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Company Act in Croatia

Updated on Tuesday 25th August 2020

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The Croatian Company Act is known for its flexibility in terms of setting up companies in Croatia. It mainly comes from the German and Austrian legislation. The Company Act was adopted in November 1993 and it regulates all types of companies in Croatia. It contains all the requirements for opening a company in Croatia, as well as all rules for running a company in this country. For a better understanding of how companies can be registered in Croatia and what the rules are in this direction, we recommend you talk to one of our company formation agents in Croatia.

 

Where can I register my company in Croatia?

 

The Company Act in Croatia mentions the great importance and obligation for all types of companies to register with the Trade Register, before starting their activities. It is actually a requirement that comes from the Court Register Act and the Court Register Entry Procedures rules. Also, the Company Act reminds of the necessity to know the particularities of all types of companies before choosing one structure.

 

What types of companies can I register in Croatia?

 

The Company Act in Croatia stipulates the rules for the following types of companies which can be registered by investors in this country:

 

  • private limited company (the shares of the company are not traded publicly);
  • limited liability company (it can be established with a minimum share capital of HRK 20,000);
  • public limited company (the shares can be traded publicly);
  • joint stock corporation (available for large companies from abroad);
  • general partnership (the owner/managing partner has unlimited liability)
  • limited partnership (the limited partner has limited liabilities);
  • silent partnership (the silent partner provides capital for the company or business).

 

Here is an infographic with extra details about the Company Act in Croatia

 

The main provisions of Company Act in Croatia (1).png

 

What is the most popular business structure in Croatia?

 

The limited liability company in Croatia is the preferred type of business in this country, mostly for the easy way of the structure and also the incorporation. Our company incorporation consultants in Croatia can help local and foreign investors set up an LLC in Croatia or OOD (Drustvo s Ogranicenom Odgovornoscu) as it is known.

 

Choosing the name for your company in Croatia

 

According to the Company Act in Croatia, the name of the newly set up company is very important as well. For that matter, the company needs a name when the procedures for company registration in Croatia are started. It is the duty of the founder to check if the chosen name for the company is already used by another legal entity and this verification can be performed online.


Employment conditions in Croatia

 

Together with the Company Act in Croatia, the legislation regarding employment is also important. According to the legislation, foreign employees must obtain a business permit or a work permit before finding a job in Croatia. The employer has the obligation to register the employment contracts with the Health and Pension Fund in Croatia. A copy has to be kept by the employee.

 

How can I open a DOO in Croatia?

 
Foreign entrepreneurs can easily register a DOO in Croatia, with a minimum share capital of HRK 20,000, a legal representative, one manager appointed by the shareholders of the company and after a name verification with the Croatian Trade Register, which needs to contain the letters DOO at the end of it. All the paperwork and the requirements of DOO registration in Croatia can be handled by our team of consultants at any time.
 

Can I open a branch in Croatia?

 
Yes, foreign companies can establish branches in Croatia and can commence the operations from abroad, under the rules of a limited liability company. Branches in Croatia are mostly met in the banking system but not limited to this.
 

How do I open a subsidiary in Croatia?

 
Subsidiaries in Croatia are independent legal entities that can have other activities besides the ones of the parent company. The public or private limited liability companies are proper and recommended business forms through which a subsidiary in Croatia can be established. For a minimum share capital of HRK 200,000, a public limited liability can be registered, in order to start the activities as a subsidiary. A supervisory board and a management board need to be appointed at the time the subsidiary is formed. The registration of a subsidiary is done with the Croatian Trade Register and the Articles of Association are the main documents that need to be submitted to this authority. We mention that one of our company formation agents in Croatia can provide in-depth support and assistance for opening a subsidiary in this country, as they can handle the entire process and the formalities involved. Foreign investors interested in establishing a subsidiary in Croatia must know and understand the applicable laws for business in this country. Our team can offer support and also guidance for VAT registration.
 

Shelf companies in Croatia

 
According to the Company Act, local and foreign entrepreneurs have the possibility of purchasing vintage companies or ready-made companies. These are incorporated companies, kept on a shelf and ready to be bought by persons who would rather skip the formation process of a company in Croatia. Shelf companies do not have activities, and therefore no financial activities, no liabilities, and debts. Such companies present confidence for banks and other financial institutions that can easily provide loans and credits for future business operations. Ready-made companies in Croatia can be purchased by any domestic or foreign entrepreneur who is interested in having a business in Croatia. Shelf companies present numerous advantages among which, a fast implementation on the market, no liabilities, an opened bank account, easy transfer of ownership rights, and trustworthiness among future clients and collaborators. It is good to know that one the ownership transfer is made, the entrepreneur has the business on his/her hands and can rapidly start the activities. You are invited to talk to one of our company formation representatives in Croatia and find out more about how to purchase a ready-made company in this country.
 

Can I purchase shares in a company in Croatia?

 
Yes, the Company Act in Croatia allows foreign investors to purchase shares in a company, following a few rules. For instance, one must have the support of an investment advisor or a licensed broker who can prepare a financial plan with the investment objectives, tax advice and many more. Instead of opening a company from scratch, some investors can be interested in purchasing company shares and open investment funds with collaborators and/or partners. The Trade Register in Croatia will have to be informed about any changes in the company, including the ones regarding the purchase of stocks in the firm. One of our company formation agents in Croatia can offer complete support and assistance for investors interested in purchasing shares in a company in this country.
 

Sole proprietorship in Croatia

 
Investors from overseas can perform their operation as sole traders in Croatia and can benefit from the same simplified business registration in this country, in respect to the Company Act. Also, such business owners need to observe the rules and regulations of the Handicraft Act in Croatia and must incorporate as sole proprietorships with the Register of Craftsmen in Croatia.
 

What’s new on the Croatian Company Act?

 
Since May 2019, there are some particular changes made to the Croatian Company Act, mostly related to the registration of limited liability companies, in respect to the EU legislation. The modifications have been brought to simplify the process and to increase competitiveness. Here are the main important changes of the Company Act in Croatia:
 
  1.  The registration of a company in Croatia can be made entirely online. You can talk to our company formation agents in Croatia for complete support.
  2. New companies can be registered in a short period.
  3. There is no need to reserve a company name before the establishment.
  4. The business activities do not need to be mentioned by the Articles of Association.
  5. The authorities will no longer solicit to deposit signatures of authorized persons, with the court register.
  6. The cessation of LLCs in Croatia is now possible in a fast manner.
 
These are a few of the main changes in the Company Act in Croatia. The registration process of a limited liability company in Croatia starts with the payment of HRK 5,000 out of HRK 20,000 that represents the minimum share capital. It is important to note that the rest of the capital can be paid within one year from the date the company is incorporated. If you would like to know more about the modifications brought to the Company Act in Croatia, please feel free to talk to one of our company formation agents in Croatia.
 

How is the business decision determined now?

 
According to the new provisions of the Company Act in Croatia, the business activity will no longer be listed by the Articles of Association, allowing entrepreneurs to register as many business operations as they want, without extra costs. However, one should note that the business activity can now be determined by a special decision that needs to be submitted to the Trade Register in Croatia. If you would like to know more about this important change in the Company Act in Croatia, please feel free to get in touch with one of our specialists in company formation in Croatia.
 

The simple limited liability company – what’s new?

 
The limited liability company is the simplest business structure in Croatia that can be now registered by 5 founders instead of 3 until recently. One director or manager must be appointed, regardless of the nationality. Moreover, there is no need to reserve the business name before the registration of the company in Croatia, as this is a new modification mentioned by the Croatian Company Act.
 

How is the cessation of a company in Croatia made?

 
The cessation of a limited liability company in Croatia has been shortened and simplified. All company members must agree on the liquidation of the company and declare that the firm has no liabilities towards creditors, employees, etc. The cessation of a company in Croatia will be a document that must be notarized and submitted to the Croatian Trade Register for acceptance. All the details and information you need about the cessation of a limited liability company in Croatia can be explained by our company formation agents in Croatia.
 

Franchise in Croatia

 
The franchising system in Croatia is permitted, as stated by the Croatian Company Act if all the conditions and requirements are fully understood and respected. Entrepreneurs can establish a branch of a foreign franchise or open a local one. The marketing strategies, the business plan, pricing, and location are detailed between the franchisee and the franchisor, with the mention that a franchise agreement must be signed. The rights of using the license in the case of a franchise can be explained by one of our specialists who can help foreigners register a franchise in Croatia.
 

Liaison offices in Croatia

 
Liaison offices make the connection between the parent company and the potential collaborators and clients in the country chosen for further business operations. Advertising, marketing, promotional activities plus market research are among the activities of a liaison office in Croatia. Having only these kinds of operations, this means that the liaison office cannot develop financial operations and therefore, no generated incomes. The registration of a liaison office starts with an application form, a copy of the certificate of incorporation of the company (issued by the competent authorities in the home country), plus a brief description of the future operations of the liaison office in Croatia.
 
If you believe it is time to set up a liaison office in Croatia, you are invited to talk to our agents and find out more about the registration process.
 

Making investments in Croatia

 
Croatia benefits from a very appreciated economic stability, a good geographic location and complete support provided by the authorities to international investors. The highly skilled and multilingual workforce, appealing tax incentives and legislative amendments to sustain the foreign direct investments in Croatia. Engineering, textile, tourism, ICT, food industry, agriculture and medicine, and pharmaceutical fields are among the business choices for international entrepreneurs in Croatia. The low labor and administrative costs are attentively measured by investors wanting to cut the expenses of a business in Croatia. Below you can find interesting information, facts, and data about the investments and the economy in Croatia:
 
  1. USD 1.15 million was the total FDI inward flow for Croatia in 2018.
  2. Around 29.9% of the total investments made in Croatia were directed to the financial services sector.
  3. According to the 2019 Doing Business Report provided by World Bank, Croatia ranks 58th out of 190 worldwide economies.
  4. Austria, Germany, Italy and the Netherlands are the main investors in Croatia.
  5. The Croatian authorities provide equal business treatment for domestic and international investors in this country.
 
The Croatian Company Act stipulates all the business rules and regulations a foreign or local entrepreneur needs to know before forming a company in Croatia.
 
For more details about the Company Act, you may contact our specialists in company formation in Croatia.

 

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Call us now at +385 95 9981 628 to set up an appointment with our consultants in Zagreb, Croatia. Alternatively you can incorporate your company without traveling to Croatia.

As a Law Firm Ivan Župan client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Croatia.

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The team from CompanyFormationCroatia.com is very qualified and benefits from extensive expertise in this area. I would definitely recommend them to any entrepreneur decided to start his own business here.

Mihai Cuc, Partner of
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www.romanianlawoffice.com

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