Requirements for Conducting Factoring

Law on Factoring (“Official Herald of the Republic of Serbia”, Nos. 62/2013 and 30/2018) regulates the concept and subject of factoring, factoring participants, conditions and manner of factoring, types of factoring, rights and obligations of factoring participants, factoring contract, reverse factoring, and supervision of factoring. According to provisions of the Law on Factoring (“Official Herald of the Republic of Serbia”, Nos. 62/2013 and 30/2018), factoring shall be a financial service of buying and selling of existing non-matured or future short-term monetary receivable, that arose from a contract of sale of goods or provision of services at home and abroad.

A company incorporated in the Republic of Serbia to conduct factoring may undertake tasks of buying and selling existing non-matured or future short-term monetary receivables that arose from a contract of sale of goods or provision of services at home and abroad if it meets the requirements of the Law on Factoring (“Official Herald of the Republic of Serbia”, Nos. 62/2013 and 30/2018) in respect of capital and has approval to conduct the business of factoring.

A company that meets stated conditions may only perform the business of factoring and factoring-related or associated business (hereinafter referred to as a factoring company).

Basic Monetary Capital of the Factoring Company

Factoring company must have a basic monetary capital of not less than 40,000,000 dinars. The capital of the factoring company must always be in an amount not less than 40,000,000 dinars.

Approval to conduct the business of factoring

Issuance of the approval to conduct the business of factoring

Request for issuing approval to conduct the business of factoring shall be submitted to the Ministry of Finance of Republic Serbia by the founder, i.e. owner of the factoring company or a person authorized by him.

The request for issuing approval to conduct the business of factoring shall be accompanied by:

Incorporation act of the factoring company;
Information about the founders, i.e. owners of the factoring company, namely:
a) For the natural persons – a certified copy of the identity card or read biometric identity card for citizens of the Republic of Serbia, or a certified copy of the passport for foreign nationals, as well as a certificate of a competent authority, not older than six months from the date of the request, that the natural person has not been convicted by a final sentence of imprisonment for more than six months, that no criminal proceedings is led against him, and that he had not been imposed with a security measure prohibiting him to be engaged in his profession, business or duty;
b) For the legal persons – a certified copy of a decree or other instrument on the registration of the legal person into the register of the authority which, according to regulations in the country where the seat of that legal person is located, is competent for keeping the register of business entities, i.e. legal persons, and a certificate of a competent authority that a final judgment for a crime has not convicted the legal person, as well as that no criminal proceedings is ongoing against it, in terms of the law that governs the liability of legal persons for crimes, all mentioned not older than six months from the day of the submission of the request;
Certified statement of founders, i.e. owners, about the amount of their stakes/shares in the factoring company;
Information about the responsible person in the factoring company: a certified copy of the identity card or read biometric identity card for citizens of the Republic of Serbia,, or a certified copy of the passport for foreign nationals, as well as a certificate of the competent authority, not older than six months from the date of the request, that the responsible person is not convicted by a final judgment to imprisonment for more than six months, that no criminal proceedings is led against him, and that he had not been imposed with a security measure prohibiting him to be engaged in his profession, business or duty;
A certified statement from the founder that the basic monetary capital of 40,000,000 dinars shall be paid into an account at a commercial bank;
Certified statement from the founder on the origins of funds of 40,000,000 dinars.

The Ministry of Finance of the Republic of Serbia shall decide on the request for issuing approval to conduct the business of factoring within 15 days of receipt of a proper request, if the applicant has previously submitted proof of payment of basic monetary capital to the Ministry of Finance of the Republic of Serbia.

The decision on issuance of approval to conduct the business of factoring shall be final in the administrative procedure, but the stated decision may be subject to judicial review. Judicial review may not include the resolution of the administrative matter.

The founder of the company, or a person authorized by him shall file the application for registration of a factoring company in the register of business entities within ten days of receipt of the decision of the Ministry of Finance of the Republic of Serbia whereby the approval for conduct of the business of factoring was issued to the factoring company.

Detailed requirements and manner of issuance of approval to conduct the business of factoring are prescribed by the Rulebook on detailed conditions and manner of issuing approval to conduct the business of factoring (“Official Gazette of RS”, No. 93/2013).

Cessation of the approval to conduct the business of factoring

Approval to conduct factoring business shall cease to be valid:

At the request of the factoring company – on the day of rendering of the decision of the Ministry of Finance of the Republic of Serbia to adopt such request;
By the cessation of a factoring company—on the day of removal from the company register based on the procedure of liquidation, forced liquidation, or bankruptcy proceedings.

The provisions of the law governing the bankruptcy and liquidation of companies shall apply to the bankruptcy and liquidation of factoring companies.

Revocation of the approval to conduct the business of factoring

The Ministry of Finance of the Republic of Serbia shall render a decision to revoke the factoring company’s approval for conduct of factoring business if:

During a supervision process, it is determined that the factoring company ceases to meet the requirements that a basic monetary capital must always be in an amount not less than 40,000,000 dinars;
During a supervision process, it is determined that the approval to conduct the factoring business was issued based on false information;
During a supervision process, it is determined that acts contrary to Article 7, paragraph 8 of this law occurred.

The decision to revoke the factoring company’s approval for the conduct of factoring business of the Ministry of Finance of the Republic of Serbia shall be final in the administrative procedure, but the stated decision may be subject to judicial review. Judicial review may not include the resolution of the administrative matter

Factoring Register

The factoring register is a unique, central, electronic database of issued and revoked approvals for conducting factoring business.

Data on issued and revoked approvals for the conduct of factoring business are recorded in the Factoring Register maintained by the Serbian Business Registers Agency through the registrar. The content of the factoring register is prescribed by the Rulebook on the content of the factoring register (“Official Gazette of RS”, No. 93/2013).

The subject of recording in the Factoring Register is data on decisions on issued and revoked approvals for the conduct of factoring business, which the Ministry of Finance of the Republic of Serbia passes following the law governing factoring, as well as data on companies to which these approvals were issued or revoked.

The factoring register contains data on the following:

the exact time (day, hour and minute) of the receipt in the Serbian Business Registers Agency of the decision of the Ministry of Finance of the Republic of Serbia issuing or revoking approval for the conduct of factoring business;
the decision of the Ministry of Finance of the Republic of Serbia issuing or revoking the approval to conduct factoring business, namely: the name of the bearer, the number and date of the decision;
the company to which the decision refers, namely: business name and registration number;
the number under which the solution was entered in the Factoring Register.

The data shall be recorded in the Factoring Register ex officio immediately upon receipt of the decision in the Serbian Business Registers Agency. Data from the Factoring Register shall be published on the Serbian Business Registers Agency’s website.

In addition to the data mentioned earlier, which is contained in the Factoring Register, every decision on the issuance or revocation of approval for the conduct of factoring business shall be published on the Serbian Business Registers Agency website.

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Factoring contract »
Conditions and methods of financing foreign business »