Limited liability companies can issue debt securities

After the Government of the Republic of Serbia adopted Regulation on the Procedure for Issuing Debt Securities in the period of state of emergency, the Securities Commission received a series of questions from limited liability companies. Their main concern is whether the legislation applies to this legal form of organization of companies and what public company status actually implies. 

In this regard, the Commission would like to point out that even the Company Law and the Law on the Capital Market from 2011 provide for this option that limited liability companies can issue debt securities.

Therefore, the new Government Regulation has not introduced any novelties, in fact Article 8, paragraph 1 of this piece of legislation only summarizes provisions of the Capital Market Law: An issuer that has successfully completed a public offering of securities in accordance with the prospectus approved by the Commission becomes a public company in the context of the law governing the capital market, and retains the status for the period of validity of debt securities.

The public company status for limited liability companies means reporting obligations to the public, Commission and the market in accordance with the Law. It does not entail and never has entailed a requirement for the company to change its legal form and to become a joint stock company (roughly equivalent to public limited company in United Kingdom company law and a public company in United States corporate law).

As a reminder, the Government of the Republic of Serbia adopted on Friday, April 10, 2020 the Regulation on the Procedure for Issuing Debt Securities. It was published on that same day in the Official Gazette of the Republic of Serbia, No 54/2020 and came into force immediately.

The regulation lays down a simplified procedure for issuing corporate debt securities in the Republic of Serbia.

It will apply in all cases where a company has made a decision to issue debt securities during the state of emergency introduced in the Republic of Serbia due to the risk of spreading the infectious disease COVID-19, or within 180 days from the termination of the state of emergency in the Republic of Serbia.