Limited Liability Company (LLC) in Kosovo
A Limited Liability Company (LLC) in Kosovo is one of the most popular business structures, allowing investors to benefit from limited liability advantages. It is considered a capital-based company model and is ideal for small and medium-sized enterprises.
1. Key Features
Legal Status: An LLC has legal personality and is independent of its shareholders.
Liability: Shareholders are only liable up to the amount of their investment in the company.
Number of Shareholders: A minimum of one shareholder is required; there is generally no maximum limit.
Capital Structure: The company's capital is divided into shares, which can be transferred.
2. Advantages
Limited Liability: Shareholders' personal assets are not affected by company debts.
Flexibility: It offers flexibility in management structure and operations.
Legal Personality: The company can enter into contracts, own property, and file lawsuits in its name.
Attracting Investment: It is easier to raise capital and attract investors.
3. Disadvantages
Higher Costs: Establishing and managing an LLC is more expensive compared to sole proprietorships and partnerships.
Tax Burden: In addition to corporate income tax, shareholders may be taxed on profit distributions.
Legal Formalities: More complex legal and reporting requirements.
4. Establishment Process
A. Required Documents:
Articles of Incorporation:
Must include the company's name, address, activity, capital structure, and shareholder information.
Proof of Capital:
Documents showing the committed capital from shareholders.
Shareholder Identification:
Valid identification documents for all shareholders.
Proof of Address:
Lease agreement or property deed for the company address.
B. Application Process:
Name Registration:
The company name must include "Shoqëri me Përgjegjësi të Kufizuar" or "Sh.p.k."
The name must be registered with the Kosovo Business Registration Agency (ARBK).
Application:
Submit the required documents in person or via electronic systems to ARBK.
Registration Fees:
Pay the specified registration fees.
C. Unique Identification Number (BIN):
Upon successful registration, a unique Business Identification Number (BIN) is assigned to the company.
5. Operations and Management
A. Management Structure:
An LLC can be managed by one or more managers.
Managers are appointed by shareholders and oversee the company's daily operations.
B. Shareholder Rights:
Shareholders have voting rights proportional to their capital contribution.
Profit distributions are determined based on the shares owned by each shareholder.
C. Reporting and Records:
The company must submit annual financial reports and file tax returns.
Any changes in shareholders or management must be reported to ARBK.
6. Legal Basis
Article 75: Nature of LLCs.
Article 80: Shareholders' Rights and Responsibilities.
Article 88: Profit Distribution.
Article 92: Transfer of Shares.
Regulated under the Kosovo Law on Business Organizations (Law No. 06/L-016).
7. Post-Establishment Obligations
A. Tax Registration:
The LLC must register with the Kosovo Tax Administration and submit annual tax returns.
Tax rates vary depending on the company's activity.
B. Notification of Changes:
Changes in the company address, management, or shareholder structure must be reported to ARBK.
C. Dissolution:
If the company wishes to close, it must notify ARBK following legal procedures.
8. Example Scenario
Two entrepreneurs planning to establish a tech startup can opt for the Limited Liability Company (LLC) structure. They can benefit from limited liability while structuring their shares to attract external investors. As the company grows, additional capital increases can be undertaken.