Simplified Limited Liability Company (PDOO) – North Macedonia
North Macedonia introduced a new type of company — the Simplified Limited Liability Company (Поедноставено Друштво со Ограничена Одговорност, or PDOO) — designed for entrepreneurs who have a business idea but lack the EUR 5,000 minimum capital required for a standard LLC. The PDOO can be formed with a minimum share capital of just EUR 1. This page is part of our practice in business and corporate law. For a full guide to standard LLC formation, see our page on company registration in North Macedonia.
The Work Program of the Government of the Republic of North Macedonia (2017-2020), Part 4 (Support to domestic companies), provided for the possibility of establishing a special type of company with a minimum share capital of EUR 1. These companies carry a clearly marked label, so that anyone cooperating with this type of business entity is aware that its founding capital is EUR 1.
Based on the Program, an additional comparative analysis was made with the legislation of the Republic of Croatia in the area of company law, which led to the incorporation of this government measure within the Law on Companies, in terms of the provisions regulating the Limited Liability Company.
The purpose of the amendments is to enable the establishment of a limited liability company with a symbolic minimum founding capital of EUR 1, by natural persons who have a business idea but do not have sufficient funds in the amount of at least EUR 5,000 to start their own business. The amendments introduce a new type of limited liability company entitled the Simplified Limited Liability Company – PDOO.
Key Features of the PDOO
The company can have up to three founders — natural persons — one of whom must serve as manager (member of the management body). Given that the share capital is EUR 1, a special financial regime applies to profit distribution and the management of the required reserve.
The minimum amount of the share capital of the simplified limited liability company is EUR 1, in denar counter value according to the middle exchange rate of the National Bank of the Republic of North Macedonia on the day of payment, unless the founders agreed that the relevant date should be the day of signing the founding act. The minimum nominal amount of a business share is 10 cents. The share capital and business shares must be expressed in whole numbers in euros. Stakes for the undertaken business shares are paid only in cash.
The application for registration of the company in the Trade Register is submitted only after the deposits for all undertaken business shares have been paid in full.
Required Reserve
The company must maintain a required reserve, which must include one quarter (1/4) of the company’s profit as expressed in the annual financial statements, reduced by the amount of any loss from the previous year.
The required reserve can be used for:
1) Increase of the share capital by distribution of the reserve into the share capital of the company;
2) To cover the loss stated for the year for which the annual financial statements are submitted, if it is not covered by the profit realized in the previous year; and
3) To cover the loss expressed for the previous year, if it is not covered by the profit expressed in the annual financial statements for the year for which they are submitted.
The simplified LLC is expected to increase the number of company registrations in North Macedonia, allowing more entrepreneurs to register a company and conduct business through a properly structured legal entity.
Practical Checklist
If you are considering forming a Simplified LLC (PDOO) in North Macedonia, verify the following: (1) Only natural persons can be founders — a PDOO can have a maximum of 3 founders, all of whom must be natural persons (not legal entities). One must serve as manager. (2) Minimum capital: EUR 1 — paid in full in cash before registration. Unlike a standard LLC, there is no 1-year grace period for capital payment. (3) Minimum share: 10 cents — shares must be expressed in whole euro amounts; the minimum share value is EUR 0.10. (4) Required reserve is mandatory — 1/4 of annual net profit must be set aside as a required reserve each year. The reserve cannot be distributed to founders as profit until the conditions for its use are met. (5) PDOO label is publicly visible — anyone dealing with your company will know it has EUR 1 capital. Consider whether this affects your business relationships or contracts. (6) Standard post-registration obligations apply — UBO registration, annual report, Labor Inspectorate notification etc. See our guide on post-registration compliance.
Frequently Asked Questions
What is the difference between a PDOO and a standard LLC in North Macedonia?
The main differences are: (1) minimum capital is EUR 1 (vs EUR 5,000 for a standard LLC); (2) founders must be natural persons only (max 3); (3) the full capital must be paid before registration (no 1-year grace period); (4) a mandatory reserve of 1/4 of annual profit applies; and (5) the PDOO label is publicly visible, signaling the EUR 1 capital to business partners.
Can a foreign national form a PDOO in North Macedonia?
Yes — there are no restrictions on foreign natural persons being founders of a PDOO. However, the founders must be natural persons (individuals), not foreign companies or legal entities.
Does the EUR 1 capital need to be paid before registration?
Yes. Unlike a standard LLC where the EUR 5,000 capital can be paid within one year of registration, the PDOO requires full payment of the share capital before the registration application is submitted to the Trade Register.
What is the required reserve and can it be paid out to founders?
The required reserve is a mandatory annual allocation of 1/4 of net profit. It cannot be distributed to founders as dividends. It can only be used to increase share capital, or to cover current or prior-year losses. It accumulates until used for one of these purposes.
Can a PDOO later convert to a standard LLC?
The Law on Companies provides for conversion of company types. In principle, a PDOO can be converted to a standard LLC if the founders decide to increase the share capital to the standard minimum of EUR 5,000. Legal assistance is recommended for this procedure.
Need legal guidance?
If you have questions about forming a Simplified LLC or any other type of company in North Macedonia, the team at Lalicic & Partners is at your disposal. Contact us through our website.
Note: The above does not constitute legal advice and in no way can be accepted or understood as an instruction to act in a specific case. Each legal situation has its own characteristics that should be reviewed at separately, and for that reason we recommend that you contact a professional – a lawyer – for legal advice.