SERBIA Trends and Developments Contributed by: Vera Davidović, Dušan Jablan, Uroš Rajić and Marko Jović, Gecić Law
Practical Implications and Future Outlook Convergence with European standards The analysis of Serbian corporate governance codes reveals a high level of convergence with codes from EU member states. This conver - gence reflects a recognition that good corporate governance practices benefit listed companies, markets, and all stakeholders. As Serbia contin - ues its EU integration process, we can expect further harmonisation of corporate governance standards and practices. The evolving market for corporate control The market for corporate control in Serbia has matured significantly since the early transition period, serving as an essential external corpo - rate governance mechanism. The continued development of this market enhances discipline among corporate managers and contributes to more efficient resource allocation within the economy. Increased focus on small and medium enterprises Corporate governance has traditionally been associated with large public companies, albeit recent developments indicate growing attention to governance practices in small and medium- sized enterprises. The Chamber of Commerce and Industry of Serbia’s corporate governance code specifically targets these companies, rec - ognising their significant economic contribution. For SMEs, improved corporate governance can streamline business processes, establish a clearer division of responsibilities, enhance accountability, and ultimately lead to better per - formance and competitiveness. This focus on SMEs is significant given their role in Serbia’s economic development and potential integration into European value chains.
European companies are now obliged to analyse their partners’ social and environmental impacts on global supply chains, directly affecting domestic suppliers in Serbia. Similarly, foreign banks are expected to conduct ESG analyses when deciding on loans and guarantees, making ESG compliance increasingly crucial for access to capital. To support Serbian businesses in this transi - tion, the United Nations Development Program, in collaboration with the Serbian Development Agency and Smart Collective, has established initiatives like the “ESG Practitioner” training program. These initiatives aim to empower busi - nesses to adopt and implement sustainable and ethical practices, demonstrating the growing institutional support for ESG implementation in Serbia. Legal framework for ESG issues While Serbia has legal regulations covering envi - ronment, labour relations, occupational safety, human rights, data protection, and corporate governance, the extensive European ESG leg - islation has not yet been fully transposed. State policies and strategies determining how domes - tic companies will align their operations with ESG requirements are still developing, particu - larly for companies directly obligated or affected by value chains. Companies that are part of international groups have an advantage in this respect, as they can transfer policies and strategies from the group level and implement them more quickly locally. The journey toward comprehensive ESG integra - tion remains more challenging for independent Serbian businesses, highlighting the need for additional guidance and support from regulatory bodies and industry associations.
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