LAW ON THE CENTRAL
REGISTER OF TEMPORARY
RESTRICTION OF RIGHTS
WHITE BOOK BALANCE SCORE CARD
Recommendations:
Introduced
in the WB:
It is necessary to make a significant refinements and changes in order
to, in the best way possible, minimize the possibility that under the
impact of the Law enter business entities and their members / bodies
that operate entirely bona fidae
2015
CURRENT SITUATION
On 30 December 2015, the National Assembly of the
Republic of Serbia adopted the Law on the Central Register of Temporary Restriction of Rights of Entities Registered
in the Business Registers Agency (RS Official Gazette No
112/2015), which came into force on 7 January 2016 (hereinafter: the Law)
The Law envisages the establishment of a unique central
register, i e an electronic database that will contain information on business entities, their owners, directors, representatives, and members of their bodies, whose business
has been subject to criminal, misdemeanour, or administrative sanctions (hereinafter: Central Register)
From 1 June 2016, the date of the beginning of the implementation of the Law, founders, management, directors,
legal representatives, and other bodies of a company may
be subject to a temporary prohibition of conducting a business activity, starting a business, and taking any steps concerning shares in the company money, etc
Certain
progress
No
progress
√
The coordination of various authorities (such as, for example, the Ministry of Interior and the National Bank of Serbia)
in the sense of a timely exchange of data on business entities and their members and bodies which do not respect
the applicable legislation related to operations of business
entities in any way is also a positive signal of the Law
Establishment of the Central Register should bring about
the promotion of business transparency for every business entity in the Republic of Serbia which shall, on the
one hand, increase the level of security of legal transactions of all participants, and on the other, have a preventive
effect on business entities operating in accordance with
regulations
Registered data shall give a complete picture of the business reliability of any specific business entity, since it will
contain details of all restrictions imposed on the business
entity, or persons performing the function of its bodies or
representatives, which should thereby remove the possibility of any business entity acting contrary to it, despite
imposed prohibitions
The basis for a temporary restriction of rights are acts of
the State or other relevant authority containing legal facts
or actions required by law in the form of legally binding or
enforceable judgments, decisions, or other formal acts submitted to the Business Registers Agency (SBRA) for entry
into the Central Register and which have temporary restriction as the legal consequence
It is important to mention Article 20 of the Law, which states
that the data from the central records pertaining to individuals to whom bans and security measures in judicial proceedings were imposed cannot be public and may be made only
in accordance with the rules governing criminal records
POSITIVE DEVELOPMENTS
Article 3 of the Law prescribes grounds for temporary
restriction, listing specified measures Consequently, no
other grounds for temporary restriction, except those listed
therein, may be the ground for a temporary restriction
The goal of introducing additional discipline in the operations of business entities in the Republic of Serbia and minimizing the possibility of misuse and causing damage to
third parties - that is, to introduce sanctions for those who
misuse their functions in business entities - is highly positive and is fully supported by the FIC, which has advocated
for just that ever since its establishment
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Significant
progress
REMAINING ISSUES
The aforesaid grounds are not always necessarily a consequence of abuse of rights by the party/person whose rights
would be restricted In fact, there are numerous cases of
business entities having their accounts blocked, or undergo-
ing bankruptcy proceedings, where such account blockage
or bankruptcy are not the consequence of any fraudulent
activity; i e both members and bodies of business entities
have acted bona fide As an example, we point out the case
of business entities that are in such a situation because the
state or local authorities have failed to pay their debt to
these entities, as well as the case of a cooperate chain (notably in the construction industry) where account blockage or
bankruptcy over one of the entities in the chain triggered a
domino effect for other members in the chain below
Some provisions in the Law are too general and imprecise and, as such, can produce a variety of negative consequences in practice
In addition, we are of the view that the number of persons encompassed by the Law is too wide, and that only
persons who undertook actions or supported actions that
led to misuse should be made subject to the restrictions
imposed by the Law (members/shareholders and members
of bodies)
It is necessary to additionally define legal consequences of
the temporary restriction due to the fact that Article 5 only
prescribes that they last during validation period in the
manner prescribed in Article 3 of the Act
The Law should contain appropriate solutions regarding
the liability for entering incorrect data, especially in a situation where there was no fraudulent intent We emphasize
this, keeping in mind the automated registration process,
the public registry, and the weight of potential consequences resulting from the application of the provisions
stipulated by the Law
FIC RECOMMENDATIONS
• Significant changes should be made and certain provisions should be more precise (as elaborated in the
Remaining Issues above) in order to minimize, to the extent possible, the possibility that the Law is applied to
business entities and their members/bodies acting bona fide
• It is necessary to regulate liability for entering incorrect data into Central Register
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