Good corporate governance is considered one of the building platforms upon
which economic success is based. The challenges of corporate governance in Serbia,
which is moving toward EU membership, are particularly serious. Takeover
regulation is an important corporate governance external mechanism, and the
attempts to improve its provisions have a significant impact on the wider corporate
governance system. Having reviewed recently released investigations on
the legal extensiveness and effectiveness of corporate governance regulation in
Serbia, we analyze significant interventions that were made in corporate and security
legislation in Serbia last years. We indicate the privatization process as
a primary, and concentration of ownership, low liquidity of the equity market,
distortion of the key functions of the capital market and de-corporatisation as
consequent key factors of corporate governance reform. We show that recent
reforms include the reinforced role of the stock exchange and security commission
in monitoring of companies’ governance, as well as the improved regulatory
framework, particularly in the field of takeover activity. The mandatory bid rule,
principle of equal treatment of shareholders, squeeze-out and sell-out rules, are
the regulatory devices created in the Serbian takeover regulation to achieve two
main aims — a well-functioning market for corporate control and protection of
the interests of minority shareholders. However, we indicate that the takeover
regulation itself provides the possibility to evade the enforcement of the provisions
regarding mandatory rules, both when parties to bid are obliged to activate
the rule application and in the price determination process.