The new Company Law came into force on November 30 2004 and aims to develop a sound legal environment for investing and doing business in Serbia. However, some inconsistencies and uncertainties will first need to be resolved by the competent authorities.
The new Insurance Law aims to bring order to the Serbian insurance sector. Among other things, it increases the levels of initial capital required to form insurance companies and affords wide-ranging powers to the supervisory authority, the National Bank of Serbia. However, due to several shortcomings it is unclear whether the law will succeed in attracting foreign investment.
Recent amendments to the Privatization Law are the first significant changes to the law since its enactment in 2001. Among other things, they simplify the privatization procedure, define eligible and ineligible buyers, specify the obligations of the companies undergoing privatization, and set out how the privatization proceeds must be allocated.
The progress of privatization in Serbia remains mixed, with some successes but significant legal obstacles still in place, especially in the high-profile area of public tenders. Sources within the Privatization Agency are discussing possible changes to the Privatization Law which would make the privatization process swifter and more efficient.
Recent amendments to the Federal Republic of Yugoslavia Law on Enterprises have resolved only some of the difficulties which the Serbian Privatization Agency was encountering in its attempts to solve the problem of converting socially owned capital into share capital to be transferred to buyers in the process of privatization.
While the initial results of privatization are impressive, the Privatization Law has a critical flaw in its failure to treat effectively the 'socially owned capital' which still dominates enterprise capital ownership in Serbia. Unless these critical ownership and control issues are resolved, the process will be hindered.
The Parliament of the Federal Republic of Yugoslavia has enacted a new Foreign Investment Law which in practice will apply only in Serbia. The law sets out a more straightforward procedure for the registration of foreign investments and minimal restrictions on foreign persons becoming majority shareholders in certain companies.