In March this year, Ordinance No. 1 of 2007 on the maintenance, storage and access to the Commercial Register and the Register of Non-Profit Legal Entities (“the Ordinance”) was amended by introducing rules governing the possibility of registering a new type of commercial company - the variable capital company (“VCC”).

This new legal-organizational form is created for start-up businesses and provides for a number of differences compared to the classic LLCs and JSCs - in the case of a VCC, no capital value will be indicated, which means that the recently complicated preliminary procedure for opening a deposit bank account is not needed. Typical for the Western legal systems, rights (options) in favor of shareholders are also envisaged, such as the right of first refusal, tag-along, drag-along, as well as the possibility for the management of the company to be exercised by a sole body (Manager) or a collective body (Board of Directors) - at the discretion of the shareholders.

On 10.06.2024 the Ministry of Justice published on the Portal for Public Consultations a draft amendment to the aforementioned Ordinance regulating the VCC establishment, which postpones the deadline for its entry into force from 30.06.2024 to 31.12.2024. This is due to the fact that for the registration of VCCs, firstly certain technical capability must be secured in the electronic platform of the Commercial Register. The appointment of a contractor for this purpose (updating the platform) is subject to a procedure under the Public Procurement Act. The procurement procedure in this case has been delayed and as of 13.05.2024 the appointed contractor had not yet started work under the contract.

From a business perspective, the development means another delay in the effective implementation of the new legal framework (after years of struggle for its initial introduction) and an inability for start-up businesses to benefit from the advantages of the VCC this year.