Setting up a company in Croatia (LLC)
Setting up a company in Croatia (LLC) can be challenging, but with proper guidance, it can become quite straightforward. In this article, we will discuss the key steps and essential information necessary for successfully establishing an LLC in Croatia.
What is a Limited Liability Company (LLC)?
A Limited Liability Company (LLC) is the most common form of commercial entity in Croatia. An LLC may be established by one or more legal or natural persons, by contributing assets to a predetermined share capital. The fundamental characteristic of this entity is the limitation of members’ liability for the obligations of the company. In other words, members of an LLC are not liable for the obligations of the company except as provided by law.
Setting up a company in Croatia (LLC) – Steps
1. Founders
An LLC may have one or more founders who can be legal or natural persons. If the founders are natural persons, they must be of legal age and fully competent to conduct business.
2. Company Name – Trade Name
As the first step towards establishing a new LLC, the founders must determine the company name. The trade name is the name under which the company operates and engages in legal transactions. It must be unique and clearly distinguishable from the trade names of other traders domiciled in the Republic of Croatia. Through the website of the commercial register, it can be determined if the desired trade name is available. The trade name must be in Latin script, in Croatian or in the official language of one of the EU member states, and Arabic numerals may be used. Special consent from the Ministry of Justice is required for the use of the word “Hrvatska” or any derivatives thereof in the company name. The trade name cannot contain names, emblems, flags, or other state emblems of other states or international (interstate) organizations, nor official marks for control and guarantee of quality, nor can they be imitated, except with the permission of the competent authority of the relevant state or international (interstate) organization, and in case these components are contained in the trade name or in the name of the founders being entered into the trade name of the commercial company.
3. Company’s purpose
Following the trade name, it is necessary to determine the (primary) business activity – the company’s purpose in accordance with the National Classification of Activities of the Croatian Bureau of Statistics. The choice of activity is primarily related to the company’s business object.
4. Registered seat
The founders of the company must determine a location in the Republic of Croatia where the company’s management will be located and from where the company’s business will be conducted or a location where the company will permanently carry out its activities.
5. Share Capital
The minimum amount of share capital is EUR 2,500.00.
6. Founding (Incorporation) Deed
An LLC is established based on the founding deed, which, depending on the number of members of the company, may be a Declaration of Establishment (for a company with one founder) or Articles of Association (for a company with multiple founders).
The founding deed of every LLC must be drawn up in the form of a notarial document and must contain:
- first and last name (trade name), residence (registered seat) of the founders, personal identification number (registration number of the subject), or appropriate data if it is a foreign person,
- trade name and registered seat of the company being established,
- company’s purpose or an indication of how it is determined,
- total amount of share capital, and the amount of each individual share capital contribution of the founders, a detailed description of contributions in assets or rights (if contributed to the company) in accordance with the provisions of the Companies Act,
- duration of the company (fixed / indefinite),
- rights and obligations of members towards the company and the company towards members.
7. Appointment of Management Board Members, Determination of Business Address
Special decisions are made appointing members of the management board and the business address of the company at the company’s registered office, and statements of acceptance of appointment are provided.
8. Payment of Share Capital
Upon signing and notarization of the founding deed, the share capital is paid in, with a minimum amount of EUR 2,500.00. Members contribute their shares to the company in cash or in assets or rights.
In case of cash contributions, each founder must pay at least one-quarter of the contributions for the business share to be acquired before registration of the company in the court register, provided that the total amount of all cash contributions cannot be less than one-quarter of the share capital. Cash contributions must be fully paid within one year from the date of registration of the company in the court register. Cash contributions are paid through a special account with financial institutions in the Republic of Croatia (banks), for which they issue a certificate.
Contributions in assets and rights must be fully contributed before the registration of the company in the court register. Such contributions must be precisely defined in the founding deed of the company, and they are transferred to the company based on a contract for the transfer of assets and rights.
9. Application for Registration in the Court Register
The company’s management board submits an application for registration of the company in the court register of the competent commercial court, along with the founding documentation, a certificate of payment of share capital, and a certificate of payment of the court fee for registration of incorporation.
10. Company seal creation
11. Registration with the Croatian Bureau of Statistics
An application is submitted to the Croatian Bureau of Statistics for classification by activities according to the National Classification of Activities, and a registration number and activity code are obtained.
12. Registration in the Register of Beneficial Owners
Legal entities are required to register data on the beneficial owner in the Register of Beneficial Owners, which is a central electronic database maintained by the Financial Agency (FINA) for the purposes of the Office for the Prevention of Money Laundering and Terrorism Financing. A beneficial owner is defined as any natural person (persons) who is the ultimate owner of the party or controls the party or otherwise manages it, including the natural person (persons) who exercises ultimate control over the legal entity.
13. Opening a Bank Account
14. Registration with the Tax Administration, Croatian Pension Insurance Institute, and Croatian Health Insurance Institute
All founding documents, except statements accepting appointments of management board members, may be signed by a lawyer based on a special power of attorney properly authenticated in the Republic of Croatia or abroad in a manner suitable for use in the Republic of Croatia.
This article provides general legal information only and cannot be considered legal advice in specific situations. If you need specific legal advice, please feel free to contact me with confidence.
