Nearly three years have passed since the adoption of a law intended to reorganise the operation of state-owned enterprises by removing the designation and legal status of “public” enterprises. Apart from their legal form, however, very little has changed within these companies. The main objectives of the new legislation were the professionalisation of management and the centralisation of governance. It appears that little, if any, progress has been made towards the former.
Their founder, the Government of Serbia, evidently never had difficulties centralising control, as it had long appointed acting directors to head these enterprises despite previous legal requirements. The new law has not brought a new approach to this issue. Since professional management has yet to gain a foothold in these companies, the first objective remains unfulfilled.
By removing the term “public” from the legal status of these state-owned enterprises, it was simultaneously removed from the asset declarations of their executives. Future directors, once appointment by public competition eventually becomes a reality, will be selected by the company’s shareholders’ assembly or supervisory board. Under the interpretation of the Law on the Prevention of Corruption, this means they will lose their status as public officials and with it the obligation to declare their assets and income.
What about public competitions?
The requirement that directors of what were formerly public enterprises, and are now mostly simply state-owned companies, be selected through open competition is one of the clearest examples of legislation remaining a dead letter. The provision has existed on paper for at least a decade, yet in practice only around a dozen officials have been appointed in this manner over all those years.
The latest Law on the Management of State-Owned Companies also provides for this method of appointment. This time, however, no deadlines have been prescribed, which is already a strong indication that there is no urgency to implement it. At the same time, the Government appears in no hurry to appoint its own representatives to these companies.
State representatives haven’t been appointed either
“State representatives have not been appointed to the state-owned enterprises that have changed their legal form,” Nemanja Nenadić of Transparency Serbia told Forbes Serbia.
“This is not the case with the Electric Power Industry of Serbia (EPS), but it underwent the transformation process earlier. There, the state representative is the Minister of Energy herself. No clear deadline has been set for this task. It is obvious that it should follow the transformation and amendment of the company statutes.”
Supervisory boards are responsible for launching competitions for the appointment of directors. A review of company records in the Serbian Business Registers Agency (APR) shows that supervisory boards were changed before the enterprises altered their legal form. “The second issue is that, unless the Law on the Prevention of Corruption is amended, these individuals will not be considered public officials. Interpretations of the law suggest that official status depends on who appoints a person rather than on the position they perform. Someone appointed by the Government is an official, whereas someone appointed by a ministry is not. Consequently, directors of state-owned companies will not be public officials,” Nenadić adds.
A practical example
Pošta Srbije (Serbian Post) is one of the enterprises that met enough criteria to become a joint-stock company after changing its legal form. However, notes accompanying last year’s financial statements indicate that the company believes a limited liability company is a more efficient and less costly structure.
“The Ministry of Economy issued an opinion that it would be expedient for the company to transform into a limited liability company, given the advantages of this legal form and its lower operating costs,” the document states.
The Government adopted the decision to change the company’s legal form on 18 December 2025. A working group was also established to prepare a proposal for a new macro-organisational structure, down to the level of the smallest organisational units.
Although the previous Law on Public Enterprises also stipulated that the director should be appointed by the Government “on the basis of a public competition”, this requirement was never fulfilled and is not even mentioned. “The company director, appointed by the founder, represents the company, organises and manages its work processes, conducts its business operations, is responsible for the legality of its activities, and performs other duties prescribed by the law governing the legal status of public enterprises, the company’s founding act, and its statute,” the report states.
Has there been any significant progress?
Zlatko Minić of Transparency Serbia points out that the public has yet to see any practical benefit from changing the legal form of these enterprises. It remains unclear what can now be achieved that could not have been done when they operated as public enterprises. “No one has explained this, and we still do not see it today – not even in the case of EPS, which began its transformation earlier. We are witnessing the same pattern that occurred with the laws on public enterprises adopted in 2012 and 2016. There was considerable negligence in their implementation. As far as transparency is concerned, the latest legislation prescribed the same level of strictness, but in practice, things have not looked particularly good,” Minić says.
Violations of previous laws governing public enterprises have led to a certain paradox, Minić explains. People with limited experience in the relevant sectors were appointed to supervisory boards. However, after spending years in those roles, they have now gained experience. “For example, we noticed that during the caretaker government of Miloš Vučević, after he submitted his resignation, the Government appointed acting members of supervisory boards. The law simply does not recognise such a position,” Minić says.
How great is the risk?
The Ministry of Finance uses the Altman Z-Score model to assess the fiscal risks posed by state-owned enterprises.
According to official financial statements:
- 2% of state-owned enterprises are classified as high risk;
- 4% are classified as moderate risk;
- The remaining 44.4% are considered low risk.
The total fiscal risk, or expected expenditure, for 36 state-owned enterprises in 2026 is estimated at approximately 2.3 billion dinars. Projections indicate expected expenditures of 4.2 billion dinars in 2027 and 3.6 billion dinars in 2028. For 2029, a decline to 3.5 billion dinars is forecast.
“Given that the size of the expected expenditure is directly affected by annual loan obligations, any new borrowing by enterprises would increase the expected expenditure, highlighting the importance of debt control and the sustainable management of financial liabilities,” the strategy states.
Still public enterprises
Srbijagas, PEU Resavica, Jugoimport SDPR, and Šar Mountain National Park have still not changed their legal form, despite the formal deadline for public enterprises to align their organisational structures and regulations with the new law having already expired. The legislation has been in force since September 2024, meaning the deadline passed in the same month last year.
“Capital companies referred to in Article 3 of this law, as well as capital companies performing activities of general interest within the meaning of the law governing public enterprises, shall harmonise their organisation and general acts with the provisions of this law no later than one year from the date this law begins to apply,” Article 48 of the law states.
At the same time, the penalty provisions contain no sanctions for companies that fail to comply with this requirement.
As for PEU Resavica, the state is still searching for a solution. According to the Fiscal Strategy, the privatisation of certain parts of the company is under consideration.
(Forbes Serbia, 15.06.2026)