Public stock company is an association of two or more persons permanently conducting business under a common company name. Each member of the partnership is jointly and severally liable to the company’s creditors with their entire assets. Any natural or legal person can be a member of a general partnership.
A person cannot become a member of the partnership if they have been legally convicted of the criminal offense of financing terrorism or the criminal offense of money laundering while the legal consequences of the conviction are in effect. They are subject to international measures restricting asset disposal while such measures are in effect.
A legal or natural person also cannot become a member if:
- They, a limited liability company of which they are a member and hold a business share representing 25% or more of the share capital, a joint-stock company of which they are the sole shareholder, or a partnership of which they are a member and personally liable for its obligations, have outstanding debts as per Article 62. a. Paragraph 1 of the Companies Act, OR
- Within one year before applying for membership or change of membership, they were a member of a limited liability company where they held a business share of 25% or more of the share capital, the sole shareholder of a joint-stock company, a member of a partnership personally liable for its obligations, or a responsible person in a company that was deleted through bankruptcy proceedings with unpaid public liabilities under general tax regulations collected by the Tax Administration.
The partnership may require a person intending to become a member to provide a statement or a certificate from the Ministry of Finance, Tax Administration, confirming the absence of debts mentioned in the third sentence of this paragraph. Companies mentioned in the third sentence of this paragraph must, upon request, provide their member intending to join another company with a certificate from the Ministry of Finance, Tax Administration, confirming the absence of such debts.
Application for Registration in the Court Register
- The application must include the company name, headquarters, business address, name and surname, OIB (Personal Identification Number), and residence or company name and headquarters of each member, as well as the names and surnames of persons authorized to represent the company and their powers and business activities.
- The application must be accompanied by the partnership agreement and the decision on defining the scope of business activities.
- In addition to the partnership agreement, any subsequent changes to the partnership agreement, company name, headquarters, business activities, admission of a new member, termination of membership, and changes in representation powers must be reported.
Partnership Agreement
- The legal relations between the members of the partnership are governed by the partnership agreement.
- The provisions of the Companies Act apply unless the members arrange their relations differently in the partnership agreement.
Contributions to the Partnership
- Members of the partnership must contribute equally unless otherwise agreed.
- A member may contribute money, assets, rights, labor, or other services or goods to the partnership.
- The value of non-monetary contributions is mutually agreed upon in monetary terms.
Management of Partnership Affairs
- Each member has the right and obligation to manage the affairs of the partnership.
- If management is assigned to one or more specific members by the partnership agreement, other members are excluded.
- The partnership agreement may require that members authorized to manage partnership affairs follow the instructions given by other members.
Decision-Making
- Decisions require the consent of all members authorized to participate in decision-making.
- If the partnership agreement stipulates that decisions are made by majority vote, in case of doubt, the majority is calculated based on the number of members.
Profit and Loss Account
- At the end of each financial year, a profit and loss account is established. Based on this account, each member’s share of profit or loss is calculated in proportion to their share in the partnership.
Share in Profit and Loss
- One-third of the current year’s profit is distributed among the members in proportion to their share in the capital of the partnership.
Restriction on Disposal of a Member’s Share
- A member cannot dispose of their share in the partnership without the consent of other members.
Representation of the Partnership
- Each member is authorized to represent the partnership unless the partnership agreement excludes them from representation.
- The partnership agreement may stipulate that all members or multiple members can represent the partnership only jointly.
Scope of Authority for Representation
- A member may enter into legal transactions and take legal actions before the court and outside of it, including disposing of and encumbering real estate and granting and revoking a power of attorney.
- Restrictions on representation authority do not apply to third parties. This is particularly true if the authority is limited to specific transactions or types of transactions, to be exercised only under certain circumstances, for a specific period, or at a specific location.
Reasons for Termination
- Expiration of the period for which the partnership was established,
- Decision of the members,
- A final court decision establishing that the registration of the partnership was unlawful,
- Bankruptcy of the partnership,
- Death or termination of a member, unless otherwise stated in the partnership agreement,
- Opening of bankruptcy proceedings against a member,
- Withdrawal by a member or their creditor,
- A final court decision,
- Initiation of liquidation proceedings.
If the partnership ceases to exist due to a member’s creditor declaring withdrawal or due to the opening of bankruptcy proceedings against a member, liquidation does not have to be carried out if the creditor or bankruptcy administrator agrees.
Competent Authority and Regulations
Ministry of Justice, Administration, and Digital Transformation
Ulica grada Vukovara 49, 10 000 Zagreb
gradjansko.pravo@mpudt.hr
Companies Act (NN 111/93, 34/99, 121/99 – Authentic Interpretation, 52/00 – Decision of the Constitutional Court, 118/03, 107/07, 146/08, 137/09, 152/11 – Consolidated Text, 111/12, 68/13, 110/15, 40/19, 34/22, 114/22, 18/23, 130/23, and 136/24)
Court Register Act (NN 1/95, 57/96, 1/98, 30/99, 45/99, 54/05, 40/07, 91/10, 90/11, 148/13, 93/14, 110/15, 40/19, 34/22, and 123/23)
Regulation on the Manner of Registration in the Court Register (NN 121/19 and 2/23)
Obligations Act (NN 35/05, 41/08, 125/11, 78/15, 29/18, 126/21, 114/22, 156/22, and 155/23)
Note: Unless otherwise stipulated by the Companies Act, the provisions regulating partnership relations under the Obligations Act apply to general partnerships.
Last updated on 28 February 2025
