Silent Company Legal Regulation in the Republic of Macedonia

Abstract

A silent company is a company in which a person (a sleeping partner) invests, i.e. participates with a cash or non-cash contribution in the enterprise of another person - the entrepreneur - a public shareholder and on the basis of the contribution acquires the right to participate in the profit and loss share of the enterprise. This company is created by concluding an agreement between the silent and the public shareholder.

The silent company is not a trading company in compliance with the macedonian Company law. This company has no legal personality and no company name. It exists only in the relations between the sleeping partner and the entrepreneur - the public shareholder, and it does not appear in the legal relations with third parties. This company is not registered in the registrar of companies that is managed by a competent authority. The entrepreneur is the subject who acts in the legal relations with third parties and is an exclusive holder of all rights and obligations that arise from the business operation.

Most commonly this type of company is used to implement business operations that are intended to stay hidden from the public. Reasons like the legal simplicity in the establishment of the company, the wide flexibility in arranging the relations between the public and the sleeping partner, the possibility of an easier way of financing the enterprise, the possibility of securing profits through a secret (silent) investment, make the silent company one of the good forms for successful realization of the business enterprise of the entrepreneur, on the one hand, and on the other hand it serves to satisfy the interest of the secret (silent) investor in a way that his investment will be hidden away from the general public.

The main goal of this paper is to present and clarify the legal bases of the silent company in the Republic of Macedonia, to encourage the need for its re-regulation in the legislation of the Republic of Macedonia, as well as to indicate its advantages or weaknesses within the realization of the business operation.