Montenegro’s corporate-governance agenda is becoming more serious. The revised Corporate Governance Code is not just a technical document for lawyers and boards. It is part of Montenegro’s wider move toward EU-aligned company law, investor protection and board accountability.
The Code uses an “apply or explain” model. Reporting of compliance begins for the financial year starting 1 January 2025, and companies are expected to complete questionnaires submitted to the Capital Market Commission. The Code also states that the Commission will publish an annual corporate-governance report for companies applying the Code.
The governance recommendations are significant. Boards should have an odd number of members, should be mostly non-executive, and should have a majority of independent members. The chairperson and CEO should not be the same person. Boards are also expected to establish nomination, remuneration and audit committees, each with at least three members, mostly independent, and chaired by an independent non-executive director.
The gender-balance provisions are also notable. The Code states that the less represented gender should account for at least 40% of non-executive directors or one-third of all director positions, including executive and non-executive roles.
This is a major cultural shift. In small markets, boards often function as extensions of owners, management or political influence. The new governance direction asks companies to separate supervision from execution, document decisions better, manage conflicts and treat minority shareholders more seriously.
For listed companies, better governance can improve investor confidence. For state-linked enterprises, it can reduce political-management risk. For family businesses, it can help with succession, sale readiness and professionalization. For foreign investors, it creates a clearer framework for board control, reserved matters and minority protections.
But implementation will be difficult. Montenegro has a limited pool of experienced independent directors. Many companies may formally comply while changing little in substance. Others may explain deviations in generic language rather than providing meaningful reasons.
That is why the “explain” part matters as much as the “apply” part. A good explanation should show why a company’s alternative arrangement protects shareholders and improves oversight. A weak explanation is just a compliance excuse.
Montenegro does not need governance theatre. It needs boards that ask harder questions about risk, related-party transactions, capital allocation, debt, real-estate exposure, executive pay and long-term strategy.
The Code is a step toward that. Whether the market follows depends on investors, regulators, banks and owners demanding substance over paperwork.
