The new compliance environment for future issuers of ‘Corona’ bonds in Serbia

As a follow-up to the Decree on the Procedure for Issuance of Debt Securities (“Decree“), the Serbian Securities Commission (“SEC“) has enacted amendments to the Regulation on Content of Application for Prospectus Publication Approval and Documentation Accompanying Application and the Regulation on Form and Minimal Content of Information to be Included in Prospectus, Basic Prospectus and Related Publications. The Decree and these two regulations provide for a simplified procedure for public offerings of debt securities by Serbian companies in Serbia. This new simplified regime will be in force for a period of 180 days from the end of the state of emergency (announced for 7 May). In short, the application for the approval of the prospectus by Serbian capital markets regulator, and the format and the content of the prospectus, are made simpler in the hope that this might foster bond offerings by Serbian corporates in the wake of the COVID-19 crisis.

Bond issuer obtains the status of a public company, even if it is a limited liability company. This means that a limited liability company that issues ‘Corona’ bonds will be subject to accounting, reporting and other regulatory obligations under the Capital Markets Act (“CMA“), the Audit Act and the Accounting Act that otherwise apply to listed joint-stock companies and other companies that has made a public offering of securities. This is a completely new regulatory environment for LLCs, especially SMEs.

Financial reporting

As long as the issuer is a public company it will have to submit audited annual reports to the Serbian capital markets regulator within four months from the financial year-end and make them accessible to the public for at least five years from the publication date. The annual report consist of standard set of financial reports (five types of financial statements, with the notes), the audit report, the annual business report, management statement confirming that the financial statements are true and objective and the resolution of the shareholders’ meeting approving the annual financial statements and dividend declaration or, as the case may be, loss coverage.

The annual business report, which is a part of the annual report, must include information required by the CMA, as well as those required under the Accounting Act, which includes, inter alia, information on related party transactions, R&D activities, treasury shares acquired and statement on corporate governance.

If the issuer is under the obligation to prepare consolidated accounts in accordance with the Accounting Act, it has to submit them to the regulator together with its individual accounts.


The issuers of ‘Corona’ bonds would be obliged to have their financial statements audited by an external auditor from the SEC’s list, regardless of their size. According to the CMA, the company must rotate auditors every five years.

Audit report to be delivered to the SEC must in particular include auditor’s opinion on the effectiveness of the internal audit, risk management and internal control system. The regulator has right to request further information from the auditor. Furthermore, the auditor must notify the regulator without delay if it finds out during the audit process a breach of the laws on accounting and audit, if the result shown in unaudited financial statements require material changes, and of circumstances that may cause material losses or are a threat to business continuity. The issuer must cure any deficiency revealed in the audit report and report to the SEC accordingly. The SEC has the authority to reject the audit report and order another audit firm to carry out super audit, at the issuer’s cost.

Audit Committee

The issuers of ‘Corona’ bonds automatically qualify as “public-interest entities” under the Audit Act and Regulation (EU) No.537/2014. Under the Audit Act, a “public-interest entity” must have an audit committee, either as a committee of the supervisory board or board of directors or as a separate corporate body. The minimum number of the members of the audit committee is three, and the majority of the members must be independent from the company. By way of exception, a “public-interest entity” is not required to have the audit committee if it is a member of a group which has the audit committee on the group level. The failure of a “public-interest entity” to form the audit committee is a commercial offence subject to a fine of up to RSD 3 million (approx. EUR 25,400) (RSD 200,000, an equivalent of EUR 1,700, for the director).

Admission of the bonds to the stock exchange:

The issuer is not required by law to request admission of the issued bonds to the Belgrade Stock Exchange (“BSE“) for trading. At present, there are only nine companies which have issued corporate bonds that are outstanding, and only one of them has its bonds listed and traded at the BSE.[1] If the issuer applies for the admission of its bonds to the BSE, and if the bonds are admitted to the relevant BSE market segment (listing, Open Market, Multilateral Trading Facility), the issuer will have additional publication and reporting obligations parallelly to both the BSE and the SEC, such as:

  • annual reports;
  • semi-annual reports;
  • if the bonds are admitted to the BSE listing segment, the quarterly reports;
  • annual statement listing or referencing all information published in the last 12 months pursuant to the CMA, SEC’s regulations, the Companies’ Act and the BSE’s regulations;
  • any other information or document as may be requested by SEC or the BSE.

The BSE’s Rules of Operation and Regulation on Listing also set out certain requirements for publication and reporting to the BSE, and such duties vary depending on the market segment on which the bonds are admitted. For example, if bonds are admitted to the listing segment, the issuer must notify the BSE on circumstances that may significantly impact the issuer’s business and securities’ price. Another example is that the issuer also must give a written prior notice to the BSE on shareholders’ meeting sessions convened to deliberate on matters such as approval of financial statements, annual reports, changes of capital, dividend payments, acquisition of own shares, as well as to submit to it the actual decisions adopted.

If the corporate bonds are admitted and traded at the BSE, the issuers must also familiarize themselves with the rules on insider trading.


[1] According to the Central Registry of Securities at and the BSE at