Slovenia

The limited liability company (“LLC”; Slo: družba z omejeno odgovornostjo, abbreviation: d.o.o.) is the most common and by far the most widespread for-profit organizational form utilized in Slovenia.

LLC is a legal entity and an independent holder of rights and obligations in legal transactions. LLC may be established by one or up to 50 natural or legal persons. The establishment of a LLC requires the share capital which amounts to at least EUR 7,500. The share capital of a LLC consists of share contributions of shareholders, on the basis of which the latter acquire their business share, expressed as a percentage, with its value in the share capital. The most important feature of a LCC is that the shareholders are not liable for the obligations of the Enterprise. Liability can be extended only exceptionally and under special statutory conditions.  

In addition to the LLC, the joint stock company (“JSC”; Slo: delniška družba, abbreviation: d.d.) is also a common organizational form in Slovenia.

The JSC is an Enterprise with share capital divided into shares. The JSC may be established by one or more natural or legal entities. Shareholders are not owners of the Enterprise but only exercise their membership and property rights from the paid-in shares in the share capital. In the JSC, the shareholders are not personally liable for the Enterprise's obligations - the Enterprise is liable for its liabilities with all its assets up to the amount of its own assets. As in the case of the LLC it is possible to establish personal liability of shareholders under special statutory conditions. 

In Slovenia it is common for individuals to carry out their economic activities also in the organizational form of sole proprietors (Slo: samostojni podjetnik, abbreviation: s.p.).

A sole proprietor is a natural person who independently performs a gainful activity on the market within an organized company. The sole proprietor does not have his own legal personality, separated from the legal personality of the business owner - the entrepreneur as a natural person. The entrepreneur is responsible for his obligations with all his assets.  

a. The most common for-profit organizational form used by Enterprises seeking financing from investors and that will have multiple owners is the JSC.

b. Slovenian legislation allows a fairly free choice as far as the organizational forms of a Social Enterprise are concerned. However, the most common one is the LLC.  

This matter is not explicitly regulated by law. In principle, the interests of the Enterprise and the shareholders are primarily pursued, however in practice also other interests, such as interests of employees, environment, etc. are taken into consideration. Notwithstanding the fact that this matter is not regulated by law, there may be guidelines at the level of industries or Enterprises that provide guidance in this area.

Slovenian legislation allows a fairly free choice as far as the organizational forms of a Social Enterprise are concerned.

1. Social Enterprise is a non-profit legal entity that acquires the status of a social enterprise and can be an association (Slo: društvo), an institution (Slo: zavod), a foundation (Slo: ustanova), a company (Slo: gospodarska družba), a cooperative (Slo: zadruga), an European cooperative (Slo: evropska zadruga) or other legal person under private law, which is not established solely for the purpose of making a profit and does not share assets, nor does it share the generated surplus of revenues over expenses.
2. Social Enterprise can also be organized in a traditional organizational form, however notwithstanding the organizational form, Social Enterprises must implement the principles provided by the Slovenian Social Entrepreneurship Act (Official Gazette of the Republic of Slovenia, no. 20/11, 90/14 – ZDU-1I and 13/18), such as the principle of non-profit, carrying out activities in the public interest, etc. There are some differences between the organizational forms in which the Social Enterprise can be established, e.g. the competent registration authority, the legislation governing a particular organizational form, the type of activity pursued, the amount of share capital, required number of founding members, etc.    
3. Special benefits, incentives and other bonuses, advantages in obtaining funds from the state and the European Union, promoting social cohesion and social assistance, limiting the liability of shareholders by freely choosing the organizational form of the Enterprise, good reputation in public and with clients, etc.
4. No.
5. No significant differences in timing or costs. In order to establish a Social Enterprise, it is necessary to establish one of the non-profit legal entities and apply for the status of a social enterprise – both procedures can be initiated at the same time, which means that the state authority responsible for registration will also assess the fulfillment of the conditions for obtaining the status of a social enterprise at the time of establishment. Additional costs may occur later e.g. in relation to the reporting requirements, etc.
6. The Social Enterprise forms are fairly well known. Among them, the most common organizational forms are LLC and association. Also common organizational forms are institution, cooperative and foundation.  

Under Slovenian law, a Social Enterprise is a non-profit legal entity, that acquires the status of a social enterprise and can be organized in organizational forms, as explained above, is not established for the purpose of making a profit and does not share assets, nor does it share the generated surplus of revenues over expenses. A Social Enterprise can nevertheless generate profit, yet the latter cannot be distributed but must be invested in the further development and expansion of activities of the Social Enterprise (i.e. nonprofit nature).

Compared to the Nonprofits that are not Social Enterprises, the Nonprofits that have the status of a social enterprise have an addendum “socialno podjetje” or an abbreviation “so.p.” in their company name indicating the obtained status of a social enterprise; Social Enterprises are subject to a special accounting standard; Social Enterprises are entitled to certain subsidies and other public funds; Social Enterprises are entitled to more favorable credit terms; certain tenders are open for Social Enterprises only; Social Enterprises are entitled to free use of the state´s or municipality´s immovable property (business premises, etc.) for the performance of activities for which they are established; in the first two years after acquiring the status of a social enterprise, Social Enterprises are entitled to co-financing of the training and education of persons responsible for the management and work with vulnerable groups of persons; etc.

Social Enterprises can be established in various organizational forms and must meet all the requirements that apply to a particular organizational form. In addition, these Enterprises must additionally meet all the conditions provided by the Social Entrepreneurship Act for Social Enterprises. Among other requirements, Social Enterprises are required to comply with the reporting obligations. This obligation is linked to the status of the social enterprise and cannot be reduced. As regards the speed of the formation process, there are no significant deviations between different organizational forms.  

Yes. In Slovenia a Cooperative is an Enterprise owned by the members themselves.

The Cooperative enables or facilitates the integration of various economic operators, including small and medium-sized entrepreneurs or Enterprises (farmers, craftsmen, etc.) into the market economy; it provides members with advantages that are enabled by savings due to a larger volume of production or operations, which members would not be able to achieve on a smaller scale by entering the market; through the participation of members, the Cooperative can improve the negotiating position of members in the market; the Cooperative is based on voluntary membership - voluntary entry and exit and democratic decision-making.

On the other hand, the democratic decision-making in Cooperatives results in slow response to sudden market changes as well as to sudden internal crises; due to the openness of the model, formation of interest groups within the Cooperative that pursue their own interests may easily occur; Cooperatives are prone and hypersensitive to financial risks; Cooperatives find it difficult to obtain funds, as traditional banks often do not trust Cooperatives in allocating funds, so Cooperatives have to rely on limited equity capital, which further slows down their market performance; etc.

Yes. The Social Enterprise must report to the Ministry of Economic Development and Technology on the commencement of its activities within one year of acquiring the status.

Additionally, the Social Enterprise is subject to certain specifics regarding annual reporting. The Social Enterprise submits the annual report to the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES) within the prescribed deadlines for each type of legal entity. In addition to the mandatory components for each type of legal entity, the annual report of the Social Enterprise must be accompanied by a part of the report that relates exclusively to the operations of the Social Enterprise.

In addition, the annual report of the Social Enterprise must also be accompanied by the assessment of the supervisory body of the Social Enterprise on the correctness and completeness of the data in the annual report. Therefore, before adopting the annual report, the supervisory body must supervise the regularity and legality of the financial and material operations of the Social Enterprise and the correctness of the keeping of books and the fulfillment of the objectives of social entrepreneurship.

Yes. There is some case law concerning the fulfillment and non-fulfillment of the required legal conditions and the consequent possibility and impossibility to obtain the status of a social enterprise; case law concerning the registration process; case law concerning the content of the articles of association of the Social Enterprise.

As regards the Environment there are no specific corporate requirements. Nevertheless, the Slovenian Environmental Protection Act and other legislation in this area also provide for the obligations of Enterprises in this area. The same goes for the Social – no specific corporate requirements, however, the Slovenian Worker Participation in Management Act and other legislation in this area also provides for the obligations of Enterprises in this area. As far as Governance is concerned, the Slovenian Companies Act sets out the requirements.  

Social Enterprises are generally committed and required to operate in a manner that is in the public interest and for the benefit of society.

No.

No, no such requirements.

Social Enterprises receive subsidies (e.g. funds to promote business), grants (e.g. for investments and organization or promotion of operations), donations, sponsorships, membership fees, prizes based on contests. 

The new for-profit impact investments are not yet present in Slovenia.

Reliefs; grants; subsidies; financial resources on the basis of public tenders; loans; guarantees; repayable funds of various public institutions (e.g. Slovene Enterprise Fund); financing of activities on the basis of obtaining concessions or various forms of exercising public powers or on the basis of a public-private partnership.

Regardless of the type of funding, it is in principle difficult to get to them. Fund providers have certain (usually already established) procedures for deciding who will receive the financial resources, and often the approval of a financial resource is also linked to the purpose of consumption. This type of obtaining of finances is usually associated with the completion of demanding documentation.   

No.

According to the Slovenian Companies Act the annual report must also, to the extent necessary, in order to understand the development and the profit or loss of the Enterprise and its financial position, contain the key accounting, financial and, when necessary, other markers, indicators, and other factors, which also include information concerning environmental protection and employees.

The impact bonds are not yet present in Slovenia.

No, only general obligations.

Crowdfunding is legal in Slovenia.

No, there are no such rules in Slovenian legislation that would make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated / accredited / qualified under applicable statutes.

No. The Slovenian Corporate Income Tax Act provides for an exemption from the obligation to pay the corporate income tax for a taxpayer – institution, association, foundation, etc., established for the purpose of carrying out a non-profit activity in accordance with a special law and who actually operates in accordance with the purpose of its establishment and operation. However, the taxpayer pays the tax on the performance of gainful activity.

Also, taxpayers – legal entities may claim a reduction in the tax base for the amount of payments for humanitarian, disability, social welfare, charitable, scientific, educational, health, sports, cultural, ecological, religious and general benefit purposes made to a Nonprofit.

In accordance with the Slovenian Value Added Tax Act, certain Nonprofits are exempt from the obligation to pay the value added tax.

No.

No.

There is no such general rule. However, this may be subject of an agreement between individual countries e.g. in the form of bilateral agreements.

Yes. In Slovenia we have the so called “business incubators”, “entrepreneurial accelerators”, “technology parks” which are support institutions that enable the creation and development of new Enterprises. The latter are founded or co-founded and financed or co-financed also by the state.

The state supports the growth and development of small businesses through financial incentives from the Ministry of Economic Development and Technology and institutions specializing in corporate financing (Slovene Enterprise Fund, SID bank, SPIRIT Slovenija). The main areas of promotion of small businesses in Slovenia are: providing an effective supportive environment for businesses; access to adequate funding for business projects; incentives for development and innovation projects of businesses; promoting the digitalization of businesses; providing adequate infrastructure for the operation of businesses; incentives for employee training; assistance in entering foreign markets.  

Social Enterprises must first and foremost follow the requirements arising from the organizational form in which they are established which differ from each other. Additionally, Social Enterprises are committed, regardless of its organizational form, to the additional requirements provided by the Social Entrepreneurship Act (e.g. specific requirements regarding annual reporting).

Supervision over the implementation of the provisions of the Social Entrepreneurship Act is carried out by the Labour Inspectorate of the Republic of Slovenia; the Financial Administration of the Republic of Slovenia; the Market Inspectorate of the Republic of Slovenia;
the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES); the competent ministry.

A violation of the Social Entrepreneurship Act constitutes an offense and thus the Social Enterprise can be fined up to EUR 20,000. A fine may also be imposed on the responsible person within the Social Enterprise.  

No.

The exact time frame of the process of establishing an Enterprise in Slovenia is difficult to foresee because it depends on a variety of factors. Roughly speaking, this process can take from a few days to a month or more.  

It is equally difficult to give a price framework for forming an Enterprise in Slovenia. It is necessary to take into account the costs of possibly engaged lawyers, the costs of possible translations of documents, notary fees, etc.

In Slovenia, the Social Enterprises have an addendum “socialno podjetje” or abbreviation “so.p.” in their company name indicating the obtained status of a social enterprise. On the basis of such acquired status, Social Enterprises are entitled to certain benefits, etc. as described above. Social Entrepreneurship Act specifies exactly what standards and conditions such an Enterprise must meet and which activities it can perform to obtain and maintain the mentioned status. The status of a social enterprise is in itself a recognizable certificate for ensuring positive social effects.

There is a wide range of certificates from various fields available for Enterprises. The latter serve primarily to improve the marketing image; increase competitiveness; increase the trust of customers, investors, the local community, etc. For example, a Social Enterprise can carry the certificate “Kupujem odgovorno” (Eng. “I buy responsibly”), which means that it adopts the principles of the social economy. By holding this certificate, a Social Enterprise becomes more recognizable, it can improve its marketing image, increase the trust of customers, investors, the local community, etc.   

Yes, startups can easily form and flourish in Slovenia - the environment is encouraging and there are many levers available to help and assist in establishment and development of the latter.

Forming an Enterprise and obtaining the status of social enterprise is relatively non-complex.  

Nevertheless, the flourishing of Social Enterprises in Slovenia is questionable. In the first place, it is worth mentioning the misuse and confusion in the use of terms related to the purpose, principles and objectives of social entrepreneurship - the concept of social entrepreneurship is poorly understood in Slovenia. Furthermore, it is worth mentioning the insufficiently developed mechanisms of statistical and analytical monitoring of social entrepreneurship, which is important for the entry of new social entrepreneurs into the industry, who usually rely on past statistics. Further on, notwithstanding the availability of various sources of obtaining financial sources, one of the main problems of Social Enterprises is obtaining financial resources and thus their financial stability. Social entrepreneurs also cite insufficient and not sufficiently stimulating tax relief as a problem. Furthermore, dispersed and poorly coordinated legislation in this area also represents a problem. In addition, Social Enterprises are tied to socially beneficial areas, but in parallel, many organizations that are financed from public funds operate and then represent unfair competition to Social Enterprises. One of the major drawbacks is also insufficiently qualified managers in Social Enterprises - it is very difficult to get managers qualified to work in a non-profit organization in the market.

No. Slovenian legislation is in principle encouraging with regard to the formation of Social Enterprises.

Social Enterprises are not exempt from the possibility of inclusion in public procurement procedures.

No.

In order for Social Enterprises to flourish, it would be advisable to on the first place raise public awareness of Social Enterprises, their goals, operation, purpose, etc.; educate young people about social entrepreneurship; provide as many educational opportunities as possible for managers to work in non-profit organizations; provide (more) tax benefits to Social Enterprises; expand the possibilities for Social Enterprises to obtain financial resources and facilitate the access to the latter; simplify and harmonize the legislation in this area as much as possible, etc.

In order for Enterprises to enhance social and environmental responsibility, it would be advisable, among other things, to introduce financial incentives (e.g. financial resources, tax incentives) for this purpose, e.g. in a way that encourages Enterprises to conduct its business in a manner that is more socially and environmentally friendly or in a manner that encourages Enterprises to obtain various certificates relating to the social and environmental responsibility of Enterprises (such as the Standard ISO 14001, the Certificate Socially responsible Enterprise), etc.  

N/A