Many foreigners are starting a business in Europe due to the diversity of the market. Slovenia is one of those up-and-coming countries that started to attract foreign entrepreneurs to register a company here. Sometimes there are unclarities regarding the status of the legal representative within the company, their responsibilities as well as the difference to the function of shareholder.
Data d.o.o. has nearly 30 years of experience in supporting entrepreneurs when starting their business in Slovenia. We offer accounting services as well as legal support. Our specialized legal department can help you to understand which responsibilities you would bear by becoming a legal representative of your Slovenian company.
What is a legal representative?
A legal representative or director is the person who is authorized to run the company’s business. All company types have to appoint at least one person as their legal representative. It has to be a natural person and can be either a local citizen or a foreigner. There has to be at least 1 legal representative but there can also be several should it suit your business model better.
The responsibilities of the director lie in carrying the liability for the company’s business conduct. The person who is the representative can sign agreements, make executorial decisions and oversee the financials of the company.
Within a company, a legal representative can have sole representation. This means that each representative can sign agreements without obtaining additional consent from the others. If you prefer to limit the representative’s decision-making, you can choose joint representation. This would mean that all the directors would have to sign the agreements in order for them to be valid.
Difference between legal representative and shareholder
Sometimes it is unclear what are the differences between a legal representative and a shareholder. While the legal representative is the person leading the company’s business activity, the shareholder is actually the owner of the company. A shareholder is the person providing the share capital when establishing an LTD company. Another difference is that while the shareholder can be either a natural person or a legal entity, the legal representative can only be a natural person. Also, the shareholder is entitled to the payout of dividends in case the company has profit, while the representative is not. A director can also request compensation for travel expenses and other expenses related to business, while the shareholder cannot.
The shareholder and legal representative can also be one and the same person. In that case it is called a one-person LTD. The shareholder can also be a legal entity and this company type is called subsidiary. It is also an LTD company but the owner is a local or foreign company.
Difference between legal representative and procurator
A company can also have a procurator. It is also a type of representative but with less authority and repercussions for business conduct. This person has the right to sign agreements but more as a business proxy. The limits of their representation are that they cannot burden or sell/buy property. Also, they cannot give the order to close the company or do structural changes in the. The responsibilities of the procurator in comparison to the legal representative are more representing the company towards third parties but not making executorial decisions for the company.
Need support with company registration in Slovenia? Contact Data d.o.o.
For more information on the company registration in Slovenia, EU, you can write to our email [email protected]. You can also contact us over the phone 00386 1 6006 270 or 00386 40 530 718 (Viber, WhatsApp). You can also follow us on Facebook.