Company Formation Bosnia
Foreign investors find a productive and welcoming economic environment and are not treated with discrimination, having the same rights as domestic entrepreneurs. It is important to note that the country is made up of two constitutional regions, Republika Srpska and the Federation of Bosnia and Herzegovina. The capital of Republika Srpska has its administrative center in Banka Luka while the country has its capital in Sarajevo, which is also the largest city.
Opening a company in Bosnia and Herzegovina implies understanding the particularities of doing business according to the chosen region where the company will be based. This is why we recommend that foreign investors get in contact with our agents who specialize in offshore company set up and can help all investors open a company in Sarajevo or another chosen city.
Types of companies in Bosnia and Herzegovina
The types of companies that can be incorporated in the Federation of Bosnia and Herzegovina are the following:
- unlimited joint liability company: founded by at least two members with each member being able to and obliged to manage the company – they both have unlimited liability; there is no mandatory minimum contribution when founding the company.
- limited liability company: as the name suggests, the liability of the members is limited in this case and it can be established by one or more investors; this type of company has a minimum share capital of approximately 1,000 EUR and partners much each make a minimum contribution.
- joint stock company: these shares similarities with the limited liability company (in terms of member’s limited liability) but it is designed to fit the needs of larger businesses as it a more significant minimum share capital (approximately 25,000 EUR).
- limited partnership: founded by two or more members out of which one has unlimited liability for the debts and obligations of the business; the general partners are the one who manages the business.
Foreign entrepreneurs can also open the same types of legal entities described above in the Republic of Srpska. Our team of Bosnian offshore company formation agents can assist you with more detailed information about all of the types of companies mentioned in this article and can help you choose the business form that suits your needs.
Main steps for company formation in Bosnia and Herzegovina
Our team presents the seven main steps needed to open a business in the country:
- Draw up the establishment contract: the company is incorporated by means of a notarized establishing contract or decision (for businesses with only one founder).
- Pay the capital: the minimum share capital is payable according to the existing regulations for the chosen type of business.
- Registration: this is performed with the municipal court, according to the city where the company is based; court fees are applicable.
- The company stamp: the company needs to have a stamp that will include the name and address and the costs for this can vary.
- Open the bank account: each company will need to have a bank account opened with a local bank for which several documents are submitted with the chosen bank branch.
- Register for tax and employment purposes: the company can now register with the tax administration and for the purpose of being able to hire employees in Bosnia.
- The service permission: this is issued by the Municipality Bureau and the costs and requirements for this permit can vary according to the municipality.
Preliminary activities before registering limited liability and joint stock companies in Bosnia
Registering limited liability and joint stock companies in Bosnia
The founders of the Bosniak companies must purchase regulated forms at a stationery shop or at court and complete them. The articles of association, charters, bank account, information on the legal address and capital and data on members and managing board are required along with the application for registration with the Municipal Court. After the issuance of the registration certificate, the Municipal Court informs the Official Gazette and the companies are automatically registered for membership in the chambers of the economy at state, entity, canton and regional levels. The registration at the Municipal Court takes around 10 days.
The following five steps must also be completed when registering a business in Bosnia and Herzegovina:
- Obtaining a company seal in Bosnia: after the issuance of the registration certificate, the next step in setting up a Bosnian company is depositing the necessary documents and paying a fee for receiving a company stamp.
- Obtaining the approval for starting the business: after receiving the company stamp, the entity must apply for receiving the municipal approval on the future activities. The process takes around 10 days.
- Notification of the Cantonal Inspection Authority: once the approval is received, the process of setting up the company in Bosnia and Herzegovina continues with the notification sent to the Cantonal Inspection Authority regarding the beginning of activities.
- Applying for a company identification number with the tax office in Bosnia: the founders of the company must submit a photocopy of the court registration and the contract on the lease of the business premises and a copy of the director's identification card. The procedure may take up to 15 days to complete.
- Registering the employees with Pension Insurance Institute and Health Insurance Institute: an important step in the finalization of the incorporation process includes enrolling the new employees with the pension and health insurance institutes.
In order to comply with the registration of the employees, the company founders must submit the application forms for pension and health insurance, a copy of the certificate of registration of the company and the employee's identification card and health booklet, a copy of the concluded employment contract and finally the employees' work booklet. One of our agents who specialize in offshore company formation in this jurisdiction can give you more details on this process.
The establishment and registration of certain types of businesses, such as insurance companies or bank branches are subject to several regulations. Additional laws, like the Law on Banks, applies for the incorporation of these specialized companies. Our specialists in European and offshore company setup matters can help you with detailed information.
Hire employees in Bosnia and Herzegovina
When all the actions required for setting up a company in Bosnia are completed, the entrepreneur may employ the needed personnel. The working conditions, wages, working hours and other rulings are provided by the Labor Law. An entrepreneur may choose to hire an employee for an indefinite contract or for a definite contract, in case of seasonal jobs, replacement of temporary absent employee, limited projects or in other situations determined by collective agreements. The working hours shall not exceed 40 hours per week and when the position and job's duties require otherwise, the maximum working hours can be extended to 60 hours per week
Setting up a company in Bosnia and Herzegovina from abroad
The state of Bosnia Herzegovina has a complex tax system but represents a rather attractive environment for foreign investors, ensuring a non-discriminatory treatment for foreigners. A company can be set up in Bosnia and Herzegovina by assigning a representative who will carry out the establishment procedures. However the company must have a local residence, and certain restrictions on the repatriation of the company's capital apply, depending on the characteristics of each company. If a branch is opened, it has to be represented by an authorized individual invested with a power of attorney. Many foreign companies prefer to open a limited liability company instead of a branch because of the fact that the foreign company carries all the liability for its branch’s actions and also must provide the capital.
The Bosnian Laws provide a certain restriction on foreign direct investments applicable in the field of arms, military equipment, explosives for military use and related activities. In this sense, the foreign investment must represent maxim 49 percent of the entire investment. For other investments, including public health and environmental protection are applicable to the same restrictions as for a domestic investment.
According to law, there are several Free Zones in Bosnia and Herzegovina and investors here can carry out their activities under preferential conditions. The Ministry of Foreign Trade and Economic Relations is the one in charge of these special investment areas.
Foreign companies can also establish their presence in the country by opening a branch. This is an extension of the parent company that will act as an office that performs the same business activities (with the parent company defining the scope of this office). The branch remains dependent on the parent company and the foreign legal entity is liable for its branch’s activities in Bosnia.
The time needed to open a company in Bosnia and Herzegovina
The process of setting up a company in Bosnia and Herzegovina can be rather complex and almost every procedure is completed in more than a week. Small steps, as opening a bank account, buying company stamp etc. are finished in no more than a day. Registering the company with the Bosnian Municipal Court can take up to 15 days, as other procedures. The entire procedure can take up to two months to be established. In most cases, the actual procedure can take up between 30 and 45 days.
We recommend that you consult with one of our offshore incorporation agents so that you can commence the incorporation procedure as soon as possible. One of our experts will be able to assist you (through a power of attorney when needed) so that you will not need to be present in the country during the entire company formation procedure.