False Business Seat of a Company and Protection of the Property Owner: Deletion of a Registered Business Seat Address in Serbia

What to do if someone registers a company’s business seat at your address without permission? Who to contact and what are your rights?

As one of the most significant innovations, the latest amendments to the Serbian Companies Act have enabled an interested party to file a lawsuit before the competent court requesting the deletion of a registered business seat address of a company. In this article, we will address a range of issues related to this lawsuit, including:

- The concept and significance of a lawsuit for the deletion of a registered business seat address,

- Subject-matter and territorial jurisdiction of the court for ruling on the lawsuit,

- Formulation of the claim,

- Consequences of granting the claim, as well as potential non-compliance by the defendant with a final judgment, among other matters.

Pursuant to the applicable legal framework, an interested party may file a lawsuit before the competent court requesting the deletion of a company’s registered business seat address if the owner of the premises has not granted permission for the use of the space as the company’s registered business location.

This lawsuit is intended for property owners whose premises have been registered as the business seat of a company without their consent, whether such consent was never given or was granted on a basis that has subsequently ceased (e.g., termination of a lease agreement).

The significance of this amendment to the Companies Act is particularly evident given that, during the registration of a company's incorporation or a change of business seat address, the Business Registers Agency does not require proof of the legal basis for the use of the premises. This practice has inevitably led to the registration of so-called ''fake'' business seats, resulting in various inconveniences. These include visits by creditors and other parties attempting to exercise their rights against the company at such registered addresses, as well as visits by public enforcement officers seeking to inventory and assess the company's assets as an enforcement debtor.

Moreover, in practice, this has led to absurd situations, with a significant number of companies registering their business seat at the address of the Tax Administration.

Given that disputes concerning lawsuits for the deletion of a registered business seat address arise from the application of the Companies Act, jurisdiction over these proceedings lies with the Commercial Court. In the event of an appeal, the Commercial Appellate Court has jurisdiction. The territorial jurisdiction of the court is determined by the location of the defendant's registered seat, as indicated in the Business Registers Agency report. In practice, this regulatory framework may create issues regarding the service of the lawsuit to the defendant. Specifically, service of process on legal entities is primarily carried out by delivering the document to the premises of the legal entity. However, if the company has registered a false business seat address, logically, the lawsuit could not be delivered in this manner. Consequently, alternative service methods may be employed, such as delivering the lawsuit to the legal representative of the company at the address listed in the public register or at their place of residence. If none of these methods prove successful, the final option is to post the lawsuit on the court’s public notice board.

The above-mentioned challenges may lead to prolonged court proceedings, despite the fact that lawsuits for the deletion of a registered business seat address are classified as urgent proceedings!

By its nature, this lawsuit falls into the category of transformational lawsuits. In the claim, the plaintiff requests an order for the deletion of the defendant company's registered business seat address, which essentially requires the defendant to change its registered address.

At the request of the party filing the lawsuit, a litigation notice is registered in accordance with the Law on Registration.

Once the court decision ordering the deletion of the registered business seat address becomes final, the court submits it to the Business Entities Register for registration.

If a company fails to register a new business seat address within 30 days from the date the court decision ordering the deletion of its registered address becomes final, the Business Entities Register shall initiate a compulsory liquidation procedure for that company ex officio.

This ground for compulsory liquidation cannot be remedied.

A lawsuit requesting the deletion of a registered business seat address may also be filed against a sole proprietor for the same reasons. The court proceedings in such cases are also classified as urgent.

At the request of the party filing the lawsuit, a litigation notice is registered in accordance with the Law on Registration, and once the court decision ordering the deletion becomes final, the court submits it to the Business Entities Register for registration.

If the sole proprietor fails to register a new business seat address within 30 days from the date the court decision becomes final, they will automatically cease business operations by force of law. In this case, the registrar of the Business Entities Register publishes a notice on the register’s website regarding the sole proprietor whose circumstances have led to deletion from the register, calling upon them to rectify the grounds for deletion within 90 days from the date of the notice’s publication. If the sole proprietor fails to do so within this period, the registrar will, ex officio, issue a decision on deletion from the register within an additional period of 30 days.