The article drafted by Mirjana Mladenovic Paripovic, Senior Associate & Jelena Pejovic, Associate for Lexology on 10 June 2026
Foreign investors entering the Serbian market are often reassured by initial familiarity of the transaction environment.
The corporate registry (Serbian Business Registers Agency) is fully transparent and digitalized, the legal framework mirrors continental European corporate structures, and transaction documents often reflect concepts and drafting techniques commonly used in European M&A practice.
However, that apparent familiarity should not be mistaken for complete alignment with the EU acquis, nor does it guarantee the absence of deep-seated local complexities.
While the European Commission’s 2025 Serbia Report acknowledges a “good level of preparation” in the field of company law, full harmonisation with the EU acquis remains a work in progress. Although substantial legislative amendments governing cross-border conversions, mergers, and divisions, as well as the legal framework for the European Company (SE) were adopted in March 2025, their implementation has been postponed until 1 January 2027, while additional regulatory alignment measures continue to be introduced. Consequently, M&A risk in Serbia operates on two distinct levels: the formal-legislative (navigating delayed enforcement and evolving statutory alignment) and the practical-commercial (risks that remain completely invisible within a standard virtual data room (VDR)).
Ownership arrangements, related-party dealings, informal decision-making channels, undocumented commercial dependencies, tax exposures, employee practices, legacy liabilities and relationships with key customers or suppliers are not always fully visible from corporate records or from standard due diligence materials.
For that reason, foreign investors should approach Serbian M&A transactions not only as a document-review exercise, but as a broader legal, regulatory and factual investigation into how the target business is actually owned, controlled, financed and operated.
What the VDR Won’t Tell You
Many prominent Serbian companies, particularly privately-owned and founder-driven businesses, developed during periods of rapid regulatory transition. To survive, they relied on tactical improvisation rather than rigid corporate governance. As a result, the way a target business actually operates is often not fully reflected in the documents uploaded to the VDR. Foreign buyers routinely underestimate just how much institutional knowledge, commercial leverage, and operational continuity depend on specific individuals rather than institutionalised systems.
This becomes visible surprisingly late in the process. A buyer may complete a thorough legal due diligence process and still fail to identify the main nuances: Who genuinely controls key customer relationships? Which operational decisions are made via informal handshakes? How dependent is the entire business model on a founder whose actual influence far exceeds their official title in the corporate registry?
In Serbia, due diligence should be approached as an operational investigation rather than just a mere paper-verification exercise.
You can read the article on Lexology here: Beyond the Virtual Data Room: Real M&A Risks for Foreign Investors in Serbia