1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 6 – Company Law Bilateral screening: Chapter 6 PRESENTATION OF MONTENEGRO Brussels, 22 November 2012

2. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 6 – Company law Poglavlje 25 Nauka i istraživanje Bilateral screening: Chapter 6 Presentation of Montenegro Brussels, 22 November 2012 Chapter 6 : Company law

3. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Directors remuneration, Independent directors and board committees Poglavlje 25 Nauka i istraživanje Aleksandar Mitrović Chamber of Economy of Montenegro amitrovic@pkcg.org Chapter 6 : Company Law

4. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union  Celex: 32004H0913  Celex: 32004H0384  Celex: 32004H0385  Celex: 32005H0162 Relevant acquis Chapter 6: Company law Chapter 6 : Company Law

5. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Chapter 6: Company law Chapter 6 : Company Law The subject matter institutes are normatively governed by the provisions of the imperative and autonomous law, including: Law on Business Organizations („Official Gazette of the Republic of Montenegro, No.06/02, "Official Gazette of Montenegro", No. 17/07, 80/08, 40/10, 36/11, 40/11) Labour Law ("Official Gazette of Montenegro", No. 49/08, 26/09, 88/09, 26/10, 59/11) The Banking Act ("Official Gazette of Montenegro", No. 17/08, 44/10, 40/11) The Law on Prevention of Conflict of Interests ("Official Gazette of Montenegro", No. 01/09, 41/11, 47/11) Code of Business Ethics Code of Business Ethics of the Chamber of Economy of Montenegro("Official Gazette of Montenegro",No.45/11) Code of Corporate Governance – Montenegroberza Corporate Governance Code

6. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Law on Business Organizations Chapter 6: Company Law Chapter 6 : Company Law The Law on Business Organizations regulates the organizational and legal forms of enterprises and their registration. The obligation to submit data and inform the public Article 28 (1) The joint-stock company submits to the Central Registry of the Commercial Court which further submits to the "Official Gazette of Montenegro" for publication the following documents and information, in accordance with paragraph 2 of this Article: 3) the appointment, dismissal and information on persons who are authorized to represent the company in dealings with third parties, as well as information as to whether the persons authorized to represent the company do this collectively or individually; 4) the appointment, dismissal and details of the Executive Director, the company secretary and auditor; Article 28. Submission and Disclosure 1) Joint-stock companies must disclose to the Central Registry of the Commercial Court which shall cause publication in the Official Gazette the following types of documents and particulars in accordance with the paragraph 2 of this Article: (3) the appointment, termination of office and details about the persons who are authorized to represent the company in dealings with third parties. It must appear from the disclosure whether the persons authorized to represent the company may do so alone or jointly; (4) the appointment, termination of office and particulars of the Authorized Officer, Chief Executive and the auditor;

7. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Law on Business Organizations The Assembly of Shareholders Article 35 (2) The exclusive right of the Assembly of Shareholders is to: 2) elect members of the board of directors and appoint auditors; 3) dismiss members of the board of directors and auditors appointed by the General Assembly of Shareholders; 4) decide on the compensation policy and compensations for members of the Board of Directors; 1) All shareholders of the company, irrespective of the number and class of shares they hold, shall have the right to attend the company’s general meeting. The Authorized Officer and the Chief Executive must attend the general meeting unless unable to do so due to circumstances beyond their control. 2) Only the general meeting of shareholders shall have a right to: (1) amend and supplement the charter of the company; (2) elect the members of the Board of Directors and approve the appointment of the auditor; (3) remove from office members of the Board of Directors and auditor who have been elected by the general meeting; (4) set the fees for the Board of Directors; Chapter 6: Company law Chapter 6 : Company Law

8. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje BANKING ACT shall regulate the establishment, management, operations and control of banks, micro finance institutions and credit unions and govern the terms and control of business performance of entities dealing with credit and guarantee operations, with the aim of establishing and maintaining a sound and stable banking system that ensures protection of the interests of depositors and other creditors. Bodies of the Board of Directors Article 40 The Board of Directors may form standing or temporary bodies for the supervision over the risk management in individual areas of the bank’s operations, for the proposal of the amount of salaries, for the proposal of election of executive directors and certain categories of employees with special powers and responsibilities and the like. The composition and scope of work of the bodies referred to in paragraph 1 above shall be specified in more details in the bank’s regulations, in accordance with the law and banking regulations. Compliance Monitoring Function Article 41 The bank shall designate in its organizational structure, subject to its size and complexity of its operations, an organizational unit or persons responsible for monitoring the bank’s compliance with the law, regulations governing the prevention of money laundering and terrorism financing, the Central Bank’s regulations and the bank’s internal rules and policies. Chapter 6: Company law Chapter 6 : Company Law

9. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje BANKING ACT Article 116 If the Central Bank establishes irregularities in the bank’s operations, it may take one of the following measures: 3) issue an order imposing one or more of the following measures: - order a bank to dismiss a member of the Board of Directors, an executive director or an official with special powers and responsibilities and set the timeframe for conducting the procedure of their relieving of duty and, as a rule, prohibit these persons to further perform their functions until the completion of the ordered procedure; - order the bank to reduce overhead costs, including limiting the salaries and other remuneration of the board of directors, executive directors and other persons with special powers and responsibilities. Chapter 6: Company law Chapter 6 : Company Law

10. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Labor Law The Directors contract of Employment Article 29 Director shall establish a labor relation for a definite or indefinite period of time. The employment relation referred to in paragraph 1 of this Article is based on the employment contract. Employment for a definite period of time referred to in paragraph 1 of this Article may last up to the termination of a period to which the Director was appointed or up to his/her dismissal. The Director shall conclude the contract referred to in paragraph 2 of this Article with the employer’s competent authority or the employers themselves. Chapter 6: Company law Chapter 6 : Company Law

11. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Labor Law Termination of the Directors contract of employment Article 145 The Director, who upon the termination of his/her term of office, is not re-elected, or who is dismissed before the termination of his/her term of office, shall not be employed further, that is, his/her employment contract shall be canceled, unless otherwise prescribed by a special law. Chapter 6: Company law Chapter 6 : Company Law

12. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje L A W ON PREVENTION OF CONFLICT OF INTERESTS Chapter 6: Company law Chapter 6 : Company law Public official may not be the president or member of a management body or supervisory body, nor the executive director or member of management in a company. A person elected, nominated or appointed to a public office in the sense of this law, shall submit a resignation to duties, i.e. office referred to in paragraph 1 of this Article within 30 days from the day of election, appointment or nomination.

13. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje L A W ON PREVENTION OF CONFLICT OF INTERESTS Public official may not be the president or member of a management body nor supervisory body, executive director, member of management of the public company, public institution or other legal entity. Notwithstanding the aforementioned, the public officer, except for an MP, member of the Government of Montenegro, judge of the Constitutional Court of Montenegro, a judge, state prosecutor and deputy state prosecutor, may be a president or member of the management body and supervisory body, executive director, member of management of a public company, public institution or other legal entity in one public company or public institution in which the state i.e. a municipality is the owner. Public official discharging the affairs in executive brunch of power at the state and local level may not discharge the office of an MP. Public official may be the president or a member of management body and supervisory body of scientific, humanitarian, sports and similar associations, if not otherwise prescribed by a special regulation. Chapter 6: Company law Chapter 6 : Company law

14. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje L A W ON PREVENTION OF CONFLICT OF INTERESTS Chapter 6: Company law Chapter 6 : Company law Obligation of Filing a Resignation Article 10 Public official who accepts, during discharge of public office, to discharge another duty, namely office referred to in Article 8, paragraph 1 and Article 9 paragraph 1 of this Law shall within 30 days from commencement of discharge of the other office, i.e. duty, file a resignation from the public office.

15. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Code of Business Ethics The Assembly of the Chamber of Economy of Montenegro - considering the importance of responsible and ethical conduct of business organizations as a necessary precondition for the efficient functioning of the market and the integration of the Montenegrin economy in an international business environment, on 8th April 2011 adopted a binding Code of Business Ethics. Article 10 Business organizations shall independently regulate their organization and rules of conduct. At the same time they are required to comply with applicable regulations, collective and individual agreements and protect human and civil rights, human dignity and reputation of each employee. Chapter 6: Company law Chapter 6 : Company law

16. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Code of Business Ethics Chapter 6: Company law Chapter 6 : Company law Article 11 Employees, members of the management and the supervisory board members, as well as other associates shall perform the duties assigned to them in a professional manner and promote the business interests of the business organization in which they are employed or engaged. This includes protecting and caring for the tangible and intangible assets of the business organization, including all forms of property, preservation of confidential business information, and concern for the reputation and relations with all business partners, government agencies, NGOs and the general public.

17. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Code of Business Ethics Article 15 The business organization bodies shall perform the functions of business in a manner responsible toward the owners, in order to protect their rights and investments. The shareholders and members of the business organizations shall be entitled to receive timely, high quality and accurate information about doing business. Chapter 6: Company law Chapter 6 : Company law

18. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Corporate governance code - montenegroberza Chapter 6: Company law Chapter 6 : Company law Article 21 Companies should adopt and implement a transparent, competitive, fair and accountable remuneration policy for members of the Board of Directors. In this regard it is suggested to companies that General Assembly adopts the “declaration of remuneration policy” as a separate act, and makes it public. It shall define main elements of the remuneration policy for members of the Board of Directors, as well as criteria for its concretization.

19. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Corporate governance code - montenegroberza Chapter 6: Company law Chapter 6 : Company law Article 22 When defining the remuneration policy for members of the Board of Directors as well as determining the rate of individual remunerations, the company should secure that: 1. the adopted methods of remuneration and individual remuneration rates are at the level that is sufficiently attractive and competitive to motivate engagement of persons who meet professional and other criteria necessary for the company; 1 Corporate governance code ın Montenegro 2. remuneration rate corresponds with tasks and volume of engagement of members of the Board of Directors, 3. remuneration rates reflect business capacities and long-term interests of the company. 4. it is proposed to the business organization for the variable fee, which belongs to the Board of Directors, to reflect contribution of the Board of Directors to the business success of a business organization, and it is determined as a percentage of a net profit, with the condition not to endanger development of business organization.

20. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Corporate governance code - montenegroberza Chapter 6: Company law Chapter 6 : Company law Article 23 Remuneration policy should be the subject of evaluation and analysis, and with reference therewith of harmonization with needs, capacities and interests of the company, as well as changes of other determining criteria.

21. Thank you for your attention! QUESTIONS