Olive, a one-third shareholder in Montenegro’s Dr Simo Milošević Institute, wants unanimous board approval for investments above 1.5 million euros as a vote on the rehabilitation centre’s statute remains pending, co-owner Žarko Rakčević said. The proposed rule would give the investor a greater say over spending as the institute seeks financing for a four-star upgrade.
Rakčević, also a co-owner of tourism group Montehos, is the institute’s largest minority shareholder. Olive did not support the proposed statute because the government had not accepted its conditions. Under his proposal, all five directors would have to agree on an investment above the threshold; if they could not, the shareholders’ assembly would decide.
The investor also wants to retain the two-thirds majority required to amend the statute and introduce qualified voting for materially important transactions above 1.5 million euros. Olive has been a shareholder for eight years and intends to remain one over the long term. Rakčević believes it has repeatedly been outvoted on decisions that did not reflect sound management.
His concern extends to any legislative change that could alter the corporate position of the largest minority shareholder after its spending on the institute’s financial recovery. In arguing for stronger protections, he cited decision-making by three-quarters majorities in Germany, Slovenia and Austria and OECD guidelines calling on governments to act as model owners. He also pointed to Italian company Terna, which has about 23% ownership in a subsea cable company and veto rights over borrowing above 250,000 euros.
Profits and renovation finance
The institute, based in Herceg Novi, recorded net profit of more than 6 million euros at the end of 2025, according to Rakčević’s figures. He expects net profit slightly above 2.5 million euros in 2026. In his view, those results make further state aid an unrealistic option, leaving borrowing and collateral central to funding a four-star renewal.
A public-private partnership agreement with the government prevented the institute’s bankruptcy and consolidated its finances, in Rakčević’s account. Olive provided a 5 million euro loan that has since been repaid, followed by a non-repayable 7 million euros to cover losses it says it did not cause. The state contributed 14.5 million euros, bringing the institute’s losses fully under cover.
The authors of the restructuring plan described it as a forced solution that left room for other strategic development paths. One measure envisaged converting the institute’s right to use its land into ownership during 2025. That conversion had not been carried out despite unanimous requests from both the board and the shareholders’ assembly, leaving unresolved an asset issue while the institute looks to credit and collateral for renovation.
Rakčević supports upgrading the institute to four-star standard but disputes the estimated cost of the work. He puts the institute’s estimate at 66,000 euros per room, compared with the 20,000–25,000 euros he says his company spends on average to bring a badly deteriorated hotel room to that standard. His comparison is intended to question the proposed spending, not the four-star target.
For another cost comparison, he puts reconstruction at the institute at almost 3,000 euros per square metre, against an announced apartment price of 1,050 euros per square metre at Velje brdo in Podgorica. Partial waterproofing of the institute’s roof alone would require 4.8 million euros on his figures. These estimates sharpen the dispute over who should approve large contracts and how renovation money should be spent.
Healthcare site and tourism investment
Olive wants the institute’s grounds kept for healthcare and potentially commercial tourism rather than apartments for sale. The rehabilitation centre treats 8,000 Montenegrin citizens a year, according to Rakčević. A government project brief for the Faculty of Civil Engineering allowed for possible mixed use within the complex, but Olive opposes that option and says it has no plans for housing there.
The position links the investor’s proposed spending controls to the future use of the property: it supports renovating the existing health-tourism complex while rejecting residential development within it. That distinction matters to the shareholder’s proposed development path because the institute must continue its rehabilitation work as it pursues an upgrade.
Separately, Olive recently bought the Plaža hotel in Herceg Novi for 20.4 million euros. Rakčević estimates that reconstruction will require about 20 million euros more. He describes the property as neglected, with roofs that leak in many places and window frames and a structural glass facade that need replacement with energy-efficient materials.
Those hotel costs sit alongside his warning about operating conditions for Montenegro’s tourism businesses. He considers higher value-added tax, the removal of incentives for four-star hotels, visa-policy changes and implementation of the Euro model a combined risk to the country’s competitiveness as a destination. A visa change could also reduce revenue from some visitor markets and make it harder to find workers, in his assessment.
Rakčević supports Montenegro’s Euro-Atlantic integration but believes alignment with rules can move too quickly without sufficient protection for domestic interests. For the institute, the immediate decisions remain the pending statute and the unresolved conversion of land-use rights into ownership, both of which bear on the shareholder’s proposed governance rules and the search for renovation finance.
