When increasing the share capital of a limited liability company by means of a new contribution, following the adoption of the resolution of the company’s shareholders’ meeting on the increase of capital, an agreement on accession is concluded between the company and the entity or person acceding to the company.

Article 175, paragraph 3 of the Company Law provides that the agreement on accession is signed by the entity or person acceding to the company and the person authorized by the company’s shareholders’ meeting to sign that agreement. However, the law does not expressly determine whom the authorized person represents, which is why different interpretations arise in practice.

In a certain number of cases, the existing members of the company are indicated as the contracting party, i.e. it is considered that the person authorized by the shareholders’ meeting represents precisely them. We believe that such practice is not in accordance with the legal nature of this institute.

Namely, an increase of share capital by means of a new contribution constitutes a legal relationship between the company and the entity or person acceding to the company. The contribution is contributed to the assets of the company, while the company, in return, issues a new share to the entity or person acceding to the company. There is no disposal of the existing shares of the company’s members, nor do the existing members transfer or encumber their membership rights.

For this reason, the other contracting party to the agreement on accession must be the company, while the person authorized by the shareholders’ meeting acts as its special representative within the meaning of Article 175, paragraph 3 of the Company Law. In order to confirm this interpretation, we addressed the Ministry of Economy, which, in its opinion, took the position that the person authorized under Article 175, paragraph 3 of the Company Law represents the company, and not its existing members. Since the registration of a new member with the competent register of the Serbian Business Registers Agency (APR) has constitutive effect, and since the APR website, in the Forms section, contains a draft agreement on accession in which the existing member and the entity or person acceding to the company are (incorrectly) indicated as the contracting parties, the opinion of the Ministry of Economy may be very important for the successful completion of the registration procedure.