The development of the digital economy and new models of product and service distribution has further blurred the line between permissible forms of direct selling and prohibited pyramid schemes. A particular challenge lies in distinguishing legitimate multi-level marketing (MLM) models from systems whose economic sustainability is primarily based on the continuous recruitment of new participants. Although both models rely on a multi-level organisation of participants, their legal and economic foundations are fundamentally different. This phenomenon has become even more complex due to the fact that, alongside traditional physical trade in goods, these models increasingly appear in the digital sphere through the sale of intangible products.

A significant milestone in the legal distinction between MLM models and prohibited pyramid schemes was the decision of the United States Federal Trade Commission (FTC) in In re Amway Corp., decided in 1979. In that proceeding, criteria relevant for distinguishing legitimate multi-level selling models from unlawful pyramid structures were systematically examined.

Although the Amway decision has no direct application in the Republic of Serbia, the criteria considered in that proceeding continue to represent one of the relevant reference points for distinguishing legitimate MLM models from pyramid schemes in numerous legal systems.

Multi-Level Marketing as a Business Model, Not a Legal Form

From the perspective of corporate law, it is important to clarify the nature of the concept of multi-level marketing. MLM, in itself, does not constitute a separate legal form or a distinct category of business entity; rather, it represents a business model that may be implemented by business entities operating under different legal forms.

The manner in which distributors are engaged and their tax status depend on the specific business model and the legal nature of their relationship with the company.

Accordingly, any entity seeking to implement this business model on the Serbian market must be registered in accordance with the Companies Act of the Republic of Serbia and other regulations governing the performance of business activities, have an appropriate registered activity, comply with its tax obligations and operate within the applicable regulatory framework.

Regulatory Framework

Where the sale of goods within a particular MLM model is carried out through direct contact with consumers outside business premises, such relationships may fall within the scope of the provisions governing direct selling under Article 15 of the Trade Law of the Republic of Serbia. This form of trade involves selling outside business premises, with the simultaneous physical presence of the trader and the consumer, together with the consumer’s prior consent to receive an offer. It may be conducted at promotional sales events or at the consumer’s residence or workplace.

In practice, relationships between a company and its distributors may be regulated through various types of contractual arrangements, depending on the actual substance of their relationship, including a commercial agency agreement where the statutory requirements for such an arrangement are fulfilled. However, the contractual structure itself is not decisive for assessing the legality of an MLM model; rather, the relevant consideration is its actual economic function and the manner in which revenue is generated.

Where a system operates in such a way that income is generated exclusively or predominantly from the actual sale of products to end consumers, this represents a lawful form of direct selling.

When Does Multi-Level Marketing Become a Prohibited Pyramid Scheme?

The absence of specific regulation governing MLM leaves room for abuse and the emergence of unlawful pyramid schemes disguised as MLM business models. A particular challenge arises from the fact that modern pyramid structures are rarely presented as traditional profit-making schemes. In practice, contemporary digital models are often presented as “educational platforms”, “digital memberships”, “affiliate programmes” or “investment communities”, meaning that the formal label attached to a business model is far less significant than its actual economic structure.

Article 43 of the Trade Law expressly prohibits organising, conducting, advertising and encouraging pyramid selling schemes. Paragraph 2 of this Article provides that pyramid selling constitutes a form of trade whereby customers are enabled to purchase goods or services exclusively from persons included in a chain or network of resale of goods or services (members of the network), where the seller conditions the purchase upon an obligation to pay membership fees or other compensation to the organiser of the network or another network member; an obligation to purchase the same or other goods in quantities or values which the seller knows or must know are unreasonably high; or an obligation to find other persons who will engage in the resale of goods offered by the seller, where the right to receive remuneration for finding such persons is conditional upon prior payment or the provision of a special fee to the seller. In addition to prohibiting pyramid selling schemes, the Trade Law also establishes misdemeanour liability for violations of this prohibition. Pursuant to Article 68 of the Trade Law, a legal entity that organises, conducts, advertises or encourages pyramid selling may be subject to a fine ranging from RSD 500,000 to RSD 2,000,000.

In addition to the prohibition of pyramid selling under the Trade Law, certain models displaying characteristics of pyramid schemes may also constitute misleading commercial practices under the Consumer Protection Act of the Republic of Serbia. These include the creation, operation or advertising by a trader of a product sales system in which a consumer pays a fee for the opportunity to obtain income which does not depend on the success of selling a particular product, but rather on the participation of other consumers in that sales system (pyramid scheme). Pursuant to Article 187 of the Consumer Protection Act, a legal entity may be subject to a fine ranging from RSD 300,000 to RSD 2,000,000 if it misleads consumers in the manner prescribed by Articles 18-20 of the Consumer Protection Act. Given that the Act expressly recognises pyramid schemes as a form of misleading commercial practice, such models may also give rise to misdemeanour liability under consumer protection legislation.

The above provisions demonstrate that the legislature does not prohibit multi-level distribution as such, but rather business models in which recruitment of new participants represents the dominant source of income.

The Economic Source of Income Criterion

From both a legal and economic perspective, the essential distinction lies in the source of profit generation. In a legitimate MLM model, the product or service has independent market value and genuine demand, regardless of the recruitment of new members. Even if the recruitment of new members were to cease, such a business model could continue to operate based on the continued sale of products or services to end consumers.

By contrast, in pyramid structures, the product or service often plays a secondary role and primarily serves as a formal basis for charging entry fees or maintaining the recruitment system. Initial participation fees are often high and may be disguised as “mandatory starter packages”, “vouchers” or “educational levels”. Where the economic survival of a system is not based on genuine market demand, but rather on purchases made by participants within the system and the recruitment of new participants, such a model exhibits characteristics of a pyramid structure and carries a significant risk of economic unsustainability. For this reason, when assessing the legal classification of a particular model, the decisive issue is not whether a company formally sells a particular product or service, but whether the business model could operate sustainably without a constant influx of new members.

Civil Law Consequences

From the perspective of civil law, contracts for participation in systems displaying characteristics of pyramid selling may be deemed void under the general principles of contract law if they are contrary to mandatory statutory provisions, public policy or good morals. However, the assessment of invalidity always depends on the specific circumstances of the case and the content of the contractual relationship, as assessed by the court.

You can read the full article on Lexology: Multi-Level Marketing (MLM) and Pyramid Schemes in the Republic of Serbia: Where Is the Line Between a Lawful Business Model and Prohibited Practice? – Lexology

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Introduction

Greece has taken a significant step towards modernizing its tax administration with the introduction of a formal Advance Tax Ruling (“ATR”) framework. Enacted through Article 9A of the Code of Tax Procedure by Law 5301/2026, the new regime—effective from 1 October 2026—allows taxpayers to obtain binding guidance from the Independent Authority for Public Revenue (“AADE”) on the tax consequences of contemplated transactions before they are implemented.

Advance tax rulings have long been recognized as an important feature of modern tax administrations across Europe. They provide businesses and investors with greater certainty when undertaking complex transactions, facilitate investment decisions and reduce the likelihood of future tax disputes. By introducing a structured ruling mechanism, Greece aligns itself with the practice followed in many other European jurisdictions and reinforces its broader objective of promoting transparency, predictability and cooperative compliance.

What is an Advance Tax Ruling?

An AΤR is a written interpretation issued by AADE confirming how Greek tax or customs legislation should apply to a specific transaction or arrangement before it is implemented. In this sense, the ATR provides certainty as to how the existing legislative framework should be interpreted and applied to the specific facts presented by the applicant.

The scope of the new framework is deliberately broad. Taxpayers may request rulings in relation to virtually all taxes administered under the Code of Tax Procedure, including corporate income tax, personal income tax, VAT, Digital Transaction Fee and customs matters. This makes the Greek regime one of the most comprehensive advance ruling systems currently available within the European Union.

Who Can Apply and Under What Conditions?

The new framework is designed to resolve genuine interpretative uncertainty before a transaction takes place. Accordingly, an application will generally be admissible only where:

• the transaction or arrangement has not yet been implemented;
• the relevant facts are sufficiently clear and complete to enable a legal assessment; and
• the request raises a genuine “gap” regarding the interpretation or application of Greek tax or customs legislation (meaning an issue that is not addressed by any administrative circulare).

The ruling mechanism is therefore not intended to provide abstract legal opinions or confirm the straightforward application of clear statutory provisions. Instead, it is aimed at situations where uncertainty exists and taxpayers require certainty before proceeding with a proposed transaction.

Article 9A also expressly excludes certain matters from the scope of the regime. Advance tax rulings cannot be requested for:

• transfer pricing matters already covered by the Advance Pricing Agreement (APA) framework;
• issues requiring the interpretation or application of foreign law; or
• matters that are already subject to administrative or judicial dispute resolution involving the applicant.

The Procedure

The ruling process is initiated by submitting an application to AADE together with the prescribed documentation and payment of the applicable administrative fee.

The legislation adopts a variable fee structure, ranging from EUR 3,500 to EUR 50,000, depending on factors such as the complexity of the request, the number of issues involved, the size of the applicant and whether expedited treatment is requested. Where the application is rejected within the statutory deadline, the amount exceeding the initial filing fee is refunded.

Although the level of the fees is higher than in some European jurisdictions, it reflects the highly specialised nature of the ruling process and seeks to ensure that the mechanism is used for transactions involving genuine interpretative uncertainty rather than theoretical or speculative questions.

You can read the full article here: Newsletter_Greece Introduces Advance Tax Rulings A New Era of Tax Certainty

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You can read the full article here: Towards a collective bargaining restoration: Law 5278/2026 and the fading of Memorandum-Era restrictions

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On 20 May 2026, Greece’s Ministry of Environment and Energy published a draft Special Spatial Framework for Renewable Energy Sources (EChP-APE) for public consultation. The framework replaces the 2008 siting regime and introduces binding constraints that will reshape how photovoltaic projects are developed, valued, and transacted. With installed RES capacity at approximately 18 GW and a licensing pipeline exceeding 110 GW, the new rules create a regulatory filter that converts previously a private-law commodity—into a scarce, regulated asset.

What the Framework Does

The draft introduces two principal instruments for Photovoltaic projects (PV). First, exclusion zones prohibit new installations in Natura 2000 areas, forests, wetlands, protected areas, and archaeological zones. Second, a quantitative land-coverage cap of 1.5% per Regional Unit applies to new PV stations that have not yet obtained Environmental Terms Approval (AEPO). The framework exempts projects already in operation or in advanced permitting. Of the roughly 110 GW pipeline, approximately 70 GW are protected by transitional provisions, while around 37 GW—21 GW PV and 16 GW wind at early licensing stages—remain exposed to the new constraints.

Land as a Regulated Scarcity Asset

Irradiation and clear titles are no longer sufficient. A viable PV site must now satisfy spatial eligibility, Regional Unit capacity, environmental clearance, grid availability, and local acceptance criteria. Developers should restructure land agreements to include conditions precedent tied to spatial eligibility, cap headroom, AEPO issuance, and grid connection—with termination rights if any condition fails. Overpaying for land in Regional Units approaching the 1.5% threshold is a quantifiable bankability risk.

Permitting Status and M&A Valuation

The transitional architecture creates a valuation bifurcation. Projects with AEPO sit on the protected side: they face no re-screening, enjoy compressed timelines, and benefit from increasing scarcity value. In M&A terms, this translates into a premium reflecting reduced regulatory risk, enhanced bankability, and timeline certainty. Buyers acquire not just megawatts but regulatory optionality—the right to develop in conditions that new entrants cannot replicate.

The premium is not automatic. Acquirers should diligence whether protected status is legally robust; whether the site is in a sensitive area carrying Habitats Directive Article 6(3) or community-opposition risk; whether grid connection is credible; and whether the transitional classification will survive potential legislative amendment.

Large Groups vs. Small Producers

Vertically integrated companies benefit from mature pipelines protected by transitional provisions, internal GIS and legal capabilities, relocation flexibility, and capacity to acquire repriced portfolios. Their principal risks are reputational exposure from grandfathered projects in sensitive zones and stranded land in saturated Regional Units.

Smaller producers face disproportionate compliance costs and intensified competition for eligible land. Without reserved electrical space, priority mechanisms for energy communities, or simplified permitting for smaller installations, the framework risks accelerating market consolidation.

Grid Risk

The framework does not integrate grid capacity into spatial licensing. A project may satisfy every spatial criterion yet remain unfinanceable if it cannot secure a credible connection, faces structural curtailment, or requires co-located storage. Grid risk is now as material as permitting status to project valuation.

Practical Recommendations

PV businesses should: (1) map portfolios against exclusion zones and Regional Unit cap data; (2) classify projects by permitting status relative to the transitional line; (3) renegotiate land options to include spatial eligibility and cap-headroom conditions; (4) diligence grid connection and curtailment exposure; (5) develop a community-benefit strategy for projects above 500 kW; and (6) prepare for M&A repricing—as potential acquirers of distressed early-stage portfolios and as sellers of advanced-stage assets.

You can read the full article here: Greece’s Draft RES Spatial Framework: Why Photovoltaic Project Value Will Turn on Permitting, Land and Grid Risk – Lexology

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On 26 February 2025, the European Commission presented the “Omnibus I” package of proposals, aimed at reducing the administrative burden on businesses, strengthening the competitiveness of the European economy, and simplifying sustainability obligations without abandoning the core objectives of the European Green Deal. Proposal COM(2025) 81 is central to the reform, as it amends the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive (CSRD and CSDDD) and related legislation. For Greek businesses, the package should be read less as a withdrawal from ESG and more as a shift toward a more proportionate, workable and commercially relevant sustainability framework.

Why does the Omnibus matter for Greek businesses?

Experience with the CSRD and CSDDD has shown that sustainability compliance can be costly, complex and resource-intensive, particularly for smaller and mid-sized undertakings. In markets such as Greece, where many businesses operate as suppliers, borrowers, sponsors, contractors or investee companies within larger European value chains, the challenge has not only been formal legal compliance, but also the indirect flow-down of ESG information requests from banks, customers, investors and public or private procurement processes.

According to the Commission, the Omnibus package is expected to deliver administrative relief of more than EUR 6 billion per year, as obligations are concentrated on businesses considered to have the greatest environmental and social impact. In practice, however, the benefit for Greek companies is likely to be relative rather than absolute: lenders, strategic customers, international groups and institutional investors are expected to continue requesting reliable ESG information through financing arrangements, supply-chain policies, investment processes and contractual undertakings.

Key proposed changes to the CSRD

The most significant change concerns the reporting framework applicable to undertakings. The proposed Directive provides that sustainability reporting obligations will apply to undertakings with more than 1,000 employees, provided they also meet the relevant financial criteria. Following the alignment of national laws, the Commission estimates that approximately 80% of companies that were expected to fall within the mandatory CSRD reporting regime will be exempted. The Omnibus proposal also provides that undertakings within the scope of the CSRD should not be able to require companies outside the Directive’s scope to provide sustainability information beyond what is set out in a simplified voluntary reporting standard.

Equally important is the simplification of the European Sustainability Reporting Standards (ESRS), with the aim of focusing on core sustainability indicators and improving proportionality without undermining the quality and comparability of disclosed information. This is particularly relevant for Greek small and medium-sized enterprises, which may not be directly in scope but may still need to respond to ESG questionnaires, onboarding requirements and tender or financing requests from larger counterparties.

The simplification also extends to the EU Taxonomy Regulation, a key tool for assessing the environmental sustainability of economic activities, including through the introduction of materiality criteria. For the Greek market, this remains relevant for bankability and investment appetite in sectors such as energy, infrastructure, real estate, transport, tourism and manufacturing, where access to financing and institutional capital increasingly depends on credible sustainability data.

Proposed recalibration of the CSDDD

The Omnibus proposal provides for the postponement of the Directive’s first application until 2028, a stronger focus of due diligence on direct business partners, the review of indirect business relationships where there are indications of heightened risk, the reduction of the frequency of risk assessments from an annual to a five-year basis, and the narrowing of certain requirements relating to stakeholder engagement and value-chain monitoring. The direction of travel is to move due diligence away from a continuous, highly expansive exercise and toward a more targeted, risk-based and manageable compliance system.

What should Greek businesses do now?

For many companies, the Omnibus represents welcome relief in terms of cost and administrative burden. The practical message for the Greek market, however, is that ESG will remain relevant where it affects financing, procurement, supply-chain access, corporate governance, M&A readiness and investor confidence. Companies should therefore focus on a proportionate ESG baseline: identify which information is actually requested by banks, customers, investors and tendering authorities; assess whether the group or its key counterparties remain in scope; and maintain a practical dataset that can be used consistently across commercial relationships.

This approach is particularly important in transactions and financing. A Greek target, borrower, sponsor or supplier that can provide concise, reliable and decision-useful ESG information is likely to be better placed in due diligence, credit approval, procurement evaluation and negotiations with international counterparties, even where it is not itself subject to full mandatory reporting.

You can read the article on Lexology here: “The EU “Omnibus I” Package: Practical Implications for the Greek Market” – Lexology

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Law 5313/2026 (Government Gazette A’ 102/25.06.2026) introduces significant amendments to the Greek tax framework applicable to investment funds and investment management activities. The new provisions clarify the tax treatment of foreign investment funds, introduce safe harbors against the creation of Greek tax residence and permanent establishment in specified circumstances, and expand the existing carried interest regime to cover contractual performance-based remuneration.

Tax Treatment of foreign funds

Article 97(1) of Law 5313/2026 amends Article 56 of Law 4706/2020, clarifying the tax treatment of Alternative Investment Funds (AIFs) falling within the scope of Directive 2011/61/EU (AIFMD). The amendment corrects a legislative cross-reference and confirms that foreign EU AIFs remain outside the scope of Greek income taxation.

The legislation further extends the same tax treatment to corresponding collective investment vehicles (hereafter “CIVs”) established outside the European Union, provided that:

• they are not established in jurisdictions included in the EU list of non-cooperative jurisdictions for tax purposes; and
• they are supervised, directly or indirectly through their manager, by a competent authority accredited with the International Organization of Securities Commissions (IOSCO).

According to the explanatory memorandum, the notion of CIVs follows the OECD approach and refers to regulated, widely held investment vehicles holding diversified investment portfolios. As a result, the same tax treatment now applies to qualifying collective investment vehicles established both within and outside the European Union.

Tax Residence and Permanent Establishment

The reform also introduces an important statutory safe harbor designed to facilitate the establishment of investment management functions in Greece.

Firstly, the legislation confirms that the investment activities of qualifying AIFs and CIVs in Greece do not, by themselves, create Greek tax residence or a permanent establishment. This protection extends not only to the investment funds themselves, but also to legal persons and legal entities in which the relevant funds directly or indirectly hold at least 95% of the participation interests and which operate exclusively as holding or investment vehicles (“investment entities”), as well as to fund managers and investors.

Secondly, the legislation provides that the provision of portfolio management, investment management, investment advisory and ancillary services by a Greek management company does not, in itself, create Greek tax residence or a permanent establishment for the relevant investment funds, their investment entities (including sub-funds), fund managers or investors.

These provisions significantly strengthen legal and tax certainty for international fund structures and remove an important source of uncertainty for groups considering the establishment of investment management functions in Greece. This particularly important for hedge funds and other actively managed strategies, where investment decisions are often taken in real time and operational realities do not always align with traditional governance models.

You can read the full newsletter here: Newsletter_Law 53132026 Key Tax Reforms for Foreign Investment Funds, Investment Management Companies and Carried Interest

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Rokas Law Firm was proud to support the 8th International Arbitration Conference, jointly organized by NOMIKI BIBLIOTHIKI and EODID Athens Mediation & Arbitration Organization, which brought together leading practitioners, academics and in-house counsel came together to discuss the challenges shaping the future of dispute resolution.

Supporting initiatives that promote excellence in international arbitration and encourage meaningful dialogue within the global legal community is at the core of our firm’s commitment.

Our Partner and Head of Arbitration Practice, Antonios Tsavdaridis contributed to the discussion as a speaker in the panel “Can Arbitration Defend Itself? Tribunal Powers, Institutional Responses and Procedural Integrity”. His insights highlighted the importance of striking the right balance between robust tribunal powers, procedural fairness, and the integrity of the arbitral process.

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On 26 March 2024, Directive 2024/927/EU “amending Directives 2011/61/EU and 2009/65/EC as regards delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services and loan origination by alternative investment funds”, also known as AIFMD II, was published and entered into force on 15 April 2024. The deadline for Member States to transpose the Directive was 16 April 2026. In Greece, on 26 May 2026, the Minister of National Economy and Finance presented before the Council of Ministers a new bill intended, inter alia, to transpose the Directive into national law.

During the period of application of Directive 2011/61/EU, the framework proved successful, with AIFs accounting for approximately one third of the European investment fund sector by the end of 2020 and the overall size of the Union AIF market recording growth more than 15% between 2020 and 2022. Nevertheless, it was considered that the sector’s growth potential remained greater, provided that institutional investors were afforded a broader range of investment opportunities and the competitiveness of the Capital Markets Union was further strengthened. Through the amending Directive, several significant reforms were introduced, the most important being the establishment of harmonized requirements applicable to AIFMs managing loan-originating AIFs. Emphasis was also placed on delegation arrangements, cross-border access to depositary services, enhanced supervisory oversight and the facilitation of the use of liquidity management tools throughout the Union. The changes under AIFMD II apply to all EEA full-scope AIFMs who manage AIFs engaged in loan origination. Consumer lending is expressly excluded from the scope of the amending Directive, as it is governed by other Union legislative acts, while Member States remain free to prohibit lending by AIFs to consumers within their territories. The Directive appears to aim to align, to the extent that there is no objective or functional justification for differentiation, the compliance requirements applicable to AIFMs and UCITS management companies.

First, considering the crucial role played by AIFs in financing small and medium-sized enterprises and with a view to addressing both microprudential and macroprudential financial risks, Directive 2011/61/EU was amended so as expressly to recognize direct lending as a permissible activity of an AIF. Provision was also made to ensure that indirect loan origination by an AIF, through third parties or special purpose vehicles, falls within the scope of the lending framework, thereby preventing circumvention of the relevant provisions. Following this reform, the list of activities that may be carried out by an AIFM was expanded to include, inter alia, credit servicing activities and loan origination on behalf of an AIF, given that under the previous regime the national laws of certain Member States prohibited lending activities by AIFMs.

To enhance legal certainty for AIFMs and UCITS management companies regarding the services they provide to third parties, it is clarified that appropriate measures must be always taken to ensure the proper management of conflicts of interest. AIFMs are prohibited from receiving loans from AIFs under their management or from entities connected with them. Transparency requirements concerning the human and technical resources of AIFMs have also been strengthened and are calibrated according to the size and complexity of the relevant AIFM and AIF. Emphasis is placed, in relation to both AIFs and UCITS, on transparency regarding the integration of sustainability risks and environmental, social and governance (ESG) factors into investment decision-making processes. In order to provide a more reliable overall picture of delegation activities within the Union and to eliminate the phenomenon of “letter-box entities” acting as managers, supervisory authorities will henceforth receive up-to-date information concerning the essential features of delegation arrangements, as well as information regarding portfolio composition and liquidity management, thereby enabling them to address redemption pressures more effectively during periods of market stress. In this manner, the focus of transparency shifts from the level of individual investment vehicles to systemic risks and interconnectedness among participants in the financial markets. A further significant reform is the introduction, under certain conditions, of a cross-border depositary regime, whereby Member States may allow their competent authorities to authorize the appointment of a depositary established in another Member State.

Furthermore, the supervisory reporting process applicable to UCITS is standardized to improve the collection and exchange of information and to address overlaps between reporting requirements arising under Union and national law. In addition, to mitigate moral hazard, risk-retention requirements are introduced in relation to the transfer of loans to third parties. More specifically, AIFMs must ensure that the AIFs they manage retain for a specified period a minimum of 5% of the notional value of each loan originated by the relevant AIF and subsequently transferred to a third party. Accordingly, the principle is established that an AIF may not completely divest itself of a loan that it originally originated; rather, it must retain a minimum economic interest and continue to bear part of the associated credit risk. At the same time, AIFMs are prohibited from managing AIFs whose sole purpose in originating loans is to sell those loans to third parties (“originate-to-distribute strategy”). It is thus made clear that loans must be originated exclusively for the purpose of investing the capital raised by the AIF in accordance with its investment strategy.

You can read the article on Lexology here: AIFMD II: The New EU Framework for Loan-Origination Funds

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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

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