Director of a Montenegrin Company

As a company director (direktor) of a Montenegrin limited company, you must manage daily operations and finances, and also have to ensure compliance with all legal obligations under the Companies Act (65/2020). You must act in the organisation’s best interests, exercise discretion, and comply with various statutory obligations, including maintaining proper accounting records.

It is the duty of the director(s) to act both lawfully and with integrity, making sure to only make decisions in the best interests of the company and its shareholders. As a director, you must strive to ensure the company’s success by using your skills, experience, and judgment. You must further file reports and statements on time, and supervise the company’s financial position.

Who can be appointed as a company director?

When setting up a business in Montenegro, the Companies Act (65/2020) stipulates that every company must have at least one shareholder and one director. Directors must be residents of Montenegro and possess at least an elementary school diploma; appointment of a company secretary remains optional. For residency compliance, foreign-owned companies may have only one director.

If a company has multiple directors, the board of directors is the body designated by the Companies Act to perform most of the company’s management functions. It acts as the company’s executive body, responsible for overseeing daily operations and setting the company’s strategic direction. Decision-making within the board is typically carried out collectively.

The Duties of a Company Director

The Companies Act of 2020 explicitly lists several specific duties that directors owe to the company:

1. Duty of Loyalty – Directors must always act with care and due diligence in managing the company’s affairs. 
2. Duty to avoid conflicts of interest – Directors must avoid situations in which they have a direct or indirect personal interest that conflicts with the interests of the company. Failing to disclose a conflict of interest can carry significant penalties.
3. Duty to protect confidential information – They must not disclose any confidential information to third parties and must make sure to protect the business’s trade secrets.
4. Duty to respect the prohibition of competition – The Companies Act places limits or prohibits the director from competing with the company under certain conditions.

The Responsibilities of a Company Director

Whether you are the sole director or one of several on a board, you’re (jointly) legally responsible for conducting company affairs and making sure information is sent to the Central Registry of Business Entities (CRPS) and tax office on time. This includes:

• the company’s annual accounts – even if the company is not active (dormant);
• any change in your company’s registered office, directors, shareholders, or their personal details;
• an allotment of shares;
• Recording and reporting the company’s ultimate beneficial owners to Montenegro’s Company Register annually.

You also have several accounting-related duties. Although it is recommended to hire a small business accountant to handle all or most of these tasks, you – the company director – are ultimately responsible for making sure that all tasks are carried out in accordance with Montenegrin law:

• Maintaining accurate statutory company records and making them available for inspection.
• You are responsible for completing and filing a company tax return (PD) and paying Corporation Tax every year.
• If your turnover exceeds the threshold, you must register for Value-added tax (VAT) and submit monthly VAT returns to the tax office.
• You are responsible for ensuring staff (and your own) salaries are paid correctly, including the deduction of personal income taxes and national insurance contributions, where applicable.
• You must make decisions for the benefit of the company and its owners, ensuring that you can always meet the financial liabilities of your business, and also consider the interests of creditors in all decision-making. This means that the directors must never enrich themselves at the expense of the company.
• You must ensure that the company complies with employment, immigration, health, safety, and data protection laws.
• As part of proper corporate governance, you should maintain minutes of board meetings and formal decisions.
• You are responsible for opening and maintaining the company’s bank accounts.