Limited Liability Company (Shoqëri me Përgjegjësi të Kufizuar - LLC) in Kosovo
The Limited Liability Company (LLC) in Kosovo is one of the most popular business structures, offering the advantage of limited liability for investors. It is considered a capital-based company model, ideal for small and medium-sized enterprises.
1. Key Features
Legal Status: An LLC has a separate legal personality, distinct from its shareholders.
Liability: Shareholders’ liability is limited to the amount of their contributions to 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 protected from the company's debts.
Flexibility: Offers flexibility in management structure and operations.
Legal Personality: The company can own property, enter into contracts, and sue or be sued in its name.
Attracting Investment: Facilitates capital raising and attracting investors.
3. Disadvantages
Higher Costs: Establishing and managing an LLC is more expensive compared to sole proprietorships or partnerships.
Tax Burden: In addition to corporate taxes, shareholders may be taxed on dividends.
Legal Formalities: Involves more complex legal and reporting requirements.
4. Establishment Process
A. Required Documents:
Articles of Incorporation:
Must include the company name, address, scope of activities, capital structure, and shareholder details.
Proof of Capital:
Documentation showing the committed capital by shareholders.
Shareholder Identification:
Valid identification documents for all shareholders.
Proof of Address:
Lease agreement or property deed for the company’s registered address.
B. Application Process:
Name Registration:
The company name must include "Shoqëri me Përgjegjësi të Kufizuar" or the abbreviation "Sh.p.k."
Register the name with the Kosovo Business Registration Agency (ARBK).
Submission:
Submit the required documents to ARBK in person or through online systems.
Registration Fees:
Pay the prescribed registration fees.
C. Unique Identification Number (BIN):
After registration, the company is assigned a unique Business Identification Number (BIN).
5. Operation and Management
A. Management Structure:
An LLC can be managed by one or more managers.
Managers are appointed by shareholders and oversee the day-to-day operations.
B. Shareholder Rights:
Shareholders have voting rights proportional to their shares.
Dividend distributions are based on the shares owned by each shareholder.
C. Reporting and Registration:
The company must submit annual financial reports and file tax returns.
Any changes to shareholders or management must be reported to ARBK.
6. Legal Basis
Article 75: Nature of LLC.
Article 80: Rights and Responsibilities of Shareholders.
Article 88: Profit Distribution.
Article 92: Transfer of Shares.
These provisions are governed by the Law on Business Organizations of Kosovo (Law No. 06/L-016).
7. Post-Establishment Obligations
A. Tax Registration:
The LLC must register with the Kosovo Tax Administration and file annual tax returns.
Tax rates may vary based on the company’s business activities.
B. Notification of Changes:
Any changes in the company address, management, or shareholder structure must be reported to ARBK.
C. Dissolution:
If the company is to be closed, it must follow legal procedures and notify ARBK accordingly.
8. Example Scenario
Two entrepreneurs planning to start a technology startup could choose the LLC structure. They can benefit from limited liability while organizing share structures to attract external investors. As the company grows, they can raise additional capital to support expansion.