE COMPETENT COURT REGISTER

The application for registration in the court register is submitted after the company contract is concluded, the contributions are paid in accordance with the law and the company contract, and one or more members of the company's management are appointed, and if the company must have a supervisory board and after that board is elected, and if the company is founded by only one founder, he must, before submitting the application, provide adequate insurance to ensure that the part of the stake in money that has not been paid will be duly paid.

Before applying for the company's registration in the court register, stakes in things and rights must be entered so that the company can dispose of them after it is entered in the court register. If the court doubts the accuracy of the submitted evidence on the entry of roles and their disposal by the company, it may request that other evidence be submitted to it. If the value of the stake in things and rights at the time of submitting the application for entry in the court register is less than the amount of the assumed stake that is paid in, the founder who has not paid the entire stake is obliged to pay the missing amount in money before the company is entered in the court register.

In the application for registration in the court register, the following must be stated:

1. company, registered office, address of the company in the Republic of Croatia and activities that make up the subject of the company's business,

2. the amount of the company's share capital,

3. according to the circumstances, information and statements (namely, if the company is founded by investment or acquisition of things and rights without revision of the establishment, in the application for registration of the company in the court register it must also be stated that the company is founded by investment or acquisition of things and rights without revision of the establishment. It must describe the object of each investment or acquisition of things, i.e. rights. Applicants must state in it that they were not aware of, nor are they aware of, extraordinary circumstances that could have affected the amount of the weighted average price of securities or money market instruments for the last three months before the day of their actual introduction into the company or circumstances that would indicate that the value of the thing, i.e. the right on the day of its introduction into the company, based on new circumstances or circumstances that were subsequently learned, was significantly lower than the value established by an independent permanent judicial appraiser of the appropriate profession)

4. statement of the board members that they are aware of the obligation to report to the court and that there are no following circumstances, e.g. that they have been punished for the criminal offense of money laundering, terrorist financing, abuse of trust in business operations, fraud in business operations, causing bankruptcy, favoring creditors or injury obligations to keep trade and business books from the Criminal Code of the Republic of Croatia or previously valid criminal offenses of bankruptcy abuse and abuse in bankruptcy proceedings, and that for the time that the legal consequences of the conviction last, or that they have been punished for a criminal offense of another state which, according to its essential features, corresponds to for the above-mentioned criminal offenses, or against whom a security measure has been imposed prohibiting the performance of an occupation that is fully or partially covered by the company's business for the duration of the ban)

The court is obliged to examine whether the company has been duly established, whether the application contains the content prescribed by law and whether the prescribed documents are attached to it, and if it determines that all the stated conditions are met, it will issue a decision on the establishment of the company, i.e., on its entry in the court register of the competent commercial register. of the court in which they are registered: 1. company, registered office, address of the company in the Republic of Croatia and object of the company's business, 2. total amount of share capital, 3. date of conclusion of the partnership agreement, 4. duration of the company if it is determined by the partnership agreement or statement of establishment of the company, 5. names and surnames of the members of the management board, president and members of the supervisory board, if the company has one, their place of residence and personal identification number, 6. authority to represent the company, 7. if it is for receiving declarations of will and writing on behalf of the company with by stating the address of an authorized person in the Republic of Croatia, that information is also entered; for the third, the mentioned person is authorized to do so until he is deleted from the court register and the entry of deletion is published, unless the third party was aware that this person no longer has the authority in question here, 8. name and surname, place of residence and personal identification number, that is, the company and registered office of the sole founder and members of the company.

In addition to these data, the provisions of the company contract or statement of incorporation of the company on the way the company publishes its announcements are also published, if the contract or statement contains these provisions.

RESPONSIBILITY OF COMPANY MEMBERS AND COMPANY MANAGEMENT MEMBERS

If incorrect information was given during the founding of the company, the members of the company and the members of the management of the company, as joint debtors, are obliged to pay the amounts that were not paid to the company, to compensate for the payments that were made during the founding of the company and were not accepted as costs of establishing the company, and are also responsible for other damages that were was caused by that. If the company is intentionally or with gross negligence damaged by contributions or costs of establishing the company, all members are liable for the damage as joint and several debtors. A member of the company and a member of the management of the company who did not know the facts on which the liability is based, nor should have known about them if he had used the attention of an orderly and conscientious businessman, is released from liability.

In addition to the company members, the people on whose account the company members took over business shares are also liable in the same way. These persons cannot claim that they were not aware of the circumstances that the member of the company who acted on their behalf knew about or that he would have had to have known by applying the attention of an orderly and conscientious businessman.

The company cannot waive claims for damages or enter into a settlement regarding them if the fulfillment of the mentioned obligations is necessary for the company to settle its creditors. This does not apply if the person liable to the company is insolvent or has entered a settlement with his creditors to avoid the opening of bankruptcy or his obligation to pay compensation is governed by a bankruptcy plan. The company's claims expire in five years. The statute of limitations begins to run from the day the company is registered in the court register, and if the action that leads to liability for damage was done after that registration, from the day it was done.

WITHDRAWAL AND EXCLUSION OF A MEMBER FROM THE COMPANY

The company contract can specify that a member can withdraw from the company and that the company can exclude him. Then the conditions, procedure and consequences of a member's resignation or exclusion from the company must also be determined. Regardless of this, a member of the company can file a lawsuit with the court to demand withdrawal from the company if there are justified reasons for doing so. There are justified reasons for withdrawing from the company, especially if the other members of the company or one of the company's organs cause him damage, if he is prevented from exercising his rights in the company, or if some organ of the company imposes disproportionate obligations on him. In the lawsuit, the amount of compensation for the business share must also be stated, and the appropriate deadline for its payment to the member leaving the company must be determined. If the claim is approved, the court must determine the amount of compensation for the market value of the plaintiff's business share and order that the company pay it to him within the period specified in the judgment. When determining the mentioned deadline, the court will take care of the state of the company and its business needs.

In addition to the previously mentioned situations, the company itself can demand that the court excludes him from the company by filing a lawsuit against its member if there is an important reason for this. An important reason for the exclusion of a member from the company is his behavior that makes it impossible or significantly difficult to achieve the goal of the company, and as a result, his remaining in the company seems intolerable for the company. All other members of the company can also file a lawsuit. It must also state the amount of compensation and the appropriate deadline for payment of compensation to the excluded member of the company. The court pronounces the exclusion of the member from the company under the deferred condition that the company pays him compensation specified in the judgment of the market value of the business share within the time limit specified in the judgment. When determining the mentioned deadline, the court will consider the state of the company and its business needs.

A member of the company cannot waive the right to withdraw from the company in advance, nor can the company waive the right to expel a member in advance.

With the resignation and expulsion of a member, his membership in the company and all rights arising therefrom cease. A member who withdraws from the company and a member who is excluded from the company have the right to be compensated for the market value of their business share as it was at the time of withdrawal or exclusion. If a member's contribution to the company was in property or rights, he has the right to have his investment returned, but not before three months have passed since his departure, that is, to his exclusion from the company. In this case, he cannot claim compensation for accidental destruction, damage, or reduction of the value of what he has invested, and if this has occurred through regular use. If the company demands compensation from the member for the damage caused or the member needs to fulfill some other obligations towards the company, the value of the stake will not be reimbursed until he settles the damage or fulfills these obligations. The membership in the company of the member who resigned from the company and the member who was excluded from it ends when they are paid compensation.

MANAGEMENT BOARD

The management of the company consists of one or more directors. The management manages the company's affairs in accordance with the company contract, the decisions of the company members and the mandatory instructions of the assembly and the supervisory board, if the company has one and represents the company. Unless otherwise specified in the company contract, the board members collectively represent the company. They are signed in such a way that, along with the indication of the company, the companies put their signature. If the board has several members, the company contract can determine that the company is represented by one member of the board alone, several of them collectively, or one member together with the procurator. A provision in the company contract that stipulates that individual or all members of the board represent the company only together with one or more procurators is not allowed.

The management's mode of operation is prescribed by the company contract. If some issues regarding the way the administration works are not regulated by the company contract or CTA, they can be regulated by the administration with a special act adopted for this purpose.

If the management board has several members, and the company contract does not stipulate otherwise, all members together undertake the actions necessary to run the company's affairs, unless there is a risk that the actions will not be taken in a timely manner.

If, according to the company contract, each member of the management board is authorized to take the actions of running the affairs of the company himself, he may not take the intended action if one of the members of the management board opposes it, unless the mentioned contract stipulates otherwise.

A member of the management board can be a fully capable natural person. If the members of the company intentionally or due to gross negligence appoint a person who cannot be a member of the management board, they shall be jointly and severally liable to the company for all damage caused to it by the fact that such a person violated his obligations to the company. Membership in the board ends by force of law if, after the decision on the appointment of a member of the board is made, circumstances prescribed by law occur on his side which, if they existed at the time of making that decision, would prevent the appointment. Other members of the management board, and when applicable, the chairman of the supervisory board, are obliged to submit an application to the registry court without delay upon learning that these circumstances have occurred in order to register the termination of that person's membership in the company's management board.

 

The members of the company appoint the management of the company by their decision, if the company contract does not stipulate that it is appointed by someone else in the company. If one of them is appointed as a member of the board, this can be done in the company contract, even during the time the board member is a member of the company. Unless otherwise stated in the appointment decision, the term of office of the president and board member begins on the date of the appointment decision, regardless of entry in the court register.

The management of the company is responsible for the orderly management of business books and management of internal supervision. The management is responsible for preparing the company's financial reports. It is obliged to prepare financial reports and a report on the state of the company, if the company is obliged to prepare it, and submit it to the supervisory board and the company's assembly without delay. If it is necessary to audit the company's financial statements, the management is obliged to submit the auditor's report along with the reports and the notification on the state of the company.

SUPERVISORY BOARD

The company contract determines whether the company has a supervisory board, with the fact that the company must have a supervisory board: 1. if the average number of employees per year is greater than 200, or 2. if this is prescribed by a special law for a company that performs a certain activity, or 3. if the share capital of the company is greater than EUR 80,000.00 and it has more than 50 members, or 4. if the company is solely managed by joint-stock companies or companies with limited liability that must have a supervisory board or participates in them with more than 50% with by a direct share in the share capital, and in both cases the number of employees in one of the companies or in all companies combined is greater than 200 on average, or 5. if the company is a general partner in a limited partnership and the average number of employees in the company and in the limited partnership together is greater than 200 .

The supervisory board consists of three members. The company contract can stipulate that the supervisory board has more members, but their number must be odd.

THE ASSEMBLY

The assembly decides on issues determined by the company contract, and in particular on: 1. the company's financial reports, the management report on the state of the company, if the company is required to prepare one, the use of realized profits and loss coverage, the dismissal of members of the management board and the supervisory board, if the company has one , what should be done in the first eight months of the business year for the previous year, 2. request for deposit payments, 2. a refund of additional payments to company members, 3. appointment and recall of management board members, 4. election and recall of members of the supervisory board if the company has, 5. divisions, mergers and withdrawals of business shares, 6. the granting of power of attorney or commercial power of attorney for all plants to be given by the management, 7. measures for examination and supervision of business management, 8. amendments to the company contract, 9. setting requests for compensation damages that the company may have against members of the management board and the supervisory board and deputy members of the management board and on the appointment of representatives in court proceedings if the company cannot be represented by the members of the management board or the supervisory board, 10. entering into contracts by which the company needs to permanently acquire things or rights for some of its facilities for which is paid a counter value that is higher than the value of a fifth of the company's share capital, as well as the amendment of such contracts at the expense of the company, which is a condition for their validity, except when it comes to acquisition in enforcement proceedings, with the fact that the decision on this must be made with a majority of three quarters of the votes cast.

The company's assembly is convened by the management, if the law or company contract does not grant that right to someone else. Unless otherwise stipulated in the company contract, the assembly is held at the company's headquarters.

The assembly must be convened at least once a year and, except in cases determined by the CTA and company contract, always when the interests of the company require it, and without delay, especially if it is noticed that there is a loss in the company in the amount of half of the share capital.

The assembly must be convened without delay and when it is requested in writing, stating the purpose, by members of the company who have taken over business shares in nominal amounts, which together make up at least one tenth of the company's share capital. The company contract can stipulate that members who have jointly taken over smaller shares have this right. If the body authorized to convene the assembly does not comply with the request of the members of the company within 14 days from the day it was received, or there is no such body, the persons who submitted the request can convene the assembly themselves, specifying the agenda. In that case, the assembly decides on the expenses for holding the assembly so convened.

If the company contract does not stipulate otherwise, the assembly can validly decide if members of the company or their representatives representing at least one tenth of the company's share capital are present. At an assembly that has not been properly convened, nor have the members of the company put in a request to decide on certain issues in the prescribed manner, no later than three days from the date of publication or receipt of the invitation convening the assembly, decisions can only be made if all members of the company are present or represented. This condition does not have to be met to decide on convening a new assembly.

If the law and company contract do not stipulate otherwise, the assembly makes decisions by a majority of the votes cast. Each EUR 10.00 nominal amount of the business share gives the right to one vote.

Decisions made at the assembly and those made in writing must be entered in a special book of decisions without delay. Every member of the company has the right to inspect the book of decisions during the working hours of the company. At his request, every member of the company must be provided without delay by registered letter an extract from all the decisions entered in the book of decisions signed by the management along with the announcement of the date and place of adoption and information about the entry in that book.

REASONS FOR TERMINATION OF THE LLC WITH AN EMPHASIS ON THE TERMINATION OF THE COMPANY BY SHORT PROCEDURE WITHOUT LIQUIDATION

The reasons for the termination of the company are: 1. expiration of the time specified in the company contract, 2. decision of the members, 3. merger of the company with another company, merger with another company and division of the company by separation, 4. final decision of the registry court determining the deletion of the company ex officio , 5. opening of bankruptcy proceedings, 6. decision of the registry court, 7. nullity of the company, 8. dissolution of the company and 9. final judgment of the court.

In addition to the above, the company can be terminated by summary procedure without liquidation if all its members unanimously decide on such termination of the company. In addition to the explicit statement that the company is terminated by a summary procedure without liquidation, the following information must also be stated in the decision: company, registered office, personal identification number and registration number of the subject of the company that is terminated in this way, the total number of members of the company, along with the name and surname, place of residence and personal identification number, i.e. company, registered office and personal identification number of each member, plan for the distribution of the company's assets.

All members of the company are also obliged to give a statement that the company has no outstanding obligations towards the employees and former employees of the company or other outstanding obligations based on the employment relationship of the employees and former employees, that the company has no disputed or undisputed, due or overdue obligations towards other creditors and that each the member undertakes to settle, jointly with all other members of the company, all remaining obligations of the company, if it is subsequently shown that they exist.

Both the aforementioned decision and the statement of the members of the company are given in the form of a notarial deed or a private document certified by a notary public. The company must publish without delay on the website of the court register and in the company's newsletter, if it has one, the decision on the termination of the company by shorter procedure without liquidation and a statement.

The termination of the company due to the decision of the members to terminate by summary procedure without liquidation must be reported to the registry court without delay to be entered in the court register. Members of the company, creditors of the company, or state bodies can lodge an objection against the decision on the termination of the company by summary procedure within 30 days from the day of its publication. The complaint is decided by the registration court that issued a decision on the termination of the company under the shorter procedure.

If no objection is filed against the decision on the termination of the company without liquidation or the court rejects or rejects the submitted objection, the registration court will issue a decision on the deletion of the company from the court register and publish it on the website of the court register. With the validity of the decision to delete the company from the court register, parts of the company's assets are transferred to the members of the company in accordance with the asset distribution plan contained in the decision on the termination of the company, and if some part of the assets is not distributed according to that plan, such part is transferred to all members of the company in proportion to the participation of each of them in the business share in the share capital of the company.

After the deletion of the company from the court register, the members of the company are jointly and severally liable with all their assets for the obligations of the company that ended in summary proceedings without liquidation. Creditors can realize their claims against the company against the members of the company within two years from the date of publication of the deletion of the company from the court register.