Setting up a company implies an obligation that when applying, you must register a core activity of a company or the activity practiced by the company. Choosing the core activity is obligatory for all the legal persons and entrepreneurs who do their business for making profit and gain.
The core activity is also called the code of activity. Besides the core activity there are secondary activities.
WHAT ARE THE MAIN AND SECONDARY ACTIVITIES?
The main activity is the activity practiced most by the company and which brings the biggest profit. The secondary activities are other activities done by the company and for which there are no legal boundaries.
It is considered that the core activity is the one that brings the biggest profit for the company during a calendar year. It is not forbidden that the legal person profits from secondary activities, but it is important that other secondary activities do not bring more profit.
In practice, there is often a question of whether or not a company can practice more than one activity. The answer is – it can but under certain conditions. This question is regulated by the Companies law.
THE BOUNDARIES IN CHOOSING THE CODE OF ACTIVITY OF FIRM IN SERBIA
A legal person can not practice activities that have legal boundaries or activities and jobs which are listed in the regulation as forbidden ones. Besides, it is not possible to practice activities for which you need special permits or licenses, except in cases where you already possess them.
If a certain code of activity does not need the special permit from a state or authorities, ministry or similar, the law does not prevent it from being practiced. If it does, then certain conditions must be met.
WHY A COMPANY MUST REGISTER ITS ACTIVITY?
The companies law in our country prescribes that every company is legally obliged to register core activity and that is the activity which will be practiced. On the other hand, the Law does not forbid the company to do other activities independent from the fact whether they are registered or not or defined and precise by the statute, the Memorandum of association and similar.
When setting up a company, the code of activity is submitted to the Business register agency and all the secondary activities do not have to be enlisted in the application (do not have to be registered). In the Business register agency, you only can record one activity, the one which will bring the biggest profit after registering the company.
The legal person is obliged to register only one activity, but besides it can do other activities. This means that it can do other activities or other activities for which there is no special permit and which are legally allowed.
THE main activiti of limited liability company
When the limited liability company is set up, one or more founders make the decision on setting up and the Memorandum of association. The Memorandum of association is very significant for companies, especially when it is related to setting up the limited liability company in Serbia.
In the Memorandum of association, all the information and characteristics of the company are defined – a legal form, the name of the company, the main office, the founders, an activity, a company's goals and other things. The founders of the LLC dedicate special attention to defining the core activity because that is the core activity of the company from which it will make gain and profit
The Memorandum of association must contain additional activities done by the LLC and which are not legally forbidden. The founders alone decide whether or not to enlist the additional activities. If they are described, there are no boundaries on the number of additional activities.
THE REGULATION ON CLASSIFICATION OF ACTIVITIES
The government of the Republic of Serbia issued the Regulation on classification of activities which gives a detailed and precise definition of activities in our country. The regulation on classification of activities is a sub-legal act that enlists all the activities which can be done by one legal person or all the activities which can be done by the entrepreneurs or the LLC.
The activities are classified with this regulation according to the names, codes, description or the areas or the sectors they belong to. Every activity has its own:
- Area (sector)
The sectors of economic activities are:
- Sector A – Agriculture, forestry and fishery
- Sector B – Mining
- Sector C – Processing industry
- Sector D – Supply with electricity, gas, steam and climatisation
- Sector E – Supply with water; managing wastewater, controlling the process of waste removal and similar activities
- Sector F – Construction industry
- Sector G – Wholesale and retail trade; fixing vehicles and motors
- Sector H – Traffic and storage
- Sector I – Services of accommodation and nutrition
- Sector J – Informing and communication
- Sector K – Finance and insurance
- Sector L – Real estate trade
- Sector M – Competent, scientific, innovational and technical activities
- Sector N – Administrative and additional services
- Sector P – Education
- Sector Q – Health and social security
- Sector R – Art, fun and recreation
- Sector S – Other service activities
- Sector T – Home economics; The activity of home which produces goods and services for own needs
IS IT POSSIBLE TO REGISTER ANOTHER ACTIVITY OF FIRM?
After the company is registered in the BRA and records its core activity there is no possibility to re-register the activity. This means that the company can not attach the activity, can not add another activity, to register additional code or other.
One company can only register and have one core activity.
THE CHANGE OF MAIN ACTIVITY OF COMPANY
The entrepreneur and the LLC can demand the change of core activity or they can change the existing code of activity and switch it with other core activities. The code activity can be changed when the additional activity becomes dominant or if the additional one starts to bring more profit.
The LLC can change its core activity with the consent of the founders on the board meeting. In that case, it is necessary to adopt the decision on the change of Memorandum of association and after that to submit the adopted change. This change must be submitted to the Business registers agency.
After recording the change, it is necessary to inform the Tax administration and the authorities. If the new code of activity represents the activity for which certain conditions must be met and special permissions, approvals or licenses are necessary, then it is obligatory to submit the documentation to the authorities.