How to Close Your Company in Montenegro
Montenegro’s Companies Act provides several methods for closing limited liability companies, sole proprietorships, joint stock companies, and other company types, depending on whether the business is solvent enough to pay its bills and obligations or not. Before you (and possibly the company’s other shareholders and directors) can formally close the business, it is crucial to understand the most common methods.
Liquidate Your LLC (D.O.O.)
The first and easiest option would be to have the limited company (D.O.O. – Društvo sa ograničenom odgovornošću) enter into a member’s voluntary liquidation procedure. This is an available measure available only to solvent companies, allowing the shareholders to pass a resolution to liquidate the business and distribute its assets among themselves. Before winding up the company, here are some important things you need to do:
- Pay all outstanding tax liabilities to Montenegro’s Tax Administration (Poreska Uprava)
- Collect any outstanding debts and terminate any monthly subscriptions and services
- Sell all remaining company assets and distribute them to the shareholders
- Settle all the company’s debts with banks and other creditors
- Prepare the liquidator’s final accounts
- Close all business bank accounts
Make a Declaration of Solvency
A Declaration of Solvency is a mandatory, sworn declaration signed by all shareholders stating that their business does not have any outstanding debts towards their employees, the tax office, and any other potential creditors. It needs to be notarized and precedes the process of a member’s voluntary liquidation.
Your lawyer or accountant should assist you with writing the statement to make sure that it includes all the necessary passages:
- the Unique Master Citizen Number
- the exact name of the company
- the correct article of the Companies Act
- how long the shareholders will be liable for the company’s debt (in case of wrongdoings)
Submit the required Documents to the CRPS
Once the ‘Declaration of Solvency‘ has been signed by all shareholders, it must be submitted to Montenegro’s Company Register by the appointed liquidator, typically your accountant or lawyer. Here is what the liquidator needs to prepare and file to complete the voluntary liquidation process.
- Sign the liquidation form
- Pay the associated fees to the Tax Administration and the Official Gazette of Montenegro
- Provide a resolution for voluntary winding up, signed by the shareholder or liquidator upon receiving power of attorney
- Attach a declaration from the revenue department confirming that all tax liabilities have been settled
Dissolving a Sole Proprietorship
The procedure for dissolving a sole proprietorship (or partnership) is generally simpler than winding up a limited liability or joint-stock company. The precise steps that need to be taken to close the business may vary greatly depending on the sole trader’s business activities and whether employees have been hired, but here are the common requirements to consider:
- Cancel all permits, licenses, and services beforehand
- Submit the final income tax and VAT returns and resolve all outstanding financial obligations
- Close your bank accounts
- Submit the dissolution documents to the Company Register
- Failure to deregister will potentially expose you to continued tax and social contribution payments
Making your Sole Proprietorship Dormant
If you’re uncertain about the future of your sole proprietorship or wish to take a temporary break from work, you may make your business dormant as an alternative to dissolving it. Note: this option is not available for LLCs or other corporate entities. It’s a good choice for those who intend to restart operations in the near future and want to keep their existing business name and bank account.
Even when your company is temporarily put ‘on hold’, you are still required to submit a final account statement to the Tax Administration and inform your banking partners that the business has been registered as dormant. During that period, you are not required to pay any taxes or social contributions. However, if you want to stay medically insured in Montenegro, you can voluntarily continue contributing the minimum required monthly amount.
After Your Company is Closed
After successfully winding up your company, you still have certain responsibilities to address, including:
- Notifying the Pension and Disability Insurance Fund (PIO/MIO) and Health Insurance Fund (HIF), and deregistering any employees
- Returning the temporary residence permits of all employees, including the director and his dependents, to the immigration office
- Retaining financial records for 10 years from the end of the last financial year, since audits can still occur after your company is closed
Filing for Bankruptcy
If your company is insolvent, meaning it cannot meet its debt obligations on time, you must file for bankruptcy via a formal liquidation procedure, either a voluntary bankruptcy initiated by the company or a compulsory bankruptcy initiated by its creditors. This procedure allows your company to be dissolved and removed from Montenegro’s Company Register.
Since an insolvent company typically has liabilities exceeding its assets, an appointed insolvency practitioner will have to investigate the business’s financial standing, sell any remaining unsecured assets, and ensure these the proceeds are distributed to creditors to the extent possible.
Frequently Asked Questions
Yes, foreign directors and shareholders can wind up a company without being physically present in Montenegro. To do this, you must appoint a liquidator (usually a lawyer or accountant) who acts on your behalf. You can grant them a power of attorney, which allows them to file the necessary documents, notify authorities, and complete all formal steps required for voluntary liquidation, bankruptcy, or deregistration.
The voluntary liquidation of a Montenegrin limited liability company (D.O.O.) takes on average 7 – 10 days. Sole proprietorships can usually be dissolved on the same day.
Solvent companies (voluntary liquidation) can cost anywhere from 350€ to 600€, depending on complexity.
- Sole proprietorships or partnerships without employees are generally cheaper to dissolve.
Insolvent companies (bankruptcy) are usually more expensive due to additional work by insolvency practitioners.
Need help with liquidating your company?
Start closing your company today. Quick, simple, and fully compliant.
– or –