MONTENEGRO Law and Practice Contributed by: Milan Keker, Aleksandra Bujkovic, Ivan Pejovic and Iva Rolovic, Keker, Bujkovic & Pejovic
lenged through administrative appeals and subse - quently before the Administrative Court in accordance with the Law on General Administrative Procedure. Restrictions on development and land use are enforced through inspection supervision, primarily carried out by construction inspectors from the com - petent ministry or municipal authorities. Inspectors may conduct site inspections, verify compliance with permits and approved designs, and order corrective measures where violations occur. The Law on the Legalisation of Illegal Structures also plays an important role in the enforcement framework. It regulates the conditions and procedure for legalising buildings constructed without a construction permit or contrary to such permit. A structure may be legalised if it meets statutory conditions, including compliance with planning requirements and the resolution of prop - erty rights over the land. If an illegally constructed building does not meet the legalisation criteria or the application is rejected, the competent authority may order the removal (demoli - tion) of the structure. The legalisation regime therefore represents an additional mechanism for addressing illegal construction while allowing certain existing structures to be integrated into the formal planning and construction system. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The most common structures used by both domestic and foreign investors for real estate holdings are the limited liability company (LLC), which is the most com - monly used in practice, and the joint stock company (JSC), which is typically used for real estate holdings tied to large-scale or complex investment projects. In practice, the LLC is by far the most preferred and efficient structure for acquiring and holding real estate assets in Montenegro, primarily due to its structural simplicity, minimal capital requirements, and the lim - ited liability protections it offers. It is also commonly
used to avoid the restrictions on foreign nationals out - lined in 2.11 Legal Restrictions on Foreign Investors . 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity LLC is a legal entity which may be established by one or more (up to 30) natural or legal persons, whether domestic or foreign. The liability of members is strictly limited to the amount of their capital contributions, offering a protective shield over their personal assets. The LLC is constituted through a founding act, which outlines the founders’ rights and obligations, their contributions, company bodies and other significant matters for company operations. JSC is a more complex corporate form and is gen - erally reserved for complex real estate development projects. It is subject to more rigorous incorporation and governance requirements. While the JSC offers greater potential for large-scale capital formation, it is typically not the preferred structure for individual or small to medium-sized real estate investors due to its complexity and cost of maintenance. Instead, it is best suited for institutional investors, develop - ment companies, or real estate funds operating in the Montenegrin market. There are no major tax differences between the two. For more details on taxes, please see 2.10 Taxes Applicable to a Transaction . 5.3 REITs REITs – as they are commonly known in jurisdictions like the US or the UK – are not currently a recognised or commonly used investment vehicle under Monte - negrin law, and Montenegro’s legal framework does not provide for specific structures or tax treatment applicable to REITs. Consequently, REITs are neither recognised nor commonly utilised as investment vehi - cles in Montenegro. Instead, investors typically rely on standard corporate structures, such as LLC or JSC, as well as investment funds, to acquire, hold and manage real estate assets. 5.4 Minimum Capital Requirement LLC is required to have a minimum share capital of EUR1.00, while a JSC must maintain a minimum share
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