Staffing Across a Fragmented System

Cross-entity matters tend to live or die on coordination, and clients expect a single experience even when the law isn’t singular.

“We structure matters through a single, integrated team that operates across the entire territory of Bosnia and Herzegovina,” Durakovic begins. “Clients view the country as a single market and expect consistent legal solutions, irrespective of whether their matters arise in the Federation of Bosnia and Herzegovina or Republika Srpska. The existence of at least two distinct legal frameworks within one jurisdiction undoubtedly increases the level of complexity, and this complexity is even greater in the Federation of Bosnia and Herzegovina, where individual cantons have their own specific regulations in many legal areas.”

Some firms pair centralized control with local fluency to keep strategy tight and execution precise. “We are experienced in working throughout Bosnia and Herzegovina,” Dimitrijevic chimes in. “From that experience, I am firm that it is manifestly wrong to assume that it is necessary to have entity-based specialists. Not only because formally we are all entitled to practice all over the country, but also because we are trained and experienced in reading different rules, all of them similar, of one and the same country, and with cultural and historical background stemming from the same legal heritage.”

And, according to Ibrahimovic, when matters extend across entities, the ability to coordinate effectively is essential. “We typically adopt a cross-entity team structure led by a responsible Partner, ensuring consistent strategy and communication. Dedicated practitioners with deep knowledge of each entity’s regulatory environment complement this central oversight.” As he puts it, this combination allows the firm to “provide both seamless coordination and tailored expertise, thereby delivering solutions that are not only legally sound but also commercially efficient.”

Where Investors Incorporate (and Why)

Entity choice tends to follow administrative simplicity, business gravity, and regulator posture more than fine tax differentials. “To put it plainly, the legal framework is generally more straightforward in Republika Srpska, largely because there is no additional layer of cantonal regulation,” Durakovic comments. “This applies both to company incorporations and to licensing in most regulated sectors. In practice, however, many clients still prefer to incorporate in the Federation of Bosnia and Herzegovina, primarily because Sarajevo is the capital and the majority of business activity takes place in the Federation.” According to Durakovic, the differences in taxation and court systems are not great and rarely influence a client’s decision.

“Tax regimes are generally the same, and the only difference is the red tape burden one may face, which can slightly differ,” Dimitrijevic adds. “Mindful of that, clients choose specific seats depending on their specific business needs and preferences, such as close access to the EU, and highway network, access to the airport, or big centers.”

And, Ibrahimovic stresses that “investors’ preferences for incorporation or licensing across the entities are primarily driven by practical considerations such as the responsiveness of regulators, procedural timelines, and incentive frameworks.” According to him, “the Federation is often seen as efficient in administrative processes, while Republika Srpska offers predictability and clarity in licensing regimes. The Brcko District, with its distinctive tax advantages and investment-friendly framework, remains an attractive option, especially for foreign investors seeking a neutral base.” As Ibrahimovic sees it, rather than being a barrier, this diversity “offers clients flexibility and choice, allowing them to select the jurisdiction that best aligns with their strategic objectives.”

The Pragmatic Choice of Forum

When transactions span entities, governing law and venue usually follow the assets, incorporation, and forum competence, not doctrine alone. “The choice of governing law and dispute forum is always transaction-specific,” Durakovic stresses. “While there are notable differences between the entities in areas such as company law, labor, licensing, and permitting, in our experience, these factors rarely drive the decision. In practice, the key considerations are where the contracting entities are incorporated, where the relevant assets are located, and which courts or arbitral institutions are best equipped to handle potential disputes.” According to her, clients also place weight on the “experience and expertise of the forum: courts in larger cities such as in Sarajevo, Banja Luka, or Tuzla, generally have more exposure to complex commercial disputes than those in smaller jurisdictions.”

Still, even so, entity-level divergences in, for example, company law and labor rules can shape drafting and forum selection, especially on builds. “Cross-entity transactions require careful attention to the choice of governing law and dispute forum,” Ibrahimovic says. “While some parties prefer neutral or foreign governing law, others opt for domestic frameworks. In such cases, divergences in company law, real estate and permitting rules, or labor frameworks often influence the decision. These differences are not obstacles but considerations that, when properly managed, allow for tailored solutions.”

From Dimitrijevic’s point of view, “internal conflict of law issues are rarely raised in transactions. More relevant in negotiations is the choice of dispute forum, and more and more clients opt for an ad hoc arbitration, seated either in Sarajevo or in Banja Luka, or with a seat abroad when available. In such a choice, they are prevailingly influenced by the expected neutrality of the place where the formal seat would have been.”

Closing on Time in a Patchwork

Finally, timelines are increasingly driven by country-wide approvals and practice shifts, more than by mechanical differences between entities. “In larger transactions, particularly M&A, procedural differences between the entities are generally limited, so the mechanics of closing do not differ significantly across entities,” Durakovic says. “What tends to affect timing more are regulatory approvals required for certain deals, such as competition authority clearance, which applies across the entire country at the state level and therefore does not differ between entities.” On the other hand, in smaller or purely local transactions, Durakovic says that the “duration of incorporation or licensing procedures may have some impact, though typically not to a material extent.”

Chiming in, Dimitrijevic adds that “the heaviest toll on timing is imposed by licensing and sector approvals, while that burden is similar across all areas in the country. On a specific note, currently we witness some slowing down in registration work in the Federation of Bosnia and Herzegovina, especially in Sarajevo, in comparison to Banja Luka, as a slightly different technical model applies in the respective procedures.”

Operationally, starting with the longest-lead jurisdiction and running parallel tracks has become a reliable way to land simultaneous completions. “Differences in registration processes, notarization requirements, sector approvals, and enforcement procedures are part of the Bosnian legal reality,” Ibrahimovic says in the end. “However, with proper planning and sequencing, these differences can be managed without jeopardizing deal timelines. Our firm typically initiates workstreams in the jurisdiction expected to require the longest lead time, while aligning other steps in parallel; this method has proven effective in ensuring that even multi-entity closings proceed smoothly and on schedule,” he concludes.

Original text Published by CEE Legal Matters: One Market, Multiple Systems: Making Deals Work in Bosnia and Herzegovina