The question I am asked most often by the purchasing and finance departments of companies dealing with Montenegrin counterparties is not about the clause but about the signature: does the person who signed bind the company, and does our own signatory bind us. Since 1 January 2026 the answer sits in a new Companies Act and a new electronic identification law, both amended again in the spring, and it differs from what most foreign groups expect. A Montenegrin company is bound by the acts of its registered representatives even where the register records a limit on their authority and even outside its registered business; representation is sole by default and joint only if the register says so; a general power of attorney covers ordinary business only, and a list of acts needs a special authority for each case; a company is bound by an offer on its letterhead signed by an unauthorised employee under four conditions; a foreign power of attorney is valid in the form of the place where it was signed; and a qualified electronic signature equals a handwritten one, but a qualified certificate issued in the European Union is not yet recognised as qualified in Montenegro. This page sets out those rules from the statutes and turns them into a checklist for both sides of the table.
Sources, checked 11 September 2026. Companies Act (Official Gazette of Montenegro 90/25, 121/25 and 44/26), Articles 5, 20, 34 to 37, 337 to 339, 407 and 426; Law on Obligations (47/08 to 94/26), Articles 32, 33, 60 and 80 to 94; Law on Private International Law (1/2014 and 47/2015), Articles 23 and 24; Law on Electronic Identification and Trust Services (92/2026), Articles 3, 63 to 65 and 68; Law on Notaries.
Who represents the company by law
Under Article 34 of the Companies Act the legal representatives of a limited liability company and a joint stock company are its executive directors or the members of its management board, and they are entered in the Central Register of Business Entities. Article 35 lets the founding act or the statute authorise other representatives, who are registered as well. Article 37 sets the default that decides most disputes: where the authority of several representatives is not expressly determined as joint, each representative acts alone; joint representation is the exception, and it is registered under Article 37(2), so the question whether one signature is enough is answered from the register extract, not from the counterparty's assurances. Article 37(3) adds that a declaration made to any one of the representatives is made to the company, which is why a notice of default or termination served on one registered director is validly served.
Registered limits and third parties
Article 36 is the article foreign counsel misread. A representative who exceeds the limits of its authority is liable to the company, and the limits are registered, but Article 36(3) provides that acts taken by authorised representatives bind the company towards third parties even where the limits of their authority are registered in the Central Register, and even where the acts fall outside the company's registered business, with one exception: acts that the law itself places outside the representative's authority or does not allow a company act or decision to delegate. A registered ceiling such as "contracts above a stated value require a board resolution" therefore gives the company a claim against its director, not a defence against the supplier. Article 5 completes the picture from the register's side: a third party that relies on data and documents entered in the register cannot suffer loss from an incorrect entry, and third parties are deemed to know registered and published data from publication, and cannot plead ignorance of them fifteen days after it. The counterparty's task is therefore to read the register for who the representatives are and whether representation is joint, and not to read it for approval thresholds it can safely ignore.
| Question | Montenegrin rule | Article |
|---|---|---|
| Who signs by law? | Executive directors or management board members, registered; other representatives under the founding act or statute, registered | Companies Act 34, 35 |
| One signature or two? | Sole representation unless joint representation is expressly determined and registered | 37(4), 37(2) |
| Does a registered value limit protect the company? | No; acts of authorised representatives bind the company even where the limits are registered and even outside the registered business, save for acts the law itself excludes | 36(3) |
| Notice served on one of several directors | Served on the company | 37(3) |
| Company seal | Not mandatory; an electronic seal is required for electronic business | 20 |
| General power of attorney | Ordinary business only; special authority for extraordinary business | Law on Obligations 87(2), (3) |
| Bills of exchange, suretyship, settlement, arbitration, waiving a right without consideration | Special authority for each case | 87(4) |
| Business power of attorney of a company | Contracts usual in its business; no real estate disposals, bills, suretyship, loans or litigation without a special power; limits bind third parties only if known or knowable | 91 |
| Offer signed by an unauthorised employee | Binds the company on its letterhead, stamped and signed in the usual way, within its regular business, if the other party did not know | 32 |
| Foreign power of attorney | Valid in form if valid under the law of the place of signing or the law governing the transaction | Private International Law 23 |
| Electronic signature | Qualified electronic signature equals a handwritten signature; EU qualified certificates not yet recognised as qualified | E-identification law 68, 64 |
Decisions that need more than a signature
For a joint stock company, Articles 337 to 339 of the Companies Act treat as a large-value transaction one whose value reaches twenty per cent of the company's net assets at the time of the decision, including purchases, sales, leases, exchanges, pledges, mortgages, loans and suretyship, and including real estate and shares; connected transactions within a year count as one; the transaction needs a three-quarters majority of the shareholders present; the company or a shareholder with five per cent may seek annulment within six months and at the latest three years; and, under Article 339(3), there is no annulment where the counterparty did not know and could not have known of the breach, which is the counterparty's protection and the reason it should keep the resolution it was shown. For a limited liability company the position is different and often misstated: the list of matters reserved to the members in Article 407 does not include the disposal of assets, Article 426(2) presumes the director competent for matters not reserved to the members, and the large-value rules of Articles 337 to 339 are written for joint stock companies only. A restriction on a d.o.o. director's power to sell assets therefore comes from the founding act or statute, if at all, and under Article 36(3) even that restriction does not defeat a third party. The mechanics of an asset or share purchase from a company are set out on the asset deal and share deal page, and the director's personal exposure on the directors' duties page.
Powers of attorney under the Law on Obligations
Articles 80 and 81 of the Law on Obligations allow any contract to be concluded through a representative whose authority comes from the law, the general act of a legal person, the act of a competent body or the principal's declaration, the power of attorney, and make a contract concluded within that authority bind the principal directly; where the representative does not disclose that it acts for another, the contract still binds the principal if the other party knew or could infer it. Article 82 forbids sub-delegation unless the law or the contract allows it. Article 83 governs excess of authority: the principal is bound only if it ratifies, ratification is deemed refused if not given within the time normally needed to consider such a contract, and a counterparty that did not know of the excess may declare itself not bound as soon as it learns of it, with the representative and the principal jointly liable for its loss if ratification is refused. Article 84 governs the case of no authority at all: the contract binds the purported principal only on ratification, the counterparty may set a reasonable period for ratification, the contract is deemed not concluded if none comes, and the false agent answers in damages to a counterparty that did not know and could not have known. Article 85 makes the existence and scope of a power of attorney independent of the underlying relationship and allows a legal person to be attorney. Article 86 requires the power of attorney to be in the form the law prescribes for the contract it is given for. Article 87 sets the scope: the attorney may do only what it is authorised to do; a general power covers only ordinary business; extraordinary business needs a special authority; and no attorney may, without a special authority for each case, assume a bill of exchange obligation, conclude a suretyship, a settlement or an arbitration agreement, or waive a right without consideration. Articles 88 to 90 let the principal narrow or revoke the power at any time without form, even where it waived that right, make revocation ineffective against a third party that did not know and could not have known of it, and end the power on the dissolution or death of either party, subject to exceptions.
The business power of attorney and the letterhead rule
Article 91 creates the instrument a company most often uses: a business power of attorney under which a company authorises a person to conclude contracts and perform the business usual in its activity. Its holder cannot alienate or encumber real estate, assume bill of exchange or suretyship obligations, borrow or conduct litigation without a special power for each such act, and where the business power is limited to certain kinds of business or certain transactions, the limit binds a third party only if it knew or should have known of it. Article 93 confines a travelling salesman to the business named in its power and presumes, in doubt, that it may collect orders but not conclude contracts, receive the price or sell on credit. Article 94 treats persons whose work consists of concluding and performing particular contracts, such as sales and counter staff, as authorised for those contracts by their position. And Article 32 binds a company to a written offer signed by an unauthorised person where four conditions meet: the offer is on the company's business stationery, it bears the company's stamp and is signed in the usual way, it concerns business the company regularly conducts within its normal scope, and the offeree did not know the signatory was unauthorised. Article 33 requires an offer or acceptance made by telephone to be confirmed by registered letter by the next working day, on pain of liability for the resulting loss. How these rules decide whose terms govern a contract formed by orders and confirmations is set out on the standard terms page.
Foreign powers of attorney
A power of attorney signed abroad raises three separate questions, and treating them as one is the usual error. Its form is governed by Article 23 of the Law on Private International Law, under which the form is valid if it satisfies either the law of the place where the power was signed or the law governing the transaction, so that a notarial certification of signature abroad, apostilled under the 1961 Hague Convention or legalised through the consular chain where the state of origin is not a party, is in principle sufficient as to form. Its content and scope are governed by the law applicable to the representation, which for real estate is the law of the place where the property lies under Article 24, so that Article 87 of the Law on Obligations applies and a general power does not carry a real estate purchase. And the form of the transaction itself is governed by its own rules: a real estate transfer needs the notarial record or solemnisation that the Law on Notaries requires, whatever the power says. A power of attorney for a supply or service contract needs none of that, but it should still name the counterparty, the type of transaction, any value limit and the acts under Article 87(4) it covers, because the counterparty will read it against those articles.
Electronic signatures and seals
The Law on Electronic Identification and Trust Services of 30 June 2026 replaced the 2017 law in full. Article 68 provides that a qualified electronic signature has the effect of a handwritten signature, and Article 65 distinguishes the electronic, advanced and qualified levels. Article 3(2) provides that the law does not affect the validity of contracts whose form is subject to special requirements, so an electronic signature does not replace the notarial form where the law requires it. Article 64, under which a qualified certificate issued in a member state of the European Union is treated as qualified in Montenegro, applies only from the date of accession, and Article 63(2) opens recognition for other states only through a treaty based on reciprocity; a foreign group's qualified signatures from its home provider are therefore not automatically qualified signatures in Montenegro today, and a contract that needs a written form should be signed with a Montenegrin qualified signature or by hand. Article 20 of the Companies Act adds that a company seal is not mandatory and that a company doing business electronically must use an electronic seal. Which signatures satisfy which form is set out on the electronic signatures page.
The checklist before countersigning
For the counterparty of a Montenegrin company: obtain the register extract on the day of signature and read who the representatives are and whether representation is joint; do not rely on a registered value limit either way, since Article 36(3) binds the company and Article 5 binds you to what is published; for a joint stock company above the twenty per cent line, ask for the shareholders' resolution under Article 338 and keep it; for a signatory who is not a registered representative, obtain the power of attorney, check it against Article 87 and, for a business power, against Article 91; for a foreign signatory, check the apostille or legalisation and the scope; and for electronic signatures, accept a Montenegrin qualified signature or insist on wet ink. For the Montenegrin company itself: register joint representation if two signatures are wanted, since an unregistered internal rule binds nobody; keep letterhead and stamps away from staff who should not bind the company, since Article 32 will bind it; and revoke powers of attorney in writing to the counterparties who hold them, since Article 89 makes revocation ineffective against those who did not know.
When a signature is challenged
Where a contract was signed without authority, the counterparty's first step is a written demand for ratification with a period under Article 84(2), and its second, where the period passes, a claim in damages against the signatory under Article 84(4); where authority was exceeded, the counterparty that did not know may withdraw under Article 83(4) or hold the principal to a ratification. Where the company argues that a registered limit was breached, the answer is Article 36(3). And where a director bound the company against an internal rule, the company's remedy is against the director, on the directors' duties page. The legal function these pages belong to is described on the outsourced legal department page.
Whose side we are on, and how we are paid
The counterparty's director signed alone and assured you that the board had approved. Your own regional manager signed on the company's letterhead without a power. The notary abroad certified a signature on a general power that does not carry the transaction. None of them is paid to tell you, before the signature, that the register decides whether one signature binds, that the limit you were shown does not protect the company, or that the electronic signature your group uses everywhere is not a qualified signature in Montenegro.
We take no commission or referral fee from counterparties, notaries, agents or registries, in any form, on any file. The fee you pay us is our only income from your matter, and it does not depend on whether a contract is signed. Because our position does not move with the outcome, telling a buyer that the signature it holds binds nobody, or a seller that its internal approval rule is worthless against third parties, costs us nothing to say.
One boundary, stated plainly. We are lawyers, not licensed investment advisers and not a registry. We do not decide who in your company should have authority. What we protect is the Montenegrin legal position: a signatory whose authority is read from the register or from a power that carries the transaction, a form that the law accepts, and a record that survives the day the counterparty says it was never bound.
Before the next contract is signed
Send us the draft, the counterparty's register extract, the powers of attorney on both sides and, for a foreign signatory, the notarised and apostilled documents. We will tell you who can sign under Montenegrin law, what is missing, and what form the signature needs. Our corporate work in Montenegro is described on the Montenegro lawyer page.
What this page does not settle
Representation of partnerships and branches of foreign companies, prokura, the detail of the register's electronic procedures, the notarial rules for real estate and share transfers, the liability of directors beyond the outline above, tax and banking signature rules and the conduct of litigation are separate subjects. The recognition of foreign qualified certificates depends on treaties that should be checked with the ministry at the time of signing.
