Legal Reform in Montenegro

The Republic of Montenegro has continued to improve its legal framework in recent years, with the view of harmonising it with the EU legislation. The Legal Transition Team will continue to support the work of the bank in strengthening companies through corporate governance initiatives and promote energy efficiency.


Access to Finance

Montenegro’s legislation regulating access to finance topics includes the Law on Property Rights, Official Gazette of the Republic of Montenegro, No 88/02, the Law on Secured Transactions, Official Gazette of the Republic of Montenegro, No 38/02, the Law on Enforcement and Securing, Official Gazette of the Republic of Montenegro, No 36 /11, the Law on Financial Leasing, Official Gazette of the Republic of Montenegro, No 81/05, and the Banking Act, Official Gazette of the Republic of Montenegro, No 17/08, 44/10, 40/11.
Improving access to finance, especially for SMEs, is an important part of the EBRD’s mission. There are no currently reported reforms in the sector.
Supporting development of factoring services by introducing legislation on factoring and developing reverse factoring programs and platforms might help to improve overall access to finance of SMEs by giving credibility to the service through supervision, making factoring services more transparent and legally certain.
In 2014 the EBRD conducted an assessment on secured transactions which examined the availability of collateralising different types of assets regardless of the underlying legal instruments used to achieve the establishment of secured creditor’s rights. In addition to the classic security interests (pledges and mortgages the assessment also covered usual types of quasi security, such as sale and lease back transactions. The assessment also covered related issues such as enforcement and syndicated lending. The links below take you to the assessment results for Montenegro.

Capital Markets

Under the current regulatory and legal framework governing the local debt capital markets of Montenegro, the primary regulatory institutions are the Ministry of Finance (the "MOF"), the Securities and Exchange Commission (the “SEC”) and the Central Bank (the “CBM”).
In Montenegro, the Bank focuses on the private corporate sector, tourism and property sector where the Bank plays an important role by providing both funding and political comfort to foreign investors.
In terms of financial markets, there seem to be no on-going reform, except the USAID work on the integration of stock exchanges from Southern and Eastern Europe in order to increase their attractiveness to issuers and investors. Within this project, the USAID is planning to implement a special IT system that would allow for more efficient execution of cross-border trades. The involved exchanges, including the MSE, established various working groups, including a legal and regulatory group, which is tasked to identify whether any legal or regulatory changes would need to be introduced for the implementation of this project. USAID is discussing possible cooperation on this project with the EBRD.

Contract Enforcement and Judicial Capacity

The EBRD Judicial Decisions Assessment 2012 found court judgments in commercial law matters to be moderately predictable and of reasonable but variable quality. The pace of justice was considered relatively slow. There remains a significant case backlog, which is being reduced slowly: in 2011 there was a 4% reduction in the backlog compared to 2010. Judges continue to have a large workload, despite Montenegro having one of the highest ratios of judge to population amongst the Council of Europe member countries. The lack of a formal system to monitor the length of trials has been noted as a deficiency in the current system and is an area of suggested reform. Access to court judgments has improved recently, with decisions of appeal courts now generally available, contributing to greater certainty in legal proceedings. However, more work remains to be done in this area; full public access to decisions at all instances would facilitate the country’s efforts to strengthen the transparency and accountability of judiciary.

Corporate Governance

According to the results of the EBRD’s 2007 Corporate Governance Sector Assessment legislation under which the quality of corporate governance in force in November 2007 was assessed, Montenegro resulted to be in “very low compliance” with the OECD Principles of Corporate Governance, showing a framework under an urgent need for reform in all sectors under consideration. Since then, the corporate governance legal framework has been amended several times and considerably improved. Pursuant to the 2011 and 2012 Progress Reports issued by the EU, Montenegrin legislation on company law is largely consistent with the EU acquis, but some discrepancies remain to be addressed. In particular, an independent public oversight body for auditors and a quality control system need to be clearly planned and established.

Debt restructuring and bankruptcy

The main legislation governing insolvency proceedings for legal entities and entrepreneurs in Montenegro is the Law on Bankruptcy.
Based on the results of the assessment, an elementary legal framework exists for the IOH profession in Montenegro. This would nevertheless benefit from further improvements to address certain key areas of weaknesses and thus further improve IOH capacity and performance.

Electronic Communications

Substantial aspects of the 2008 Law on Electronic Communications are broadly aligned with EU 2003 framework; however several areas have not yet been fully aligned, including independence of the regulator, more effective allocation of inspection and monitoring responsibilities, meaningful penalties for breaches of the law and comprehensive provisions for obtaining rights of way. A draft new Law on Electronic Communications, which would more fully align with the 2009 EU Framework, was submitted for public hearing in July 2012.
EBRD Legal reform projects
Communications Sector – Law Review & Secondary Legislation Development
In 2010 the Legal Transition Team completed a review of the latest draft of a new communications law during the course of the Montenegro Regulatory Development TC, below, revealed significant deficiencies in the draft from the standpoint of EU compliance and investor attractiveness. A similar review of the draft law by the European Agency for Reconstruction concluded with identical concerns being relayed to government. The Bank has agreed technical assistance with improving the draft law and drafting of certain secondary legislation instruments with the
Ministry for Maritime Affairs relating to the feasibility and timing of this assistance.
Communications Sector – Regulatory Development
Arising from a visit to Podgorica during July 2006, a request was received to provide technical assistance to the Montenegrin Telecom Regulator (AGENTEL) in the areas of technical capacity building and regulatory framework implementation – mostly in the areas of interconnection, costing and law review/revision. Funding is from the EBRD West Balkans Fund. Project launch in Podgorica occurred in November 2007 and project implementation proceeded successfully. All project tasks have been concluded and the project will be formally wound up during Q4of 2008. AGENTEL has requested further assistance with implementation of the new law – a request that is currently under discussion.

Energy and resource efficiency

Montenegro’s policy framework for renewable energy (RE) is set out in the Energy Policy of Montenegro until 2030 adopted in March 2011 (the “Policy”) and the Energy Development Strategy of Montenegro by 2030 adopted in December 2012 (the “Strategy”). Overall, the country has made some progress towards creating well-functioning RE and EE sectors as part of the negotiations towards its EU membership; however, efforts should be intensified in order to set up a modern and enabling regulatory and institutional framework for both the RES and EE sectors.

Energy legal and regulatory reform

The Energy Law covers the broader energy sector, including the RE sector; several implementing regulations in the RE sector envisaged by the Energy Law have been adopted. The recent EBRD energy law reform dimensions assessment project has shown that regulatory independence, transparency and tariff structure are the key strengths of the country’s electricity framework, while public service obligations and market framework are its key weaknesses.


Montenegro has quite a modern and comprehensive concessions act, enacted in 2009 (the “Concession Law”). There is no special Law regulating all forms of private-public partnership, however, there have been reports about the existence of a PPP Working Group with one of the tasks being the drafting of such a law. During the recent EBRD PPP/Concessions Laws Assessment throughout the EBRD countries the quality of laws in Montenegro were rated as “in high compliance” with international best standards). However the effectiveness of the laws in practice was ranked as in “low compliance” largely due to the absence of a clear PPP policy and the underdeveloped institutional infrastructure.

Public Procurement

Public procurement in Montenegro is regulated by the Public Procurement Law (the PPL), adopted in 2012. Four pieces of secondary legislation supplement the PPL—the Regulation on expressing award criteria into corresponding number of points, the Regulation on standard templates and forms, the Regulation on public procurement records and the Regulation on violation of anti-corruption rules.
The EBRD assessments conducted in 2010 and 2012 shows that regulatory framework is being modernised in terms of stability and integrity measures. On contrary, results from assessment of the legislation in 2012 suggest that no action has been taken to improve the law since 2010, since all the indicators other than competition scored the same and competition scored lower than in 2010.