Forms of Business Entities/BBusiness Organizations in Kosovo: A Guide to Choosing and Registering

In Kosovo, there are various forms of business entities that individuals and companies can choose to structure their economic activities. Each form has its own advantages and limitations, and selecting the right form is crucial for the long-term success of your business. In this blog, we will explore the main forms of business organization in Kosovo as outlined by the Law on Business Entities, including the registration process and other important details.

1. Limited Liability Company (LLC)

The Limited Liability Company (LLC) is one of the most common forms of business entities in Kosovo and is suitable for small and medium-sized businesses. This form provides legal protection for shareholders (owners), as their liability for the company’s obligations is limited to the amount of capital invested.

Registration Process:

• Documentation: To register an LLC, foundational documents, including the founding act and company statute, must be submitted.
• Minimum Capital: There is no minimum capital requirement for establishing an LLC, but it is important to specify the initial capital amount in the founding documents.
• Registration Authority: Companies are registered with the Kosovo Business Registration Agency (KBRA).
• Processing Time: The registration process typically takes around 3–7 business days.

2. Joint Stock Company (JSC)

The Joint Stock Company (JSC) is suitable for large companies that aim to raise capital by selling shares. This form offers a high level of flexibility in capital management and share distribution among shareholders.

Registration Process:

• Documentation: In addition to the founding act and statute, joint stock companies must submit a list of shareholders and the board of directors.
• Minimum Capital: The minimum capital for establishing a JSC is 10,000 euros. This capital must be divided into shares and fully paid before registration.
• Public Registration: After registration with KBRA, information on shareholders and the board must be publicly available.
• Regulation and Oversight: Joint stock companies are regulated by financial authorities, and those listed on the stock exchange must meet public reporting and transparency requirements.

3. General Partnership

A general partnership involves partners who are individuals, legal entities, and/or business entities as defined in the general partnership agreement. The general partnership is not a legal entity. Despite this, it can enter into contracts, own property, sue, and be sued in its own name.

General Partners are individually and collectively responsible for all debts and other contractual or legal obligations of the general partnership. This responsibility is unlimited and includes all assets of any kind directly or indirectly owned by a general partner.

Registration Process:

• Documentation:
  • The form prepared by KBRA for this purpose, including the following data:
    • The name of the authorized representative(s) appointed by the general partners under Article 24 of this law, as well as, if applicable, the name and address of the competent person for receiving documents under Article 25 of this law;
    • Information on whether general partners and authorized representatives or proxies are authorized to represent the general partnership individually or jointly.
  • A copy of the personal identification document of the authorized representative; and
  • The “General Partnership Agreement” was signed by all General Partners.
• Minimum Capital: There is no minimum capital requirement, but it is important to specify the capital invested by the general partners.
• Tax Obligations: Partnerships are required to register for VAT and profit tax if they meet the required legal conditions.

4. Limited Partnership

A limited partnership is a simple form of partnership, often used for short-term collaborations or specific projects. A Limited Partnership consists of:

• At least one general partner; and
• At least one limited partner. A limited partnership is not a legal entity. Despite this, it can enter into contracts, own property, sue, and be sued in its own name.

The general partner in a limited partnership is individually and collectively responsible with other general partners for ensuring that the limited partnership complies with all obligations arising from applicable laws in Kosovo, including this law. The limited partner is not responsible for the debts or other obligations of the limited partnership.

Registration Process:

• Documentation:
  • The form was prepared by KBRA.
  • A copy of the personal identification document of the authorized representative.
  • The “Limited Partnership Agreement.”
• Minimum Capital: There is no minimum capital for registration, but it is necessary for the partners to agree on the distribution of profits and losses.
• Legal Responsibility: Partners bear full responsibility for the company’s obligations, including debts.

5. Sole Proprietorship

A Sole Proprietorship is the simplest form of business organization and is suitable for individuals who wish to operate independently. In this business form, the owner is the sole manager of activities and bears all responsibilities for the business’s obligations with their personal assets.

Registration Process:

• Documentation: To register a sole proprietorship, a registration application must be submitted to the Kosovo Business Registration Agency (KBRA) along with the owner’s identification document.
• Minimum Capital: There is no minimum capital requirement to register a sole proprietorship.
• Responsibility: The owner bears full and unlimited responsibility for all business debts and obligations.
• Tax and Obligations: Sole proprietorships are subject to personal income tax, and if they meet the required conditions, they must register for VAT if they reach the annual turnover threshold stipulated by the VAT law.

6. Branches and Representative Offices of Foreign Companies

Foreign companies wishing to operate in Kosovo can register a branch or representative office. These units do not have independent legal personalities and are directly linked to the parent company.

Registration Process:

• Documentation: Foreign companies must submit documents proving their legal existence in the home country, as well as an authorization for the branch representative in Kosovo.
• Capital: No minimum capital is required, but branches must fulfill all fiscal and legal obligations in Kosovo.
• Reporting: Branches are required to submit financial reports and fulfill tax obligations just like local companies.

Benefits and Limitations of Business Forms

Each form of business organization offers different benefits, such as legal protection, management flexibility, and the ability to raise capital. However, they also come with limitations that should be considered before establishing a business. Choosing the right form should be based on the specific needs of the business, capital structure, and long-term goals.

Conclusion

Registering your business in the right form is a crucial step for its success in Kosovo. At Hoxha & Associates, we are committed to providing full legal support and personalized advice to ensure that every aspect of your business registration and operation complies with the law and your interests.

For any questions or further assistance, do not hesitate to contact us at info@hoxha.law, call us at +383 (0) 45 205 389, or visit our offices in Prizren, Rr. De Rada p.n.