1. Which law is applicable to the legal capacity and right of representation of a legal entity?
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According to Article 19 of the , the applicable law to the legal capacity and right of representation of a legal entity is the law of the country where the legal entity is established (incorporated).
To the best of our knowledge there is no official English translation of the Private International Law Act.
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To the best of our knowledge there is no official English translation of the Private International Law Act.
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2. What criteria/rules are used to determine the applicable law (for example the law of incorporation or the actual seat)?
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The criteria that is used for the determination of the applicable law is the country of origin/incorporation of the legal entity. – Article 19 of the Private International Law Act
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3. Which international conventions have to be respected?
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The international conventions shown on the list of the Ministry of Justice do not refer to the registration of companies.
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4. Are there international conventions with regard to certain countries?
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The international conventions shown on the list of the Ministry of Justice do not refer to the registration of companies.
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5. Are all companies registered in a public register? What are the effects of registration? (please add a link to the register, if possible)
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Yes, all companies are registered in a public register
. Companies acquire legal capacity and can operate on the market as a legal entity only after the registration in the public register. - Articles 4, 5 and 6 of the Companies Act.
To the best of our knowledge, there is no official English translation of the Companies Act.
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To the best of our knowledge, there is no official English translation of the Companies Act.
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6. Does a foreign company have to be registered in your public company register?
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A foreign company must be registered if it wishes to open a subsidiary in Croatia. If a foreign company only wants to operate on the domestic market (without the incorporation of some legal entity), there is no need for it to register in a public company register. However, if a foreign company wants to carry out economic activity on a permanent basis in the domestic Croatian market, they need to open their subsidiary in Croatia. - Articles 611, 612 and 613 of the Companies Act
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7. Who has the legal right of representation of a legal entity?
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The members of the Management Board and procurators of the company have the legal right of representation of a legal entity (public and/or private limited companies). The company’s Statute (company’s article of association) regulates whether the Managment Board members represent the company independently or jointly. - Articles 241 and 422 of the Companies Act
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8. Must the right of representation be registered (if yes, please add a link to the register, if possible)?
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The right of representation must be registered, but the registration of the person who has the right of representation of the company only has a declaratory effect, which means that the right of representation derives from the appointment of the person as the management board member of the company and not at the moment of the registration of that person as management board member in the public register. – Articles 396 and 425 of the Companies Act.
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9. If the right of representation must be registered, what legal effect does the registration have with respect to third parties?
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Regarding third parties, the registration of the right of representation of a company implies that a third party cannot declare that they did not know which person or persons were authorised to represent the company.
Before the registration, third parties that are in good faith (the person is in good faith if they don’t know that there are is another persons appointed as the representative of a legal entity) are protected by the information on the company’s representatives published in the register. – Article 66 of the Companies Act
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Before the registration, third parties that are in good faith (the person is in good faith if they don’t know that there are is another persons appointed as the representative of a legal entity) are protected by the information on the company’s representatives published in the register. – Article 66 of the Companies Act
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10. May the rights of the legal representative be restricted? If yes, please explain how (e.g. by laws or the articles of association)?
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The rights of the legal representative, in relation to individual members of the management board of a company, can be restricted if the founders/shareholders of the company state in the company’s articles of association (Statute) that the members of the management board can represent the company only jointly, and not independently. The authority of the management board as a whole (as a managing body of the legal entity) to represent the company cannot be restricted. – Articles 241, 242, 426 and 427 of the Companies Act
The shareholders can also regulate in the Articles of association that some rights of the legal representatives are resticted but they do not have legal effects towards third persons if they are not published in the public register.
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The shareholders can also regulate in the Articles of association that some rights of the legal representatives are resticted but they do not have legal effects towards third persons if they are not published in the public register.
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11. Does that restriction have any legal effect towards third persons?
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The restrictions have legal effects towards third persons only if they are published in the register or if they are known to the third parties in some other way.
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12. How can the representative prove the right of representation (e.g. extract in paper from the registry certified by some authorities, extract from public registry)?
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The representative can prove his/her right of representation of the legal entity by presenting the extract from the public registry or by presenting the decision of his/her appointment as a member of the Management Board of the company.
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13. Are there any circumstances where the transactions entered into by the legal representative of a company are considered not binding on the company (e.g. for a valid transaction should there be a decision or consent of the shareholders, supervisory body)? If yes, please explain.
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The Article 234 of the Companies Act states that the contract in which a public limited company grants an advance payment, loan or security for the purpose of acquiring a public limited company’s own shares is void. However, such contract would not be void if the management board obtainted a prior consent of the company’s General Shareholders Assembly for entering that kind of contract with two additional requirements: first, the shares of the public limited company must be acquired for a fair market price and second, the value of the financial transaction can amount up to the half of the company’s net assets. - Article 234 of the Companies Act
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14. Is it possible to verify the right of representation by digital means from the register? Please indicate the source and in which language the inquiries should be conducted.
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The Company register can be accessed through the web page of the Ministry of Justice and it is free of charge for any person to access it. However, Notaries in Croatia have a special right to access the Company register, and they can issue the official certified excerpts from the Register at the requests of the clients.
Enquiries can be conducted only in Croatian.
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Enquiries can be conducted only in Croatian.
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15. When anti-money laundering measures are applied, how are the beneficial owners of a legal entity registered in your country identified? Would there be different possibilities for professionals from other countries to identify the beneficial owners? Please indicate the source and in which language the inquiries should be conducted.
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When anti-money laundering measures are applied, the beneficial owners of a legal entity registered in Croatia can be identified through the Company register and via the statements of the management board members. Starting from January 2020, it will be possible to access the new register, the Register of the beneficial owners of the companies that is established as an auxiliary implementation tool for anti-money laundering measures.
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