The new Law on Business Organisations of Montenegro (the “ZPD”) has brought about an important change concerning the point at which the appointment and removal of a director take legal effect.

Unlike the previous law, which left room for interpretation as to when a director’s removal took effect, there was a longstanding practice of treating a director as appointed or removed only upon registration of the change with the Central Register of Business Entities (the “CRPS”). The new ZPD, which has applied since 1 January 2026, resolves this uncertainty: its provisions support the clear conclusion that an appointment or removal takes effect when the relevant resolution is adopted, unless the resolution itself specifies a different date. In other words, the resolution of the company’s general meeting has constitutive effect, while registration with the CRPS has only declaratory (informational) effect.

The Ministry of Economic Development of Montenegro recently confirmed this interpretation to us in relation to the removal of a director. In its opinion, the Ministry clearly stated that, for changes within a company, registration with the CRPS has constitutive effect only where the ZPD expressly provides for it. Where the law intends registration to have constitutive effect, it says so expressly: for example, Article 6 provides that a company “acquires legal personality on the date its incorporation is registered with the CRPS”. There is no equivalent wording for the removal of a director. This resolves an important practical question: it is now clear when a director’s appointment or removal takes legal effect and, consequently, when all the legal consequences associated with acquiring or ceasing to hold the position of director arise. This also matters for employment relationships. Article 178 of the Montenegrin Labour Law provides that the employment contract of a director removed before the expiry of their term of office shall be terminated, unless a special law or the employment contract provides otherwise. Accordingly, Article 178 of the Labour Law directly governs the legal status of the director’s employment relationship when their term of office ends, as well as the employer’s (the company’s) obligations concerning taxes and contributions arising from the director’s employment. By providing that a removed director’s employment contract “shall be terminated”, the Labour Law links the end of the employment relationship to the end of the director’s corporate term of office, unless a special law or the contract provides otherwise.