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Serbian Business Registers Agency (SBRA) Presentation CRF 2009


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Presentation by Serbian Business Registers Agency (SBRA)

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Serbian Business Registers Agency (SBRA) Presentation CRF 2009

  1. 1. CRF2009 BUSINESS REGISTRATION REFORMS IN AFRICA Practitioners’ Workshop Cape Town - March 30, 2009 REFORM OF THE BUSINESS REGISTRATION SYSTEM IN THE REPUBLIC OF SERBIA Zvonko Obradovic, Director, Serbian Business Registers Agency (SBRA)
  2. 2. FORMER BUSINESS REGISTRATION SYSTEM IN SERBIA <ul><li>INSTITUTIONAL NETWORK : </li></ul><ul><li>- Commercial courts: 17 </li></ul><ul><li>- Municipalities: 165 </li></ul><ul><li>TIME AND COST indicators : </li></ul>1. Time: - Companies: 71 days (2002) , 5 1 days (2003) - Entrepreneurs (“sole traders”): 3 - 7 days   2. Costs: - Companies: US$ 202 - Entrepreneurs (“sole traders”): US$ 4 - 7 The source for the data: The World Bank “Doing Business” Report Indicator 2002 2003 Average number of days 71 51 to register a new company Cost US$ US$ to register a new a company 202,43 197,99
  3. 3. FORMER BUSINESS REGISTRATION SYSTEM IN SERBIA (continued) <ul><li>4 Different Databases (PARALLEL ): </li></ul><ul><ul><li>Commercial Courts: registered companies </li></ul></ul><ul><ul><li>Municipalities: registered entrepreneurs </li></ul></ul><ul><ul><li>Republican Statistics Bureau: registered companies and entrepreneurs </li></ul></ul><ul><ul><li>Customs Office: companies which engage in foreign trade </li></ul></ul><ul><li>3 Procedures for Registration of Business Entities : </li></ul><ul><ul><li>For companies: in the commercial courts </li></ul></ul><ul><ul><li>For entrepreneurs: in the municipalities </li></ul></ul><ul><ul><li>National Bank/Solvency Center: Financial </li></ul></ul>
  4. 4. DRAWBACKS OF THE FORMER SYSTEM <ul><ul><li>Decentralized : each of the 17 commercial courts had its own paper register </li></ul></ul><ul><ul><li>Difficult to Implement </li></ul></ul><ul><ul><li>Costly for new businesses </li></ul></ul><ul><ul><li>Sometimes corrupt, semi-regulatory in a manner inconsistent with market needs </li></ul></ul><ul><ul><li>Data produced was unreliable : out of 250.000 registered companies app. 90.000 only were active companies </li></ul></ul><ul><ul><li>Lack of Transparency : access to data only by proving legal interest </li></ul></ul>
  5. 5. SETTING THE GROUND S FOR THE REFORM <ul><li>Several studies (WB, USAID, E conomic Institute ) identified the legal framework for start-up as one of the main impediments to investments </li></ul><ul><li>The Reform was designed within the Council for Regulatory Reform and implemented within the Serbian Business Registers Agency </li></ul><ul><li>The Business Registration Law was the f irst law passed in Serbia through RIA; The success of the reform is the proof that RIA helps develop better regulations </li></ul><ul><li>This positive experience influenced the introduction of mandatory RIA in the legislative process; RIA is now coordinated by the Council for Regulatory Reform </li></ul>
  6. 6. GOALS FOR REFORMING THE REGISTRATION SYSTEM <ul><li>To simplify and accelerate the business registration procedure in Serbia </li></ul><ul><li>To create a more favorable business environment for foreign investments </li></ul><ul><li>To create conditions for easier business start ups in Serbia </li></ul><ul><li>To upgrade state administration through a greater reliance on ITC </li></ul><ul><li>To establish the conditions for creating new jobs and reducing the informal economy </li></ul>6
  7. 7. IMPLEMENTATION OF THE BUSINESS REGISTRATION REFORM <ul><li>The reform implementation was guided by key principles adopted by the Serbian Government in 2003: </li></ul><ul><ul><li>Ministry of Economy </li></ul></ul><ul><ul><li>Council for Regulatory Reform </li></ul></ul><ul><ul><li>S upport by the WORLD BANK was cruci al! </li></ul></ul><ul><li>Implementation was financed through a grant by : </li></ul><ul><ul><li>The Swedish Government </li></ul></ul><ul><ul><li>USAID </li></ul></ul>
  8. 8. STEPS IN THE REFORM PROCESS <ul><li>Step 1: Analyze best practices </li></ul><ul><ul><li>Serbia has applied some aspects of the Anglo-Saxon legal system </li></ul></ul><ul><ul><li>Organizational and operational system from the Irish Companies Registration Office served as a model for establishing the SBRA </li></ul></ul><ul><li>Step 2: Principles for the reform were developed </li></ul><ul><li>Step 3: Legislation was drafted (using RIA) </li></ul><ul><li>Step 4: Funds for implementation were secured </li></ul><ul><li>Step 5: Public Consultation Process </li></ul><ul><li>Step 6: Adoption of the laws </li></ul><ul><li>Step 7: Implementation </li></ul>
  9. 9. LEGISLATION DRAFTED <ul><li>Parliament adopted the following laws: </li></ul><ul><ul><li>LAW ON THE SERBIAN BUSINESS REGISTERS AGENCY </li></ul></ul><ul><ul><li>(“Official Gazette of the RS” – No. 55, May 21, 2004) </li></ul></ul><ul><ul><li>BUSINESS REGISTRATION LAW </li></ul></ul><ul><ul><li>(“Official Gazette of the RS” – No. 55, May 21, 2004) </li></ul></ul><ul><ul><li>REGULATION ON THE LEVEL OF FEES CHARGED BY THE SERBIAN BUSINESS REGISTERS AGENCY FOR ISSUING REGISTRATION CERTIFICATES AND OTHER SERVICES PROVIDED BY SBRA </li></ul></ul><ul><ul><li>LAW ON THE CHANGES OF AND SUPPLEMENT TO THE BUSINESS REGISTRATION LAW was passed in the later stage, in order to harmonize it with the Company Law </li></ul></ul>
  10. 10. ESTABLISHMENT AND IMPLEMENTATION OF THE SERBIAN BUSINESS REGISTERS AGENCY ( SBRA ) <ul><li>SBRA : </li></ul><ul><ul><li>Is self sustainable </li></ul></ul><ul><ul><li>Holds e lectronic and centralized registers </li></ul></ul><ul><ul><li>Appl ies the “ Silence is Consent ” Rule : if it does not act within 5 days registration is considered granted </li></ul></ul><ul><ul><li>Appl ies fees , which are limited by law and set at the minimum level to secure self-sustainability </li></ul></ul><ul><li>SBRA is the first institution in Serbia where STATE ADMINISTRATION HAS BEEN TRANSFORMED IN A SERVICE FOR CITIZENS </li></ul><ul><li>Its Head Office is in Be l grad e , and it has 1 3 branch offices throughout Serbia </li></ul>
  11. 11. IMPLEMENTATION COSTS <ul><li>For software and hardware , and the first three months of operational costs , a GRANT was secured by the Swedish Government in the amount of app. EUR 1 . 4 mill . </li></ul><ul><li>( The grant was administered by the World Bank ) </li></ul><ul><li>USAID secured equipment in the value of app. US $ 200 , 000 </li></ul><ul><li>Microsoft secured a temporary software solution to allow for a timely start of operation s </li></ul><ul><li>The Agency was self-sustainable after three months of operation </li></ul>
  12. 12. SERBIAN BUSINESS REGISTERS AGENCY ( SBRA ) <ul><li>At present, the SBRA runs 3 registers : </li></ul><ul><li>REGISTER OF BUSINESS ENTITIES (operational as of January 1, 2005): </li></ul><ul><ul><ul><li>Registration of companies (operational as of January 1, 2005) </li></ul></ul></ul><ul><ul><ul><li>Registration of entrepreneurs (“sole traders”) (operational as of January 1, 2006) </li></ul></ul></ul><ul><ul><ul><li>Registration of foreign branch offices (operational as of January 1, 2006) </li></ul></ul></ul><ul><ul><ul><li>Registration of annual accounts of business entities (operational as of January 1, 2006) </li></ul></ul></ul><ul><li>FINANCIAL LEASING REGISTER (operational as of January 1, 2005) </li></ul><ul><li>REGISTER OF PLEDGES ON MOVABLES AND RIGHTS (operational as of August 15, 2005) </li></ul>
  13. 13. IMPACTS OF THE REFORM <ul><li>Since its establishment, the Agency has achieved exceptionally good results: within the 1 st yr of operation, number of new registered companies increased by 50% </li></ul><ul><li>Creation of a UNIQUE ELECTRONIC DATABASE of registered business entities on the territory of the Republic of Serbia: </li></ul><ul><li>THE SBRA is the ONLY UPDATED SOURCE OF DATA on registered companies and entrepreneurs (“sole traders”) </li></ul><ul><li>3 . SIMPLIFICATION and ACCELERATION of the registration procedure: </li></ul><ul><ul><li>only formal registration requirements have to be met </li></ul></ul><ul><ul><li>introduction of “silence is consent” rule </li></ul></ul><ul><ul><li>time required to register a new company is now 2-3 days , and 1 day for registering a new entrepreneur (“sole trader”) , although the law allows for a maximum of 5 days </li></ul></ul>
  14. 14. WEAKNESSES IN THE REFORM PROCESS <ul><li>Lack of a clear strategy by the Government regarding the commercial law reform in general, which impacted implementation of the business registration reform </li></ul><ul><li>Poor coordination between different ministries - due to the lack of strategy (e.g., the Ministry of Justice undertook a parallel project financing a registration software for the commercial courts) </li></ul><ul><li>Lack of a strategy in regards to the compromises that need to be made in order to reach consensus between different interest groups involved in the reform process (Ministry of Economy and Privatization, Ministry of Justice, National Bank, Commercial Courts) </li></ul><ul><li>Lack of institutional capacity for the reform at the beginning of the process </li></ul><ul><ul><li>Strengthening of the Council for Regulatory Reform accompanied the reform implementation </li></ul></ul>
  15. 15. IMPLEMENTATION CHALLENGES OF THE BUSINESS REFORM <ul><li>1. LEGAL CHALLENGES: </li></ul><ul><li>In the phase of drafting the necessary laws, the reform was highly controversial and was opposed even by some of the ministries within the Government (MOJ) </li></ul><ul><li>Management of legal challenges: </li></ul><ul><li>Adoption of the principles of the reform by the Government eliminated further opposition </li></ul><ul><li>2. TECHNICAL CHALLENGES: </li></ul><ul><li>The IT can be crucial for the success of the reform. </li></ul><ul><li>The software was not ready in time due to the complex procurement rules of the World Bank. </li></ul><ul><li>The reformers faced a difficult decision: whether to postpone the implementation date or to start operation even if not completely ready? </li></ul><ul><li>Management of technical challenges: </li></ul><ul><li>A temporary software solution was developed to surpass the problem. </li></ul>
  16. 16. IMPLEMENTATION CHALLENGES OF THE BUSINESS REFORM <ul><li>3. HUMAN RESOURCES CHALLENGES: </li></ul><ul><li>The Agency was pressured to employ existing government officials and judges and staff from commercial courts </li></ul><ul><li>Management of human resources challenges: </li></ul><ul><li>The Agency decided to start employing new young people who will be able to learn that public administration is a service for its users </li></ul><ul><li>4. FINANCIAL CHALLENGES </li></ul><ul><li>The donor funds secured only three months of operational costs (rent, salaries, office supplies..) </li></ul><ul><li>Management of financial challenges: </li></ul><ul><li>When drafting the law RIA was applied including cost-benefit analysis, which secured setting the fees of the Agency at the lowest level which at the same time secures self-sustainability of the Agency. </li></ul>
  17. 17. <ul><li>UNIFORMITY of registration practices regardless of where registration takes place </li></ul><ul><li>DECREASE COSTS OF REGISTRATION: </li></ul><ul><ul><li>C osts of registration have been cut to EUR 41 for the registration of a limited liability company and EUR 6 for entrepreneurs (“sole traders”) </li></ul></ul><ul><ul><li>B asic capital requirement has been cut from US$ 5,000 to EUR 500 </li></ul></ul><ul><li>AVAILABILITY OF ALL DATA in the Register without having to prove legal interest </li></ul><ul><li>HARMONIZATION with EU standards and directives </li></ul>IMPACTS OF THE REFORM
  18. 18. STRENGTHS IN THE REFORM PROCESS <ul><li>Accepted strategy was immediately aimed at a radical reform </li></ul><ul><li>The reform was implemented in two phases : phase I included elimination of the pre-entry inspections </li></ul><ul><li>To develop the scope and principles of the reform and draft the law RIA was applied </li></ul><ul><ul><li>A detailed cost analysis of the new register was conducted to find the right balance between the requirements for an independent and self-financing register and the minimum costs for the users-businesses </li></ul></ul><ul><li>Different interest groups were included in the process , both in the drafting and public consultation phases </li></ul><ul><ul><li>It is advisable to use an inter-ministerial body , such as the Council for Regulatory Reform, as a basis for the creation of an strategy for the reform of the commercial law, and as a mechanism for coordination between different ministries involved in the reform process </li></ul></ul>
  19. 19. USEFUL ADVICE FOR ANY COUNTRY PLANNING TO REFORM THE BUSINESS REGISTRATION SYSTEM <ul><li>Prior to starting a radical reform such as reform of the business registration system, and as early as possible, is necessary TO ENSURE as wide as possible CONSENSUS ON THE BASIC PRINCIPLES OF THE REFORM within the Government and interested institutions </li></ul><ul><li>Since reform involves competencies of several ministries, it is necessary for the Government to establish an INTER-MINISTERIAL BODY to follow up and coordinate the overall reform, and to ensure consistency in the regulations and in the implementation of the Action plan ( for the reform) </li></ul>
  20. 20. SBRA STATISTICS As of February 27, 2009 <ul><li>REGISTER OF BUSINESS ENTITIES: </li></ul><ul><li>Entrepreneurs ( “ Sole traders ” ) </li></ul><ul><li>Total registered 216,983 </li></ul><ul><li>Registered in 2008 43,584 </li></ul><ul><li>Registered in 2009 5,699 </li></ul><ul><li>Deleted in 2008 34,769 </li></ul><ul><li>Deleted in 2009 5,854 </li></ul><ul><li>Companies </li></ul><ul><li>Total registered 105,559 </li></ul><ul><li>Registered in 2008 11,406 </li></ul><ul><li>Registered in 2009 1,506 </li></ul><ul><li>Deleted in 2008 3,077 </li></ul><ul><li>Deleted in 2009 425 </li></ul><ul><li>Annual Financial reports in 2008 110,655 </li></ul>
  21. 21. CURRENT REGISTRATION REQUIREMENTS Source: “ Doing Business 2007” No Procedure for a LTD Company Time to complete Cost to complete 1 Obtain registration forms (Form RJR-1, Form OP, Forms M1 and M4) 1 day CSD 5 (form OP) 2 Notarize the memorandum of association and lease contract at the Basic Court 1 day depends on the amount of capital 3 Open a temporary bank account; pay founding deposit or its part and all other fees 1 day no charge 4 Obtain the registration certificate Business Registers Agency (SBRA) 3 days RSD 5,060 (RSD 3,600 + RSD 1,460) 5 Make Stamp and seal 1 day RSD 2,500 6 Obtain tax identification number (PIB) at the Municipal Hall; certify the signatures (three copies) for opening bank account 6 days no charge 7 Register with local tax authority 5 days no charge 8 Open a permanent business account with the commercial bank 1 day (less than half a day) RSD 400 (signature certification and republic tax) 9 Register the employment contracts with the Employment Organization/Fund 1 day no charge 10 Obtain certificate from the pension fund (PIO Fund) 2 days no charge 11 Obtain certificate from the Health Fund 1 day no charge 23 days
  22. 22. INEFFICIENCIES OF THE CURRENT MODEL <ul><li>Registrants must: </li></ul><ul><ul><li>Personally visit up to 6 different offices </li></ul></ul><ul><ul><li>Complete up to 11 procedures </li></ul></ul><ul><ul><li>Submit forms to different offices containing duplicate information </li></ul></ul><ul><ul><li>Perform many procedures sequentially, rather than concurrently (in parallel) </li></ul></ul><ul><ul><li>Register separately with each agency </li></ul></ul>
  23. 23. <ul><li>Desired Model: </li></ul><ul><li>Introduce a single business registration form </li></ul><ul><li>Introduce a system whereby public authorities can recognise enterprises by a single identification number </li></ul><ul><li>Set up single contact points where a single registration form can be deposited </li></ul><ul><li>Ensure that government departments avoid introducing duplicated or superfluous forms and/or contact points </li></ul><ul><li>Use IT and databases as much as possible for the transmission and authentication of information submitted and/or the exchange of information between public authorities </li></ul>PRINCIPLES FOR FUTURE REFORMS
  24. 24. <ul><li>Thank you for your attention! </li></ul><ul><li>  </li></ul><ul><li>I am at your disposal for any further questions! </li></ul><ul><li>  </li></ul><ul><li>[email_address] </li></ul>