Factoring Law (Official Gazette No. 62/2013), Serbia
FACTORING LAW
I. BASIC PROVISIONS
Article 1
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This Law governs the concept and subjects of factoring; parties to factoring;
conditions and manner of providing factoring services; types of factoring; rights and
obligations of parties to factoring; factoring contracts; reverse factoring; and oversight
of factoring.
II. DEFINITIONS
Article 2
[1] The terms used in this Law shall have the following meanings:
1) Factoring is the financial service of selling and purchasing existing non-matured
or future short-term receivables arising from agreements on the sale of goods or
provision of services, either nationally or abroad;
2) Any existing non-matured or future short-term receivables, either in whole or in
part, arising from an agreement on the sale of goods or provision of services
entered into between legal entities and sole proprietors, may be subject to
factoring.
3) Short-term receivables are receivables maturing up to one year from the date of
sale of goods or provision of services under the pertinent agreement on the sale
of goods or provision of services;
4) The following may act as parties to factoring:
(1) Any bank, business entity or sole proprietor domiciled in the Republic of
Serbia (‘Serbia’), or any such entity domiciled abroad and incorporated
under legislation of its home country, may act as assignor, the party
assigning to the factor its receivables against the debtor arising from an
agreement on the sale of goods or provision of services;
(2) Any:
(a) Bank, as governed by legislation concerning the operation of banks;
(b) Business entity, set up as a joint-stock or limited liability company,
domiciled in Serbia and in possession of an authorisation issued by the
Ministry of Finance (‘the Ministry’) to provide factoring services;
(c) Foreign bank or foreign business entity, solely in matters of crossborder factoring;
may act as factor, the party purchasing receivables from the assignor.
(3) Any bank, business entity or sole proprietor domiciled in Serbia, or any
such entity domiciled abroad and incorporated under legislation of its
home country, may appear as debtor.
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Factoring Law (Official Gazette No. 62/2013), Serbia
[2] Any existing non-matured or future short-term receivables, either in whole or in
part, arising from any agreement on the sale of goods or provision of services entered
into with beneficiaries of funding provided from the budget of the Republic of Serbia,
a sub-national unit, or local authority, or with beneficiaries of funding provided by
mandatory social security organisations, may also be subject to factoring.
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Article 3
[1] Future receivables may be subject to factoring only if their characteristics are such
that they may be defined and if the factoring agreement stipulates the debtor.
[2] Any provision of an agreement assigning future receivables shall have legal effect
as of the time such receivables arise.
Article 4
No receivables arising from the sale of goods or provision of services for personal,
family, or household needs may be subject to factoring.
III. CONDITIONS FOR PROVIDING FACTORING SERVICES
Article 5
[1] Any business entity established in Serbia for the purpose of providing factoring
services may undertake activities referred to in Article 2[1] hereof if it meets the
conditions set out herein with respect to its capital stock and is in possession of an
authorisation to provide factoring services.
[2] Any business entity referred to in Paragraph [1] of this Article (‘factoring
company’) may provide only factoring and factoring-related services.
Article 6
[1] A factoring company must hold capital stock amounting to not less than RSD 40
million.
[2] The capital stock of a factoring company may not at any time fall below the
amount referred to in Paragraph [1] of this Article.
Article 7
[1] The founder of a factoring company, or a person designated by him, may apply
with the Ministry for an authorisation to provide factoring services.
[2] The following documents shall be appended to the application referred to in
Paragraph [1] of this Article:
1) Articles of Association of the factoring company;
2) Information on the founders of the company and the amounts of their
stakes/shares:
(1) For founders who are individuals –a certified copy of a personal identity
card, or a printout of a biometric identity card, for nationals of Serbia, or a
certified copy of a passport, for foreign nationals; and a certificate issued
by the appropriate body, not older than six months, attesting that no
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Factoring Law (Official Gazette No. 62/2013), Serbia
criminal charges have been brought against the founder and that no ban on
performance or holding office has been imposed against him;
(2) For founders that are legal entities –a certified copy of a decision or other
document attesting registration with the body charged with keeping a
registry of business or legal entities, as provided for under local
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legislation, not older than six months;
3) Certified statement by the founders attesting the amounts of their shares/stakes
in the factoring company;
4) Information concerning the authorised officer of the factoring company: a
certified copy of a personal identity card, or a printout of a biometric identity
card, for nationals of Serbia, or a certified copy of a passport, for foreign
nationals; and a certificate issued by the appropriate body, not older than six
months, attesting that no criminal charges have been brought against the
founder and that no ban on performance or holding office has been imposed
against him;
5) Certified statement of the founder attesting that the cash capital in the amount
referred to in Article 6[1] hereof is to be paid into the company bank account;
6) Certified statement of the founder regarding the origin of the funds referred to in
Item 5) of this Paragraph.
[3] The Ministry shall issue a procedural decision regarding the application referred to
in Paragraph [1] of this Article within 15 days of receiving a duly substantiated
application, provided that the applicant had beforehand provided proof to the Ministry
of having paid in the cash capital.
[4] The procedural decision issued by the Ministry and referred to in Paragraph [1] of
this Article shall be deemed final for the purposes of administrative proceedings.
[5]An administrative dispute may be initiated to contest the procedural decision
referred to in Paragraph [3] of this Article.
[6] In adjudicating in such administrative dispute, no court may rule on an
administrative matter.
[7] The founder of the business entity or a person designated by him shall be required
to apply for registration with the business registry within ten days of receiving the
procedural decision of the Ministry authorising the factoring company to provide
factoring services.
[8] The founder of the business entity or a person authorised by him shall be required
to notify the Ministry of any and all changes to information referred to in Paragraph
[2] of this Article without delay, or at the latest within ten days of such change having
occurred.
[9] The Minister of Finance shall define in greater detail the conditions for and
manner of issuing authorisations.
Article 8
[1] Authorisation to provide factoring services shall cease to have effect:
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Factoring Law (Official Gazette No. 62/2013), Serbia
1) Where so requested by the holder of such authorisation, as of the date of
receipt of the procedural decision issued by the Ministry granting such
request, and
2) Upon the termination of the company, as of the date the company is stricken
from the business registry due to voluntary or compulsory liquidation or
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bankruptcy.
[2] Provisions of legislation governing bankruptcy and liquidation of business entities
shall apply to the bankruptcy and liquidation of factoring companies.
Article 9
[1] The Ministry shall issue a procedural decision revoking a factoring company’s
authorisation to provide factoring services where it is established in the course of
oversight that:
1) Such factoring company no longer complies with conditions stipulated under
Article 6 hereof;
2) Authorisation to provide factoring services was granted on the basis of false
information;
3) Such company did not comply with Article 7[8] hereof.
[2] The procedural decision issued by the Ministry and referred to in Paragraph [1] of
this Article shall be deemed final for the purposes of administrative proceedings.
[3] An administrative dispute may be initiated to contest the procedural decision
referred to in Paragraph [1] of this Article.
[4] In adjudicating in such administrative dispute, no court may rule on an
administrative matter.
Article 10
[1] Data on authorisations to provide factoring services that have been issued or
revoked shall be recorded in a Factoring Registry (‘the Registry’), kept by the
Business Registries Agency and managed by a Registrar.
[2] The Registry shall be kept as a unified electronic database of data on
authorisations to provide factoring services that have been issued or revoked.
[3] Legislation governing the operation of the Business Registries Agency shall apply
to the appointment of the Registrar and his scope of authority and obligations, while
legislation governing registration procedure at the Business Registries Agency shall
govern the procedure of registration.
[4] Data referred to in Paragraph [1] of this Article shall be recorded with the Registry
immediately upon the receipt of the procedural decision referred to in Article 7[3] and
Article 9[1] hereof by the Business Registries Agency.
[5] The Minister of Finance shall determine the content of the Registry.
IV.TYPES OF FACTORING
Article 11
[1] Within the meaning of this Law, factoring may be:
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Factoring Law (Official Gazette No. 62/2013), Serbia
1) Domestic, and
2) International.
[2] Based on the obligation to undertake the risk of collecting a receivable, factoring
referred to in Paragraph [1] above may be:
1) Factoring without recourse, and
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2) Factoring with recourse.
Article 12
Domestic factoring is defined as factoring the object of which is the sale of
receivables arising from the sale of goods or provision of services between domestic
entities in the internal market.
Article 13
[1] International factoring is defined as factoring the object of which is the sale of
receivables arising from foreign trade in goods or services, within the meaning of
legislation governing foreign trade.
[2] International factoring may entail:
3) A one-factor system, whereby only one factor is party to the factoring
transaction, and
4) A two-factor system, whereby a factor domiciled in Serbia and another
factor domiciled abroad are parties to the factoring transaction.
[3] Where the sale of receivables in foreign trade in goods or services is otherwise
governed under another law, the provisions contained herein shall prevail in the event
of international factoring.
Article 14
[1] A factor providing services in international factoring in a two-factor system shall
be required to:
1) Enter into an interfactor agreement, using the internationally-recognised
and accepted legal and technical framework developed by international
associations, particularly Factors Chain International (FCI) and
International Factors Group (IFG);
2) Carry out customer due diligence, as provided for under legislation
governing the prevention of money laundering and financing of terrorist
activities.
[2] An interfactor agreement, within the meaning of Paragraph [1]1) above, is defined
as an agreement between a factor domiciled in Serbia and a factor domiciled abroad.
Article 15
[1] Factoring without recourse shall entail the factor assuming credit risk.
[2] Within the meaning of this Law, credit risk shall comprise the risk of the debtor
becoming insolvent.
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Factoring Law (Official Gazette No. 62/2013), Serbia
Article 16
[1] Factoring with recourse shall entail the assignor being liable to the factor for the
collectability of the receivables on their due date.
[2] Where factoring with recourse has been provided for in the factoring agreement,
the factor may demand satisfaction from the debtor, the assignor, or both
simultaneously, within the limits of the liability of the debtor and the assignor, if not Page | 6
otherwise agreed.
[3] With regard to the liability of the assignor referred to in Paragraph [2] of this
Article, the factor shall be required to notify the assignor that the receivables have not
been collected within eight days of such receivables becoming due.
[4] Upon having exercised its option of recourse against the assignor, the factor shall
be required to restore the receivables to the assignor.
Article 17
Where it cannot be ascertained with any degree of certainty whether factoring with
recourse or factoring without recourse has been contracted for, factoring with
recourse shall be deemed to have been contracted for.
V. REVERSE FACTORING
Article 18
[1] Reverse factoring is a specific type of factoring contracted for between a factor
and a debtor under an agreement on the sale of goods or provision of services at home
or abroad, whereby the factor assumes the debtor’s invoices and thus also the debtor’s
payables owed to creditors, and acquires the right to collect the receivables due from
the debtor by the deadline set in the agreement on the sale of goods or provision of
services.
[2] The debtor shall be required to secure the consent of the creditors.
[3] Provisions contained herein that govern factoring shall apply, as appropriate, to
reverse factoring.
[4] Beneficiaries of funding from the national budget of Serbia, or budget of a subnational unit or local authority, or beneficiaries of funding provided by mandatory
social security organisations, may not be parties to reverse factoring.
VI. FACTORING AGREEMENT
Article 19
[1] Factoring services may only be provided pursuant to an agreement entered into in
writing or electronically.
[2] Any agreement the subject of which is not defined as provided for in Article 3
hereof shall not be deemed a factoring agreement within the meaning of this Law.
[3] A factoring agreement shall not be deemed a credit or loan agreement within the
meaning of legislation in force in Serbia and sound business practice.
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Factoring Law (Official Gazette No. 62/2013), Serbia
Article 20
A factoring agreement shall contain, in particular:
1) Information regarding parties to the agreement;
2) Indication of the type of factoring;
3) Grounds for and information on the receivables that are the subject of the
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agreement;
4) Amount and manner of calculating and remitting the purchased receivables to
the assignor;
5) Amount and manner of calculating and remitting the fee due to the factor;
6) Entitlement of the factor to interest and other costs that may arise in the course
of the implementation of the agreement;
7) Date of entering into the agreement;
8) Signatures of authorised representatives of each contracting party or other
authorised signatories or their representatives under power of attorney.
Article 21
A factoring agreement shall cease to have effect upon the expiry of its original term;
if no term is stipulated, an agreement may not cease to have effect before the
collection of all receivables assigned or the exercise of recourse by the factor.
Article 22
[1] Factoring agreements entered into between one assignor and multiple factors that
have as their subject the assignment of the same receivables may not be allowed; any
such agreement entered into subsequently shall be null and void.
[2] Provisions of factoring agreements or general operating conditions of an assignor
or factor that run contrary to the rule referred to in Paragraph [1] of this Article shall
be null and void.
VII. SALE OF RECEIVABLES
Article 23
[1] At the time the assignor sells each receivable designated in a factoring agreement,
the assignor shall provide the factor with:
1) Agreements (original or copy certified by an appropriate body) and/or any and
all invoices and other documents proving the existence of the receivables and
identifying them;
2) Notice to the debtor of sale of receivables to the factor.
[2] The assignor and the factor shall draw up a set of minutes regarding the transfer of
documents referred to in Paragraph [1] of this Article.
[3] The date on which the assignor provides the factor with documentation referred to
in Paragraphs [1] and [2] of this Article shall be deemed to be the date of sale of the
receivables.
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Factoring Law (Official Gazette No. 62/2013), Serbia
Article 24
The assignor shall be required to give the debtor notice of the sale of receivables in
writing or electronically.
Article 25
[1] Notice of the sale of receivables may be given with respect to all receivables Page | 8
covered in a factoring agreement, regardless of whether they actually exist at the time
the agreement was entered into.
[2] The notice referred to in Paragraph [1] of this Article must contain information on
the factoring agreement, data on the factor to which the debtor is required to remit
funds, and payment instructions.
[3] Where the notice referred to in Paragraph [1] of this Article refers to one or
multiple existing receivables, such notice must, in addition to data referred to in
Paragraph [2]of this Article, contain the invoice number, amount receivable, and
currency.
Article 26
[1] Having received the notice referred to in Article 24 hereof, the debtor shall be
required to remit the amount receivable to the factor.
[2] The remittance of the amount receivable to the assignor shall not extinguish the
liability of the debtor with the factor where notice of the sale of the receivables had
been given prior to such remittance; the assignor shall be required to transfer such
payment to the factor without delay.
VI. COLLECTION OF RECEIVABLES
Article 27
A factor shall collect on receivables that have become due for and on behalf of itself.
VIII. RIGHTS, OBLIGATIONS AND LIABILITIES IN FACTORING
Article 28
[1] The factor shall be required to keep orderly and up-to-date records, and shall be
required to make such records available to any and all bodies charged with oversight
of factoring.
[2] The factor shall be required to exercise due care in ledgering purchased
receivables.
Article 29
[1] The assignor shall be liable to the factor for the grounds and amounts of any and
all receivables subject to a factoring agreement.
[2] The assignor shall guarantee that any and all receivables sold are free of pledges,
contestations, burdens and other rights of third parties and that such receivables may
not be contested on any grounds, excepting where otherwise agreed.
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Factoring Law (Official Gazette No. 62/2013), Serbia
[3] Where any receivables sold are the subject of a pledge, or if such receivables have
been contested in any manner whatsoever by a debtor or any third party, and where
the factoring agreement does not exclude the assignor’s guarantee referred to in
Paragraph [2] of this Article, the factor shall have recourse against the assignor even
where factoring without recourse has been agreed on.
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Article 30
Where the sale of receivables is prohibited under an agreement between the assignor
and the debtor or the general operating conditions of the debtor, such prohibition shall
not have legal effect on the sale of receivables to a factor subject to a factoring
agreement and in compliance with this Law, except where otherwise provided for
under an international treaty.
Article 31
Where not otherwise provided for in a factoring agreement, onward sale and
assignment of receivables from a factoring company to another factoring company
shall be deemed allowed where this is in compliance with the remaining provisions
contained herein.
Article 32
[1] The documents referred to in Article 23[1] hereof shall be considered authentic
documents for the purposes of enforcement.
[2] Proof of grounds for the assignment of receivables shall be provided along with
the invoice.
X. OVERSIGHT OF FACTORING SERVICES
Article 33
[1] Oversight of factoring companies shall be performed by the Ministry or by another
duly authorised body, as provided for under particular legislation governing the
powers of such bodies.
[2] The National Bank of Serbia shall perform oversight of banks that provide
factoring services, as governed by legislation concerning the operation of banks.
XI. PENAL PROVISIONS
Article 34
[1] A misdemeanour fine of between RSD 100,000 and RSD 2,000,000 shall be
imposed on a bank or a business entity:
1) Providing factoring services in contravention of the requirements stipulated
herein (Article 5);
2) Failing to file for registration with the business registry by the deadline
stipulated herein (Article 7[7]);
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Factoring Law (Official Gazette No. 62/2013), Serbia
3) Providing factoring services in an international two-factor system in
contravention of the requirements stipulated herein(Article 13, Paragraph 1);
4) Providing factoring services without an agreement (Article 19[1]);
5) Entering into multiple factoring agreements dealing with the sale of the same
receivables in their entirety with more than one factor (Article 22[1]);
6) Failing to keep orderly and up-to-date records or failing make such records Page | 10
available to any and all bodies charged with oversight of factoring (Article
28[1]).
[2] A misdemeanour fine of between RSD 5,000 and RSD 150,000 shall also be
imposed on the responsible officers of the bank or business entity committing actions
referred to in Paragraph [1] of this Article.
Article 35
A misdemeanour fine of between RSD 10,000 and RSD 500,000 shall be imposed on
a sole proprietor:
1) Providing factoring services without an agreement (Article 19[1]);
2) Entering into multiple factoring agreements dealing with the sale of the same
receivables in their entirety with more than one factor (Article 22[1]).
XII. TRANSITIONAL AND FINAL PROVISIONS
Article 36
[1] Business entities providing factoring services established prior to the entry into
effect of this Law shall be required to harmonise their operations with the provisions
hereof by filing the application referred to in Article 7[1] hereof with the Ministry
within six months from the entry into effect of this Law.
[2] Business entities providing factoring services established prior to the entry into
effect of this Law shall be exempt from the requirement to provide the statement
referred to in Article 7[2]5) hereof, but shall rather be required to provide proof of
meeting conditions referred to in Article 6[2] hereof.
[3] Provisions of Articles 5-10 hereof shall not apply to business entities established
by Serbia under particular legislation with the purpose of financing exports that
operate under such particular legislation.
[4] Provisions contained herein shall not apply to factoring agreements entered into
prior to the entry into effect of this Law.
Article 37
The byelaw referred to in Article 7[9] hereof shall be enacted at the latest six months
following the entry into effect of this Law; the byelaw referred to in Article 10[5]
hereof shall be enacted at the latest 90 days following the entry into effect of this
Law.
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Factoring Law (Official Gazette No. 62/2013), Serbia
Article 38
The Factoring Registry shall be established within 90 days of the entry into effect of
this Law.
Article 39
This Law shall enter into effect eight days following the day of its publication in the Page | 11
Official Gazette of the Republic of Serbia, excepting only the provision of Article 2[2]
hereof, which shall enter into effect on 1 May 2014.
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