Short Guide on Legal Framework For Mergers and Acquisitions in Serbia

Mergers and acquisitions (M&A) are a common practice in the business world.

But, at the same time M&As are complex transactions that require careful planning, legal expertise, and a thorough understanding of the local business and regulatory environment.

Therefore, the process can be complex and it too requires careful consideration of legal, financial, and business aspects.

In Serbia, M&A activity has increased significantly over the past decade, with several high-profile transactions taking place. However, navigating the legal landscape of M&A in Serbia can be challenging for foreign investors. In this article, we will provide an overview of the legal framework for M&A in Serbia and offer practical advice on how to carry out M&A transactions in the country.

Legal Framework for M&A in Serbia

The legal framework for M&A in Serbia is primarily governed by the Companies Act, the Law on Privatization, and the Law on Protection of Competition. These laws provide the legal basis for the acquisition of Serbian companies by both domestic and foreign investors.

Companies Act

The Companies Act regulates the formation, management, and liquidation of companies in Serbia. It sets out the rules for mergers, demergers, and acquisitions, including the legal procedures for share transfers and the rights of minority shareholders.

Privatization Act

The Law on Privatization provides the legal framework for the privatization of state-owned enterprises. It sets out the rules for the sale of state-owned assets and the conditions for participation in the privatization process.

Protection of Competition Act

The Law on Protection of Competition is designed to ensure fair competition in the Serbian market. It regulates mergers and acquisitions that could lead to the creation or strengthening of dominant market positions. The law requires companies to notify the Serbian Commission for Protection of Competition (CPC) of any proposed merger or acquisition that meets certain thresholds.

5 Practical Steps for Carrying out M&A in Serbia

1. Conduct Due Diligence

Before entering into an M&A transaction in Serbia, it is essential to conduct thorough due diligence. This process involves a detailed examination of the target company’s financial, legal, and operational aspects. Due diligence will help the buyer to identify any potential risks and liabilities associated with the target company.

So, the first step in any M&A transaction is to conduct preliminary due diligence. This involves reviewing the target company’s financial and legal documents, contracts, intellectual property rights, and other relevant information. It is essential to identify any potential liabilities, risks, or legal issues that could impact the success of the transaction.

In Serbia, due diligence is usually carried out by a team of lawyers, accountants, and other professionals. The due diligence report should provide a comprehensive analysis of the target company’s financial and legal position, including its assets, liabilities, cash flow, and financial performance.

2. Negotiating the Transaction

Once the due diligence process is complete, the parties can begin negotiating the terms of the transaction. In Serbia, M&A transactions are usually structured as asset or share deals. In an asset deal, the buyer acquires specific assets of the target company, while in a share deal, the buyer acquires the shares of the target company.

The terms of the transaction should be negotiated and documented in a letter of intent (LOI) or a memorandum of understanding (MOU). The LOI/MOU should outline the key terms of the transaction, including the purchase price, payment terms, conditions precedent, warranties, and representations.

It is important to note that the LOI/MOU is not a binding agreement and is only meant to outline the general terms of the transaction. The final agreement is usually a share purchase agreement (SPA) or an asset purchase agreement (APA), which is a legally binding document that governs the transaction.

3. Obtain Necessary Approvals & Observe Regulatory Considerations

Depending on the type of transaction, the buyer may need to obtain various approvals and permits from regulatory authorities. For example, if the transaction involves a state-owned enterprise, the buyer may need to obtain approval from the Serbian Privatization Agency. If the transaction meets certain thresholds, the buyer may need to notify the CPC and obtain its approval.

Also, M&A transactions in Serbia are subject to various regulatory requirements, including competition law, foreign investment law, and securities law. The most important regulatory body in Serbia is the Commission for Protection of Competition (CPC), which is responsible for ensuring that M&A transactions do not create monopolies or restrict competition.

Under Serbian law, M&A transactions that meet certain thresholds must be notified to the CPC for approval. The thresholds vary depending on the type of transaction and the turnover of the parties involved. If the transaction is likely to result in a significant market concentration, the CPC may require remedies or conditions to be imposed to address any potential competition concerns.

4. Draft and Negotiate the Sale Agreement

Once due diligence is complete, and all necessary approvals have been obtained, the buyer and the seller will need to negotiate the terms of the sale agreement. This agreement will set out the terms and conditions of the transaction, including the purchase price, the representations and warranties of the seller, and the conditions for closing the deal.

5. Closing the Deal

The final stage of the M&A transaction is the closing of the deal. At this stage, the buyer will transfer the purchase price to the seller, and the seller will transfer ownership of the shares or assets to the buyer. It is essential to ensure that all closing conditions have been met before completing the transaction.


M&A transactions in Serbia can be complex and require careful consideration of legal, financial, and business aspects. However, with the right legal and financial advice, foreign investors can successfully carry out M&A transactions in Serbia. It is essential to conduct thorough due diligence, obtain all necessary approvals, and draft a detailed sale agreement to ensure a successful transaction. With the recent increase in M&A activity in Serbia, it is an exciting time for foreign investors looking to enter the Serbian market.

For more information on this or any other legal, tax, or business topic, feel free to write to us at [email protected] at any time or call us at phone number +381113281914 every working day from 08:30 to 16:30.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your AK STATT representative, or other competent legal counsel.

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